I can't wait for this bubble to burst so I never have to hear about these tulips again.
We've been having rolling blackouts recently because of these fuckers. Energy is cheap in my country and they use that. Power lines are not built for that sort of thing. The normal paying consumers are suffering as a result.
Actually in a way the market price is not only defined by speculation but also how much "paying for energy" compares to "getting the bitcoin reward". So in a way the market price tells us how much people are willing to pay for energy (globally).
But yeah I agree it all sucks that it's going to mess up our planet even more.
Serious question, where does this line of thinking end? Gaming rigs use upwards of a thousand watts, no practical value in gaming. Watching sitcoms on a television has no practical value. Phones capable of doing things other than making calls have no practical value, but we charge them all the time.
Honestly I think providing an alternative financial system is more practical than most of the other energy intensive things we do these days.
The idea that we should do less stuff and be miserable because climate change is fatalist and just silly. We should be building nuclear power plants at a drastic rate to meet supply.
Remind me what did Wikileaks resort to using after it got banned from all payment networks?
> https://solana.com/news/solana-energy-usage-report-november-...
Humans have been playing games literally for thousands of years - there is a value in entertainment, especially with our busy lives of 21st century.
You can of course overdo it, turn it into an addiction and it can destroy your life - like many other things.
Crypto trading is as valuable as trading scraps of paper with a dollar sign scribbled on it - if it were done for fun or entertainment, then sure, whatever, but it's having major impact on our energy consumption and has to be curbed.
PS - also, a small side note - literally no gaming rig uses an "upwards of a thousands watts". Even fitted with the highest rated components currently available on the market(say a 12th gen i9 + RTX3090) you won't be using 1000W of power. Consoles use about 200-300W under full load, and that's a bigger gaming market than PC. And then the biggest gaming market is mobile - larger than PC and consoles combined, and the energy consumption there is tiny. So you're massively off base here.
>>Honestly I think providing an alternative financial system is more practical than most of the other energy intensive things we do these days.
And I honestly think that anyone who thinks crypto will become "an alternative financial system" and not just a pyramid scheme is lying to themselves.
ANYTHING can be used as money. The systems that we currently have in place have lots of big problems, but "we" decided to use them and that's why they are popular. We could also decide to use a cryptocurrency as money, and it would be equally valid, and it would become our "money" - that bit is fine and I'm not arguing with it.
What I am commenting on, and what I am calling bullshit, is the cold hard reality of crypto - there hasn't been a coin invented yet that is anything but a ponzi scheme. Everything from bitcoin to ETH to dogecoin is just a scam to make some people rich, even if it started with good intentions(and I believe Bitcoin really was started with the intention to become a currency).
The second this changes, and we have a cryptocurrency that is actually used as money and not a plaything, I'll happily stop complaining about it.
You might reply "you're just using a proxy of USD the original currency, its not new".
That's true my reply to that would be:
Having the USD be on chain allows very efficient lending. For eg. I can use a lending aggregator that is constantly polling many lending sources and moves my money to the best source of yield regularly. How would you do this with traditional banking?
I expect over time for the volatility to smooth out as more of the expectations are realised and we figure out a widely agreed fair price for most cryptos (for many this will be zero).
Chasing yield is a recipe for disaster.
100% agree, I hope my comment didn't paint it as if there is no risk. In terms of default, virtually all borrow lend dApps currently are overcollatoralized so if the borrower defaults, they are liquidated and I will be made whole.
> Chasing yield is a recipe for disaster.
Kind of a bizarre and baseless statement? Why should people not earn yield on their capital? We are all constantly losing purchasing power to inflation, it makes absolute sense to earn yield to negate this.
If you live somewhere where cryptocurrency gains are taxed as income, how do you handle the reporting of this at tax time? It seems like it would be tedious to keep track of every transaction across multiple defi platforms.
It's so country by country right now due to how early we are. Tax rules will be more clearly defined assuming Web3 and DeFi continue to be adopted over time.
I won't: we still have proof-of-work to get rid of (and generally, the unreasonable energy consumption and chip usage).
Now we need to nuke the Bitcoin farms. (Half serious: I wonder whether launching tactical nukes on those farms would generate less pollution in the long term than letting those farms be.)
Considering the explosion in the gaming industry in recent years you may find that it outpaces crypto already, or is catching up very fast.
For tiny values of many.
There is no major cryptocurrency using anything other than PoW. Ethereum has plans to start moving to PoS in 2022, but isn't there yet.
And related to gaming: Bitcoin alone consumes more power than entire European countries - including all the gaming, smelting, heating, industry, finance, data centers etc in those countries. There is no chance in hell gaming alone, for the entire world, is consuming more power than even Bitcoin - not to mention comparing it to all crypto combined.
EU nations may be a poor comparison, as it has many tiny nations as members as well as a few big ones.
The first Google hit I got said Bitcoin uses 80 TWh/year which puts it around Belgium (9th in EU) for pure electricity, the second said Bitcoin was using about 177 TWh/year (bit more than Poland, 5th in EU, again just for electricity).
I don’t have exact figures for game consoles or power usage per console or gaming PCs, so I will do a Fermi estimate: 1 billion active gaming devices (PCs and all consoles combined), 200 W per device, each used for 3 hours per day. This is 219 TWh/year. As a Fermi estimate, take with a grain of salt.
(I don’t accept the general claim that BTC actually has real value; conversely I think most gaming does, including gambling although for gambling the value is much less than the cost, but that’s not the focus of this comment).
So, let's say 300 million devices, running 3h/day at 150W, that's closer to 50TWh/year, less than even your smaller estimate for Bitcoin.
But you do also have to include the power cost of displays when the game machine doesn’t have one built in, adding 10-120W.
And the older consoles didn’t all vanish into the ether when new models arrived; my brother still has an original Xbox 360, and not for lack of money to upgrade. So I expect many of its contemporaries to also contribute to the total number of gaming units, not just total sales of most recent Xbox + most recent PlayStation + most recent Nintendo console.
7 of the 10 largest chains use PoS.
Volume traded is admittedly an imperfect measure of activity, but its better than market cap.
And that’s not “fake activity” by any means. Both chains run essentially the same DeFi and NFT activity as Ethereum.
Who gets to decide that? You see value in entertainment derived from a gaming rig, a person in Argentina sees value in mining a unit of make-believe currency which they can then sell on a speculative market. Should we form a global committee to decide on which types of computation have value, and should therefore be allowed to execute?
About 25 % of energy expended today is to make people not freeze, which is the single biggest or second biggest energy consumer world wide. The other one is transporting stuff and people. The third one is making stuff (food, buildings etc. use a lot of energy).
But if it's still taxed proportionally to the generated emissions, does it matter how big the rewards are?
I don't follow your logic, could you elaborate? One could say that about other things subject to carbon tax. Like all goods and services, the price is set by how much people are will to pay for it.
"the price people are willing to pay for short-haul flights could just increase, and therefore the airline profits are unaffected." "the price people are willing to pay for aluminium could just increase, and therefore the smelters are unaffected."
They don't really make sense. Carbon taxing would change miner behaviour, because greener energy would be more attractive (by virtue of being cheaper, especially with carbon taxing and reduced fossil fuel subsidies).
It ends at the last pyramid scheme.
These places have already got laws against pyramid schemes, so I’d start by asking a lawyer to explain the various existing laws: https://en.wikipedia.org/wiki/File:Pyramid_Scheme_Illegal_Ma...
Crypto isn't the first of this kind, nor will it be the last. But it does use obscene amounts of energy to make the scam work. And the energy requirements become greater year after year. It is not sustainable in our civilization.
All of those things have practical value. Humans need relaxation and entertainment in order to be productive, which gaming and sitcoms provide. (I'm not going to explain how smartphones have practical value because I assume that was included due to some sort of editing buffer mix up or similar while you were simultaneously writing something else while commenting here).
> Honestly I think providing an alternative financial system is more practical than most of the other energy intensive things we do these days.
That can be done for orders of magnitude less energy. The high energy use of Bitcoin and similar is not due to its providing a financial system aspect. It is due to the particular implementation details of its ledger.
It absolutely will need to be if we are going to avoid frying the fucking planet. The free market is the enemy of humanity.
Manufacturing them is not environmentally neutral either.
This has been the effect we saw when Germany started investing so heavily into solar.
This makes sense to anyone with a tech background. You don't want to use censorship-resistant, decentralized currency which is used every day to settle billions to buy coffee. That would be an overkill.
Instead, you use LN which allows to trustlessly instantly transfer small amounts of Bitcoin for extremely low fees.
It also can't scale the way it's usually promised, in part due to Bitcoin's horribly low transaction rate (you can't open LN channels fast enough, given Bitcoin's transaction rate), in part because of limits on the number of transactions in a live channel.
And in practice, it seems it's highly centralized [0].
0: https://iopscience.iop.org/article/10.1088/1367-2630/aba062
I'd also note that this seems to make DoS much worse of a problem. If I have a transaction with a node that has gone offline and can't be reached, and I initiate a forced closure, what's to stop the other node from taking all the money in the channel, especially if I am not constantly online and the channel state I can't know for sure if the other node may have made some transactions while I was away?
This is the bitter lesson every anarchist learns — by tearing down the establishment, you're not creating "actual anarchic freedom" — you're creating a utopia for pimps and thieves. It provides a huge raft of new freedoms for organized crime, being a massive catalyst for money laundering and the like. It provides surprisingly few freedoms for the little guy, since nothing's protecting you from theft by the same mobsters. Seriously — if your BTC wallet gets stolen/exchange gets hacked, you're basically fucked. And it's at its worst in exactly those countries we'd naively think would be helped by some underground currency, because there's nothing to stop the mob from robbing the little guy in a place like Russia. We moved away from gold for the exact same reason.
This is to say nothing of all the scams, ponzi schemes, environmental damage, etc, etc, which are several additional shitshows on top of what I just described.
---
Anarchy is always a more powerful tool for the bad guys than it is for the good guys. It's an iron law of history. The bad guys will always capitalize on the inherent power-differential of organized groups versus a disorganized group of individuals. As soon as the good guys try to fight back by banding together —— then they've violated the principles of anarchy. At that point they've simply created a new government, with censorship and granting of permissions.
Le Roi Est Mort, Vive Le Roi.
Today it’s over 10 years of crypto. I have only observed one application of crypto that touches the real economy - with a relatively obscure token.
Everything else, seems to be just be playing financial games inside of crypto, money laundering, side-stepping regulations, speculative meme assets and of course scams.
Can you point to an actual application of crypto that touches the real economy? I will be very interested!
https://www.theverge.com/2021/12/7/22822410/ubisoft-nfts-qua...
Of course it's worthless when the game will be shut down in only a few years.
Which will probably happen the first time some high profile streamer gets scammed out of his special shirt or whatever.
Of course.
> What experience does in-game NFTs offer to players
The warm glow of feeling they're the trendiest kids.
Yes, it's a "real" use in a "real" company, but that's like trying to argue that Bitcoins are useful and totally absolutely not a scam because a few real world companies decided to accept them as payment. Like, "sure, wink wink".
It's deeply harmful, but it is part of the real economy
I wonder if any new solutions would need to use any existing crypto network or if they can just spin off their own.
Crypto as in cryptography? Maybe.
Yeah, cryptocurrency effectively replaced Liberty Reserve & co.
It has less regulation than the official channels. Can have better privacy. Can be cheaper. Can be faster. Compared to Western Union, international wire transfers and the likes, sending money home for foreign workers (remittance), seems to be much better with Stellar, or other low-fee crypto currencies.
Maybe one more problem that it solves: I bought some crypto early on as a hedge against global politics going to shit (US, Russia or China going into proxy wars) or economics taking a dive (and governments/central banks deciding to devaluate, ...).
I totally agree with you on NFT's though. And I don't like the speculation/gambling aspect of crypto currencies.
Bank payment from Spain to Poland is cheaper than cryptocurrency; bank payment from Nigeria to Peru is likely to be more expensive than cryptocurrency; and a bank payment from USA to Iran is effectively impossible while cryptocurrency can work.
Go find out what the actual numbers are, then make the argument. Wishful thinking gets you nowhere.
You'll send $1000 from your Nigerian bank to the Peruvian bank, $937.65 will arrive after a week+. Most likely nobody will be able to explain where the money went.
It's just almost impossible to know the answer to the fee question beyond "probably a lot"
An bank payment from Nigeria to Peru might reasonably cost $20-$100, and I wouldn't be that surprised if in a particular situation it would come out to $10 or $300 (like, making a typo in some field of a non-validated foreign payment, or having an unclear tax situation on the goods for which the payment is held - that can easily cause e.g. a $100 extra unexpected processing fee for the payment). Also, you may get amount-proportional fees, and a 0.5% fee can potentially be huge for larger payments. On the other hand of the comparison there is also significant variability for the extra costs of the cryptocurrency payment - as the original question stated, including the cost and exchange rate variation of buying crypto for fiat in the sending country and selling crypto in the receiving country.
So it's likely but not certain that it's more expensive than an equivalent crypto payment + the to-crypto and from-crypto conversion, it depends on unknowable circumstances, and the variability and unpredictability of such fees is a big drawback on those types of international payments - unlike e.g. the intra-EU case where the fees would be predictable and low - perhaps zero, depending on your bank.
Additionally, a hedge is only as good as its performance in case of a worst-case scenario. If the stock market takes a dive or war breaks out, crypto will dive just as hard - same as it had done in the past.
When Greece was freezing / slowing bank withdrawals during its financial crisis in 2015, BTC price climbed.
IIRC BTC also jumped when Russia was getting involved in Ukraine in 2014.
It's not a perfect hedge, but I do believe bitcoin could be valuable if the world/governments go (partly) to shit.
[0] https://en.wikipedia.org/wiki/2012–2013_Cypriot_financial_cr...
[1] https://money.cnn.com/2013/03/28/investing/bitcoin-cyprus/in...
Genuinely asking as a newbie to this kind of thing, what's the advantage of using crypto over assets more traditionally used for this purpose such as gold?
I don't think it has much use other than speculation either, but it does have advantages over gold.
In a stable, law-abiding society these advantages are a bit pointless, but enough people either see the future as unstable and lawless, or currently live in unstable and lawless places, that there is market demand for crypto as a store of value.
I don't own any gold because I'd be worried about securing it. While I do have some valuables in my house, most of it is easily replaceable.
Less regulation -> more crime.
Better privacy -> more crime.
Cheaper -> more unstable currency markets.
Faster -> more unstable currency markets.
There is a balance to be found, but at the moment most cryptocurrencies are a nightmare from the perspective of people who value stability and order in social arrangements. And none of the current players seem particularly interested in finding that balance, because they know very well that most of their customers are interested in keeping it wild.
Bitcoin is permissionless money. You might not value that, but others do.
Bitcoin is indeed permissionless, which means you can use it for things society might find nefarious: tax evasion, drug trade, uncontrolled arms trade, human trafficking, money laundering, etc etc. You might not value that, but society as a whole does.
If the way it "solves the problem" is by not following the regulations that everybody else has to follow, I don't know if it's actually solving a problem so much as cheating the system.
NFT's like offered by NBA Topshots (basically replacing physical collectibles in a digital form factor) have their appeal if your into collecting sports stuff). 20 pixel unicorns for 1 ETH? Not so much..
And less regulation means more crime - the only reason the ransomware epidemic exists is cryptocurrency. Remittance is also not actually cheaper with cryptocurrency if you actually count all the fees, but most likely more expensive than Western Union.
Cryptocurrency delivers none of what it promises. It only delivers crime and ecological destruction.
I also tried not to pass judgement. I understand that less regulation leads to more crime (and I think we are seeing evidence of that). What I'm trying to say is that this solves a problem for people who want less regulation.
With respect to simplicity and fees; If I want to send money to a family member in Botswana, I can do that in about a minute with something like Stellar. The transaction fees are negligible (<1 cent). Converting to fiat to actually use it, does carry some fees (roughly 2 x 0.1% on Binance). I couldn't get an exact quote from Western Union, but I remember it being a lot more expensive and a lot more hassle (granted, it's been over a decade since I last used them)
Withdrawing to GBP is only £0.5.
The volatility of cryptocurrency prices alone makes them a pretty bad fit for any transaction whose value needs to be agreed upon within reasonable limits.
For stuff like blackmail, where profit margins are high and payments are highly negotiable, the benefits of anonymity outweigh this drawback, but for most honest business, it matters to a recipient whether they get $100k or $75k.
> economics taking a dive
And your bet is that when society collapses, the power grid and the internet will keep operating to keep cryptocurrencies cranking on. Not sure that is a safe bet.
The (tiny) investment I keep in crypto is a hedge when economies tank, or governments/central banks intervene. Eg, when bank withdrawals were frozen/slowed in Greece 2015, or when bank balances over 100K were seized in Cyprus 2013.
The whole point of these systems is to be permissionless and censorship-resistant. Simple yard stick: If your proposed alternate "distributed system" is harder to use successfully for extorting ransomware payments, then it does not do the same work, and it does not do it better.
Start thinking of crypto as luxury goods, then a lot of what happens (has happened) makes sense. It started out with practical problems it was trying to solve, but clearly morphed into something else entirely.
It’s hard to know what happens when the hype dies. I don’t suspect cryptocurrency will cease to exist, but for the good of cryptocurrency’s long term future, you might hope for such a bubble burst, too.
So good look with that.
So if people divest from bitcoin and the price drops, that won't make bitcoin more suitable for buying stuff. Nothing can make the blockchain shorter.
Bitcoin isn't going anywhere though, so if you include that under your definition of a "tulip", I wouldn't hold my breath if I were you.
The number of rubes you could convince about tulips in Amsterdam was finite, but on the Internet...
I think a lot of "investors" (gamblers) know it is mostly a scam, but are hoping they're not going to be the ones left without a chair when the music stops.
For all the naysayers and the evangelists, at this point it is clear that cryptocurrencies have staying power and the broader market (not going to pick out bitcoin specifically) seems likely outlive the US dollar. Decentralised protocols are more reliable than the US government.
The reason the dollar is so strong is because it is backed by a goverment which will use its power to guarantee the dollar does not collapse. The same goes for the Euro, yen, RMB etc.
When hyperinflation kicks in, will a decentralised protocol step up and try to curtail it?
If so how?
By what logic do you expect a ~10 year old technology reliant on massive amounts of power in a global warming world, that only started seeing adoption ~5 years ago, will beat the US dollar's ~200 year old lifetime?
Not to mention, USD and the US are such a central part of all finance and technology worldwide that it's absurd to imagine Bitcoin would survive a collapse of the US government.