Bitcoin mining is being banned in countries across the globe
fortune.com
fortune.com
Who could have seen that coming.
You can find another 3 orders of magnitude in certain financial exchanges. In some cases, those millions of transactions per second are being managed on a single thread.
The disruptor pattern is the way to solve any problem where you need to process events/transactions/commands/et. al. in a serialized fashion [0] as quickly as possible.
This problem space involves almost all business software, databases, simulations, etc.
I do not know of any other technique that would allow for faster serial processing of data, especially when controlling for practical applicability.
When I refer to blinders, I think I am mostly pointing to the ignorance regarding what is actually possible with the hardware (if you get the software out of its way). Any other technique involving cache-friendly structures, ring buffers, etc. is in the same league as far as I am concerned.
[0] To be as clear as possible, "serialized" in this context means that the consequences of event #1 may alter how event #2 would be processed, and so on.
The two-(business!-)day lag for finality really hurts their latency figures though.
The real (unspoken) use-case of bitcoin is large-scale international money laundering.
I'm not making any judgements in my comment above, I'm merely stating my perception.
In PoW blockchains, on the other hand, it's just electricity.
According to their 2021 financial report (year end Sept 30, 2020), VISA logged $8.3B in operating expenses. The majority of this is "personnel" at $4.2B (covering the salaries, benefits, etc. for their staff), $0.7B is "network and processing" (covering the expenses to operating their payments network), and the remainder is stuff like general administrative, marketing, professional fees and legal fees. But for comparison I'll use the $8.3B in total operating expenses.
Over the same period VISA processed 164.7B transactions, so if you divide you get that on average it costs VISA $0.05 in total expenses to process a transaction, of which $0.004 is for actually operating the payments network.
By comparison, it currently costs the Bitcoin network $176.39 to process a transaction (transaction fees plus block rewards per day / total transactions per day), over 3500x the expenses of VISA.
Maybe you'll say that's still not the same thing, because "total transaction fees" represents _revenue_ to miners, not expenses. Fine. VISA's revenue over the same period was $24.1B, which works out to revenue-per-transaction of $0.14. That's still over 1200x as much as VISA.
https://s29.q4cdn.com/385744025/files/doc_downloads/Visa-Inc... https://ycharts.com/indicators/bitcoin_average_cost_per_tran...
https://ycharts.com/indicators/bitcoin_average_transaction_f...
"Bitcoin Average Transaction Fee measures the average fee in USD when a Bitcoin transaction is processed by a miner and confirmed. Average Bitcoin transaction fees can spike during periods of congestion on the network, as they did during the 2017 Crypto boom where they reached nearly 60 USD.
Bitcoin Average Transaction Fee is at a current level of 1.560, down from 1.798 yesterday and down from 15.45 one year ago. This is a change of -13.20% from yesterday and -89.90% from one year ago."
So if we need to consider the resources used by the whole banking system when thinking about VISA etc, we must do so for Bitcoin as well. Otherwise we’re just playing with blue-sky hypotheticals.
The US Bureau of Engraving and Printing has a $1 Billion budget for manufacturing.
https://home.treasury.gov/system/files/266/24.-BEP-FY-2022-B...
How far down the rabbit hole do you want to go? No matter how you look at it, Bitcoin is horribly inefficient. Compared to the US Dollar (the literal physical dollar), credit cards, banks, or other institutions.
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Mind you: Coinbase is _NOT_ part of the bitcoin mining network, despite being a "bank" or "exchange" that processes a huge number of bitcoin transactions. Even when we ignore the electricity costs of Coinbase (and other servers), the BTC electricity usage is colossal.
The US Dollar has far more transactions per second than the measly 7 transactions per second.
Bitcoin is miniscule, far smaller than the US Dollar. Do whatever you want to make BTC as big as possible. Artificially inflate the value and scope of BTC as much as you wish.
It won't be anything close to the US Dollar. And yet, the electricity usage of BTC is absolutely colossal.
As if BTC were absolutely free to use and maintain? Sure, its "just a private key", except no one I know can use GPG or PGP on their emails, so its a bit harder than that ya think?
The typical non-techie out there relies upon a techie to handle the details of private key, transactions and so forth. A BTC transaction will be handled by coinbase (or some other crypto-exchange + transaction processor) rather than by the users directly.
"Etc. etc." being how much? There aren't that many crypto exchanges. They don't have personnel in any way comparable in size to that of traditional finances. Also they're not part of bitcoin. It can operate without them. Centralized exchanges are actually part of traditional finance.
Two last paragraphs in your comment are completely out of context, but how is owning a private key for a wallet any different than owning and managing a password for your account on an exchange?
Only a tiny fraction of the costs have anything to do with the actual network.
Also, the most important thing, is power and incumbency.
VISA made sense 50 years ago - it was a financial innovation.
But now, they refuse to adapt their pricing, and the cost is just not worth it.
The Banks are raking it in in processing charges that are not commensurate to the value created.
This is actually the 'true hope' of Crypto, that we can get around ugly costs.
Do you know when smartphones first started, Verizon and AT&T were charging 5 cents each to visit those stupid little WAP pages with a bit of text and a few combo boxes?
Imagine if the internet was ruled by Verizon and AT&T and their 5-cents-per-visit crap pages.
I loathe BTC and most of the Crypto world because it's all MLM, but, as a currency there's definitely material opportunity there.
That's ridiculous.
Those fee structures were designed for an alternate universe.
It made sense in 1970 - not on the internet today.
If we invented an 'interbank exchange' scheme today, which would probably include some decent form of identity management, it could operate at less than 1/10th of that fee.
The entire industry, which is controlled by the banks, is pure incumbency.
Not only is there value lost to that tax, but that network holds transactions back to some extent.
The real economic value of crypto is there, not in the current form of deflationary shenanigans.
Depends. With the Bitcoin lightning network live now it's only a tiny fraction of that price. I use FLUX for my crypto transactions: 0,00002951 USD per transaction, and that is PoW! LTC (Litecoin) is another great coin with super cheap transactions. There are so many :)
I often see on HN the mostly negative comments and attitude against this new technology, why? Do you really think the current system is better? With all the Quantative Easing (read money printing at the tax payers cost -> inflation), corruption, name it..
Soon your government will present you a new digital wallet based on the same tech. Only with one difference compared to the original crypto currencies: they will have full control over your wallet. And your wallet will have smart contracts, so they can decide where you are allowed to spend you money on and on what conditions. Let that sink in for a while before you start criticizing the real decentralized crypto currencies.
Crypto currencies are a dream come true and everyone should embrace it.
I'll take steady, minor inflation over crypto's love affair with hyper-deflation for Bitcoin, hyperinflation for most altcoins after their bubbles burst, and general instability.
And you want to talk about corruption? Crypto has a new scandal, scam, or rugpull nearly every month, and that's not even limited to altcoins. Then there's the whole thing with NFTs, which I repeatedly seen linked to the money laundering that used to go on in the art world[1]. Bad actors are attracted to crypto precisely because it's decentralized and unregulated. It's a dream come true for them, certainly.
Housing costs have roughly doubled in the past decade (not accounting for inflation; if you account for that, it's only by 50%). Bitcoin has, on multiple occasions, changed by that same factor of two in the span of a month. Anyone who thinks cryptocurrencies represent anything other than a volatile investment vehicle at the present moment is not living in reality.
The mechanics would work differently, but the value of an IOU issued by a global superpower has intrinsic worth regardless of how it is assigned. Governments are not powerful because of their currencies; their currencies have value because of their power. If the US Treasury forked bitcoin tomorrow, it would certainly have positive value.
Cryptocurrencies, in general, are not all valued the same. And why stop at crypto—surely the same reasoning would apply to USD supply inflation, if you're just going to lump all (crypto-)currencies together as a single good?
Sure, you can introduce new types of coins or massively inflate the ones which don't have a fixed supply, but that doesn't impact (for example) the limited supply of bitcoins. The overall effect is mainly just to devalue the inflated coins relative to other currencies.
This attitude is what really irks me about cryptobros. "You can't criticize crypto because [insert dystopian sci-fi novel scenario] might happen"
Pointing out how it's inefficient means nothing if the alternative means that you're robbed blind.
Is it harmful though? Whether this is a good or bad thing might come down to how much importance you place on random consumption vs capital investment as the real engine of society. The Keynesian viewpoint is more favorable towards the importance of random consumption, the Austrian mentality would put a lot more weight on the value of saving for future investment and building.
EDIT: to add onto that answer, I'd say that just as there are still savers in an inflationary environment, there will still be consumers in a deflationary environment. Incentives matter, but are not absolute drivers.
If you said "It is counter intuitive with Keynesian economic theory", I'd see your point a bit more. But different schools of thought like the Austrians view the importance of short-term consumption differently than what is a sort of textbook model of the world.
Deflationary currency competes with investment, not with consumption. For example investing in infrastructure, is a safe, low return investment. in single percentage digits. If the deflation of the currency is faster than that rate of return, then nobody will ever invest in infrastructure. People will never install solar panels on their house, etc.
1) concentration of wealth on early adopters
2) no long term security unless you have a constant backlog of high-fee paying transactions
I think an uncapped, disinflationary emission is to be preferred [1].
[1] https://john-tromp.medium.com/a-case-for-using-soft-total-su...
How can you transfer large amounts of money between countries with minimal fees using credit cards?
The sender doesn't have to buy Bitcoin first. They don't have to wire it to me. I don't have to turn it back into money (at God knows what rate). Coinbase looks like it would take 1.49%+$2.99 at each end for a large end-to-end.
And 1% is expensive. My bank charges a flat £25 for sending internationally. Many other banks and companies charge considerably less.
You should look into other cryptos.... bitcoin is not the one with least fees...
But whoever you pick, if you have to buy it with a card, chances are you're going to pay that card processing fee and a withdrawal fee at the other end. However you look at it, it's three transactions instead of one.
Ideally, an app would pick the best one at the time of transaction?
Edit: and just today I had issues receiving a wire transfer from Canada, again, and it was less then $1k (because of my home address)
The high power consumption used by a heavy gamer (CPU + GPU) is easily indistinguishable and probably higher than a plain old individual miner since you would have CPU + GPU + Peripherals running.
And since there are 1000+ X more gamers than miners, the Bitcoin Inquisitors will have a hard time finding the needle in that haystack by simply examining your electricity bills.
However, the miners with 150 GPUs, 500 GPUs, thousands of GPUs are absolutely a problem.
I want to buy a new video card too, but if the market is paying more than they are retailing for, but what can I do? I must compete with the miners.
If 150 cards are used to play fortnite, or 150 cards are used to mine, that is entirely the prerogative of the person that bought the cards. Is the problem that you don't like what someone else is doing with their own property?
https://www.ign.com/articles/dell-alienware-gaming-pcs-six-s...
My understanding is that (even top-tier) consumer-grade hardware and consumer electricity prices are not going to be enough to turn a profit, at least in current hashing conditions.
If a country detects 10,000 people running high GPU loads (not sure how they could tell the difference between GPU and, say, a space heater) then it probably would just be gamers and not miners.
Its very easy to distinguish a gamer from a miner/weed producer. Gamers, even when addicted, are human beings. Human beings sleep. Which means you are going to see patterns (normally at night) where usage is down. Also, a lot of gaming is mobile, increasingly in cloud, and every Xbox, Playstation, and Nintendo Switch is going to have a specific power profile (non-unique, except TV output) as well as a specific heat dissipation. And the usage of power and heat dissipation is both much lower than both mining and weed producers.
You can bet your ass both the electricity companies and the Dutch authority use big data to aid in their discovery of such criminal enterprises. However, the goal of a weed producer is to generate for a criminal enterprise, knowing they get busted. If they hidden their assets well, they can reap the benefits after the case (even if they bankrupted). And therein, in that cat and mouse game, lies a market for cryptocurrencies, unfortunately if I may add.
Because I am from The Netherlands, and I would like my children being able to visit the provinces of Holland where they were born (I get that nobody from China gives a shit about that though, but just to give ut a personal touch from my PoV). To achieve that, environmental waste must go down. Cryptocurrencies are the single most useless asset in that equation. They don't contribute in any positive way to the environmental issues we face. Its an eccentric if not downright narcissistic financial world, while the environmental clock is ticking.
I therefore agree with a world-wide ban on this MLM driven scam business (another downside). However, banning alone is not enough. It requires moderation by an already overburdened police force. If its banned though, you no longer need to differentiate between cryptocurrency mining and weed producing. And you don't go after Harry the 16 year old gamer or Joe the Norton user who mine a bit on the side. Its the big boys who matter.
The 1 million crypto miners on the other hand are devoting at least 1 CPU/GPU to mining 24/7.
https://www.statista.com/statistics/420621/number-of-pc-game...
Also, the noise of the fans required to cool such an electric load will get you thrown out of any apartment complex fast, not even considering that this heat is dissipated into your living room which would lead to somewhat uncomfortable room temperatures of over 30°C even in the coldest of winters.
What you're probably thinking about is GPU-based mining, but that has nothing to do with Bitocin.
[1] https://www.statista.com/statistics/1262471/per-capita-elect...
What do you base your 2-3 kWh number on? Because there's literally no way that's true. A fridge alone consumes close to 200 kWh.
No matter how polluting, running around with a sports car will in some way counter most users' personal finance. But if using cars made free money, not only nearly everybody would be doing it, but there would be potentially no limit to "scaling up" the earnings, as long as one could cover the initial investment.
The Kazakhs are protesting and rebelling over high fuel prices. But why would fuel prices be high in a country with large oil and gas reserves? Well, funny enough China banned cryptocurrency mining, and a lot of miners (allegedly) crossed the border into Kazakhstan, where energy is cheap in the form of oil and gas. The proportion of bitcoin mining out of Kazakhstan has massively increased since then.
The miners drive up the demand for oil and gas, increasing price, leading to the protests.
Now, how true is all of this? No idea. But you can bet that in the coming weeks the Kazakh authorities will blame cryptocurrency for the entire issue, redirecting the anger people are feeling. Then, they too will ban it.
And if they're right, and this is what happened, you can expect to see this process repeat again in whatever country has the next cheapest energy,
To prevent arbitraging opportunity. If fuel is subsidised for local citizens, they will start siphoning it out of country to sell overseas and profit off of it. Oil and gas companies would rather do it on their own.
It effectively monetizes the inefficiencies of the energy markets.
It burns the energy, providing no real value except that the coin 'exists' on the ledger. You can't use the coin for any real purpose.
Crypto finds where energy is cheapest and then ensures that it isn't cheap anymore.
This is also directly responsible for increasing levels of fuels poverty and inequality. Driving up the cost of energy forces people into making decisions on whether to heat their home, cook their food, and how they live.
The direct human impact of this is really hard to justify because some capitalists in the western world want to make a few bucks.
Not because of Bitcoin miners:
https://www.npr.org/2022/01/08/1071198056/theres-chaos-in-ka...
New NFT "drop", someone purchases, takes a DeFi flash loan, "purchases" it from themselves for a ridiculous amount, sells it to the sucker, pays off the loan.
I'm bullish on crypto, but this is just another cycle. Same as - what was it, 5 years ago?
Maybe 40k BTC will be the bottom... maybe it'll slowly taper down to 30, 25.. then it'll be quiet for a while, then...
I am bearish long term though because the narrative that anyone can get rich from crypto has time decay.
It doesn't just have to go up but it has to go up so much that the guy investing $10k thinks they will be "rich" from it someday. That is just so unsustainable as price goes up.
When that narrative is lost then it is just standard commodity speculation like gold/silver.
It took gold and silver 27 years to take out the 1980 high. The oversupply from mining that very high prices create makes the boring bear market longer.
The vision is for mining to be distributed amongst many small to mid-sized, non-colluding teams, the sum of whose hashpower is still greater than that which could be mustered by, say, a government or bank.
I hope that one day the UX and hardware for mining and joining mining pools becomes so simple and cheap it just makes sense for many semi-technical people to run a node in their home or contribute their compute/storage to distributed protocols. Even have this built into the operating system, with a simple toggle for turning it on and off.
Truly distributed mining is largely a UX problem. I hope that these bans may spur spur development on dead simple mining pools for all.
At least looking at ASIC-resistant mining algos... it would be a hopeful future if we could get protocol-level compute and storage sharing to distributed mining pools, like https://www.nicehash.com/
Until contributing your unused compute and storage is as easy as clicking a toggle, the economies of scale will prevail.
I think crypto + ASIC resistance + seamless edge computing = the original dream of the Internet
Your only real hope for making money is to buy an ASIC miner.
But just try to buy a single unit - they’re either perpetually “sold out”.
Or there’s some guy in another country that will deliver a unit but only accepts payments in Bitcoin. So there’s no recourse if he doesn’t deliver.
On emissions, a quick google gives me this:
> most states provide some type of exemption specific to older cars.
https://www.hagerty.com/media/archived/emissions-and-your-co...
But classic cars are not a big interest of mine so I don't know the details.
What part exactly do they want to ban? Can there be no reward for computations?
They're actively shooting protestors in the streets, I think at some point you stop worrying about the technical details and just put the datacenter admin in prison if they don't do well enough.
Especially if it is a scapegoat, really, because then they really just want people in prison to blame for things. Due process needs to exist before legal arguments mean much.
Additionally, 1000 computers running full Bitcoin nodes will all be performing the exact same verification work as they download the latest blocks as every other node because they all want to independently verify the same source data.
1000 computers running folding@home, seti@home etc are typically performing different computations and actually sending their results back for analysis.
If someone truly "wins" the race in folding@home and finds an algorithmic shortcut to speed things up they've made a breakthrough in our understanding of biology and protein folding.
If someone truly "wins" the race in seti@home and finds an algorithmic shortcut to speed things up they've made a breakthrough in our understanding of signal processing, possibly radio astronomy as a whole, and maybe even found something life changing (or a much faster way to test the null hypothesis).
If someone truly "wins" the race in Bitcoin and finds an algorithmic shortcut to speed things up they've broken a major global security tool and possibly "won" internet security in general (by breaking it).
One runs sporadically, with each result (even the negative ones) being useful for mankind as a whole.
The other one is run dedicatedly 24/7, with almost absolutely all of the calculation being worthless in the end.
If it is to complex for some to understand then let me state the obvious; banning of and enforcement for home run crypto mining will not be feasable. That isn't what is being discussed. It is the large industrial scale that is being banned. Those can easily be monitored and shut down by energy companies and governments.
I say ban the whole thing. The whole thing is idiotic.
Crypto skeptics (such as myself) point out the flaws in all this. For example:
1. It's not a currency. It's an asset;
2. Reversible transactions for fiat currencies is a feature not a bug;
3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited;
4. Crypto has its own vulnerabilities (eg 51% attack);
5. This whole system is hugely energy wasteful; and (here's the big one)
6. Government action could shut down crypto tomorrow so how robust is it really?
(6) seems to be contentious but there's a ton of evidence for this. China banned mining, for example, out of energy concerns so all the crypto miners moved to Kazakhstan, a country that may end up being invaded by Russia. What happens to those crypto farms then? Rising energy costs in the developed world are slowly going to turn the eye on crypto mining. You already see the US government cracking down on crypto anonymity and tax reporting.
All of this is enough for me to wonder if the solution to the Fermi Paradox isn't just that civilizations end up choking on micro-plastics and cooking themselves to death with crypto-mining. But hey for awhile there they created a lot of shareholder value.
You didn't mentioned one big disadvantage: 7. Cryptos are also used by naughty people for hacking, extorting etc. And we already know how many of them are involved in mlm strategy.
What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system?
That's not fantastical. We already do this with trading with countries that are sanctioned (eg Iran). The US uses this power to exert influence on foreign banks so it's not just a US banking issue.
And I agree: governments don't willingly lose control.
America isn't banning crypto because we, overwhelmingly, benefit from it. While the public pitch is fire and revolution, the ground-level truth of crypto is it exports cheap, often-subsidized, environmentally-ruinous energy from poor regions to financial centers.
No it doesn't. I'm not sure where people are getting this from. It _wastes_ energy; it does not move it.
I don't see how such law can be enforced legally in not communist government.
Bitcoin isn't a country, this is fantastical. Wall Street is deeply entrenched in crypto and once there are more crypto-backed ETFs this will be even more true.
A well funded actor could 51% attack BTC, and short at several times leverage and make their money there.
Or double-spend and make money there.
Or both!
That's technically illegal too but not in the same category as, say, ransomware, drugs, etc.
Anyway, I don't think the illegal use cases really matter. After all, cash can be used this way too. Sure cash can't be used for certain things crypto can be but crypto isn't fundamentally immoral any more than money is.
What about the fact that those video cards use HUNDREDS of times more power than even a relatively busy hospital?
Using energy is fine. Producing unclean energy is immoral. So is driving an internal combustion vehicle. We must get our power generation efficient and clean as possible.
The thing is that, even if, it is not going to happen soon. And Energy for Bitcoin is out of proportion if you compare it with anything you have mentioned. Bitcoin wants to replace something with less efficient way. Bitcoin is backward thinking.
You can't stop it, you can't stop people mining it, you can't stop people using it. Complaining about the energy is like complaining about the moon. Nothing you say or do can make it go away. So get people to generate it cleanly.
0.5% of Bitcoin's volume is illegal activity. [2]
When will this crime meme finally die?
[1]: https://www.investopedia.com/articles/markets/032916/how-big...
[2]: https://ciphertrace.com/2020-year-end-cryptocurrency-crime-a...
> illicit transactions making up less than 0.5% of Bitcoin’s yearly volume in 2020
No adding required.
[1] throws a lot of numbers including/excluding different categories of drugs/etc. You can squabble about 7% or 12%, but the point is it's an order of magnitude higher than 0.5%.
Well sort of both, but many of us use exclusively as currency. For instance, I generally only hold it long enough to make some bitpay transactions to avoid CC fees.
2. Reversible transactions for fiat currencies is a feature not a bug;
Feature of some fiat transactions, but you can avoid that with fiat too. Some people WANT irreversibility, but you're free to use fiat instead if you like.
3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited;
OK fine, they needn't use crypto.
4. Crypto has its own vulnerabilities (eg 51% attack);
If 51% militantly attack the treasury and fed it won't exist either.
5. This whole system is hugely energy wasteful; and (here's the big one)
Your beef is with externalities of electricity. I don't like that either. Lets fix that rather than play whack-a-mole with whatever use of electricity you disapprove of.
6. Government action could shut down crypto tomorrow so how robust is it really?
All I can say is good luck with that.
It is significantly harder to convince 51% of the population of something than to convince >51% of Bitcoin hashpower: the top 4 mining pools control 51% of the hashpower, so you'd really only need to convince a handful of people to execute a 51% attack.
I think we're both acknowledging reality of 51% attack.
If not, then it sounds like someone actually does want irreverability.
Consumers want to charge back if the vendor isn't supporting them.
Consumers want to charge back if the charge is fraud - stolen/leaked/socially engineered - whatever it may be.
The last thing a consumer wants is to be liable for transactions they didn't make/want and have those transactions be irreversable.
Reversing transactions as a scam is fraud and you are protected from fraud by your card member agreement, and you would be refunded your cash because the cash transaction is reversable.
Please list one non scam related use case for irreversible transactions and tell me how anything crypto/coin solves that. I've seen in the past 2 weeks alone that oddly enough, smart contracts are changeable and someone changed them to defraud the market... so what good is a smart contract if you can change the terms of the contract and you have to devalue/destroy any coin that participated?
Introducing a mechanism for reversibility introduces risk for the party responsible for bearing the cost of reversing the transaction. For CC companies, that cost is reflected by charging the merchant maybe a couple percent fee which covers both insurance for reversing customers as well as transaction costs.
Some transaction occur between parties who already trust each other in at least one direction. For instance, I sometimes buy metals from APMEX. I have absolute trust in them to not rip me off. They on the other hand, do not have absolute trust I will not rip them off. I do not desire any insurance whatsoever by an intermediary. By using cryptocurrency, I'm able to avoid credit card fees while still yielding fast <30 clearing times for precious metals transactions. This speed and cost point unachievable almost any other way with online payment to a bullion dealer.
So what do I gain by losing reversibility? Less transaction fee. The merchant is absolutely assured I can't reverse the transaction, thus their risk is lowered, and they hand off the lower prices to me.
It is not going to happen.
I could even see it classified as a collectable. I agree with "asset", but the price volatility makes this a bit of a harder sell; and let's not kid ourselves, it's Bitcoins convertibility into fiat that is _exactly_ what makes it attractive (there is a reason it used to be "worth" only $1 before it was integrated into the financial system/exchanges).
I love the idea of Bitcoin, but I'm not 100% convinced that it will usher in the paradigm shift in money that many talk about... but it certainly has stirred things up and gotten the conversation started, so that's something.
It's an asset that can easily be used as a currency using technology like payment channels or rollups.
> 2. Reversible transactions for fiat currencies is a feature not a bug;
I can make my blockchain transactions reversible if that's a shared priority between all parties taking part in the transaction. I can even assign some quorum of others who can facilitate the reversibility process if we want. Blockchain is about freedom to choose what is important to you and not be forced to give control to some anointed third-party.
> 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited;
Managing private keys can be difficult. Social recovery wallets make this much easier - you can choose to be the sole individual who can generate your private key, you can trust a group of friends/family members, or you can trust a combination of friends, family members, and private/public institutions. People who don't value decentralization or autonomy can let a third party manage their keys, and people who don't trust third parties can manage their own keys with a fallback plan if they lose it.
> 4. Crypto has its own vulnerabilities (eg 51% attack);
I don't think any informed member of the crypto/blockchain community pretends that crypto doesn't have its own vulnerabilities. What they talk about is the existence of vulnerabilities and the trade-off you take by using a blockchain. 51% attacks are very difficult to pull off in a meaningful way (rewriting history or stealing funds), but by using a blockchain you can own assets, do p2p transactions, and have a record of digital asset ownership on top of many other uses.
For many of us, the benefits outweigh the risks of a 51% attack or potential contract bugs, though many people who are now "investing" in this space don't understand anything about blockchains and treat them as money-printing machines, often using highly centralized chains that would be better run as centralized gambling services.
> 5. This whole system is hugely energy wasteful; and (here's the big one)
You are talking about a specific implementation detail of proof-of-work blockchains. Proof-of-Stake (PoS) chains exist, and even the second largest chain by market cap has been running its PoS chain for over a year and will fully migrate over to it within months (cue jokes about dev delays). Blockchains can and do exist in a form that doesn't waste huge amounts of energy.
> 6. Government action could shut down crypto tomorrow so how robust is it really?
I see people have already replied about this point. Certainly there are ways that governments could hamper blockchain development and adoption, though they could also embrace the technology. Blockchains were created to give power to people over the governments and large financial institutions that control them - sadly, most people in the space have lost sight of this and are focused on getting rich. In a world where all assets (including currency) will soon be digital, having government control over these assets is a huge risk to individuals whose governments may someday freeze their assets or fall to an authoritative regime that creates an economic prison where fleeing oppression means losing what you've spent your life working to earn. People should have power over their governments, not the other way around, and giving people a way of holding assets that are beyond government control is a great start.
That's true of any asset. You miss the main point about what makes a currency a currency. Bitcoin, for example, is massively deflationary to the point of someone having spent $800 million on a pizza [1]. People are also hoarding (hodling) crypto... like an asset.
> Social recovery wallets make this much easier
You can recover a wallet but what does it matter if someone has drained it? I guess it matters if the wallet is tied to certain smart contracts. This also matters for so-called Web3 identities.
Any such recovery mechanisms are also an attack vector.
> Proof-of-Stake (PoS) chains exist
I'm well aware of PoS (vs PoW). For years there's been a lot of hand-waving how PoS will fix everything. PoS just seems to trade one set of problems for another. Whereas PoW has an economic incentive (ie mining new coins) to maintain the blockchain, PoS doesn't. I've heard the analogy that PoS is like a presidential election where only the richest can vote.
> sadly, most people in the space have lost sight of this and are focused on getting rich
This is the only force behind crypto. Many are obsessed at jumping on the next Bitcoin so you see people jumping on NFTs, having wallets with 300+ different coins in them, etc. If the belief that crypto will only go up in value is the only thing propping up the network what happens when that belief goes away/ Every bubble can burst.
[1]: https://www.complex.com/life/2019/05/man-who-spent-800-milli...
Cryptocurrencies are not Bitcoin, Bitcoin is a cryptocurrency. I can use an algorithmic stable coin that matches any asset.
A currency also doesn’t require stability. I spend cryptocurrency all the time even though the price fluctuates.
The point is that it can be used as a currency, though you may not see most people doing that in practice.
> Any such recovery mechanisms are also an attack vector.
Sure they’re attack vectors, but they can be mitigated quite easily if you’re afraid that someone might kidnap your friends to recover your private key. I can timelock my funds or have alternative keys that can challenge any attempt to move my funds. These aren’t hard problems to solve, but building the right UX is hard and often times traditional financial institutions still do a bad job at implementing those.
> I've heard the analogy that PoS is like a presidential election where only the richest can vote.
Most solutions in life are trading one set of problems for another, you just choose the solution with the fewest issues.
People often criticize PoS by saying it reinforces the wealth of the already wealthy. The same can be said of PoW (mining at scale to be competitive is capital intensive), banking, or any industry. There’s a reason that poor people have a harder time starting businesses.
PoS makes it easier for small players to pool funds and have shared validators that can earn them all money without needing the time and expertise to run mining hardware.
PoS also comes with some nicer solution than PoS, including the ability to punish dishonest network participants.
In PoW, you can’t actually kick a single dishonest miner off the chain. If you switch to a new PoW algorithm, all miners need to buy new ASICs and there’s no guarantee that the attacker won’t buy up the majority of the hash rate. Because of that you might choose to use an ASIC-resistant algorithm and rely on GPUs, but if your attacker buys sufficient GPU hashing power, they are now in control for as long as they can afford to run.
In PoS, you burn the attacker’s capital and they have to rebuy the stakes token to resume the attack. This will cause a massive increase in asset price, followed by the attacker losing all of their funds again as they are burned.
The only downside to PoS is that you have weaker properties for knowing what the “true chain” is when you initially sync a node (there’s no concept of ‘work’). You can mitigate that via trusting a third party, or buy getting the network state in aggregate from a large number of unique nodes.
> This is the only force behind crypto. Many are obsessed at jumping on the next Bitcoin so you see people jumping on NFTs, having wallets with 300+ different coins in them, etc. If the belief that crypto will only go up in value is the only thing propping up the network what happens when that belief goes away/ Every bubble can burst.
Perhaps from your limited engagement with the community, you think this is true. To be fair, it is the most vocal part of the community and I certainly wish there were fewer speculators and people hoping to become overnight millionaires.
Perhaps when you say “the only force behind crypto”, you mean behind the price of crypto, but that’s not a very interesting topic if you ask me. I don’t care about the bubble or the price of crypto, so arguing from that perspective is arguing against points I haven’t made.
There are plenty of people who focus on the technology and the advantages that decentralization brings. You can find a great community of these people in the Eth R&D discord or ethresear.ch.
> Government action could shut down crypto tomorrow
"crypto" meaning...all cryptocurrencies? The ban mentioned in the article only applies to BTC. We've seen major governments try to ban it already and it didn't shut it down. Many currencies can't be mined and are much more difficult to trace than BTC.
Additionally most people who use it don't actually know how BC works. They read BC banned and assume that's the entire architecture, not just mining, and don't want to be stuck with an illegal asset. Alternatively they see the mining bans as a first step toward making the crypto completely illegal, making them want to dump them.
It will just make remaining miners more profitable. It will though reduce the security of the network by reducing the cumulative hashrate, but it's already incredibly secure, so I doubt that would have a big price impact.
Again, that's not an easy or likely outcome knowing the nature of Bitcoin's intended resilience against it, but it is a possible outcome and knowing it is a possible outcome can indeed affect price today. (Markets take such uncertainties into account.) Bitcoin can't make transactions if it doesn't have miners. Miners are not just for coin production, but for all transaction processing.
We didn't go and tax CFC in the late 80s, we didn't go and tax sulphur and lead in fuels, we banned them for their destructive potential - and we saw drastic results out of these three bans.
Despite decades of "small government"/neoliberal propaganda (since the 90s, which is not a coincidence!), governmental action to global problems works.
ETA: And obviously, countries like China have to worry about their climate targets, and countries like Khazakhstan have to worry about supplying their citizens with power. They are fully in their right to ban rich foreigners from coming in and making life for their citizens more difficult just for profit.
[1]: https://medium.com/gochain/the-truth-about-bitcoin-and-ether...
I don't see people losing years of their life for mining crypto.
When Big Co. does this at least they pay salaries, and bring some network effects in your country. Mining on the other hand is extremely resource intensive but doesn't presume any substantial local investment to make it worth it for the country.
* That tax would have to be so high to fully pay for the environmental damages mining is causing, that it would make mining not economically viable anyway. So might as well save yourself from burning public funds trying to find ways to legislate and enforce that tax (no secret that crypto people tend to not declare a lot of their coins).
* Allowing new/more emissions to happen now counting on the fact that we will just take that carbon out of the atmosphere later on is exactly the wrong thing to do. We will already need gigantic monetary and technological investments to make that technology able to pump out any significant amount of CO2 assuming we do all the right things toward decarbonization until this is possible, so we don't really need to shoot ourselves in our only remaining foot by just adding more CO2 to be removed. Not emitting one ton of CO2 today is much much more valuable than pumping one ton out later on, just because of the massive amount of energy needed to pump it out.
So I think banning is absolutely the right choice.
So I fail to see how your anecdotal experience generalizes.
TFA didn’t mention PoS, and I have gotten the impression that the crypto community regards it the way people talk about fusion energy, “the future if someone ever figures it out.”
HN is more knowledgeable about crypto than the average bear, so I’m wondering if this crowd expects the crypto bans to cool off once PoS is (ever) proven with a mainstream stablecoin, or if I’m missing any crucial details.
I don't like it but his parents don't mind - they have no clue what it's about. I'm the Uncle, wondering if I should say anything or let him have fun. So far I haven't said anything.
There's not much learning going on mining coins, is there? I might be wrong, but I was hoping he'd be into creative programming and making things on his PC. But for the teenager it's all games, bitcoins and good times!
I don't understand why it takes so much time for Government that BTC, animal farming, climate change shouldn't be taken lightly. I feel sad for those tax payers whose money were used to subsidize electricity.
And it’s so astonishing to me why crytobois don't switch to the better currency that doesn't use POW at least they won’t use exorbitant power.
There are a few “climate-friendly” miners making a bit of noise, but the players that dominate by hashrate are using coal and natural gas. For example, here's a thread from the other day about one of the largest US miners and the difficulties they encountered bringing an old coal plant back up to capacity: https://mobile.twitter.com/anthonyc3004/status/1479506660200...
China already have their own Digital Currency (DC) https://en.wikipedia.org/wiki/Digital_renminbi
and on the 18th the UK unveils this, which people can watch online for free. https://www.rusi.org/events/open-to-all/central-bank-digital...
One thing I noted with the Chinese DC, is that the DC can starting expiring in order to stimulate spending in the wider economy, much like the ECB's negative interest rates. Reports suggest the big global corps like Siemens and Phillips are paying to store money in EU banks instead of investing it, but this could also be the mopping up of quantitative easing money being End-of-Lifed.
Nothing is ever transparent in global finance and politics.
So yes, many people in crypto have switched, and I'm in favour of an outright global ban on PoW mining (though El Salvador might be hard to get on board). Bitcoin is still number 1 by market cap but I suspect Ethereum will flip it soon, perhaps this year as they move to proof of stake, and (hopefully) more countries ban mining.
Let's ignore the fact that the world is burning, and pile onto an energy-thirsty blockchain that accounts for (perhaps now a little under) 0.5% of global energy consumption, because hey, if we're lucky, maybe that'll become 1% of energy consumption.
There are so many problems with this. And yet, bitcoin maxis will continue to handwave and gaslight with arguments of the energy coming from 'green' sources (as if that energy couldn't be used for more productive things).
But will they move?
There are no better options that provide the security required for Bitcoin. The energy is not wasted, it is being used to provide security.
What's interesting to me about crypto currency is the ancillary philosophical discussion of what the necessary and sufficient features of "real money" actually are. Crypto shares a lot of the features we'd normally associate with "real money," people use crypto currencies as "real money," and generally people trust, to some degree, that crypto will have ongoing value (regardless of how misguided we may think that is.)
Does there ever reach a point where those claiming that crypto currency is "not real money" becomes analogous with the man yelling that US currency is somehow "fake" because it isn't backed by gold? The ongoing utility of both "currencies" seem to make both of these positions appear misguided (this coming from a fellow long time crypto-skeptic.)
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Well, mining Bitcoin is not more wasteful than an electric heater. If we assume that cryptocurrencies provide no benefits, a computer mining crypto is equivalent to an electric heater.
If we assume that cryptocurrencies provide some sort of benefit, then mining Bitcoin is more energy-efficient than electric heaters.
So, if you want to ban Bitcoin mining, you should also ban electric heaters, if you want to be morally coherent.
This is the same old straw man, you can make the same argument for Twitter or Hatebook. For all their ills, there is some human benefit from us using them collectively. Crypto is unusable and always will be. Everyone in it is on the pump & dump train. It is all speculation and chasing dumb money.
Nobody sane runs electric heaters which heat the great outdoors either.
But also, in general, the heat produced by mining magical internet money is, generally, not being used; it's waste.
christmas lights are mostly LEDs now, which are super low power. i think our lighting setup was less than 5W draw total, and they only run for a few hours/day
Beyond a certain point*, each additional watt-hour spent on Bitcoin mining doesn't make Bitcoin any better. It doesn't deliver more value at all. It's just a rat race between miners trying to get a bigger slice of the rewards pie.
It's like if there was a fixed amount of Christmas-lighting in the world, and each new person who plugged in Christmas lights got some of it in proportion to how much power they drew. So when you plug your lights in, everybody else's get a little dimmer, but you all still use electricity.
* The "certain point" being the point at which the mining expenses make a 51% attack unprofitable. That's all the security Bitcoin needs, more security than that is waste with no benefit. There is nothing in the Bitcoin protocol that causes mining to stabilize at this level and not overshoot it. Or undershoot it for that matter -- but we can conclude we haven't been undershooting it so far by the lack of attacks.
This is a fundamental misunderstanding of security spend. You just don't know how much is enough. If you could provide a trustless (or.. maybe even useless, trusted) mechanism for determining appropriate security spend, there is many Billion dollar industries that would love to hear it.
Bitcoin's model for how much to spend is basically just "pick a number". Right now it's 37.5 BTC per hour. In 2024 it will be halved. Is it way too much now? (I suspect so, but I don't know so). Will it be too little after the halving? (Probably not). The next halving, or the one after that? Who knows.
[0]: https://simon.medium.com/bitcoin-and-pollution-the-definitiv...
Then the one argument against Bitcoin could fall away, and companies like Tesla could start using it again.
I'd like to see this on a national scale instead of an international one (which is already the case) so that you wouldn't have to move countries to simply evade a law, which is a very arduous process.
Then you will go in front of other people, called Judges, who will determine your guilt.
Finally you will get to spend a lot of time with the people known as "jailers".
Also I respond to a lot of crypto bros who think the same old tired mantras are witty replies. Governments didn't become dominant entities by happenstance. Most people don't want broad tax evasion, endless scams and seriously environmentally destructive practices in the name of an asset that isn't actually decentralized, where all transactions are public and where you pay enormous transaction fees along with gaining a serious security burden.
However:
> and threatening the future of crypto
No it does not.
What does the banning of Bitcoin mining have to do with other coins that do not use mining at all? it is more like the uncertain and unsustainable future of Bitcoin and Proof-of-Work coins rather than all cryptocurrencies.
Again, an article who's editors think that all cryptocurrencies have the same characteristics as Bitcoin. It's like thinking that all cars have the same characteristics as petrol cars and having a 'ban' on petrol cars means is a 'threat' to the future of cars in general.
Downvoters: Care to explain yourselves as to how every single cryptocurrency shares the same environmental disadvantages as Bitcoin and other Proof-of-Work coins?
Once the money starts leaving Bitcoin, how likely is it that retail investors are going to consider other crypto, based on concepts they don't understand?
If they don't understand, then should they have ever invested at all? Just a stray though of mine, but usually "don't invest in what you don't understand" is a pretty good principle to live by.
Or maybe substitute computer for something else, like internet.
It seems that we are in the stage where your taxi driver tells you to buy.
Bitcoin comes along and becomes the most profitable way to monetize energy, so of course you have this profit seeking behavior of arbitraging low cost energy for btc.
This isn't as big of a problem in the long run because renewable energy from solar, wind, geothermal, are now the cheapest forms of energy, and will probably get even cheaper. This means new capacity from these sources are likely to be built out increasingly in the future, and development would be accelerated by proper pricing of fossil fuels. Combine this with improvements in batteries and other complimentary technologies (solar roofs) and the future of self sustaining, affordable renewable clean energy is very promising. It does not make sense to use fossil fuels for mining in this future when fossil fuel gets priced correctly.
/s
Renewables were the world’s cheapest source of energy in 2020, new report shows https://www.weforum.org/agenda/2021/07/renewables-cheapest-e...
Solar is now ‘cheapest electricity in history’, confirms IEA https://www.carbonbrief.org/solar-is-now-cheapest-electricit...
Why did renewables become so cheap so fast? https://ourworldindata.org/cheap-renewables-growth
Not to mention yet another reason for mining 24/7 - rising global hashrate makes your equipment quickly obsolete.
Bitcoin _fundamentally_ is difficult to mine because it consumes available resources at a rate that takes time. If it becomes easier to mine, they'll just make the problem harder. It will _always_ find some resource limitation that slows mining.
If energy is no longer an issue, then one can imagine physical hardware will become the next resource limitation. It just pushes the carbon problem from electric generation to manufacturing.
> This isn't as big of a problem in the long run because renewable energy from solar, wind, geothermal, are now the cheapest forms of energy, and will probably get even cheaper.
You assume. Soon we will hit against other issues though. Even if electricity generation costs nothing, you still need to implement infrastructure to move it around. In reality this means massive power stations, large cabling that travels long distances, etc.
This is not something that gets solved in the short term, it's one of the (many) problems that will slow down the push for EVs too.
> Combine this with improvements in batteries and other complimentary technologies (solar roofs) and the future of self sustaining, affordable renewable clean energy is very promising. It does not make sense to use fossil fuels for mining in this future when fossil fuel gets priced correctly.
Don't swallow Elon Musk's promises, batteries have not really changed all that much. It's difficult to improve on batteries much further than we already have - hydrogen stores may still be the way forwards (and we may regret abandoning them). Solar roofs are better than solar roads, but fixed-position solar panels that do not track the sun are inefficient compared to those that do.
Bare in mind also that most renewable energy is dependant on seasons and/or weather conditions. No sun, no solar power. No wind, no turbine power. No gas, no gas power. You only need to checkout the most recent global energy shortage to see this possibility is very real. (Germany will soon regret turning off their nuclear power stations.)
Fossil fuels if anything are currently massively overpriced (at retail value). Checkout how much tax your government currently put on them - it's hardly subsidized. Bare in mind also that the oil supply is artificially controlled, it's very heavily tied into politics.
Mining competition is related to price; btc being worth more draws more competition to generate hashes. At some point scale effects occur and there is no longer rapid price growth because volume is large enough (there are no new adopters to bitcoin). Mining ceases to grow at this point, and may actually decrease as block rewards halve.
> If energy is no longer an issue, then one can imagine physical hardware will become the next resource limitation. It just pushes the carbon problem from electric generation to manufacturing.
I don't know much about SHA2 hashing chipsets but I know there must be some flattening curve where the improvements in efficiency start to flatten and become less worthwhile. I don't see mining chip manufacturing being an existential threat to society.
> Even if electricity generation costs nothing, you still need to implement infrastructure to move it around. In reality this means massive power stations, large cabling that travels long distances, etc.
You don't, thanks to satellite internet and solar panels. An independent mining operation can sit in the dessert or remote geothermal glacials, entirely self sufficient, beaming up bits to the sky and using its own energy supply.
A new idiot is born every second. Many users of crypto want to see it have global adoption and replace existing money - in which case we are nowhere near saturation.
And that all assumes it won't get some other widely adopted use. Imagine for example it actually became the new Web3, and every single page somehow requires some transaction on the blockchain. The demand would increase beyond levels we have ever seen.
It is not clear to me at all that this is a problem that ever resolves itself.
> I don't know much about SHA2 hashing chipsets but I know there must be some flattening curve where the improvements in efficiency start to flatten and become less worthwhile. I don't see mining chip manufacturing being an existential threat to society.
It's basically Moore's Law (or whatever variation we're on now). If we can't make the chip cores more efficient, just make more of them, make them run faster, make them run more efficient, make them cheaper, etc. As long as their is demand manufacturers will keep churning out new and slightly improved variations of existing designs. As long as there is even some minimal advantage, miners will be forced to buy the new stuff.
We see this with GPUs right now. Nvidia literally cannot make enough of them to meet demand.
> You don't, thanks to satellite internet and solar panels. An independent mining operation can sit in the dessert or remote geothermal glacials, entirely self sufficient, beaming up bits to the sky and using its own energy supply.
This is possible today, and yet, how many crypto mining operations are entirely self-sufficient and operating in the middle of nowhere? Likely not many. Why build your own self-sustaining infrastructure when you can just burden somebody else's? It's much cheaper to tap into your neighbour's electricity and run a mining rig in your basement after all.