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"