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Comment by yashg | Hacker News Reader

Blockchain has no use other than to store tokens for speculative gambling. Take a look at this presentation - https://bit.ly/3OB5G18

Proof-of-work - the USP of blockchain makes it slow and expensive and planet destroying at scale. But it's not a bug, it's a feature. You take it out and the blockchain is neither public not permission-less. A private, trusted, permissioned blockchain is pointless.

The whole blockchain, web3, crypto, NFT, DeFi, DAO ecosystem is a massive ponzi scheme. The proponents keep cooking up new buzzwords to keep the pot boiling and to attract new starry eyed idiots who will bring in real money into the system to keep the ponzi going.

Blockchain is a hammer in search of nail. A solution for problems that do not exist.

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I wonder whether one can postulate an impossibility theorem (call it SEV, similar to CAP) for public blockchains (at least using PoW, and whether one can overcome it with PoS or similar is an open question):

You can't have a (PoW) public blockchain that is Secure, Efficient (=not planet destroyingly wasteful), and Valuable. Pick any two.

Secure and efficient. Money should be a medium of transfer, not a store of value. The fact remains that you can't really get "efficient" with proof of work, and claims about "secure" are dubious with proof of stake.

I think maybe "valuable" meant "scalable" or something? I can't speak for the OP though.

I think there's something to the idea of some proof of an efficiency-security tradeoff or lack thereof though. Seems like something that should be out there in the literature.

With “Valuable” I meant that a lot of value is on-chain (in terms of market cap or transactions - basically whatever makes it worth stealing it).

Nobody would bother mounting an attack on some random shitcoin, so it can be secure (for all practical purposes) without wasting massive amounts of energy.

A public blockchain that carries a lot of value must burn a significant proportion of available hash power to guard against interference, so it’s either wasteful or insecure.

That makes sense, but I still don't think you want "valuable." In practice, most of the value of real economic systems is not held in money, but in assets. In the crypto universe, Bitcoin is more of an asset than a currency (although a valueless one if you don't consider it a currency). All you need now is a good currency.

From my economics training, Money needs to have all 3 of the following characteristics. 1. A medium of transfer 2. A unit of account 3. A store of value

Cryptocurrency generally does well on the first and not at the others.

Modern monetary theory disagrees with the third one, and so do I. I don't think a currency needs to be a store of value, just a medium of exchange. In practice, we store value in a lot of things that are not money (stocks, bonds, commodities, real estate, etc).

For example, if you had a system of money with guaranteed inflation at a certain level, you could produce a synthetic store of value that is not the money.

Someone forgot to read Marx.

Money is both a means of transfer and a store of value. The reason for those conditional properties in crypto (secure and efficient but not valuable) is because currencies have value embedded in them, it is an abstract presentation of value, it abstracts work. In this case, hash power.

Real paper money and its digital representation, like the USD, is also proof of work currency, in this casw, human power. And it's distribution evidences exploitation, not effort.

Agreed; one major reason Bitcoin became so valuable is its capped emission with the majority of supply taken up by early adopters due to Fear Of Missing Out. Tt would be less valuable when undesirable for speculators, which can be achieved with a more equitable emission such as a pure linear one.

> A private, trusted, permissioned blockchain is pointless

Not at all - it's a verifiable audit log. Git is an example of exactly this.

Git is not a blockchain. An audit log doesn't need to be blockchain. The whole point of blockchain is that is is decentralized, trust-less and permission-less. You take it away and what is left?

That is largely an issue of nomenclature, but there is a school of thought that distinguishes between public, open, trust-less blockchains (which then need a consensus mechanism), and private, permissioned blockchains (which have a central authority and thus don't need a consensus mechanism).

Whether the latter has many use cases is a good question, but git certainly fits the definition.

I moved the whole fortune out of Russia with that "speculative gambling tokens", while both Putin's regime and outside world tried to cut out russians of the possibility to move their money out of dictatorship control (almost any payment systems are now banned for russians).

Maybe that's not that obvious from some first-world countries perspective, but money with enforced property right over any governments decisions is pretty much important.

Some people gambling in NFTs, sitting in developed countries. Others try to save their life's work from thiefs, wars, inflation and other things. Your view depends on what you crowd in.

Good for you.

Also, taking your money elsewhere is imo a valid way to hinder the Putin regime.

Your comment goes in all directions so it’s hard to answer. Perhaps it’s useful to point that proof of work is not ubiquitously used in blockchains and much greener alternatives have been preferred in pretty much any crypto that’s been released in the past 5 years

Proof of work is still what powers the vast majority of block chains by value. Perhaps if ETH goes to PoS in some future this will change, but until then, all of the big permission-less crypto curencies are proof of work.

We’re talking about what the technology can do, not what the bottom of the tech is not doing

Sure, but those alternatives are not yet proven technologies. It's unclear for example if PoS is actually trust-worthy at scale, and we can't use Bitcoin or Ethereum's success so far to check that.

What makes you say that? PoS coins have been running without issues for almost as long as PoW coins and as far as I know there’s been no attacks. On the other hand there’s been many 51% attacks on PoW coins.

No major PoS coin (well, Ripple is PoS, but centralized in other ways) exists, so it may be that they haven't been attacked simply because they are too small.

Algorand, dfinity, celo, avalanche, solana, shall I go on?

What exactly is fiat based financial system to you? Can you say it's abs. not a ponzi scheme for baby boomers and corporate America?

Because I can't. It's wealth oppur. destrying system only to create wealth for certain age group with assets and their friends.

Millennials and newer gener. are out of most of the "real "financial oppr. by design. So they create their system. It's that simple.

I suggest you read about history of money. How it came to be, why humans needed money and what all things have been used as money and why eventually we ended up with money being issued by a sovereign (by a fiat). Then read up on the history of banking. The idea of cryptocurrency and its underlying ideology goes against the fundamental principles of finance and economics that have evolved naturally over past thousands of years ever since humans stopped being hunter gatherers.

Yes but "crypto" is also can be put under entire new asset class. It's slowly growing along with fiat based financial system.

I’m not sure any efficient use for cheap energy is going to be less destructive than blockchain

Where did you get the notion that the energy usage is planet destroying? Current Bitcoin usage is literally a rounding error of global energy usage (0.1%) and if wildly successful would still be < 1% of energy usage.

https://www.lynalden.com/bitcoin-energy/

Please. This one is not even up for debate. Crypto mining is a waste of electricity.

Yes it is. I have a friend who thinks heating his apartment in winter is a waste. He puts on a lot of layers, drinks warm beverages, and exercises to keep warm.

> Current Bitcoin usage is literally a rounding error of global energy usage

I'd say that BTC + ETC use up about 1% of world electricity. That is significant, given that the main value is to make a few miners rich ($50m a day).

> and won’t increase too much.

The energy usage (more precisely: the amount of money spent on energy and electro waste) is roughly proportional to BTC price, I posit (until the next halving), and so would go up dramatically if BTC went up dramatically (like 100x, as Peter Thiel suggested at Bitcoin 2022 in Miami recently).

> I'd say that BTC + ETC use up about 1% of world electricity

Where did you get that figure? If you read the researched article I linked, the estimate is around 0.1%.

> would go up dramatically if BTC went up dramatically

Not as dramatically as you think: if BTC goes up to 1 million per coin it will still be using less than 1% of global energy consumption (again relying on the article I previously cited as my source). 1% is no longer a rounding error that we can just dismiss, but a price of 1 million per coin would imply that Bitcoin-based financial systems have become incredibly valuable and are displacing other financial systems.

Despite all the hype. Very few people use Crypto. It doesn't matter if it's "just" 0.1% what matters is how much do all the banking and credit card systems in the world consume by comparison. I would bet it's less than that.

So it's not tenable as a currency.

It's also not very valuable as a commodity since it fluctuates too much and has no intrinsic value.

It has no value to "disconnect from the banks/government" since you need to convert it to "real currency" for usage.

There's the claim that green is possible with Crypto but I don't see how. Without turning it into a centralized system. The wastefulness is the system designed to discourage bad actors from taking over. Without it, what will stop the hacks? (not that it helps with all the robberies anyway).

> So it's not tenable as a currency.

Did you read the article that I linked to? It's helpful also to read this one about Bitcoin: https://www.lynalden.com/gold-and-bitcoin/

Bitcoin's usage is not as currency, but as money (read this article about what money is: https://www.lynalden.com/what-is-money/. So Bitcoin is useful as a store of value, rather than a currency. The ability to transact like a currency is being built in layers on top of it (Lightning Network, etc), somewhat similar to how currencies used to be backed by gold.

> what matters is how much do all the banking and credit card systems in the world consume by comparison. I would bet it's less than that.

Thing is, with bitcoin the energy consumption is easily quantifiable and it's a single number. The banking system also uses a lot of energy to heat/cool the employees, builds lots of office buildings, and does many things which could be considered wasteful. It really is a little tricky to compare.

The banking system employs a lot of people. Depending on your point of view, this can be a bad thing (they could be doing something more productive instead!) or a good thing (the people are getting jobs, employment is good!).

This is a good point, and the banking system is certainly bloated - just before the GFC more than a third of US GDP went to the financial sector, WTF.

However, the traditional banking system also performs way more functions than crypto and DeFi, and I very much doubt that DeFi can provide them.

Lastly, disrupting banking with good old Fintech would be great, as it is vastly more efficient than blockchain.

I said electricity, not energy. Energy use encompasses industry, transport (oil), heating, and electricity.

As for the rise, as I said, I think money spent on energy and electro waste is largely proportional to BTC price, since unscrupulous miners will be incentivised to come in and mine if mining profits become larger due to a higher price (since they are unconcerned about the externalities. Private gain, socialised costs).

Do you have a source for the electricity usage? 26% of US energy usage is for transportation. For your math to work, 90% of energy usage would have to be non-electrical.

If you read the article I linked about Bitcoin, it explains how Bitcoin mining stops producing coins over time and instead miners have to make their money in transaction fees- this is a very different model for mining incentive. Again, it would be great to see some sources or math contradicting the researched article that I linked to.

Sorry, no complete source, I’ve calculated it myself.

The discrepancy arises from several issues:

1. The article you quote is from last year. Current estimates for BTC are around 200 TWh/a, not 140 as in the article.

2. The article looks at BTC only. My statement was BTC + ETH.

3. Energy vs electricity

4. There is also the issue of energy production vs consumption (differences arise from energy used for the production of energy, as well as transport losses).

5. It is plausible that electricity is “just” 10% to 35% of energy usage, would need to look that up.

With all that, I stand by my statement that crypto uses 1% or more of the world electricity consumption.

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