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Comment by otterley | Hacker News Reader

I don’t think anyone disagrees that money is an exchange medium for work. The question is whether the practice of mining Bitcoin is work worth valuing for its own sake. Nobody is getting fed, housed, or clothed when mining cryptocurrencies, nor is it improving business productivity in some way.

In other words, it’s a question of “useful work,” not just “work.” And this is an especially important question in light of the fact that a lot of energy used to mine cryptocurrency is produced in environmentally harmful ways.

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>The question is whether the practice of mining Bitcoin is work worth valuing for its own sake.

The same question is asked by any gold miner or oil driller. Depending on the price others are willing to pay, sometimes it's worth it and sometimes it's not. When a barrel of oil goes above $80 people want to start fracking again. When it's below that, they stop.

>Nobody is getting fed, housed, or clothed when mining cryptocurrencies, nor is it improving business productivity in some way.

This statement is just not true. Just as the mining of gold creates jobs for the miners, the equipment manufacturers, the logistics personnel, the security personnel, and allows those people to clothe house and feed their families, so it is with Bitcoin mining. Powerplants and the internet are built, operated and maintained by real people with families, you know.

Physical material mining and energy generation are useful work, except where the material being mined is overvalued - gold being a textbook example. Physical materials and energy can be used in manufacturing all sorts of goods that house or transport people or aid in manufacturing productivity (e.g. producing food). Cryptocurrency has no such inherent property.

Your last paragraph justifies the work because the people involved in the process get paid and therefore can feed, clothe, and house themselves. But that proves too much: there is a lot of economic activity that is arguably wasteful or immoral that people get paid for. Economic bubbles generate jobs, but once the speculation finally ends and the waste is revealed, those jobs disappear.

So you are anti-gold in addition to anti-crypto?

And gold mining is devastating to the environment, arguably much moreso than a lot of the electricity generated for bitcoin.

Yes, gold has the same problems. A tiny amount of it is used for manufacturing, the rest for hoarding. We don't even use it as a currency of exchange anymore, so I honestly have no idea why its price remains stubbornly high. Old religions die slowly, I guess.

Central banks rely on it

How so? Some (certainly not all) central banks do keep gold reserves, but in what sense do they rely on them?

Because it is a rare, malleable, and chemically inert metal, humanity attached a special significance to it.

Since it preserved value for millennia, there is a good chance it will keep doing so. Unlike government-emitted currency, which devalues at the behest of politicians.

Central banks are relying on gold for its scarcity, especially relative to said government currency.

You are simply restating the claim without an explanation as to how they rely on it. In what way do they use this gold on a day-to-day basis? And what do they expect to do with it later?

If you can find evidence of a single central banker saying “we need it because [some economic reason]” then that would be a significant discovery. Norway, for example, keeps zero gold in its central bank, and yet, their finance system is unquestionably healthy.

According to Reuters:

> This increase in money supply may be necessary to stave off economic turmoil but at the cost of devaluing the currency. Gold, by contrast, is a finite physical commodity whose supply can’t easily be added to. As such, it is a natural hedge against inflation.

> As gold carries no credit or counterparty risks, it serves as a source of trust in a country, and in all economic environments, making it one of the most crucial reserve assets worldwide, alongside government bonds.

> Gold’s inverse relationship with the US dollar, another major reserve asset, is an added element to its appeal. When the dollar dips in value, gold typically rises, enabling central banks to protect their reserves at times of market volatility.

https://www.reuters.com/article/sponsored/why-central-banks-...

You realize this was sponsored content "Paid for and posted by World Gold Council," right? Let's find an authoritative source in a government, as opposed to a trade group representing gold miners and sellers.

Here you go... because Googling is hard.

> The signatories confirm that gold remains an important element of global monetary reserves, as it continues to provide asset diversification benefits and none of them currently has plans to sell significant amounts of gold.

https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.pr1907...

You asked a very good and important question. I don't want to share the answer, but know that it explains a very important topic on economic systems.

Since I'm not going to be giving away the answer, I want you to at least ask yourself:

Does the practice of pressing buttons and printing dollars provide value at the value the units represent?

And since your concern seems to be the environmental cost of bitcoin mining, what are the environmental costs to pressing buttons on a computer adding dollars into a digital dollar network along with running printers to create a few sheets of paper money?

Are there any environmental costs beyond the electricity that runs the printers and the computer and the trees cut down to print the money on?

If so what would those environment costs be and where would they be coming from?

If not, where is the value of that dollar coming from to begin with?

Can you get to your point, please?

From my previous comment:

> I don't want to share the answer

I'm not here to win arguments. No. I wont be "getting to the point" because I'm going to keep it for later.

It definitely isn't improving business productivity. Nothing improves business productivity like fiat which has an ever expanding supply.

If inflation was non existent or radically less than what it is today would people be so keen to invest their money in companies or spend so much time and effort trying to hoard money for the future?

People who are into Bitcoin talk about inflation like it's a bug but I think it is a feature.

Bitcoin has inflation. One coin every ten minutes. Tic toc next block.

There's the question of when new money enters the world, who gets to have it? Should it be randomly distributed, or should one guy in charge of the money printer get to keep most of it for himself and all his friends, lie about having done that, and then gaslight people to say all of that was okay anyway?

Randomly distributed would be pretty fun.

The world is facing a climate crisis.

Which is mostly caused by humanity using fossil energy to boost the output of the economy.

An economy that expends the energy on so many more things than just enabling people to be fed and live modestly comfortable lives. An economy that is thus harmful as it entirely neglects the urgent crisis.

Humanity is at a point where we ought to think about actually cooling down the economy to drastically reduce our emissions until industries and energy generation will slowly turn to being climate neutral.

The much decried deflation is precisely what would be the better dynamic for the economy in this situation, rather than an inflation dynamic that virtually turbo charges the system.

I'm aware that this is a bold statement, but I wouldn't be surprised if in some 50-100 years Bitcoin were to turn out as the fundamental technology that enabled humanity to overcome the crisis, despite consuming resources that right now appear to many as wasted.

To make it blunt: yes, I absolutely think that in our current situation inflation _is_ a bug. Possibly a fatal one.

I agree with everything you said.

As it stands our current civilisation is a ponzi scheme that relies on constant technological innovation in order to sustain itself. This constant technological innovation is partly fueled by the deterioration of value built into the money system.

When I said it was a feature not a bug I was talking about it from a nation state perspective. The problem with the Bitcoin community is that they don't acknowledge the indirect benefits of fiat that they benefit from so they are blinded to the potential benefits to the environment that Bitcoin could provide.

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