Crypto-Current (2021)

I have never read a more (intentionally?) cryptic and needlessly philosophical praise of cryptocurrency in my life.

As a developer who worked in Crypto sector, I was never a big fan of Bitcoin though I recognize its value as the pioneer of an important movement and philosophy.

I found out about Bitcoin when it was $100 a coin and as a developer I had the same initial somewhat skeptical reaction described in the article... But I decided to read up on it anyway. I quickly learned that every transaction had to pass through every node in the network and it required potentially a huge amount of electricity... I knew here and then that it could not scale to be what it was claiming to be "A global payment system." Indeed, it cannot scale beyond 4 transactions per second and the costs are enormous. It was a red flag for me that proponents were claiming that its intrinsic value was grounded in its operating costs as if wasting money on electricity and hardware was a reason for a company or asset to be valuable. I knew too much about software architecture and scalability (and just enough about economics) so it looked like a bubble. I was discussing with colleagues to get their thoughts and they all came to the same conclusion as me.

I didn't understand that it could be valuable purely as a "store of value"; I didn't hear about this narrative until much later once other people started realizing that it couldn't scale as a payment system. Anyway, to me, software was about efficiency and Bitcoin was the opposite of that. I was convinced of the problem which Bitcoin had identified and recognized the value of addressing it thoroughly but once it became clear that the problem could be solved much more efficiently using Proof of Stake (PoS) consensus mechanisms, I lost interest in Bitcoin.

It's disappointing that the pioneering coins in the PoS space get no credit for their role. Most of these coins are gone and Ethereum absorbed (IMO corrupted) that market. Basically feels like communities got corrupted out of existence.

IMO, multi-chain PoS is the correct, final form of this decentralization movement. Specific implementation doesn't matter though, the efficiency difference between PoW and PoS is order of magnitudes. PoS coins are all approximately the same in terms of efficiency... Some like Solana are like 100x more efficient than others but that's usually at the expense of other things like simplicity of design, transparency, developer-friendliness, interoperability and decentralization... But still, to put in into perspective, Bitcoin consumes between 20000 and 60000 TIMES more electricity than the entire Ethereum network and Ethereum is quite inefficient as far as PoS is concerned; not to mention it is a large network with many nodes... What's worse is that Bitcoin becomes less efficient as its value goes up (wastes more electricity due to more competition), while PoS's efficiency doesn't change relative to price.

PoW's energy efficiency relative to token price only stays the same or improves in a world where people are increasingly poor, powerless and can't afford to run nodes... Because higher token price makes mining more profitable, which creates an incentive to buy more machines; normally creating more intense competition for participants to mine blocks... Only way token price increases can NOT cause more electricity waste is if people can't afford to buy machines to compete against large established players and if large established players agree with one another not to increase the size of their mining farms... Then they can all maximize their profits if they play ball. As a thought experiment; if the biggest Bitcoin miners could agree to cut the size of their mining farms to a max of just 100 machines each whilst banning anyone else from mining Bitcoin, then their profits would be MASSIVE and they could claim to be protecting the planet... From their own kind. Not a nice dynamic.