But it should be glaringly obvious that Bitcoin is by far the most expensive way to do financial transactions. That shouldn't even be contentious. It's literally built on the idea of doing computationally-expensive busywork.
Whether or not that busywork is a waste of power or a necessary cost then depends on your social beliefs, but it's definitely going to be vastly more power-expensive than any of the existing systems.
I respectfully disagree. There are many many transactions that happen behind the scenes when you're paying with a Visa card. All transactions go through a merchant bank before ever being sent to Visa, and they may even go through a second third party. Additionally there's a number of times in which clearing and settlement occurs, both on the merchant side and on the "monthly bill" part that you discounted as irrelevant.
This all takes energy, the POS takes energy, the banks all require energy to process transactions, it takes energy to send out statements, to pay your bill. I have no clue if this entire process takes more energy than Bitcoin or not, but I can guarantee the cost of doing a transaction through Visa isn't glaringly obvious.
Far from a perfect number and you're correct it won't cover payment processors, but it's also picking up non-trivial amounts of other stuff since those data centers don't do exclusively payment processing.
But either way you wouldn't count the POS. The POS is still there consuming the same amount of power if you pay with BTC, VISA, or cash.
It's driving electrical/computational consumption efficiency but its definitely a catch-22 as with most technology.
Of course you can work around this by having third party payment processors that sit between customers and the raw blockchain. But because Visa already does much of that, you need to include the cost of those as well, in order to get an apples-to-apples comparison.
There are decentralized solutions that don't involve trusted 3rd party payment processors. Payment channels and the lightning network will allow many transactions to happen between users that eventually and safely get settled onto the blockchain as only a few transactions containing the net transfer. These systems are decentralized without relying on trusted 3rd party payment processors, and the users are safe from counterparty risk like they are with normal transactions. (I know another reply mentioned Lightning. I just wanted to do more explanation and emphasis on parts.)
However the transaction throughput doesn't depend on the hashrate. The network could for example handle 10x or 100x the number of transaction with the same hashrate as today.
Not actually true. See the Lightning proposal.
2. It's not certain it can work in a decentralized way
Yes, it's uncertain it will work, but the point is that it's not inherently obvious that bitcoin can't accommodate Visa's transaction volume. The above comment made it seem like that's a given.
The second part I agree with. According to Satoshi:
> Bitcoin can scale larger than the Visa Network
It's not obvious that this is false.
I think you're mixing lightning up with something else; lightning is not a sidechain[0]. In lightning, at every step participants create standard Bitcoin transactions that can be finalized and settled at any time by just publicly broadcasting them on the Bitcoin network. The participants hold off on broadcasting the transactions until they're done with the payment channel so that they save on transaction fees (and avoid bloating the blockchain). They're immune to counterparty risk like normal transactions are, and it doesn't rely on any central or trusted authorities.
[0] https://bitcoinmagazine.com/articles/greg-maxwell-lightning-...
You're saying it yourself, it creates standard Bitcoin transactions (not lightning transactions). They hold off on broadcasting them, but that may mean if they both go offline they loose their state. It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
It still has not been shown that LN can even work in a decentralized fashion.
It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
How can this distinction not be clear?
Yeah, the guarantees aren't exactly the same. Personally I expect that the risks will be for the most part smoothed over by things like lightning software that automatically syncs the state of payment channels between all of your devices for redundancy.
>It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
When a payment channel is settled by any of the participants, it's normal Bitcoin that comes out.
>It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
I really think that's splitting hairs. If it becomes the standard way to send Bitcoin around, such that nearly everyone talking about making or receiving payments in Bitcoin is using Lightning, and if it does end up working very well in practice with many transactions per second, then I think it's more than fair to argue against statements like "Bitcoin can't scale up to VISA volume". Are you insisting on always explicitly referring to them as a combination ("Bitcoin/Lightning")? Kind of reminds me of the losing battle fought by some to correct all references to Linux as "GNU/Linux"...
[0] http://www.businesswire.com/news/home/20170725006524/en/
High-availability data centers use power. We understand this. They also have meaningful outputs that Bitcoin struggles to demonstrate on its own.
Maybe my naive interpretation of what VISA actually does is showing here, but I don't see how it's a valid comparison. Bitcoin doesn't simply replace credit card transactions, it replaces an entire banking system. Who confirms VISA transactions? How can you send and receive transactions through VISA? What about all the facilities that are supporting that transaction?
I think it's easier to trace the cost of a bitcoin transaction, which bears the entire cost succinctly, compared to an institution like VISA, which has its tentacles in a ton of energy costing faculties.