What do you mean "stored"? The fiat used to buy bitcoins went to sellers, so they have it.

The current "valuation" suffers from the same issues as the valuation of any asset.

A significant part (literal billions of dollars) of fiat used to buy bitcoins went to miners direct electricity expenses, and those extreme amounts of resources were permanently spent, possibly wasted. It's not a zero-sum game, as sustaining the current system costs a lot.

A quick, rough calculation - if ~30 TWh were spent on mining Bitcoin, and the marginal rate of death for electricity generation is at least 100 per TWh (https://www.forbes.com/sites/jamesconca/2012/06/10/energys-d... or https://www.nextbigfuture.com/2016/06/update-of-death-per-te...), this means that we have sacrificed the lives of at least 3000 people to make this happen. Are the benefits worth this cost?

The problem is the death rate of electricity generation. Because you are killing as many people playing computer games, or turning on your microwave, or ...

Or, said another way: what service does bitcoin provide, as opposed to say banking? Because that is what it is "trying" to replace. How many deaths does banking produce? Will replacing a part of the banking activities with bitcoin increase or decrease the death rate?

Bitcoin is not trying to replace banking - the set of services that it's trying to replace is a (not so big) part of payments processing, and a tiny part of whole banking (for example, lending is a much larger function than payments).

If I look at the headcount structure of a typical bank or at the tasks where the wider financial industry employs people, the settlement of payments takes 1%, perhaps 2% depending on how widely you interpret the area. So total worldwide adoption of Bitcoin (or some newcoin) might replace at most 1%-2% of the current banking employment and energy cost. As far as I understand, this energy cost is already smaller than Bitcoin's despite processing multiple orders of magnitude more transactions.

First, what bitcoin tries to replace in the banking industry is not so clear cut. It could be payments, but also investment (value store), funding, and even credit. This very much depends on how successful and flexible the technology turns out to be. It is very early to say.

Second, the resources used by the banking industry to provide the services they do are not limited to the direct associated costs: we also have technology development, personnel costs (including energy used by the banking personnel to reach their workplace, the costs of turning on the lights in all the bank offices, and the fuel consumed by the bank managers to attend the party on the other side of the country without which the industry can not function, since, you know, you need some fun in order to sign the required contracts), the fuel consumed by the customers to reach the branch where, for the third time, they are going to evaluate their mortgage application, ... A long list.

In summary, yes, you are probably right that bitcoin is currently inefficient, and that currently it is not providing much value. But the sector is ripe for disruption, it is easy to disrupt, and any change in the current status quo will be an improvement, since the banking industry is so hugely inefficient for society as a whole.

At the core, the banking industry is just information processing, and that is the cake that technology is eating at the moment.

Are the costs of the current paradigm any different?

Yes, any other international electronic payment system (Fedwire, SEPA, SWIFT, Visa, Mastercard, etc) requires much, much less (Thousandfold? more? It's tricky to estimate) energy resources per transaction. Bitcoin consumes more electricity than whole small nations, and in each of those small nations that electricity is sufficient to run a financial industry that processes much more transactions than Bitcoin, and leaves enough energy for other industries as well. Bitcoin proof-of-work principle means that the power wasted (intentionally, to prove that work has been done) on a single transaction is absolutely ridiculous.

Clearing transactions, the (comparably small) part of a financial transfer that Bitcoin does, is comparably simple and easy and constitutes a minority of both the effort and cost of financial transactions. Things like dispute resolution, fraud control, client-side tools, customer service and acquisition, etc take more than that, but that's not included in the standard Bitcoin transaction fee / miner's expense.

Just to play devil's advocate on this, the money in the stock market (i.e. any stock transaction outside of a public offering) is generally not being invested in companies that actually build things, it's getting stored.

i totally agree, i am not a big fan of the stock market, we need investing 2.0, we have the tools, we just need the "Elon Musk" of finance

It's stored, but isn't it also being loaned out as well? Isn't that part of how the money supply grows - fractional reserve?

"isn't it also being loaned out as well"

Hm? In the stock market, you pay a current stockholder for their share(s). The company sees no money from the transaction. It sounds like what you're thinking of is banking, which is something different.

I was mostly thinking about brokers. If I buy stock and hold it in my brokerage account, doesn't the brokerage use that money and stock to generate even more wealth? For example, they might loan my stock to somebody that wants to short that company.

incorrect. the company sees money from the transaction in several indirect ways. the existence of the market is what enabled the company to go public in the first place.

They also see money from the increased valuation of the stock they are still holding. This can be used to be borrowed against or sold.

not really true, your broker will often lend out your shares for a fee or use them as collateral for their own business

There's beginning to be a lot of movement in the alt-coin space where people are trying to DO things with the blockchain, far beyond just a store of value.

There's not a lot of love here on HN for a lot of that effort, but it's not terribly controversial to say that there are a large number of dev teams working on products in a multitude of fields that are putting the blockchain to work.

The controversy seems to be whether blockchain tech is a sensible solution to some of these problems (that is, people ARE actually building lots of things, but the verdict is contentiously out on how sensible/lasting those things will be).

I guess it depends on how you define "blockchain". If it's a system that involves distributed, untrusted participants and the need for proof-of-work, then I too wonder how useful that ends up being in the general case.

The general case is: federation of individuals can compete with single large corporation because cryptocontracts provide equivalent operational stability to what a single controlling entity can provide.

When corporate bylaws are written in code, you can replace a single legal entity with thousands of former employees operating as sole proprietorships.

Sure, but you don't need proof-of-work for that. All you need is for every participant to ratify the bylaws-as-code, which you can do with simple public/private signing. The only reason that proof-of-work is needed for a currency is that the ledger is changing constantly. For something that changes infrequently, the double-spend problem (or the contractual equivalent) isn't nearly as big of a deal.

Like I said, it depends on how you define "the blockchain". Many problems don't involve an open set of untrusted peers, and many problems don't require proof-of-work. So if you include those in the definition, then the blockchain isn't appropriate for a lot of those problems. And if you exclude those aspects, then what do you have left? A chain of cryptographically signed nodes that each point to their predecessor? That's been an underpinning of x.509 for, what, over 20 years? It's nothing new.

How do you verify the ratifications without a blockchain? You’d need to meet in person ahead of time right?

(I do agree that 99% of the decentralization of protocols can happen off the blockchain, amongst trusted parties... just saying that doesn’t get you all the way to “McDonalds Corp Replacement”.)

The people that got the money probably didn't put it under their bed.

I don't think you're seeing it entirely wrong, but there are other effects this is having other than locking away money.

One positive effect this is possibly having (I haven't seen a direct analysis of this) is to boost GPU R&D. Right now it sucks for people who want to use GPUs for other things, because it's causing shortages, but that's presumably not a permanent state of affairs. And better GPUs will be good for a lot of other fields, particularly AI.

Part of the reason Bitcoin's value exploded the way it did is probably because stock market valuations have been looking rather frothy lately; there's a lot more money out there looking for good uses to which it can be put than there is actual investments.

Do you have the same complaint about gold? To me, they seem very similar from a gambling perspective.

Gold has been used as a store of value for countries which do not trust their fiat.

It's also used to speculate.

It's also used in industry.

It's actually pretty easy to turn gold into fiat and vice versa outside of north America. It's also fairly easy to do it in North America as well. The spread between buy/sell is also quite low.

Is gold used as an investment/speculation vehicle? My impression was that generally was quite ill advised to 'invest' into gold.

yes, i'd rather buy a farm and no gold (someday i'll buy a urban farm)