It’s also hard to forget the last few years of relentless evangelism, which was equal parts annoying and ethically challenged.
One has to admit that the reputation of the entire space has been tarnished by snake oil salesmen. For some historical context it is worth looking at countless examples such as the Railway Mania[1] of the 1840s or the more recent Dot-Com bubble[2]. For more depth one can read Mackay[3].
Some of the most promising advancements in payment channels were only published as papers in 2016[4] and are understandably still being implemented. If anything the speed at which enthusiasts are willing to deploy experimental software at their own risk is breathtaking.
Regarding the environmental impact of the Bitcoin network, while being widely derided for its energy use, it is in fact using less electricity than the major credit card networks. It is also using less energy than global gold mining. There are ways to reduce consumption should a consensus accept the tradeoffs.
The term "Blockchain" as it is currently used often refers to private chains which are in vogue with corporate stakeholders. This appears to be a solution in search of a problem–I have not been able to identify a compelling use case here either.
Most ICOs are outright scams.
It is truly unfortunate that promising advancements of micropayments, smart contracts and the world's closet thing to an incorruptible currency are lumped together with so much rubbish.
[1]https://en.wikipedia.org/wiki/Railway_Mania [2]https://en.wikipedia.org/wiki/Dot-com_bubble [3]https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusion... [4]https://lightning.network/lightning-network-paper.pdf
I googled around for "Bitcoin vs. VISA energy consumption"; the only argument I found in favor of VISA using more is here [0]. This compares Bitcoin to the entire global banking system, including the cost of e.g. keeping the lights on at physical bank branches. It very approximately guesstimates that the entire global banking system requires ~100 TWh/year, compared to Bitcoin's ~30 TWh/year [1].
For comparison: all data centers worldwide combined use about ~400 TWh/year [2]. I very much doubt that the credit card networks account for 7% of all data center energy consumption.
[0] https://hackernoon.com/the-bitcoin-vs-visa-electricity-consu...
[1] https://arstechnica.com/tech-policy/2017/12/bitcoins-insane-...
[2] https://www.forbes.com/sites/forbestechcouncil/2017/12/15/wh...
Currencies are adopted and developed on a different time scale than most other technologies we are used to.
Saying cryptocurrency has failed after being around for 10 years is shortsighted and not giving the incredible minds working on these problems enough credit.
Visa OTOH is around 41Wh per transaction, or 20,000x more efficient.
There need be only one decentralized, immutable ledger to handle all transactions, the store of value and registration of assets for the entire planet.
While we’re comparing Apples and Oranges, credit cards don’t confirm payments for weeks and there are significant fees associated with accepting transactions, apart from that risk for the merchant.
Second layer technologies, in the form of exchanges, aren't blockchain at all. They're just varying degrees of fly-by-night bookkeeping and/or settlement. They require blockchain tokens as much as they require the dollar - not at all.
There's no viable L2 technology right now that anyone is using (especially LN) yet, so it's too early to speculate. If I recall correctly it takes a traditional transaction to open a channel, and we're still capped at 7 per second. If there's 7.5 billion people on earth and we want to establish a channel for each of them, well, buckle up, we'll be here melting the Earth for 1.071 BILLION seconds, or 34 years. Just to open channels. Then another 34 years to close them. Here's a mathematical proof of the LN issues [1].
Hand-waving and pretending there's a path or some solution today means we're not even talking about objective reality anymore.
[1] https://medium.com/@jonaldfyookball/mathematical-proof-that-...
Bitcoin is essentially unused compared to the world economy, yet consumes a comparable amount of energy.
That's not the point. The issue is with its growth trajectory.
Setting aside how little Bitcoin network can handle vs. major credit cards per unit of energy used, the "mainstream" financial system treats energy use as waste that has to be minimized. Per constant number of players, it is expected to stay stable or even decrease. Bitcoin treats energy use as a security feature, and is designed up front to grow it continuously. Per constant number of players, it'll still grow fast as the difficulty of mining is increased. Even with growing populations, mainstream system seems at worst O(n log n), and Bitcoin is definitely faster[0].
Another thing is - the mainstream financial system already works, and does its job well. Bitcoin is seen as a way for some mix of greedy and politically fringe types to make money quick, exploiting cheap electricity.
--
[0] - I'm giving a tentative O(n^2) here, I have a feeling it might be faster, but didn't check it. I'd love if someone could list here the sources of growth of energy usage in Bitcoin network.
The immutable base layer Bitcoin provides is also on a trajectory of feature completion and second layer technology will increase the amount of transactions per kWh tremendously.
Who knows what benefits micropayments or smart contracts are poised to bring to further increase the efficiency of the global economy?
Isn't this kind of like comparing a moped to a big rig in terms of transaction rate?
The market for snake oil wasn't much without the salespeople in the end though, was it?
What I meant by this is the total energy expenditure of current payment systems (Credit cards, PayPal, WeChat Pay, Alipay, SWIFT, ACH, SEPA) including the overhead of fraud detection, chargebacks and the cost of fees on the economy.
To be entirely fair you would also factor in the cost of QE & inflation.
Although cryptocurrency isn’t widely used as such, notarization and its associated costs could also be taken into account.
All of these factors are obviously extremely difficult to estimate properly.
I still stand by my assertion that a mature cryptocurrency would be less costly for the global economy than the current systems of regional central banking and the damaging credit & debt cycles it brings with it.
Lightning is broken, sadly - not enough trust.
I suggest you ask him e.g. on Twitter: https://twitter.com/ajtowns
I think the jury is still out on Lightning.
Can you elaborate on this?
Here's a short article on the phenomenon: https://thenextweb.com/hardfork/2018/06/26/lighting-network-...
I use Bitcoin to get paid and to pay. That is legitimate. I know a lot of people that uses it for the same reason. There is also a whole lot people using it to evade capital controls; which is modern day repression on freedoms.
Also what is wrong about buying "drugs"? Would you say the same about an encrypted messaging platform that operates in China. That the user should not use it since China did not approve that?
The fact that you have never been subject to financial censorship puts you in a priviledged position that you are fortunate to be in.
I am similarly priviledged in that I have never needed to use TOR, but I still recognize the extreme value of something like TOR brings for the billions of people in the world who live under oppressive, censoring governments.
Mainstream 'economics' might not like a deflationary currency, but since the last economic collapse was 10 years ago, I don't exactly trust 'economics'.
There are 21,000,000 BTC ever ever ever.
1)While abundance certainly reduces value (by creating oversupply), scarcity can't in and of itself create value if there isn't demand. Say there is only 1 original Sean Hunter painting in the entire world. Since there are 34 Vermeers, it should be worth more than a Vermeer, right? Well no. Vermeer was much much better at art than I will ever be, so noone is ever going to want to own anything I paint.
2)While there is a finite supply of BTC, there is a limitless supply of alternative altcoins, and no barrier whatsoever to entry, so people can keep creating them. Since these can be made functionally identical to BTC, why should BTC retain value through scarcity? It's not doing anything that can't easily be done via another altcoin.
>Vermeer was much much better at art
BTC is a 'much better coin' than alt coins. Its currently used worldwide. No other coin is used worldwide.
Its not just scarce, but its also highly demanded. Consider that people don't care about other coins, AND this is scarce. Its very difficult to become a rockstar, but once you do, your signature is very valuable.
BTC has broken into rockstar status. It has already happened. Alt coins have not.
Taxation is in fact continually reducing the value of Bitcoin when it's applied - you can't pay your taxes in BTC, so you have to sell some of them to gain USD to cover your taxes (easy enough: you do it when you trade). But the person you sell them to has the same requirement - they will have to sell some BTC and trade out into local currency to extinguish tax obligations. The long term trend is everyone eventually must trade out of BTC to cover their taxes.
The trajectory of BTC is inexorably down - the current market is irrational.
Nations want their taxes to be paid in local currencies.
Not sure why some situations requiring a different payment method has you hung up.
Lots of people hold gold. These people musy sell their gold to pay taxes.
This does not drive the price of gold down to 0, because that's not it works.
Bitcoin is exactly the same as any other commodity.
This isn't even remotely accurate.
Let's just use Litecoin as an example here, or even dogecoin for that matter. Are you seriously claiming those don't have global reach?
You can't pay to a Bitcoin wallet with an altcoin. It's a different currency.
I could start printing jstanley dollars but that won't impact the scarcity of actual dollars. Even though a jstanley dollar is still just a piece of paper that can do exactly the same things as a USD piece of paper.
But, for the most part, our financial systems work. In countries like Venezuela, it doesn't, and blockchain is much more revolutionary.
shared accounting systems between collaborates. complete replacement of ap/ar and every company in a consortium not needing to keep their own, isolated, audit requiring, double entry books. the amount of duplication reduction potential is staggering.
"It's just like the time I lost my car keys and need to buy a new car next day."
"It’s just like the time that I lost my house keys and had to move into a homeless shelter."
"It's just like the time I forgot my personal question to my 401k account and I got locked out forever, nobody could help me, and I lost the entire balance."
Unlike all the efficiency and speed questions, this part here is a stated, inalienable objective of Bitcoin and other cryptocurrencies. This is the expected behavior. Some clown designed it to work like this. Imagine grandma trying to use this. Remember that time PayPal locked your account and you were so mad you couldn't get at your $600 for a few weeks? Now imagine you lost your life savings because you can't remember your password and literally nobody can help you now, or ever again - and thats the point.
I'd imagine it'll destroy itself anyways, it seems like any random walk ends in 100% of coins lost to human inability to preserve access.
Who cares how amazing the system is technically? It's designed to be actively hostile to human users.
That being said, there are number of ways you can store your crypto-currency, with varying degrees of trust-minimization:
- Use a multi-signature smart contract wallet, where a master key has power to move the money. If the master key is lost, the money can be moved by X out of Y keys signing off on the transaction. You can then distribute the Y keys to your trusted associates, preferably without telling them who the other key-holders are.
- Use a dead-hand smart contract wallet, where the money can be retrieved by a trusted associate, if the dead-hand switch hasn't been activated within Z amount of time. Can be combined with the above, in case further trust minimization is needed.
- Store your crypto-currency at a FDIC exchange. Pretty much the same model as the banking world. This really should be the go to way for the average Joe, as it mirrors what you currently can expect from online-banking.
I'm pretty sure the Federal Deposit Insurance Corporation doesn't cover crypto. I know what you mean but even with the more reputable players like Coinbase of Kracken I'm a bit wary of the oops we got hacked / shut down / we can't give to you due to AML type stuff.
The third, an exchange, violates all the core principals of cryptocurrency and is basically no different than what we have today but way harder and less efficient. Exchanges don’t require crypto they just run a MySQL store and attribute fractional ownership as centralized, opaque records not protected by the blockchain. If everyone just did that because it’s the simplest and easiest and most secure way to hold on to your coins, cryptocurrency would just replace bank to bank transfers which by definition don’t require a trustless backing and all the worlds electricity.
Plus to quote your fellow converts “not your keys, not your coins.”
Online payment system through bitcoin? High confirmation times, sometimes high fees, and very few accepting vendors
Deflationary store of value through bitcoin? Nope, just speculative frenzy.
"Ethereum World Computer"? More like platform for ERC20 token fraud. Top dapps get low thousands of users, so Etherum has thus far failed to turn up anything of note to the mainstream.
"Will be ready for mainstream once (SegWit / block size increase / lightning / PoS) is done"? None of these have materialized into any mainstream value.
On top every mainstream use case being a dud, the goalposts move every single time there's a discussion about crypto. If you bring up the transaction time, you get "it's supposed to be digital gold". If you bring up the speculative frenzy, you get the "it's supposed to be a foundational technology, not immediately useful". It's exhausting, and it's predictable that there can be no good faith discussion since the speculative price varies based on public opinion & new user buy-in (ie shilling galore).
It's great that some people in Venezuela have found blockchain actually useful for avoiding the collapse of their currency, rather than hypothetically useful like it is for the rest of the world. Personally, I would be happy to not hear from any blockchain project ever again unless it has say 100,000 daily users that actually use it "as intended" - say as a payment system rather than as a speculative investment, or as a decentralized computing platform rather than as a speculative investment disguised as a token.
You seem to root for cryptocurrencies so I can understand your frustration when faced with naysayers like me but understand that the feeling is mutual. Ten years that we hear the same promises, ten years that we're told that "it's being researched", ten years that we only see half-assed solutions to fundamental problems that create as many issues as they solve (e.g. Segwit, PoS) or basically give up on the whole ideal of cryptocurrencies by introducing centralization or trusted peers (Ripple and many others). Ten years on, billions of dollars speculatively invested, "clever people" supposedly working on these issues and what do you have to show for it? People basically reinventing the current banking system on top of an inefficient, wildly speculative asset. "Fidelity just made it easier for hedge funds and other pros to invest in cryptocurrencies". New ways to speculate with cryptocurrencies!
The conversation is frustrating because all's been said. We all know where we stand and at this point the only way to move forward would be for the cryptocurrency scene to come up with something truly novel and useful, not something that reinvents the current banking system but worse.
Ten years on, and with as much intellectual honesty I can muster, I still see only two worthwhile uses of cryptocurrencies: buying drugs online and serving as some sort of notary to timestamp documents. For these two things Bitcoin is actually very competitive. For the rest as far as I'm concerned it's either "reinventing the wheel but worse" (re-creating current infrastructure only less efficiently) or "software cold fusion" (pipe dreams that would require major breakthrough in computer science to achieve their stated goals).
>Frenzied speculation brought about inadvertent side effects but these should not detract from the fact that significant advancements are continuously being researched and implemented.
The frenzied speculation is basically the only actuality surrounding cryptocurrencies these days. Maybe this research you speak of is going to bear fruits and revolutionize the world as we know it or maybe it's going to fizzle out gently as hype dies. This is not a small startup in a garage, this is supposedly a trillion dollar market cap industry, "we're working on it" doesn't cut it for me anymore.
The environment probably needs more rigorous and academic consideration in order to legitimise it (if for no other reason than that it does contribute to comp sci theory at least).
I also do not think that Satoshi Nakamoto intended for his technology to be the last say in the crypto space. The implementation was given to the world to iterate on and improve the tech (just like every other tech ever). Environmental impact of mining, inefficiency, scalability etc. should all be considered candidates for improvement as opposed to armchair criticism alone.
A related problem is a Sybil attack, where a decentralized peer-to-peer system that is truly open makes it easy to generate new identities and overwhelm the system, so simply relying on the majority of accounts to agree on truth can still be subverted by a motivated attacker.
Bitcoin was a novel solution to this problem by using “mining”, or raw computation power, as a mechanism for enforcing consensus. This made Sybil attacks worthless as the only thing that truly matters in Bitcoin is computation power, which is expensive, and an attacker would need 51% of the power to attack the network.
Having said that, smaller PoW coins have been recently hit by 51% attacks, as renting the needed hash power for them is cheaper than the profits from selling the double spent coins.
But wait: Some of those messages may have been captured by the enemy, and some generals may simply not agree with your strategy. If enough generals don't attack, but you still attack, you will fail. So the new plan is to send a message to the other N-1 generals saying "attack tomorrow at dawn, please reply with confirmation that you will be participate", and then if you get confirmation from at least (N/2 - 1) generals, you can attack with confidence.
But wait: Your fellow generals know that the enemy is potentially capturing messengers, and they won't want to attack if nobody else is attacking, and they know nobody will attack if they don't get the confirmation, so they need confirmation that everyone got their confirmation.
But wait: You'll need confirmation of their confirmation, and so down the rabbit hole we go.
What we end up with is a network of messengers, where every general keeps broadcasting a planned attack date to all the others, but it never able to be certain that the others heard and agreed to it. What's needed to solve this problem is a way of sending a message who's mere existence proves that a majority of generals are committed to the attack, and thus you don't have to reply to the message asking for confirmation that everyone still agrees.
Enter proof of work. What if each general would, upon receipt of the proposed attack date, perform some complex and time consuming calculation; maybe have some poets write a poem in iambic pentameter about the proposed date, and then the first one to finish attachs the poem to the message, and rebroadcasts it? Each time a general receives a new message, they'll take the one with the most poems attached, and start writing a new poem that references the attack date and all previous poems. Fairly soon you'll have a massive chain of dozens of epic poems about the proposed attack date. This tells you a couple of things:
1. All those poems are too much work for one rogue general (or the defending army) to have done. This took the finest minds of the most of the Byzantine general staff to create.
2. And that means that most of the generals must be okay with this plan, because they've spent all week writing poems about it.
3. And most of them must be aware that everyone else is okay with it too, since they've all seen all the poems everyone else saw.
The mere existence of this attack plan, with all of it's self-referentials poems attached, is proof that a consensus attack date exists, and means you're safe to attack, without needing to communicate further.
(For another, much shorter attempt at explaining the link, see: https://bitcointalk.org/oldSiteFiles/byzantine.html)
The overarching goal is consensus between agents (e.g servers) over the state of the system.
For example, suppose that you want to achieve atomic consistency (i.e at any point in time the committed/persistent state of the system is homogeneous across all live nodes) in a private cluster replicating a database. The incoming requests are routed randomly to any node in your cluster. You have a synchronization mechanism (a consensus algorithm - like any-Paxos, Raft, Viewstamped Replication etc.) that lets you get this cluster of machines to agree on the state of the database. This is useful if you want fault-tolerance. The synchronization part is the consensus. The agents have to agree on the state-transition.
Now, observe two things:
1. This is a private cluster you own. In other words, you can make all the machines run the same software, trust each other, and assume they act on a best effort basis.
2. The failure model is "fail-stop". If a machine encounters some kind of failure, it won't exhibit arbitrary behavior but rather crash immediately. And you do not consider the case where a machine is taken over and tries to mess with the rest of the cluster in order to violate the desired safety guarantee (atomic consistency).
Obviously, these works if you are a privately own company and can spend resources hardening the parts of your network that are susceptible to be taken over. In a private setting, these assumptions are sufficient even though they are weak and optimistic. In practice, this is not so much an issue.
This falls apart however when you are in an adversarial setting and when your cluster is an open and public network that anyone can join or leave at any point in time. In that model, malicious actors can also show-up and exhibit/fake any kind of failure they want (e.g re-order messages, lie on their internal state, attempt to spoof other agents etc.). In that case, we say the fault-tolerance model is Byzantine. We go one level above in difficulty from the comfortable fail-stop assumption.
That's the gist of what Byzantine fault-tolerance is about. It defines the ability of a distributed system to resist a subset of its network trying to break consensus by any means possible as long as a sufficient majority remains honest.
For years, the major result on Byzantine Fault-Tolerance (BFT) had been a system called PBFT which although innovative and first of its kind, suffered several limitations. One of them was that any node in the network needed to have a complete list of the other nodes in the network, another was high-overhead, and communication complexity.
The innovation of Bitcoin cannot be explained without providing full-context of many different topics (defining asynchronicity, FLP result etc.) but the crux of it is that it offered a way to circumvent these limitations by massaging some of the requirements and cleverly aligning incentives such that you get a system where: 1/ safety is preserved even in an adversarial setting 2/ anyone can join/leave 3/ you get some degree of asynchronicity, 4/ many other things.
I realize this cannot be a satisfactory or exhaustive exposition of all the innovation that Bitcoin introduces but that would turn this comment into x10 its current length.
Couldn't agree with you more, however, this story is not about a significant advancement in technology and people are reading too much blockchain into it.
This new investment product is nothing to do with 'proof of stake' or the ethics of bitcoin mining. In essence it is a fund that is backed by bitcoin that has been purchased privately without going through exchanges people know about, e.g. Coinbase.
People investing in this fund do not have their transactions recorded on the blockchain. The bank simply have bitcoin in cold storage to back the fund in a similar way to how banks used to have gold in a vault. With legacy banking the gold did not physically move every time someone used the ATM. Same here, no bitcoins get moved.
This is not a difficult story to understand. There is no need for people to be getting uppity about it and to downvote those that bring information to the story that is obfuscated by how the crypto-media have described it thus far from their understanding of the press releases made available.
Should keep all of these shitcoins and ICO scams around because 1/100 might be legit while 99/100 of them do real damage to investors? Or do you want to keep them around because a CS breakthrough being implemented takes precedence over enforcing financial fraud?
Our job is to keep on grinding to bring these things into fruition.
It's a shame that scammers in the space have turned most technologists against Bitcoin. But really, there's nothing that can be done other than to keep pushing.
Keep up the fight. If it doesn't work, it doesn't work. But really, this mud flinging is distraction. And yeah, there's a bloody lot of it.
But I certainly downvote ludicrous and dishonest statements like Visa consumes more energy than bitcoin and here's why.
While theoritcally true here's the thing:
While one bitcoin transaction consumes 1'005 kWh of energy 100'000 visa transactions require 169 kWh.[1]
Trying to frame that in a way that Visa is more expensive than Bitcoin, energy wise, is a deeply dishonest sleight of hand, which absolutely deserves to be downvoted into oblivion.
[1] https://www.statista.com/statistics/881541/bitcoin-energy-co...
Is Bitcoin's cost per transaction a fixed number or improving in efficiency? What if planes were "downvoted" 10 years after invention due to inefficiency over rail transport?
Which side of history will you be on?
People are forgetting that Nakamoto Consensus is a legitimate CS breakthrough concerning the Byzantine Generals Problem.
Is it acceptable to bash every stock in the Nasdaq just because a second tech bubble popped and some SV companies are behaving unscrupulously?
Frenzied speculation brought about inadvertent side effects but these should not detract from the fact that significant advancements are continuously being researched and implemented.