You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.
That said, I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.
> I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
It sounds like you're projecting what you think Bitcoin should be.
> We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
10 transactions per second on the L1 network (averaging $10k-20k each), and many thousands possible today on L2. Plus a way to securely store the transacted value.
To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
Technically the brain is just another layer of encryption to the data. And that level of encryption can often be solved by the purchase of a $5 wrench.
No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
> It sounds like you're projecting what you think Bitcoin should be.
Probably, yes. Bitcoin is a failed project. It spawned many others, some of which may be successful. I am interested to see how they do.
> To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
That's assuming that banking is JUST storing and sending value. Banking does a whole lot more. I understand the drive behind taking that power away from banks, but it's just not going to happen until one can fluidly exchange USD for some for of highly-stable distributed currency. And once that happens, banks are still going to exist and handle most of the transactions! Please, take a stroll in r/cryptocurrency or r/bitcoin and see how many people are whining about how their private key got lost or stolen or etc etc. Banks exist because they not only store value, but protect it in numerous ways. They will continue to exist past whatever cryptocurrency-revolution people envision.
> You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
Great? So a fraction of the energy would have been wasted anyway. Fine, use that for bitcoin mining. For everything else, it's pouring carbons into the atmosphere so idiots who don't know how investing works can leverage 100x on margin while the exchange they're betting on is manipulating the price to call their bets and wipe them out.
> It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
Really? "Let's buy a bunch of toxic waste and dump it into the river because the government will be incentivized to not output toxic waste" isn't the best argument for why bitcoin is useful.
Yes, for those amounts. But for several purposes, unfortunately most of them 'evil' (money laundering / terrorism), this works fine. I know it's used a lot for people in countries where getting currency out above a certain threshold is very hard unless you are at the highest level of corruption with great success. They are not so bothered with losing a few 1000$ by fluctuation as their goal is getting it out and converted to something else (safer) (USD/EUR) asap.
Tomorrow, who knows. if North Korea or Russia or China turn half of the US into a nuclear wasteland, the banks are unlikely to function very well for those who remain. There are hundreds of such scenarios that could play out in the next 50 years -- Bitcoin is a great disaster hedge, if nothing else. Everyone should have 1% of their portfolio be crypto, IMO.
The criticisms of its fluctuation are valid, but like you said, there are plenty of people today for whom the fluctuations are tolerable for their use case. As the fluctuations get less, it will become tolerable for even more.
https://makerdao.com/en/whitepaper/
It's an Ethereum-based scheme that's tied in value to the U.S. dollar. That sounds good. The methods to achieve that look... complex... to say the least. If they work, then there's at least one of them that's stable so long as there's no serious problems in it and/or Ethereum. Well, that sounds promising. ;)
It's a bunch of math that uses market mechanisms to try to solve the problem of stability when the only real answer for the question "how do I stabilize a cryptocurrency" is "for each unit you issue, you have a bank account with $1 matching USD in it."
Maker essentially banks on the fact that a bundle of cryptos (ETH and a few others) will not drop past a certain amount in relation to USD over a given amount of time. They've been correct, so far, but that doesn't mean there won't come a time when the markets drop past whatever magical threshold they've set.
I'm not putting down the project, I followed it closely for a while and a lot of work went into it. My point is you can't really have a stablecoin unless you have the USD to back it up.
An interesting plot twist will be if Maker derives from other stablecoins (ones backed by USD reserves, like GUSD) and not ETH.
Circulating supply fluctuations don't seem to have much of an influence on crypto prices (as seen with quarterly Binance Coin burns for instance)
That is a big "if". Stability is a principle which has been tried time and again in fiat money and failed. Too many times to count. See GBP peg etc. for examples.
If something is unstable, it is because the market deems it to be. Adding an artificial support goes against that same market.
Cryptocurrency circles like to talk about government control being a bad thing. But in the same vein cheer stablcoins which exert near similar control - by algos or by adding coin supply. They want to have their cake and eat it too.
From an outside perspective, I don't think it's worth continuing the discussion as is. Perhaps you should both come back in a few hours when everyone is a bit calmer.
No, this is an important distinction. Bitcoin isn't liquid enough to count as actual money and proponents of the idea that sending bitcoin is the same as sending money are glossing over the cost to buy bitcoin, and the cost of transferring it back to actual money on the other side.
Having access to 30K BTC doesn't do you much good if nobody is willing to trade you goods or real money for it on the other side.
Seeing how Americans Elected Trump, I can't imagine the USD being better than BTC over 10 years.
Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."
Removing externalities of electricity pricing solves this. That's the point. If a kilowatt of electricity usage costs enough to offset its environmental impact, then who cares if a tiny minority of people are doing some wacky confusing things with their computers?
The day that markets actually price externalities into the costs of goods and services, whether by benevolent owners or force of regulation, I'll gladly declare Bitcoin useful.
This sounds very much like you've decided that you don't like Bitcoin (and that's fine, with good reasons) but you have rationalized it with an argument that is almost certainly inconsistent with the rest of your worldview. Bitcoin isn't any more bullshit than countless other systems/goods, the argument based on environmental externalities is a very weird reason to draw such an absolutist line given all the other (arguably) bullshit systems that incur the same costs.
Either we have a fully managed economy (which I'm pretty sure the historical consensus is clear on) or it has to be guided by attaching costs to externalities.
All this is doing is just picking on Bitcoin because people don't like it. There is no principled economic or environmental argument here, just a biased rationalization applied inconsistently.
It doesn’t make sense to make the environmental argument for things that you consider wasteful, but not for other things that other people may consider wasteful.
Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens.
Until then, I'd rather see some form of distributed currency that doesn't rely on pissing finite resources away to function.
I get where you're coming from, but our planet is at a critical point right now objectively. Pouring pollutants into the atmosphere so people can play with FunBux is an incredibly stupid use of resources. Yes, markets should price in externalities. That would solve SO MUCH MORE than just bitcoin's energy usage. But unfortunately that concept is at odds with market capitalism, and as such, I believe my critique of bitcoin stands. Markets are not rational, prices are not accurate, bitcoin is a polluting waste of energy.
Say you don’t care much about professional sports. Of course you would think that any innovation that reduces the energy requirements of professional would be great (more efficient arena lights, climate control, etc.). But I think it would be inappropriate to single out sports as a waste of energy, because it is only a “waste” because you don’t happen to receive and of the benefits.
That’s why we have environmental regulation, as imperfect as it is.
This implicitly means a society does make choices about how energy is used. Therefore, a discussion about societal priorities amongst individuals is essential.
Likewise with regulation related to finance and money.
Energy and money. Among the most highly regulated things in all societies.
I agree with the poster that POW cryptocoin systems are a shocking waste of electricity.
In addition, the only use cases that have proved viable are illegal or highly destructive to the social fabric.
When you look at the sheer amount of money transferred from losers to winners, it’s clear that this is not a benefit to anyone. The scams, the hacks, the thefts. Bitcoin and it’s ilk are parasitic systems that weaken the host.
To compare to Ferraris, well Ferraris are a niche product, are already regulated, and have a historical component that accounts for their hedonic properties.
To compare bitcoin to hello kitty backpacks is just a category error, which belies that the argument is disengenuous.
As for the stuff about cryptocurrencies being associated with scams and wealth inequality, to me that’s entirely independent of environmental impact and should be dealt with (and probably can be dealt with using existing laws) regardless of the environmental impact.
I guess the issue I have is such a tiny minority of people are using such an excess of energy to do something that adds very little value to society. Even if the value of bitcoin is subjective, there's still a tiny minority of people consuming vast amounts of energy to derive what value it does bring them.
It just feel disproportionately harmful at a time when our top scientists are blue in the face from telling us to reduce carbon emissions.
I understand that it's not my place to judge what people derive value from. I also would argue that energy should be neutral (similar to my views on internet access). I guess my biggest gripe is probably something you and me share in common: the understanding that market mechanisms allowed this waste to happen in the first place. So you're definitely not wrong, and your argument about externalities is well-taken.
The same could be said for people changing their behavior because you complain about it on a message board that the people in question don't even read. Nobody's going to stop using Bitcoin because you don't like it, so why bother?
That said, I think the cryptocurrency world is moving in that direction anyway. Most of the more exciting new cryptocurrencies use non-PoW consensus mechanisms, eg. IOTA = tangle, Ethereum Casper = PoS, EOS = DPoS, Stellar = SCP. And there's a strong economic incentive for that: when you reduce the cost of computation, you can use those computations for more applications, which drives adoption, which increases the value of peoples' cryptocurrencies. The challenge is that the fundamental benefit cryptocurrencies offer is computational trust, so until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
Perhaps someone who did actually read what I wrote will realize that there are many, many things that do what Bitcoin does without the power usage of Bitcoin and perhaps seeks those as an alternative (like, PoS coins). And originally, the argument was "this is an environmental crisis," someone said "no it's not because of ferraris and backpacks," and I countered and said, yes, it's an issue. Why does anyone argue on an internet forum? I guess in the hopes of changing minds. I hope you would not find debate a waste of energy, at least not in a democratic form of governance.
> until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
Yeah, that's the real meat of the argument, I suppose. We know PoW is at least difficult to attack. I am very happy that other consensus mechanisms are being explored though. I'm also not convinced existing non-PoW consensus mechanisms won't be as secure trust-wise as PoW.
I guess the overall point of this is that, yes, there's nothing I can do about people doing horribly wasteful things. But let's not pretend that bitcoin isn't horribly wasteful. Let's call a giraffe a giraffe. And maybe it's ok to be a giraffe if you're aware of the trade-offs, but it's certainly not a gazelle just because you're uncomfortable with the properties of giraffes.
You just proved their point. The beneficiaries of Bitcoin – like you – have a subjective viewpoint. You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders (the relatively few people who hold Bitcoin and actually profit from it). Objectively, it's largely a method to siphon real wealth from many to few, bearing a striking resemblance to Tulip Mania. That doesn't mean that all crypto and blockchain tech is somehow inherently evil, it's just not doing a lot of public good in this particular incarnation. One can argue it does the opposite by facilitating criminal enterprise.
Your point about externalities is correct but moot, as no one is successfully passing on the full cost of electricity production to the consumer.
That's a different claim, and I agree with it. In fact, the entire point of my comments in this thread is that I want environmental regulations that internalize all the costs of energy usage.
nearly no value = many more transactions per second for much less energy cost.
It's only an artificial limit of Core fork of Bitcoin.
Increasing it to 10 000 transactions per second doesn't use more energy for mining. https://www.reddit.com/r/btc/comments/7nn5wa/bitcoin_cash_is...
Oh wait, you're bringing sin into the argument. My bad, I thought we were being rational.
And just a side-note, it irks me when people say that bitcoin uses as much energy as the country of Iceland like that's some kind of horror. Iceland is pretty damn small, with a population smaller than the mid-sized city I live in.
If the purpose is to limit environmental impact, why are we choosing by subjective value instead of actual impact?
You're just describing capitalism there ;)
That said, I don't think a complex economy can really operate very well without some form of market (at least not until we're at 80%+ automation). And with markets come waste.
I guess I'm not saying anything should be done about bitcoin, but rather that I personally believe it's a complete waste of energy when there are already many better alternatives.
does this number include off-chain transactions?
This is begging the question.
Great! I look forward to seeing your solution in action.
I said it's possible. I didn't say it was easy. That said, PoW on a small scale is an interesting experiment. On a large scale, it's a horrible way of allocating energy usage. So while the databases running on PoW are working, they are a stupid waste of energy.
I welcome any alternative.
I think it's more accurate to talk about the amount of value the Bitcoin network is storing than the transactions per second.
Bitcoin currently has a market cap of $68B. I'm not aware of any other distributed system that's worth that much money. It's definitely interesting that a fully distributed system has been able to achieve that valuation without any centralization or governing authority (debates over developer and miner power aside).
Market cap is a farcical number to look at for a thinly-traded asset on unregulated markets. If I make my own new cryptocurrency, print 100 million tokens, and then talk my friend into buying one for $10, does that mean my token has $1 billion market cap?
No it isn't. The market cap of bitcoin, which is a bullshit number anyway as already explained, is dwarfed by other forms of distributed wealth storage such as (but certainly not limited to) old fashioned pieces of gold. Gold is distributed. If you revise your assertion to be distributed and digital then perhaps you're correct. But the more qualifications you tack on, the less impressive your claims to fame become.
Don't bother mistaking me for some sort of gold bug either. Real Estate is another form of distributed wealth storage that blows bitcoin's pathetic market cap out of the water.
Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA. Also can you let me how how I can costlessly assay gold when I accept it as payment? or make the supply of gold only dependent only on time and not how it currently is (price and time)? Whenever the price of gold goes up, they mine more of it :C this makes its Store of Value property worse than bitcoin. Looking forward to your reply and our future endeavor together. /s
Even if you could somehow do this, you would be incredibly vulnerable to extortion, and I doubt you would actually really want to do this even if you had the capability. There are people that have significant wealth that exists outside of "official" legal capacities (drug lords, dictators of small nations, etc.). They have to spend incredible effort on maintaining security of their assets. Pretty much the only thing that works is giving an army of people a better deal than they can get from someone else to steal your wealth from you.
You already can: bitcoin.
>I doubt you would actually really want to do this even if you had the capability
If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.
I didn't disagree with any of that. My position is that if you are actually in that situation, bitcoin doesn't help that much, and no technology can. If you attempt to actually execute this plan, the risk is extremely high that you will be detected, and a corrupt government doesn't have any shortage of ways to force you to comply with whatever they come up with.
Are there any examples of a Venezuelan moving a significant amount of wealth out of the country via bitcoin?
But judging by the trade volume in Venezuela, they're clearly using it for something.
https://www.cnbc.com/2019/02/14/venezuela-crisis-bitcoin-tra...
https://cointelegraph.com/news/how-venezuela-came-to-be-one-...
I guess you mean "how can I violate capital control laws"?
You're supposing that the vast majority of people using bitcoin are using it to exfiltrate money out of countries. That niche application is very far from the reality of what most bitcoin advocates are doing.
But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.
It's a single example of the value of decentralized property rights. Say I'm an alcohol maker in Sharia-law country, I want to be able to make wine but prevent the state from expropriating my wealth because they ban alcohol. Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.
The moment Bitcoin becomes a viable way to subvert the state, they'll just change the laws. And if people actually start using it to smuggle money internationally the feds will get involved. The entire idea that Bitcoin can subvert the state is absurd.
And if you don't believe me, look at the evidence. ICOs got regulated. Silk roads got shut down.
And furthermore, while it's convenient to use oppressive regimes as examples for this Bitcoin "feature", it's way, way more likely the 1% (you know, the people who actually have money) will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
>if people actually start using it to smuggle money
If? People already use bitcoin to evade capital controls in China, Venezuela etc
>the 1% will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
You're confusing equity (something you own) and equality (rights that you have). Bitcoin promotes equality (each client has the same rights). Arbitrarily making certain people unequal (different people have different rights, some have their wealth stolen, some don't) always leads to more inequity. Voting about who to steal from doesn't legitimize theft. If people who generated wealth through voluntary exchange want to protect their property rights from theft, I won't deny them that. Agents who use the state to expropriate wealth through artificial privilege (the real enemy here) want to perpetuate the existing system, not encourage a neutral rights network such as bitcoin.
> Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
Your argument is that Bitcoin will let you subvert existing state monetary policy and other regulations. My argument is that once that happens on a significant scale, states will change their policies and enforce them more or less with state violence.
A good example is anonymous payments via a tumbler. As soon as these payments start seriously foiling law enforcement, states will outlaw tumbler services. If that doesn't solve the problem, and the problem is severe enough, they'll outlaw Bitcoin. The way they would do that is to outlaw exchanges and pursue them over Tor the same way the pursue dark web markets, by enlisting banks, employing cyberwarfare and other espionage, and ultimately with on the ground law enforcement.
It's very, very hard (maybe impossible) to solve a political problem with technology, unless that technology is weapons. It's immoral in a democracy because it by definition subverts the will of the people.
>> if people actually start using it to smuggle money
> If? People already use bitcoin to evade capital controls in China, Venezuela etc
I mean "on a significant level minus state actors".
> equity vs. equality.
I think if you're a "taxes are theft" person then we have deeper disagreements, because I'm a "property is theft" person. But those antipodes aside, Bitcoin no more promotes equality than regular currency does, in fact there are lots of services that only let you do certain things with certain account balance amounts.
Furthermore, I have no idea what you mean about a "neutral rights network". Do I get to vote on things because I hold Bitcoin? Did I miss the votes on various forks? Does my vote count equal to one of the Winklevoss'?
I think the exact opposite is true. Not only is there no voting, but holders of lots of Bitcoin (which you can only accrue with actual currency or mining, which you need to spend actual currency to get the equipment for) have far more power over the Bitcoin network than I do. I have no idea what "rights" you think I get through Bitcoin, but I'm pretty sure the answer is "none".
EDIT:
Also, come on, I'm fine with "crypto" meaning "cryptocurrency" now, but it absolutely doesn't mean that "cryptography" means "cryptocurrency" now. This is a hill I am willing to die on.
There's also an issue of debt differences. One of the big 'benefits' of inflation is that it makes old debts worth less. This is a major incentive for pursuing investments on debt. Not only can you see investments on money beyond what you presently have, but the debt that you took on becomes worth less - meaning it takes a smaller share of your profits each year assuming the principle is not growing. For instance during the government auto bailouts Ford took on a loan for billions of dollars of debt from the government. The interest rate on that loan is sub-inflation. Unsurprisingly, they aren't paying it back since each year it becomes worth less, and given enough time, it will become worthless.
By contrast when a lower income individual takes on debt, it's often 'consumed' such as in the case of education. And the debt becoming worth less over time is not true if an individual's income is not keeping pace with inflation. And another big issue is that lower income individuals are also often going to be seeing rather high interest rates on their loans further diminishing any theoretic benefit of inflation.
---
This is not to say inflation is bad. You can create a comparably negative argument against deflation. I don't really have much of an opinion one way or the other. We've seen how depressive systems can end. And while our current inflation and debt driven system has not yet collapsed, it's not looking as stable as it once did to put it very mildly. I think in 20 or so years (and especially once the petro dollar is 100% dead) we'll have a much better idea of the pros and cons of each system.
Given that some forms of cryptocurrency can be stored using only a memorized passphrase and nothing else, (ie. a brain wallet), it's pretty much guaranteed that getting cryptocurrency put of the country would be easier.
Most cryptoanarchists are deluded nerds who would fold in less than 5 minutes of waterboarding. Do you think these thugs who are willing to look up your ass for a few pieces of gold aren't willing to violate you in other ways? Of course you don't believe that, you've merely failed to seriously consider that possibility.
The only reason smuggling BTC sometimes works right now is because they're not looking for it.
Then you were refuting a position I never espoused. My point wasn't that gold is easier to exfiltrate, but rather that BTC isn't necessarily easier to get out. If the border agents of the tyrannical government you're fleeing know you to have wealth, and are informed about bitcoin, they have many options available to them to prevent you from leaving with your wealth, including simply forbidding you from leaving at all. At that point, you'll have to smuggle your body out, so smuggling a few pieces of gold along with your body isn't a huge inconvenience.
If on the other hand the border agents don't know that you're trying to smuggle wealth out of the country, then it shouldn't be to hard to get through the border no matter what method you choose.
The one scenario in which BTC seems clearly superior is when the border guards are simultaneously alert but ignorant. Looking very carefully for money, but totally oblivious to the possibility of BTC. This might work during the present, but don't count on this remaining true forever. If enough people start using BTC for this, tyrannical governments will wisen up pretty quick.
1. The government doesn't know you have any money, but you are targeted in a random search.
2. The government does know you have money but doesn't know how much. Simply give them X out of Y cryptocurrency keys. They won't know you have any more.
I don't know how much exposure you have to tyrannical regimes, but they aren't as efficient as you seem to think, in that they don't really have much grasp on how much money people own, nor are able to find out instantly.
They also do care about how they are perceived and aren't going to grab some tourist and with no proof whatsoever, torture him to death because he might possibly have some cryptocurrency.
Gold is fantastic. Apart from its physical properties, we all agreed to assign value to it and it's been working for thousands of years.
But wouldn't it be great to have gold in a digital form? Something easily divisible and transferable, yet as gold is, not dependent for its value on some 3rd party? Something that is truly yours not just IOU. Which can keep value.
Forget about Bitcoin, how would you envision something like this?
Apart from technological problems, we have a problem of initial trust and distribution. Please stop here and think for a moment, this is a hard and interesting problem. I'm not saying you can solve it with a few minutes of thinking but just after a few moments some things clarify.
Now imagine we do have it. We did it. Because it would be a cool future where we do have this digital gold. Is it a safe storage of value? What if some better digital gold 2.0 comes along? If people would prefer to move their wealth to it then the 1.0 would become less desirable, so its value should drop. But if it does, then it's not a good storage of value after all.
You can devise a system in which 1.0 tokens can be exchanged to 2.0 but then you cannot change the initial distribution.
If all that thinking is not enough, it is interesting to ponder impact of an actual perfect storage of value system on society. Wealth can be leveraged to generate more of it.
Not that it's something completely new, we had a few close enough matches throughout the history. That's what most wars are about. Although it's easier to go get something if you know where it is.
Bitcoin just needs electricity.
Bitcoin has about 500k active bitcoin addresses [2], most of which contain less than $100 [3].
So what are we actually getting for all this energy usage, and couldn't we get that same result for a fraction of the energy usage?
[1] https://digiconomist.net/bitcoin-energy-consumption
[2] https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
[3] https://bitinfocharts.com/comparison/bitcoin-activeaddresses...
https://drive.google.com/file/d/0B1s8219SGDIjMnkzdFI2QjhwNm8...
My gut instinct is that the vast majority of all computing cycles used by humanity are completely wasted on irrelevant tasks and inefficiencies.
Rendering images is useful work. Processing transactions is useful work.
With gaming computers, increasing energy costs means increasing detail and complexity in the images that can be processed.
Bitcoin is wasteful because the increasing energy costs does not increase the total number of transactions that can be processed.
Cryptocurrencies are not secured by the hashrate, but by the cost of exceeding the hashrate of the network.
Think of bitcoin mining as a raffle. You can buy as many raffle tickets as you want, and so can everybody else. Each raffle ticket costs $1, and so people buy tickets until the prizes start getting spread out too much. The next day, though, the raffle tickets are only 10 cents apiece. However, the prizes are still the same, so the break-even point is still the same when expressed in dollar value. As a result, the same amount of money is spent, just buying 10x as many raffle tickets.
In this analogy, each hash performed by the miners is buying a raffle ticket. The block reward is the prize at the end of the raffle. Going from CPU mining to GPU mining to ASIC mining each increase the efficiency of performing a hash, analogous to lowering the price of a raffle ticket. Just as lowering the price of each raffle ticket results in an increase in the number of ticket sales without changing the total value of ticket sales, so decreasing the cost of each hash results in an increased number of hashes performed, without changing the total amount of electricity spent to perform those hashes.
I agree it doesn't sound like the most efficient system and these incentives are somewhat perverse, but there weren't any systems like this before bitcoin. If cryptocurrencies do have valuable attributes that cannot be attained by conventional currencies and bitcoin introduced these concepts to the world in the first viable way and the popularity of these networks has lead to people researching more efficient analogues such as proof of stake and the techniques mentioned in the original article then can't we still say that the existence of bitcoin had a utilitarian benefit for the world? If the popularity of bitcoin goes down and these more efficient networks supplant it then the total energy-expenditure should be minuscule compared to the total energy usage of all humans over all time. Given the the rate at which these technologies seem to be maturing it will likely still be a lower expenditure than bootstrapping many other equally useless human endeavors.
Furthermore, the decentralized nature of bitcoin cannot last indefinitely, and arguably has already ended. All mining nodes need to have a record of all balances, in order to verify that incoming transactions are valid. This places a limit on the ability to contribute to trust by mining, and will result in further centralization of miners. If a cryptocurrency were to replace fiat currency, it would not be a change from centralized currency to decentralized. Rather, it would be a from a centralized currency controlled by an elected government to a centralized currency controlled by conglomerations of miners.
I have done my best to understand their use, their applications, and their limits. With that in mind, I believe cryptocurrencies to be a obfuscated form of pyramid scheme, with additional externalities of heavy power use.
Trustworthiness always depends on your use case.
If you are transacting small amounts of money (less than is spent on mining a block) then waiting for 3 confirmations is probably sufficient to consider the transaction settled. But what if you send a transaction with a 100 times higher value than goes into mining a block then you will need to wait for over 100 confirmations till you can be sure it doesn't make economical sense for anyone to try to double spend your transaction by orphaning the first block your transaction was in (with a very simplified incentive model not taking into account other transactions in these blocks).
Thus the money spent on mining blocks determines how much value can be transferred in one block. Allowing for higher value transactions is good thing imo, is necessary for its success as digital gold and therefore justifies the higher energy consumption (especially since there don't seem to be any alternatives with similarly good or better robustness against attacks yet, proof of stake can't work under the same assumptions bitcoin does [1]).
> Allowing for higher value transactions is good thing imo
PoW systems are the only ones where "higher value transactions" need security proportional to their size.
> PoW systems are the only ones where "higher value transactions" need security proportional to their size.
Every other currency is either backed by men with guns and transactions are reversible (fiat) or you have to spend a roughly proportional amount of resources securing it (e.g. gold). I didn't look at the data, but judging by US military spending I'd guess that the strongest economies also have to spend the most to keep their system safe.
You can still argue that the assumption of pseudonymous actors in bitcoin makes the proportion factor larger (=system less efficient) than for systems that can use identities and attribution and I'd agree with that. But that's only because it can operate with less assumptions (no identities), which I see as a feature.
So what? Men with guns are also the foundation of property rights, law and order, and national sovereignty; they are not an extra cost of fiat currency, they underpin the government's ability to maintain order and structure within society. I shouldn't have to explicitly point this out.
> transactions are reversible (fiat)
Cash payments are not reversible. Reversible payments are also a feature that nearly everyone wants.
> spend a roughly proportional amount of resources securing it (e.g. gold).
Gold is not a currency.
> that's only because it can operate with less assumptions (no identities), which I see as a feature
Untrue. A centralized anonymous payment system is technically possible, the limitations are strictly legal.
It was for millennia.
I can't imagine the processing being done by my computer right now is all strictly necessary to read and post these comments, and I'd wager this site is more efficient than most these days. Still I accept reality and pay these costs in order to talk with you on the internet because this is the world we live in. It looks like these nice people at MIT are working on some of the inefficiencies of cryptocurrencies, so let's rejoice.
Yes, that's exactly the point. Bitcoin is insanely inefficient because PoW is insanely inefficient. Unlike other "inefficiencies" where there is a logical relationship between "energy spent" and "useful work accomplished", with PoW there is no such relationship since the energy isn't spent doing useful work (i.e. processing transactions). Yes, more power into the network makes it "more secure" by making it "more expensive" to perform a 51% attack. The increased expense is distributed across the network in the form of increased difficulty. If a 51% attack was already implausible (which most bitcoin enthusiasts would say is true), then making it even more expensive doesn't actually do anything useful.
Trust-less consensus may be the same. Nature doesn't care either way.
Well it depends what you are considering. Arguably, yes, your computer finished the HTTPS connection long before you got around to reading the words on the page itself. But the scale of an idle CPU compared to a 100% CPU is not even close. Mine is sitting at 2% use while I type this.
You could put that money into mining actual gold, and literally make 4x as much as mining bitcoin [0].
[0] https://www.theguardian.com/technology/2018/nov/05/energy-co...
Are you saying the number of transactions the market will demand of a system is independent of the trust of the system? If I need to move $250,000[1] in one hour with ~100% certainty are you saying an IOU from a bank janitor is equivalent in value to a bitcoin transaction? An increase in attack costs increases the types of transactions that can occur safely on L1. The number of L2 updates are unbounded by L1 transaction capacity, increase attack costs gives the market confidence L2 updates cannot be erased.
A high cost to signal which money you're willing to use filters out fraud attempts. Which should I trust more, Malory Money who double-pinky swears to run her Malory Money servers 5 years from now but is signaling with no costs or Bobby Bitcoiner who signals by billions of dollars in single-use capex (ASICS)
[1] 12.5 BTC/block * 3850 $/BTC * 6 Blocks/hour < tx.value()
No. I'm saying that if a 51% attack is practically impossible today, the increasing amount of energy consumed to secure the same amount of transactions is wasted. It's also a sign that the system is broken because the amount of energy consumed has no practical impact on security. Reasoning otherwise would suggest it is justified to consume infinite energy because that would be infinitely secure.
It appears you think a 51% attack is when an external agent attempts to out hash the network. This is only one type of 51% attack.
A 51% attack means there is a almost equal amount of hash rate being applied to two divergent, consensus equivalent chains. This can happen in above scenario or when existing miners attempt to reorg blocks (See ETC 51% attack) There is nothing stopping this behavior from occurring at any point in time. The only check on this behavior is the cost to rewrite history, decrease this cost, and you increase the profitability of such attacks.
And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens. What does bitcoin provide in terms of add-on benefits like jobs? The ability for power companies to maximize profits by having their supply used more fully?
Edit: Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe. There are numerous areas such that, if money was not a concern, could be made safer and more profitable by adding more security. Creating infinite trust in bitcoin would... do what exactly? Let nerds buy drugs on the internet?
Jobs are only useful if they waste people's time? Mining is a job. Mining can also become green much faster than constantly moving around millions of tons of vehicles can.
> Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe.
I would argue it decreases security, with all the wars and disruption it caused in the last decades.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
The argument summary of your article is hand waving, claims that the sum usage of software designed to be increasingly energy wasteful (Satoshi's random nonce lottery as a means of increasing CAPEX and decreasing production output)
We mean that mining Bitcoin is extremely energy-intensive by design. This is to say that the energy consumed by Bitcoin's economic activity is deliberately and gratuitously significant, not incidentally so. Moreover, the energy consumed by Bitcoin mining scales commensurate with how many Bitcoins have been mined thus far.
So yes, that makes it categorically different from other energy-expensive activities like farming or hospital maintenance. We are actually economically incentivized to consume less energy over time in most energy-expensive activities. With most cryptocurrencies, energy consumption is a design imperative.
It's not special pleading if I'm equally annoyed by Ferraris and other environmentally disastrous forms of conspicuous consumption. I don't know enough about Hello Kitty backpacks to have a serious reason to be against them.
It's perfectly consistent for me or anyone else to leave a negative comment about Bitcoin on an online forum and then as much or far more to tackle a different issue that I/they consider pressing. And this, largely, is how it seems to be playing out: nobody has been arrested for using wasteful PoW schemes yet, because we have bigger fish to fry.
I feel the parent comment shares this common intuition that there must be some way to design and code any crytocurrency to offer the same features without having to consume so much energy in the process.
I'm no expert on cryptocoins but we surely can agree that any hope to see them mainstream won't rely on countless power plants to brute force computational puzzles.
Perhaps a more direct analogy is "literally miming gold hurts the environment (since I highly doubt renewable energy is significantly leveraged in the supply chain)".
> That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
It makes me wonder if you couldn't somehow tie a renewable energy certificate (1) to a mined coin. I suppose green coin (2) is a similar, albeit indirect concept (i.e. value is from a unit of carbon sequestration).
1.) https://www.epa.gov/greenpower/renewable-energy-tracking-sys...
For myself, that is not what I mean when I use the phrase.
Bitcoin hurts the environment because Bitcoin, by design, wants to use as much power as available to secure it - and conversely is vulnerable to anyone who has significant power available, and so it had to design itself so that the rational thing to do is to commit that power to Bitcoin itself.
Bitcoin automatically adjusts its difficulty based on the computational speed of the network over the past few thousand blocks. There is a target mining speed of one block every ten minutes. If someone throws more computational power at Bitcoin, Bitcoin itself will adjust to the additional available power, so that nothing more gets done, it just uses up the power. This is not a claim that the benefit is too low relative to the additional energy; this is a claim that the benefit is zero, by design, relative to additional energy, and that this property is inherent to Bitcoin.
There is a reason to single out Bitcoin and blame it for environmental problems. No other product, concept, or idea in human history (besides Bitcoin clones) has been designed in a way where it expands gas-like to all the energy available to it (... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change).
I'm supportive of other forms of cryptocurrency without this property (weakly supportive, given that I haven't used any of them in detail, but they seem promising). There seems no particular reason to use Bitcoin if alternatives exist without the burn-all-the-available-energy property.
You're right that a core part of its design is making sure real computational resources are spent on it. That means the (total, social) cost network as such will scale with the size of the economy, not the number of transactions. So, in a sense, there's (something that looks) like an arms race going on, where more resources spent on it don't mean more transactions. Point taken.
But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked. At equilibrium, the cost will be some fraction of the economy, not all available growth or energy (like a gas). That amount of energy that this involves will decrease as energy is taxed.
That's pretty much the dynamic of gold mining under a gold standard: the larger the economy, the more money being spent mining (literal) money.
I agree that it's a high price to pay, but I don't think the benefits should count as zero. Being able to bypass financial choke points so you can donate to Wikileaks is definitely a positive.
Hypothetical scenario: a hardfork of Bitcoin is developed that maintains all of these wonderful properties — impossible for any one party to control, bypasses financial choke points, impossible to censor — but requires orders of magnitude less energy. It utilizes a variety of clever mechanisms to achieve the same goals without using Proof of Work calculations to secure the network. This sort of thing is what the exactly what the MIT team in the article is attempting to accomplish, it's not an intractable problem.
Would you support switching over to the new fork? I would. It does all the things I like about Bitcoin without this big carbon footprint. No downside.
But do you know who will never support the fork? Bitcoin miners. They've invested millions in custom hardware to let them process proofs of work as quickly as possible. They have a massive economic incentive to continue to use PoW. Forever. Even if there exists a better way.
Maybe in this world the price of BTC would go down as people moved to alternatives. I'd like to think people would be ashamed to use an unnecessarily inefficient currency. But when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy, it doesn't make me terribly optimistic.
... You know, when you put it that way, there's another problem with this argument. "Bitcoin is good because governments shouldn't be interfering with my ability to give money to Julian Assange. They shouldn't even know that I'm paying him. And if it hurts the environment, well, that's the fault of governments not taxing energy usage appropriately. They should be paying close attention to what people spend money on and dissuading uses that have harmful effects for society, as determined in their sole opinion."
So I don't think there's a comparison in how the economy correlates. As long as gold is mineable in the earth, a growing economy mines more gold. But a growing economy demands more energy, which can go either to the economy or to Bitcoin. Bitcoin has no way of saying "I want this portion of the energy in the world, and no more," the way that mines are naturally filled with resources other than gold; all it can say is "I want all the energy possibly available."
(If you could store energy and use it as the basis of a Bitcoin-style network, such that your limited resource was energy itself and not loss-of-energy-per-unit-time, it would kill basically all of these arguments. There would be other arguments about the fairness of OilFuturesCoin, but it wouldn't be these, and it would basically be the arguments about any natural-resource standard.)
And yes, the benefit of Bitcoin is a permissionless network, but the entire question is whether this energy-monster property of Bitcoin is required to have a permissionless network. You could donate to Wikileaks just fine with, say, Stellar's consensus protocol, could you not?
Also life. Evolution, birth, and metabolism also result in all available energy going into increasing the complexity of the system. The real reason we have an environmental crisis is because there are 7.5B of us, but few people recommend destroying all life on earth to save the environment.
It's not about how many. It's not about how many.
It's about how systematically detached we are from sustainable ways of life.
Humanity, to some extent, competes with capitalism for resources. But while resources are not at their limit, we can grow together, and capitalism seems to bring us benefits. Humanity also competes with Bitcoin, which is a much newer system that has become seriously competitive very quickly, and it's much less obvious that it's the best or even only way to solve the problems it sets out to solve.
The only reason to single out bitcoin is that it’s a highly visible waste.
But just because there’s multiple ways we waste a ton of energy, does not mean we shouldn’t fix any of them.
I think his argument is that it shouldn't matter whether it is a good expenditure of energy or not. Environmental costs should be priced in the energy costs. Then it wouldn't matter for the society and for the environment how much energy you use or waste.
And at least in broad strokes, it is possible to determine benefit to harm ratios. It is esntially uncontroversial to say "Coal Rollers"[1] do more harm relative to good than candy manufacturing or face lifts.
And a cap/tax carbon emissions would be great. But that hasn't happened, effectively isn't going to anytime soon and is more complex than it seems. Consider that spikes in green energy use will drive its price such that petroleum becomes more attractive in spite of a tax. And there is no way to correctly price carbon emissions when the effect will be felt by hundreds of generations and the extent of the harm is still unknown. It is, after all, simpler to try to persuade a smaller interest just to stop mining (even though that too has almost no chance of happening).
I have no idea whether Bitcoin is being unfairly singled out or not. But since the thread is about mining efficiency, it is the logical topic rather than say deforestation.
So it's not a-priori impossible that it does more harm than good. And even if not a catastrophic problem, surely it would still be nice to reduce the harm if possible.
[1]https://www.businessinsider.com/conservatives-purposely-maki...
Just because one thing is bad doesn't mean the other thing isn't also bad.
As far as our carbon budget, how we choose to create energy and how much energy something uses are unrelated concepts. If people pay a proper price for energy that reflects its scarcity and externalities, then there is no problem. In a world where we use 100% renewable energy sources, would you complain about bitcoin mining? In any case, one could argue that the amount of energy required to secure the bitcoin network is a drop in the bucket compared to the amount of energy that (for example) the USA uses to secure the value of the dollar. If we then factor in the pretty obvious benefits of a decentralized currency, it seems like a great idea if the downsides can be properly addressed.
Hold on. Technology (and knowledge in general) is ethically neutral.
The action of researching and developing it in a specific way, time and place in never ethically [and politically] neutral.
This kind of hyperbole suggests you didn’t read the person’s comment very closely.
How is using X joules mining bitcoin worse than using it for anything else? Eg. mining gold?
If the energy grid was 100% sustainable would bitcoin still be “literally killing the planet”? Surely not, so maybe the problem is actually the energy source, not this particular use case.
Or powering an MRI machine to detect cancer in a patient. Is it the same ethically?
Wow, gotta be one of the best arguments on HN.
Bitcoin is one way to use energy. There are hundreds of thousands of other ways.
When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".
That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
Which is great, but I could say the same thing of Ferraris for show-off producers in LA, or Hello Kitty backpacks.
What justifies focusing our attention on Bitcoin per se, and not those? Do you plan to publish a universal, agreed-upon list of things whose social value doesn't justify its environmental cost?
The real problem is energy users not bearing the full environmental costs of what they do.
The thing is, we have a well known solution to that: cap the total carbon emissions, or tax them in a way that reflects the harm.
Yes, Bitcoin creates an incentive to use energy. And it will be spent by miners who weigh the costs of the energy against the value of the Bitcoins produced. Like every other good on the market, it will respond to incentives created by laws.
If the damage of energy isn't priced in, then there will be too many resources spent on mining relative to the environmental cost. But this is true of every other good as well.
All Bitcoin does is amplify the problems of the existing failure to appropriately price energy. But this is true of literally every other energy-using good in existence!
There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.
"I don't want wiggins at my university. They cheat!"
'Well, a certain percentage of any demographic is going to ch--'
"Irrelevant! We're talking about wiggins!"
EDIT: Should probably add the disclaimer that I'm long Bitcoin.