The first is that scaling Bitcoin up to the size of visa is not particularly possible. You might be able to match visa's throughput by greatly increasing the block interval (e.x. one block every week) but the protocol cannot reasonably scale past a couple hundred transactions per second without taking a massive hit to transaction latency. So, in this sense the question of how much energy Bitcoin would consume if you scaled it up is meaningless, it cannot be scaled up.
The second mistake is that Bitcoin's energy consumption has no relationship with its scale. Say you built a hypothetical MiniBitcoin which was exactly the same except each block was so small they could fit just one transaction, MiniBitcoin would consume almost exactly the same amount of energy as Bitcoin does now. The energy usage goes up as competition between miners increases. The energy usage does not go up as more transactions are processed.
That’s no mistake, folks are suggesting that on a per transaction basis - today - Bitcoin is cheaper or more efficient if you take into account hand wavey externalities not captured in the classical transaction cost model of a payment processor like visa.
What I’ve done is invalidate that argument not by scaling visa down to a single transaction (as that doesn’t capture externalities, per the argument posited) but scale BTC up as the argument is BTC captures all externalities. By then showing that it’s physically impossible I’ve disproved the thesis.
You’re making a different argument about avenues for scaling and that deserves its own conversation.
Good point, you're right, I was forgetting this.
> since the value of each unit would have to increase to satisfy the demand.
I didn't follow this though, what do you mean?
> In a world where Bitcoin replaces gold or visa
It doesn't seem very meaningful to me to talk about energy usage in this world because Bitcoin can't replace visa. To replace visa we would have to make enough changes to it that I don't have much of an idea of what the energy usage of the modified system will look like.
Though let's consider Nervos' NC-Max, which gets a lot closer to replacing visa than an unmodified Bitcoin can. It works by, effectively, massively increasing the block size limit. In a NC-Max world energy usage would still be proportional to the coinbase but the coinbase might stay small because there's so much room in each block that transaction fees stay low.
I should have worded it better, I just mean that if Bitcoin were to replace gold as the primary store of value, the price of Bitcoin would have to rise significantly to absorb the demand, since supply is inelastic. This in turn would increase the environmental externalities.
Since transaction inclusion is a marketplace and since most products we care about will continue to be denominated in local currencies I don't think transaction fees will change much as the price of bitcoin changes.
As the dollar-denominated value of a 0.01btc fee increases people will become less willing to spend that 0.01btc. There might be some stickiness but I expect the kwh-denominated fees will grow much more slowly than the price of bitcoin.
This seems to be a misunderstanding of how mining works. The amount of energy used for mining is largely disconnected from transaction volume. Mining a block with one transaction takes about the same amount of energy (within a few watts) as mining a block with 10000 transactions.
The hope for scaling bitcoin is on stuff like the lightning network and other more esoteric stuff like coinjoin. That being said lighting network could scale arbitrarily in theory, but the security properties depend on being able to tx on the main chain in a timely manner. In the case that there is a wide spread theft attempt on the lighting network we could see many LN channels trying to be closed at the same time and shooting the fees up beyond the attack value.
> you could conceivably implement lightning with classical assets.
Not with the same security properties. The idea of building a money transfer service where you simply have many people with liquidity that transfer IOUs instead of the actual money has been around since at least the 8th century: https://en.wikipedia.org/wiki/Hawala
There was no formal ultimate settlement layer though.
I personally think that we need to continue to investigate ways to push what we trust and eventually have a workable system that actually trusts individual public keys to not double spend on pain of losing their reputation.
Until that happens I'll continue to hold some BTC.
That's not blockchain, and it's not crypto. You can do that right now with literally any asset in an InteractiveBrokers account.
In theory, since there is no notion of a Bitcoin chargeback and no need to extend credit to any party in the transaction, the intrinsic cost of a bitcoin transaction should be lower.
Believe it or not chargebacks and credit are good things. This you can find out if you ask literally anyone why they use their credit card instead of their debit card.
This is a classic pro Bitcoin argument that’s trivially falsifiable.
The fact folks here think their transactions in the online economy should heat their homes is so bananas to me. What is this, the industrial revolution? I mean, I know we’ve got our plague doctor masks on but that’s not intentional.