For the vast majority of businesses/individuals, it is governments and banking cartels the ones stealing your money (via inflation and fractional reserve respectively) without recourse. Switching to a world in which, instead of all of us, but only a few, are stolen money, is a bit better.
> The most prominent negative effect is the huge energy waste, which doesn't help when we are trying to cut on our carbon footprint
Debunked. Sources:
* https://newmoneyreview.com/index.php/2020/09/03/big-oil-goes...
* https://www.bloomberg.com/opinion/articles/2017-12-07/bitcoi...
* https://blog.bitcoin.org.hk/bitcoin-mining-and-energy-consum...
* https://www.youtube.com/watch?v=2T0OUIW89II
* https://cointelegraph.com/news/study-over-74-of-bitcoin-mini...
Re: Energy use - A single Bitcoin transaction is around $8 today. If you assume an efficient market, where the cost to compute Bitcoin is roughly equivalent to the energy cost, that's a crazy 80kWh in US energy cost for a single transaction (and probably more, since Bitcoin mining is done where energy cost is lower). The claim that a fraction of that comes from renewable is silly, this renewable energy could go to other means.
Don't put words in my mouth that I didn't say (or rather, typed). I never said it's better. Government&banks-robbing-all is a worthy cause to fight anytime, even if it doesn't directly help the criminals-robbing-a-few problem, because actually, the latter already happens today, and will always happen (sadly). So we must fix one thing at a time.
One of the biggest misconceptions around Bitcoin is somehow that it was supposed to sort all this out before it bootstrapped to a large enough network, but we all know that´s impossible.
Depends on how quickly you need that transaction to hit the blockchain.
Anything over 30 minutes is currently 1 sat/vByte and 1 sat = $0.00019230 dollars. The average bitcoin transaction is about 250 bytes. That's $0.048075 or almost 5 cents.
If, on the other hand, you accept contemporary definitions of inflation and consider normal modern monetary systems as being the least bad - then it’s a pretty different picture.
These articles invariably attract the gold heads.
Are you sure? Gold is a massive problem: https://theconversation.com/gold-mining-leaves-deforested-am... (bitcoin fixes this)
If that was your idea, wouldn't we be better served by lobbying our politicians to move the needle on the drug war (seems to be happening) instead of creating volatile whale controlled crypto "currencies" which use huge amounts of electricity as our planet faces a climate change crises and which also enables all of the other really terrible illegal things listed?
What would really be better is to push politicians to stop using the banking system as a mass surveillance apparatus and allow there to be above-board systems for the anonymous digital transfer of modest amounts of cash. Then you destroy the demand for cryptocurrency by out-competing it, and eliminate the energy waste problem.
The US, for example, will happily assert its ability to intercede when Iran and China trade. It isn't at all obvious why that should be the case, and it is profoundly unclear why China and Iran should cooperate. It is plausible that countries should be trading using a decentralised system like a bitcoin-style cryptocurrency. US law really should stop at the US border.
Kids would benefit if their parents' savings in USD wasnt debased at an accelerating rate aka 50% loss of purchasing power every 8-10 years (soon to be 5-10 years).
Bitcoin is better money, because it allows for more pure self-organization, as a result of its money supply being predetermined by hard-coded algorithm, rather than by fiat decree.
This single benefit far outweighs the mentioned negatives. It has the potential to completely eliminate the boom/bust cycle, eliminate currency manipulation that facilitates international trade imbalances, and free hyperinflated jurisdictions from that aspect of their poverty.
Many think these expectations are unreal, and that's fine. I'll see you when we get there.
Because bitcoin requires substantial inputs (hardware, energy), if it actually has legs, it will end up being controlled by whoever controls the most capital.
That's not self-organization, that's just replicating the same broken economic system we have right now, but (ironically) with much lower efficiency.
> It has the potential to completely eliminate the boom/bust cycle
Citation needed. =)
> eliminate currency manipulation
"A single anonymous market manipulator caused bitcoin to top $20,000 two years ago, study shows"
https://www.cnbc.com/2019/11/04/study-single-anonymous-marke...
> free hyperinflated jurisdictions from that aspect of their poverty.
I'm sure that'll work great for folks who can afford to buy (or would be payed in increments of) approximately 0.0005 BTC at a time. What are transaction fees these days, anyway? =)
Huh? Whoever has the most capital has the most capital? I don't get it.
> Citation needed
The boom/bust cycle is caused by what we declare to be the solution: active management and printing of the money supply as desired to achieve short-term economic or political goals.
> an anonymous market manipulator caused bitcoin to top $20k
I was speaking about the money supply, not the price. Dunno if you meant to misinterpret or not. But regardless, even that criticism isn't really doable at the scale Bitcoin will achieve.
> I'm sure that'll work...
I don't consider this to be a real criticism. I don't consider any scaling criticism to be valid, because they all come from the perspective of "Bitcoin hasn't scaled already, therefore it will never scale." 80% of software engineering is scaling. It's what we do, it's what's being done. It's a lazy argument. For it to be interesting, you have to tell me why Bitcoin can't scale, ever, in principle.
That seems like quite an extraordinary claim without much evidence.
"Much evidence", smh. How about the work that won the Nobel prize on this exact topic? https://en.wikipedia.org/wiki/Austrian_business_cycle_theory
It shows exactly how the boom/bust cycle is caused by the active management of money.
It's an efficient store of value. Here is a dilemma - you have 10 million dollars. You need somewhere to park your money. Do you follow the Chinese businessman pattern and buy real estate in Toronto? That seems complicated - picking a property, being subject to the real estate market, etc. Often these houses sit empty, since you are on the topic of wasted resources.
Do you buy gold? Gold is as useless as Bitcoin, in terms of intrinsic value, your special snowflake "industrial applications" of coating McLaren F1 engines as a heatshield and superconductivity aside.
Buy stocks? How do you pick them? A financial advisor certainly won't do it properly for you. And the fed is pumping out USD.
Of course USD is going to deflate.
So, Bitcoin suddenly doesn't seem so useless.
"is the huge energy waste"
Gold takes a lot to store, secure, and transport. BTC replaces that with mining.
"The second one is that it makes illegal activities easier, and at a larger scale. It's quite common right now for companies to be coerced pay millions of dollars to anonymous criminals, all enabled with cryptocurrencies."
Every single transaction is on the chain. At this point they are worried that Monero is insecure. There are even conspiracy theorists saying that "the man" wants blockchain currencies as the norm due to the "nowhere to hide" policy.
And yes, you can create a wallet on some hotspot, and it is "anon". But let's be honest.
"Unless equally sized positive effects would emerge"
It's a secure place to park cash that doesn't deflate by nature.
edit: If you downvote, try to explain what you disagree with.
Are people using bitcoin to replace USD in general? No, not really. It's not a very good medium of exchange not because of the illegal stuff but because no one knows how it works and it's messy, that's why no one buys stuff with it. They also don't know how much it's worth on average and therefore struggle to use it, bringing me to my next point...
Are people using it as a standard of value? No, if I tell you a car costs 15k USD you know what that means. If I tell you it costs 1 BTC, you have no tangible idea of how to relate that to the real world because BTC's value changes sporadically. I am sure this will stabilise as crypto matures, but i dont think people should invest this much effort into something that is just going to be used as a value measurement.
So back to the 'store of value' thing, why do I want people not to invest their money? Is wealth hoarding not a problem now, or do you believe that just by virtue of it existing as BTC, it's doing something good?
"why do I want people not to invest their money"
You don't - you absolutely don't want someone to park their money in BTC and avoid spending it. It's an economic inefficiency. It's also the nature of people to hoard wealth - that's why they buy land to "sit on" and why they buy gold. Both do not have the world OR wealth distribution. That's also why in the US, we have a property tax - to keep the wealthy from hoarding all the land without generating a profit on it (assuming they aren't living on the property.
Conclusion - we need, or at the very least have used stores of value throughout history that are not "investments" in the sense of efficient use of resources.
"What are the benefits of BTC over existing stores of value?" ("USD" in a bank account, USD (cash), gold, and property).
The ones I listed above - USD depreciates. It's trite but it's also true - you cannot hold USD without losing wealth. Gold has no intrinsic value, you have less control over the asset unless you store it in your basement (managed by third party), you cannot easily move it or transact in it.
Real estate is entirely too complicated for a non-professional to invest in. Same with land.
BTC does what cash was supposed to - you buy it, it sits there, it doesn't depreciate.
Now, you will correctly say "No, I buy BTC at $20,000 and tomorrow it's $3,000". Completely correct and true, but the bet is that as it becomes more established it will become a more reliable store of value than a nationally backed currency, kind of like currency was when it was backed by the gold standard.
Hopefully that helps you understand my viewpoint without thinking I am trying to shove my opinion down your throat, as most crypto debates go that way, and it's definitely not my intent. I don't even hold crypto, nor do I necessarily think it's "changing the world".
No, the "huge energy waste" is so vast as to be nearly inconceivable. It cannot reasonably be compared to anything else. Even shipping literal gold around by helicopter might be more efficient.
"Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows." https://www.bbc.com/news/technology-48853230
Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save."
That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system.
Of course, BTC is not going to replace cash/gold fully in the near future, if ever, and the cost is absurd. Nor is there a solution to this, as transaction demand will just continue driving up price.
The environmental argument is one that I concede.
> That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system.
There are very good counterarguments to that as well.
The idea that the "banking system" functions primarily by shipping cash and gold around is nonsense. 99.9% of traditional banking nowadays happens on computer networks. The Visa network for example handles 150 million transactions per day (that is, 500x more than bitcoin) while using a tiny fraction of the electricity. When a bank in London wants to send money to a bank in New York, they don't ship a container full of gold, they send the money electronically using the SWIFT network. To the extent that cash is still physically shipped around, it's only because people still sometimes use cash to pay for things, and banks collect and distribute this cash and replace damaged bills.
And your estimate of labor is similarly flawed. To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well. The transactional parts of banking can be (and are being) largely replaced with mobile apps and ATMs. The other aforementioned parts of banking aren't replaced by Bitcoin, so all of that labor still needs to exist.
So the efficiency argument shouldn't be "what if BTC replaced banks", it should be "what if BTC replaced SWIFT, ACH, BACS, Visa network, etc." there is a value proposition here but it is much smaller than the one originally proposed.
As far as loans - the theoretical, grand idea there is that the loan market becomes global, e.g. Americans can loan to Sierra Leone, where they don't have access to a traditional, efficient banking system. Again, a pipe dream for now. Btw, there are other coins claiming to do loans based on reputation, but so far, I haven't seen them working well. And of course, there will be scammers.
This may be a lack of imagination on your part....Many companies already offer loans/mortgages using Bitcoin as collateral (at much lower interest rates than traditional banks). Not having thousands of idle bank employees sitting around in brick and mortar banks makes the financial system a lot more efficient...
It's not a dilemma. At all. If you have 10 million dollars just lying around, chances are, uo already know what to do with your money.
So your entire premise is based on a combination of assumptions that make it entirely laughable:
- that if you have 10 million dollars, you have a problem with storing them
- that in order to defend bitcoin you have to come up with an example involving no less than 10 million dollars
> Do you buy gold? Gold is useless. Buy stocks? How do you pick them? Of course USD is going to deflate.
Ah, I feel so sad for people who have 10 million dollars which they have to just "park". How did they ever manage to do that in the past?
Oh, right. Stocks, property, securities, bonds, investments, diversified portfolios.
As the parent poster mentioned, the US’ monetary policy is awful and many believe is on the brink of major problems.
China’s financial reporting is untrustworthy- you never know what you’re getting investing there.
EU is in the middle of brexit, financial crisis in member nations.
So, yeah, some new alternative financial instrument seems attractive to me.
Ah yes, "the brink of major problems". That's the undying adage of USSR and later Russian news programs. "Dollar is on the brink of collapse".
> So, yeah, some new alternative financial instrument seems attractive to me.
How can one forget, that these crises are unique, are happening for the first time ever, d no one in the history in the world ever had 10 million dollars before, so they have no idea what to do with this money.
As you mentioned in another reply- diversification of ones’ portfolio is important. I, and most people, would never put all their money into BTC or crypto in general. That would clearly be a bad decision. But, why _shouldn’t_ I put <10% of my portfolio in a new asset class that has growth potential? Many people put 10% of their portfolio into all kinds of crazy things.
The USSR existed during multiple global conflicts. The USSR existed during the oil crisis in the 70s. Russia existed during multiple global conflicts. Russia existed through multiple global economic crises including the one in 2008.
And through it all the fall f the US dollar was just around the corner. Within weeks. Well, months at most.
In 1998 I was an exchange student in the US. I read an editorial in some newspaper like The NY Timesthat argued that financial crisis that would kill the dollar was inevitable within at most two-three years. And yet, here we are.
So no, I don't buy "you sould put money in bitcoin because of course USD is going to deflate and is on the brink of major problems." as an argument for storing 10 million dollars in Bitcoin.
On top of that this entire argument ignores the actual reality of how people protected their assets before Bitcoin. Let me show you how: https://dataroma.com/m/holdings.php?m=BRK
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
I would appreciate if you called me by the nickname I specifically chose for the purpose of online communication
> Dimas, I already clearly listed the problems with those investments, in case you didn't understand, I will repeat:
In case yo didn't understand, I will repeat:
- If a person has a spare 10 million dollars they want to "park", it most likely means they already know how to manage their own money
- Ask yourself: how did people manage to "park" their 10 million dollars in the ancient era of 10 years ago, before blockchain.
> Diversified portfolios - oh, I guess you are. Next you are going to say "Index funds" - what do I win?
You win exactly nothing. Diversified portfolios is the way to "park" money: "don't put all your eggs in one basket" and all that.
The most prominent negative effect is the huge energy waste, which doesn't help when we are trying to cut on our carbon footprint
The second one is that it makes illegal activities easier, and at a larger scale. It's quite common right now for companies to be coerced pay millions of dollars to anonymous criminals, all enabled with cryptocurrencies.
Unless equally sized positive effects would emerge, it creates a growing pressure on governments to regulate and potentially criminalize the usage of cryptocurrencies. If that happens, the monetary value will naturally fall down.