But why are people willing to exchange something of value for it? Because they can trust in it serving as a secure way to transfer tokens of ownership. And that is only possible thanks to the PoW computations, which have to be expensive enough that attacking the system would be more costly than the value you could extract through an attack.

So, in a sense its value indeed derives directly from the work put into the system. Which is not to say there aren't alternatives (I'm really curious how Proof of Stake will change the Crypto landscape), but at least for BTC, that's how it is currently.

People also invested in Bernie Madoff's Ponzi scheme, and that one didn't cost as much energy as the Czech Republic. Even more interestingly, it seems likely that some people were investing in Bernie's scheme while knowning that it is fraud - they trusted that others trust it, not that it's secure.

Point being, trust and trust-worthiness are two separate things. Most people investing in Bitcoin have not in any way confirmed for themselves that the algorithm is trust-worthy, they just trust that others are also willing to buy it so that they won't be left defrauded. Hell, people have been defrauded by the likes of Mt Gox, and the network didn't collapse entirely.

True, when you break it down, people will ultimately invest in anything they "trust" (well, hope) to rise in value, no matter how trustworthy they inherently are. So you will indeed have a lot of people that invest in BTC simply because they see others doing the same, since that means they might be able to make a profit.

But there's also the people that invest long-term because they think crypto currencies have a lot of potential to be adopted more widely in the future, which entirely depends on their trustworthiness. Without that second group, any sufficiently negative news would cause the BTC price to collapse completely -- and to be fair, there's always the risk of that happening (Tether sends its regards), but the underlying "trust in the benefits of the system itself" at least gives a floor for its price that's above $0.

Doesn't sound like it's worth torching the only inhabitable planet for.

I see PoW more as a stepping stone to bootstrap a crypto currency, and I think it might just go away over time.

Ethereum has done it this way: First you build a stable blockchain, secured through tremendous amounts of power. Then, once your system has been widely adopted and people have "skin in the game", you switch to Proof of Stake to minimize power consumption while still maintaining security.

PoS is the better solution, environmentally speaking, but it necessarily depends on there already being value in the system that people can be held accountable with and thus kept honest. But to reach that state, people have to trust your system first, and if you're not an already trusted entity, PoW is one way of achieving that initial phase of trust building.

It also happens to be a huge incentive for clean nuclear power.

I'm sure you don't want that though, because solar+batteries will power interplanetary civilizations somehow.

It's a huge incentive for more power, not for any particular kind of energy. In fact, the value of BTC is actually putting a floor on how efficient it is to close down a fossil-fuel plant.

The value lies not in the energy but in its utility to facilitate transfers without the expressed permission of some authority.

The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste.

The energy is a pure waste. The "difficulty" of bitcoin blocks is continually increasing but the utility of being able to transact in bitcoin is not greater today than it was in 2015 (arguably less, since fewer merchants will sell goods in bitcoin)

Some authority could just demand your bitcoin on some gimmicky pretext (USA) or draft laws largely stymying its use (China). Also I've yet to find a reason to transfer $30k in one go for any reason - I've yet to fall victim to some kidnapper or blackmailer who wants cash by the evening without raising any alarms on my part.

> The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste.

This would be somewhat true if Bitcoin were the only mechanism for trustless transactions, but there are others that consume far less energy, such as https://en.wikipedia.org/wiki/Hawala.

In what way is Hawala trustless?

Oops, you're absolutely right, I was thinking of distributed payments and somehow confused that in my head with being trustless...

how could you possibly call Hawala trustless if you understand it?

Oops, you're absolutely right, I was thinking of distributed payments and somehow confused that in my head with being trustless...

I disagree, sunk cost fallacy and just plain miners needing to ROI their equipment, facilities, and energy costs sets a base psychological minimum price that is rising every year as the hash rises. Now that we've hit a wall at the 5nm process it's anyone's guess what kind of effect that will have on new entrants. I imagine China will take an even larger slice of the pie as energy costs will be the main deciding factor of profitability.

The reason Proof of work is set apart from its POS clones is because the inflation/emission brought to market every day has real costs to obtain... Fiat being printed cost 1% of its nominal value to create, which is devaluing every single dollar already in existence, POW psychologically adds more value to existing coins, because each new coin cost even more to mine than the one before it.

> It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy.

What's also maddening is how subjective the term 'value' has on it's intended usecase that some can be so completely oblviius to make coax it into a specific farmework: cocoa beans and shells were also equally valuable to it's respective communities, but your forcing of modernity to this matter is equally marred by illogical and quite frankly lazy conclusions.

Bitcoin (lower case b, as in the token) does require a great deal of hashing power, but this model, proof of work, is what is required to ensure Bitcoin's immutability (the network capital B). And that is the cost of such a system which, if you aren't aware, is mainly operating on renewable energy [0].

That is just the cost of entry if you want to incentivize keep everyone honest and play by the rules, the fiat World is littered with countless stories of failed currencies and failed societies and cultures because man's inherit nature: greed and corruption.

0: https://bitcoinmagazine.com/articles/study-74-percent-of-bit...

It's valuable because of unforgeable costliness.

And to make it difficult to forge transactions it asks you provably(!) burn some electricity.

No, it's valuable because people trust that others will buy it. That trust is somewhat motivated by Satoshi's protocol, but it is much more motivated by simply seeing that others trust it.

Your reasoning is purely tautological and contains no actual explanation. Wondering why cannot see that yourself.

Scarcity is the important thing here. Making Bitcoin hard to compute increases their scarcity. The amount of work that was put in, does not directly drive the price.

The point of "Marxist" labor theory, is that you shouldn't pay workers less, than the value of what they produce. I don't think Bitcoin miners ever made that claim, unionized and found their class consciousness to get paid the real value...