The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.

(Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)

> Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.

Is this really true? I mean, what do large international exchanges use now? A majority of them certainly don't currently use bitcoin. Many large banks have a significant international presence, and most parties interested in exchanging can find a bank they both trust.

Say that I want to buy a DJI drone, which is made in China. The workers who made the drone all get paid in yuan. I get paid in dollars. I want to spend my dollars on Amazon, receive a drone, and have those dollars automagically converted into yuan to pay DJI. Behind the scenes, Amazon takes my orders and my dollars, and has a contract with DJI to send them a certain number of yuan. Similarly, behind the scenes DJI is spending yuan to buy ads on Google.cn (hypothetically), which Google then wants to turn into dollars so it can pay my salary. Both Amazon and Google have relationships with banking institutions, so they say "I need to convert $X of dollars in CN¥0.15X of yuan".

The banks net out all the purchases made by Americans with the purchases made by Chinese, and then they need to trade on the currency exchange markets for any shortfall. On the national level, the shortfall is called the current account deficit, which has been persistently growing since 1991:

https://www.economicshelp.org/blog/483/economics/why-us-curr...

That article lists a lot of hypotheses for why the current account deficit has been growing for the last 30 years, but the primary one relevant to this thread is the dollar's status as the world reserve currency. This means a few things:

1) Historically, since WW2, the U.S. has been the most economically stable nation in the world, and so holding U.S. government debt is the most stable place you can park any excess savings that you get from a current account surplus.

2) Because of this stability, a lot of trade in other currency markets is denominated in dollars. Rather than trade directly between Iranian rial and Chinese yuan, Iran takes the dollars they receive for oil, pays China for infrastructure improvements with them, and then China converts the dollars into yuan to pay their employees. (In practice it's a bit more complicated because since 2015 China has been doing their best to reduce their dollar holdings, so now China might pay Caterpillar or Bechtel to build a road in Zimbabwe, with a contract that lets China take over the road if Zimbabwe defaults on the loan that funds it.)

3) Oil is priced in dollars, meaning that most countries on earth need to buy excess dollars in order to afford a fundamental energy source.

The dollar's status as a reserve currency means that the U.S. can get away with certain things that would cause other countries to default. For example, take the recent $6T COVID stimulus. Who's paying for that? It's literally holders of U.S. treasuries: all the countries that have sold more to the U.S. than they've bought and parked the excess in treasury bond purchases. They're not exactly happy about that, but the U.S. controls the world supply of both dollars and of U.S. government debt, so if you own either of those, you are at the mercy of the U.S. government's decision to print more.

This is where the trustless aspect of Bitcoin comes in. You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings). This makes it very appealing to other governments who are sick of bankrolling Americans' propensity to consume more than they produce. It's potentially bad for Americans (though the effect of this is complex: it might actually bring manufacturing back to the U.S at the expense of the financial industry, because a major reason U.S. manufacturing is non-competitive is because the dollar is overvalued, which is because the dollar is the world's reserve currency), but it's good for foreign countries with a trade surplus, and for holders of Bitcoin.

>You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings).

Doesn't the historic price volatility of bitcoin make it a very poor solution for these problems? Despite the supply being semi-fixed (for now), the value in USD or Yuan or whatever is the furthest thing from fixed. It's gained more than 8% in the last five days, and lost ~4% today alone. I guess if these were all very short term conversions USD --> BTC --> Yuan and vice versa, then maybe price volatility would burn users less often, but they'd still get burned eventually. In my mind, Bitcoin has inherent risk (in volatile pricing), and transactional cost (measured in either time or fees, as I understand it). As long as the (risk + fees) of BTC are greater than the fees charged by banks for money conversions, I don't expect widespread adoption.

Second, it's possible there could be a mean-reverting effect such that the long term volatility is less than you'd expect by looking at the short term volatility. Some claim that gold has this property and it's possible that Bitcoin might as well (not really enough data yet to tell).

https://news.ycombinator.com/item?id=25407583

Imagine that AMC launches a promotion where they announce that once COVID is over and theaters reopen, you will be able to exchange acorns for movie tickets. You'd expect a mad scramble for acorns, because a useless nut will suddenly become tradable for something of value to many people. When all the acorns have been snatched up, you'd expect a trade to commence in acorns themselves, with people paying for them on the expectation that they're convertible to tickets worth something in the future. Moreover, AMC didn't announce a price for this conversion, so there's a lot of uncertainty about what acorns are actually worth. If AMC then says "Oh, by the way, acorns will be the only way you can pay for movie tickets in the future, and we won't accept dollars", then you might see acorns bid up to totally brain-dead levels, because there's no ceiling for how high it might go, and you know that you won't be able to go to the movies with dollars anymore. Only when theaters actually reopen, and you find out how many people have acorns and how many people want to see movies, can you put an accurate price on them.

This is analogous to the scenario where the dollar loses its reserve currency status. You don't know what the eventual valuation of each country's local currency will be against Bitcoin. You do know that the dollar is going to be worth less. So you can get wild price swings as people FOMO into Bitcoin but have no accurate data to base their purchase price on.

Once a switchover does occur, then yes, the price of Bitcoin will still be volatile. But this volatility is the point! The idea is for each country's local currency to float up or down until it equalizes the demand for the country's imports & exports. So if American manufacturing is uncompetitive, few people will desire American goods, which means there will be little demand for dollars relative to Bitcoin, which means that the price of the dollar relative to Bitcoin will fall. Falling dollar prices mean that foreign countries can get more American goods for a given amount of Bitcoin, which raises the price-competitiveness of American exports, which raises the demand for dollars. Eventually you end up with equilibrium prices that reflect the overall competitiveness of the country's economy within the global economy. As a country produces more & higher value goods, the value of their currency relative to Bitcoin will rise, and they can afford to consume more. As a country's industry declines, the value of its currency will decline as well, which makes its product attractive as a low-cost alternative.

1) Countries want external control of their international transactions

2) They accept Bitcoin as said thing.

They are sort of , to some degree, forced to 1, by the US Govt. there is likely near zero chance they WANT this as a property though.

2) This is also not very likely. With some 70% of BTC being mined inside of PRC and a 51% attack possible, there is a lot of trust required of the Chinese govt. Unless this changes, I don't see countries wanting this to happen, either.

So while what you say is theoretically possible, I don't think it's very likely. I think what will happen, and what already is happening to some degree, is countries are just deciding to convert in direct currency transactions and not use USD as the base contract amounts, because the US reserve currency status is slowly declining. I.e. they are using the dominant currency in their region ( Yuan/Yen, Euro, USD, etc)

It's unknown how the US will respond at this point, with Trump in office they were basically ignoring the problem(that I'm aware of). How Biden's team will handle this is still unknown(or if they also will kick the can down the road).

We do see some corporations using BTC as a store of "cash", TSLA the latest big company to do so. It's still unknown if this is just a short-term thing to make some extra dollars on otherwise boring cash, or if this will be a long-term situation.

I liked your answer here on https://news.ycombinator.com/item?id=26093675. Would you like to write for our website on topics finance and crypto as a volunteer?

This is excessively hypothetical.

The more obvious benefit is that a Tesla can't drive 3000 miles in 15 minutes. But a VISA transaction is faster and uses 1/100,000th the electricity. And neither are "anonymous".

A given transaction might be "anonymous" today(for some definition of anonymous), but chances are it won't be anonymous at some point in the future. This may or may not matter given your definition of anonymous, but to think your transaction will STAY anonymous forever is just asking for trouble.

1. When the US dollar eventually loses its status as the global currency for settlement and reserves, no individual country needs to have the same perverse control that they US had as a consequence today.

2. Citizens have an exit ramp from the local currency. This means the state doesn’t have the same totalitarian control of the national economy, limiting the impact on citizens of demonetization and hyperinflation.

Aren't we losing the assumed federation in this system? A country whose banking system is under strain (Nigeria) or has collapsed (Zimbabwe) will have a bad-faith government acting to constrain the free-flow of money (because they want a transaction-fee cut).

Wouldn't that still lead to me wanting to go buy my groceries with BTC? Do we create a localised version/model where people can transact with each other without touching the blockchain (because of the low throughput), or how do we address this use-case; as it seems to be the most attractive one?

Has the energy requirement peaked, or is it still going to increase? Linearly or not?

This is what the lightning network is for: scalable, instant, low-cost, and off-chain TXs. All transactions between the opening and closing of a payment channel are consolidated into two TXs. One to open it another to close it. This means energy cost per TX goes down pretty significantly with adoption.

Similarly, we've had folks transacting personally with Bitcoin in Venezuela and Zimbabwe. It tends to work out fairly well for them - at least their money holds value. But transaction costs in Bitcoin during the 2017 bubble were about $20/transaction, which makes it a pretty high-friction experience for groceries. There's a lot of market pressure to create other solutions (Lightning Network? Stellar? Local fintech companies?) for payments when Bitcoin costs $20 for everything.

I don't. You don't. Nobody does. In the one-off case that you do, we can special-case it, instead of blowing energy on every single transaction as though everyone did.

You’re arguing we should be zipping around town in a car with a W12 engine in case somebody wants to drag race an airplane.

Here "deutsche mark" (and lira, which is another dead currency) are stand-ins for whatever national currency emerges after a Euro collapse. It may not be called that, but the point is that there will be some German national currency that settles up into Bitcoin in the international markets.

But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems.

But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin.

If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.

We don't really see this as inflation because of the value of Bitcoin going up, but it is a tiny tiny tax on all the people HODLING their coins, as it dilutes the value (again, by a miniscule amount).

In theory if BTC is still being used in 2150 or whenever the block reward goes to zero, all the cost of mining will be borne by those actually exchanging BTC, and the people just holding it will be free-riding, with the security of the network paid for entirely by people transacting on it. Not sure how well this will work.

No energy "goes into a Bitcoin transaction". A block with 0 transactions and a block with 100 transactions will both take the same amount of energy to generate.

This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.

People have this wrong idea that more transactions imply more energy consumption. That's just not true.

The calculations are based on the maximum throughput of the Bitcoin protocol, which is a fixed value due to the 10-minute block time and the limited block size.

The average number of transactions per block is always around 2K: https://www.blockchain.com/charts/n-transactions-per-block

> The proof-of-work is completely independent of the number of transactions.

Right, which makes this whole thing even more ridiculous. If number of transactions went to zero we'd still have to burn 120+ TWh per year just to keep the system going.

The 165kWh per transaction calculation is the best case scenario assuming every block is filled to the maximum with transactions.

The Bitcoin blockchain could subsist on a minuscule fraction of todays energy usage if the majority of miners decided to throw away their investments and stop mining.

Whatever else you may think of those features, it's a bit weird to call it pure waste when clearly millions of people find this incredibly valuable.

There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.

With the current concentration of mining capacity in China, that's not exactly a sure thing any more.

It can be safely increased over time as bandwidth, storage and processing costs go down.

For now there's still a lot of viable efficiency enhancements to be implemented/adopted so increasing the limit isn't strictly necessary.

This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!

Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.

And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered

In the bitcoin's case, to verify the immutability of *any block*, you only need some basic knowledge of cryptography, and all the blockchain after that block. You then need to sum all the proofs of work of every subsequent block and divide by the network's current hash power, that will give you the amount of effort (energy, cost, etc) needed today to create that amount of proof of work, and that's how you get a feeling of the mind-boggling immutability of bitcoin's block

In summary, you can, independently, verify how much work a piece of information in a bitcoin block has. You don't need to trust anyone

Immutability is by consensus, not some fundamental law of the universe. Consensus can change (see the reason Eth Classic exists).

Bitcoin's guarantees are not mind-boggling, and the amount of work it would take to fake is not mind-boggling either, it's very quantifiable, and it is some fraction of the available computing power that exists today, for a time period of no more than the age of bitcoin. Compare that to the stronger guarantees of things like AES encryption, if you want your mind boggled.

I don't give a crap how much work a piece of information has attached to it, all that is to me, is a record of wasted cycles.

Further, in most real-world situations having no central authority that can make changes coupled with immutable transactions is actively terrible.

Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.

I’m not sure that any of this is meaningful in any way.

They include air travel and whatnot. Basically the whole energy consumption of the company. Also including building stuff etc.

Visa doesn't share that in order to poke at Bitcoin. They share that because enviromentalism is hip nowadays. So they want to tell how they're improving their CO2 emissions as a company.

- Visa: 7 million GJ

- Bitcoin: 403 million GJ

BTC is not magic dude, it has externalities too.

If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.

Bitcoin is too elegantly designed to approach in this fashion.

It's 2021. Carrying around duffel bags of paper bills received from a human bank teller is not how anyone manages their cash or transactions.

Bitcoin is not the only way to digitally transact. It's not even a good way. In practice, it's just about the worst way to handle transactions unless you have no other options.

Just like the mining rigs that produce bitcoin. It seems like you're conflating fixed costs (of plant and machinery) with marginal costs (of exchanging some amount of BTC vs fiat).

Now we have pure currency and all fiat currencies go to ~0 in less than 100 years.

USD, GBP, CAD = currency

Bitcoin, Gold, Silver = money

Incidentally, Bitcoin is also not a commodity in the general sense of the word (as opposed to the CFTC thinks it should regulate it like other exotic financial instruments sense of the word)

Bitcoin is forcing an expansion of the definition of money. A self-regulated financial network backed by tremendous amounts of hardware and electricity is "advanced money".

We are at a transition point so I don't expect good labeling/categorization from the shortsighted/incumbents/fiat-boomers (directed at the gatekeepers, not you personally).

Side note: What people complaining about electricity consumption don't get is, BTC transfers the uncounterfeitable properties of energy to a money.

Side note: what people don't get is that pretending tokens have more exchange value because more energy was expended than the printing of other tokens is just sunk cost fallacy.

>BTC transfers the uncounterfeitable properties of energy to a money.

This statement has a lot more depth than you seem to appreciate. I believe this is from a lack of understanding of BTC's incentive structure. Perhaps a few years from now you will gain enough of an understanding...Almost every thinking-person was in the position you are in (skeptic) at some point before an extended education and eventual full BTC adoption.

The sooner you get this education the better for your family, so I recommend diving deep sooner than later, even if you still end up as a "nocoiner".

Final Note: I expect clean energy regulations and BTC's hunger for hashrate will create a larger (more direct) market for cleaner energy and faster processing, which is a win-win for humanity.

"More Direct Market" clarification: Selling clean electricity to a power grid is much harder than selling it to the BTC network, especially in remote areas. The ability to easily monetize energy production on small/mid/large scales makes experimentation and innovation more likely.

Example: Many facilities now mine Bitcoin with otherwise flared waste gas and the controlled burn actually leads to less negative environmental impact.

First, let's look at the actual transacted value: last 24h ~90 billion USD.

Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well.

One estimate of the current market cap of Bitcoin is ~800 billion USD.

Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions.

Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country?

If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.

Protecting the value of the US dollar requires a huge economy with politics and military power.

Block production, on the other hand, takes as much energy as the market will bear.

The entire cost of Bitcoin mining is in block production, no matter how many or few transactions there are. If you're going to get mad about the energy use, at least direct it towards the right target.

You can calculate cost per transaction because each block has a maximum number of transactions, irregardless of the current PoW difficulty. I don't know why you're so fixated on this. You can take 10 minutes of electricity costs and project it onto the number of transactions in the last block.

You and the OP commit a category error in thinking that transactions contribute to Bitcoin's energy expenditure. Transactions are no more a source of Bitcoin's energy usage than solar panels are a source of the Sun's energy usage. The sun produces energy on a schedule that is independent of the number of solar panels around to collect it. Similarly, Bitcoin consumes energy on a schedule that is independent of the number of transactions around to be mined.

Just because PoW have to happen regardless of transactions doesn’t make transactions decoupled from it - and thus they have a ‘price’.

Putting this in terms of distributed systems, we would say that the act of mining a block is the act of executing a view change (or a leader election). We would say that transactions are the messages sent to all nodes during the epoch. Obviously a system that only executes view-changes is not an interesting system, and nor is a system that just transmits messages but cannot order them or decide which are accepted by other nodes. But my original point is, these are separate operations, and only one of them is energy-intensive.

Trying to say that both view-changes and message transmission are energy intensive because just one of them is not only belies a fundamental lack of understanding of how the system operates, but also hinders an effective regulatory response to stopping the real problem: pollution from fossil fuels.

It's a view-change operation. If Bitcoin were a conventional replicated database, mining would be Paxos.

> There is no point in it without transactions

As I said above, a distributed system with only view-changes and no messages is not an interesting system. So, yes? But, that doesn't change the fact that only view-changes are energy-intensive in Bitcoin.

> ok, there is in terms of an immutable ledger that can store some information, like this event have to have happened before that

I think this is perhaps by far the most underappreciated value proposition of Bitcoin. I don't really care for the whole "hurr durr let's replace money and visa because freedom" song and dance routine that gets trotted out whenever Bitcoin comes up. But I do have use for a highly-available, highly-resilient, always-online append-only log. Even if that log is slow (messages take ~10 minutes to propagate in expectation) and expensive (I have to pay market rate for block space), the high uptime and resiliency make it worthwhile if you're willing to be clever in how you make use of it. My $DAYJOB makes liberal use of storing hashes and metadata for valuable data in Bitcoin OP_RETURNs, for example.

> so how can you measure a bitcoin transaction’s energy cost otherwise?

Consider the PoW difficulty and the power usage of the state-of-the-art PoW-solving hardware, and work backwards from there. The number of transactions has nothing to do with this calculation.

It's funny -- articles like this one are sooooo close to getting it, but so far away. They do the electricity usage estimation from the cumulative PoW difficulty and efficiencies of mining hardware over time just as I describe above, but then they commit a category error by saying that PoW energy usage tells us anything at all about how much energy a Bitcoin transaction takes.

No information on actual transactions performed. But in practice the lightning network is tiny and stagnant.

If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.

Yeah it _might_ grow in the future. But until it does it doesn't work as an argument.

Also in order to get into Visa levels of efficiency one would have to have (assuming the 741kWh in the main network) 500k TX per second in the lightning network with 0 energy cost. Visa handles around 1700 per second.

So basically if we'd have all the worlds economy in Lightning network we might get close to those numbers (assuming 8 billion people each doing one transaction per 4 hours, that's super high but ah well, whatever). And that's assuming the mining energy consumption doesn't change at all which it definitely would not do in case of the whole world relying on Bitcoin.

So is 1,000 BTC a lot of money, in which case, it's a lot to spend on mining?

Or is it a small amount of money, in which case, it looks like LN is hardly used?

Lightning requires that you trust the person you're transacting with, otherwise you need to wait for it to clear bitcoin, meaning you may as well just use bitcoin or a more accepted, efficient trusted system.

By trying to straddle both, Lightning is the worst of the both worlds.

They are worthless transactions until they clear, so you have to make them with trusted parties. Otherwise you may as well just use bitcoin.

This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units.

It varies but over the past couple months a Bitcoin transaction has cost from $7-$20.

source: https://ycharts.com/indicators/bitcoin_average_transaction_f...

That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-)

It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient.

Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.

However, the upside of driving your Tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.

Bitcoin isn't digital cash, it has different tradeoffs. That implies there are upsides/downsides to all of these factors.

In the end, this situation is one of the few things humans have grown really adept at handling. We're (compared to many other things) very good at negotiating complex social situations and teasing out who are getting shafted in a situation, and we have techniques for dealing with it. (Spreading rumours and/or going to the local leader are prominent among them.)

We have set up economic systems based on trust since forever, and they generally work very well. The only times they stop working are when too large authorities get involved. But there are many responses to that that aren't cryptocurrency.

This made me laugh. It's true, but the name literally means "digital cash".

If you don't want irreversible transactions, you don't want bitcoin.

My point is that claiming bitcoin is or isn't inefficient relative to other systems is nonsense. There's simply no comparable system that has the same guarantees as bitcoin, presently or throughout history.

As far as we know, the power cost of bitcoin may very well be the minimum required energy to run an irreversible proof-of-work distributed ledger. Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal? I really don't know.

You brought it up as an upside.

> Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal?

That seems highly unlikely, especially at a time when we don't have negative externalities priced into that energy cost, and we know we're damaging the climate, and given that the only thing it really brings to the table is decentralisation. Which itself is firstly a bit of a sham (mining tends to centralise) and not even that important to the speculators.

Back in the world of actual use cases, we can probably put a ceiling on the value of circumventing AML laws without using a non-POW altcoin at well below BTC's current energy cost.

I'm off to play in the penny stock section of Yahoo... /s

What ledger has recorded this transaction? How might a dispute be resolved? What's stopping the receiver from just claiming you never dropped off the cash when you drive back home?

And if they can sign a non-repudiable statement that a given address is theirs, they can just as easily sign a non-repudiable receipt when you hand over the cash.

I am simply pointing out that USD != bitcoin, so the Tesla-driving-cash example is a fundamentally different thing than a bitcoin transaction.

It's like saying "Jeez, it took THAT MUCH energy to get to the Moon? I can drive around the earth a thousand times with that much energy!"

Yes. You can do that. It might be smarter and better for you to do that. But you won't be on the Moon at the end, and there's no way for you to get there unless you take a spaceship.

In this example cars = money, and spaceships = bitcoin.

Turning "often" into "always" is the reason bitcoin exists, and the reason it uses so much energy.

Everyone else will do whatever kind of wire transfer you do for moving a billion dollars.

edit: fixed a typo

It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.

They would argue that a chunk of the energy is renewable -- so that makes it better.

There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.

It's pretty important for adoption to happen. Right now most Ethereum apps with complex contracts (i.e. Augur, Synthetix) can cost $50+ per transaction.

> 2) TPS on L2 such as lightning is both extremely fast and very cheap.

That's only true if there isn't high demand. If there is opening a channel costs $15 or more.

> Ethereum is also going to have an L2 because it makes a lot of sense.

Something which has been discussed since 2017. The architecture still isn't there. Most apps have to interact on the main chain. Not confident it is going to happen anytime soon even with startups like Matic.

Sure, but lightning is (effectively) infinitely reusable. You can keep doing as many TXs as you need, and the fee is only to open and close the channel.

I have spent far more than the cost of opening a lightning channel on buying wallets for physical cash, and they aren't nearly as reusable.

Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.

If this were taxpayer supported I could understand the objection, but the people buying the energy to run the system are doing so as a commercial activity to make a profit. How is this commercial use of energy inherently worse than other commercial activities?

I think you mean "morally reprehensible"

The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear.

Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.

OTOH lightning is IMHO a joke as well, for many reasons. Funds need to be tied up, nodes generally need to be online, routing is a (mathematically) hard issue, and the channel open and close transactions (or 'add funds') would certainly become an issue on the main chain if lightning became popular.

It's basically a bank at that point. Or a worse Visa.

If you want to be paid you have to find a route that's willing to lock up enough coin at their end for that.

So they are exactly like banks - if you want good ability to transact you have to pick one that works for you and pay appropriate fees.

It really is a hack.

off chain operations don't need to spend a lot of energy to validate transactions.

AFAIK globally the banking system estimated energy consumption amounts to ~100 terrawatt of power annually

that amount includes ATMs, servers and branch offices

EDIT: I forgot how touchy people on BC threads could be.

The data on energy consumption of banking system was cited from a post of a BC advocate

Statista has published data for transaction costs of 2020

https://www.statista.com/statistics/881541/bitcoin-energy-co...

What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.

Funny, indeed.

It's also worth to note that nobody really knows how many kW miners really burn. All the figures are more or less educated guesses from the efficiency of equipment sold publicly. If someone has a more efficient method they probably won't share it.

But nobody accused Bitcoin of being efficient, ever. That's what almost everyone notices when reading about it first time.

A fun thought experiment is to see just how limited the throughput of Bitcoin is. Suppose the Bitcoin enthusiasts were to get their wish and Bitcoin becomes the dominant "currency". If every person on the planet were to make a bitcoin transaction once if their lifetime, that alone would be too many transactions/second for the network to handle.

Some say Litecoin will be used for that but I doubt it. Coins like Cardano or IOTA will be used for transactions. I'm not sure about Cardano but with IOTA you can transfer a fraction of a cent (or no value at all) without fees (that doesn't mean everything will be always fee-less).

Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".

The marginal energy usage being zero is another way of saying that Bitcoin wastes the tremendous amount of energy that it does even if nobody is using it at the time.

We went through this with BTC/BCH. The BTC folks did not want to increase block size.

Total energy required to mine one block / # transactions per block.

Bitcoin is six orders of magnitude less efficient than Visa. Six.

And it's getting worse every day.

Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that.

All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.

Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on.

Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.

I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn.

People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin.

Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).

Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim.

In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable.

It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.

Not a lot, but it's definitely a thing. Speaking about majority, these days, most people and companies are accumulating Bitcoin only because in 5-10 years it'll worth much, much more. And that makes a lot of sense if you think about it. The shift to a digital form of currency will eventually happen anyway. I do not believe Bitcoin will ever become a global currency, but I strongly believe that it's going to stay with us for quite a long while. The blockchain technology is in its infancy and is experiencing a lot of research on all fronts.

Edit: 39% of energy used is renewable, not really sure how that doesn't matter.

[1] https://www.finextra.com/newsarticle/36672/renewable-energy-....

>However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.

> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.

As far as the question what are you good for is concerned, we've been printing money at an alarming rate ever since 2008 crisis, if the new stimulus is passed, the us will have printed 40% of all dollars in existence in the past year alone, I don't know how you think that won't cause inflation/it's acceptable that the cost of printing is borne by other countries because the us dollar is the international reserve currency. Bitcoin has been adopting a store of value narrative and is synonymous with digital gold at this point, so in effect a hedge against inflation.

Two, I'm not sure if you relate with it or not, but maybe we just believe in decentralization of financial institutions just a little bit more than you do, everyone who got burned because of banks in the past decade has developed a deep distrust of the modern financial system.

If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.