Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis. He says that Visa consumes way, way more if you price in nebulous externalities.
I am rejecting his thesis by saying that if Visa used as much power per transaction as Bitcoin we'd need to generate 3X as much power as we currently do.
The quote is: "Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar."
I'm taking it into account. And I'm saying he's wrong.
Sure he does:
> Second, metrics like the “per-transaction energy cost” are misleading because transactions themselves do not cost energy; nor does bitcoin’s CO2 footprint scale with transactional count.
The point is that transactions per second isn't the unit of value by which Bitcoin is priced. Bitcoin is not competing with other monetary systems simply on the basis of transactions per second, but also network trustworthiness/security
He's not disputing the per-transaction cost of Bitcoin OR Visa, and is explicitly pointing out how looking at it on a per-transaction basis is misleading.
He is disputing the overall total network costs, not considered on a per-transaction basis but in terms of the total value provided by the network to all its users.
Transactions per second is just one of the factors that could add value to a monetary system, but it isn't the only one.
I factored it in with my calculus and you and nic are wrong. If you believe otherwise please show your work like I did not gut feelings.
TPS is a means to an end re disproving the thesis not a talking point about utility.
I am not looking at value in terms of TPS. TPS an intermediate step in my calculation. I am looking at total system usage. Sorry bud, your system is the digital equivalent of rolling coal and no amount of mental gymnastics will change that.
But by all means show your work and let’s talk about it, don’t just say “nope try again” haha that’s what people who have no leg to stand on do.
The problem here is not about including the externalities (although that is an important thing to consider). The problem here is that it is a mistake to look at the value only in terms of transactions per second when transaction rate is just one factor by which you can judge a monetary system. It's not necessary for Bitcoin to compete with other monetary systems in terms of transaction rate for it to be useful.
But if you find that Bitcoin is a digital, permissionless, borderless, uncensorable store of value, a better gold than gold, then it doesn't need millions of transactions per second.
Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.
Fiat money isn't going anywhere, Visa doesn't need to be replaced, and Bitcoin doesn't need to pay for your coffee to be useful. It can do what it does best, coexisting with fiat systems and other cryptocurrencies.
It's not, because its inability to scale means folks are pushed onto L2 which has none of the guarantees you mention.
As Bitcoin's use as a store of value increases and transaction throughput remains constant, transactions will be larger, less frequent and more expensive.
I won't get pushed out onto L2 just like I'm not pushed to liquidate real estate or art collections. I don't transact in long-term stores of value more than once every few years, and then I expect the transaction will be large, slow and expensive.
It is a strawman to say that Bitcoin can only be useful if it replaces all traditional financial instruments.
As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.
Sure. The Lightning Network already exists, is working and in use, and can in principle do essentially unlimited TPS.
Bitcoin doesn't need to scale to millions of TPS to be successful (since payments and microtransactions aren't its only use case), but it so happens that it can do that through second layer technologies.
Again, that’s not an argument for Bitcoin, just so we’re clear. This is an argument for visa instead.
And it's even more complicated than that, because you'd have to take the data from every node, and reconstruct complete paths to identify a single transaction.
And yes, I personally use the Strike app + Fold app to collect satoshi rewards by buying gift cards for shopping. Strike also has a beta app that uses lightning as the rails for global p2p transfers, e.g. you can instantly send USD to EUR. https://twitter.com/JackMallers/status/1346867753253220356
I was trying to figure out the same thing a month back[0], but most of the responses I got boiled down to "you're asking the wrong question". It's hard to wade through the crowd of "it's just digital gold", but the best response I got[1] is that it works decently for places that accept it, but there are hiccups, usually around liquidity.
Each channel accommodates theoretically infinite amount of transaction.
https://store.blockstream.com/
https://acceptlightning.com/list.html
Several major exchanges have announced that they are implementing LN support. Still very early days.
As always, call me when I can buy a latte with it.
You can buy a Starbucks gift card on fold app using LN and currently get 3% back in sats.
But seriously, why would anyone spend a ton of effort right now integrating a coffee shop directly with LN in the first world? Traditional payment systems work fine. Bitcoin was never primarily concerned with replacing Visa. Think bigger.
In such cases, there is no reason such users can't "enter" bitcoin through a second layer such as the Lightning Network.
Why would they do that if it isn't real bitcoin?, you might ask. Well, for one, their local, tin-pot-dictator created currencies are often worthless, meaning that even second-layer bitcoin is a far more sound and reliable currency.
And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.
Yes there is they need a channel, which costs $20 to open and $20 to close.
> And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.
Ah you're a comedian too!
No, they don't need to open a channel via the blockchain. They can have an account with a third party, for example.
And again, keep in mind we are talking about access to money -- a money that cannot be debased -- for those people living in the poorest and most terribly governed areas of the world, where debasement, hyperinflation, and the utter destruction of savings is commonplace.
Even if they don't get the full benefits of on-chain bitcoin transactions, they will still be light years ahead of where they were relying on failed local currencies. A massive improvement even in the worst case scenario, helping to lift real-world folks out of poverty. This is something to applaud and cheer for, not shake your head at or mock.
I was referring to the idea that a $40 channel fee might be palatable or even negligible for folks such as those in Malawi whose GDP per capita is $400 per year.