BTC for many is a way to stop central banks from eroding their lifetime savings which they paid for with their physical labor and time. Thats not a waste of energy in my opinion.
The narrative about central banks eroding life savings is greatly exaggerated by people who want us all to buy Bitcoin. Inflation raises the price of assets in general (virtually the definition of inflation), meaning virtually any non-cash investment will be buoyed by inflation. The idea that Bitcoin is the only way (or even a particular good way) to avoid inflation is a myth.
Source for this?
Buying into a token pool hoping you will be able to resell it for a bigger piece to people who want to enter as well is not something people should do in general.
BTC is terrible as currency fit many reasons. It has an advantage of skipping over regulations transactions in other currencies are subject to. How long it lasts is a speculation game. You can win at it but it's anything but "stopping central banks from eroding savings".
You don’t seem to know much about crypto currencies to name energy usage as a real problem of crypto.
While Bitcoin will keep it’s “proof of work” approach to mining in the foreseeable future, there are now quite a few alternative crypto currencies in circulation employing “proof of stake” that do not suffer from large computer power usage e.g. Cardano, Solana or Algorand just to name a few. Furthermore, Ethereum, the second largest Crypto currency in circulation, plans to migrate to “proof of stake” by 2022. Stakes are already online.
So please inform yourself before stating that Crypto will destroy the planet. No one is forcing you to like Bitcoin but you need to keep in mind this project has been invented over 13 years ago. It would have been impossible for the creator to anticipate its popularity and fix all its technical issues including energy consumption.
People, especially newbies trust it much more than other blockchains. That’s why everybody buys Bitcoin, currently.
I believe Bitcoin’s going to take on an important role in a value storage once it’s market value stabilizes. Essentially, it will become digital Gold. As the gold price didn’t “crash” to zero when it lost its utility as a currency, I believe we will never see a complete crash of the Bitcoin value. It will serve a niche application and, hence, keep having value. But it’s continued growth of its value will flatten over time in the future, I am sure. So I wouldn’t worry too much about its energy usage.
It's concerning to me that there's not even a "light at the end of the tunnel" as far as BTC's energy usage goes.
No, I said that BTC is _currently_ more popular for the reasons I describe and _predicted_ it to become a niche crypto asset in the future. I might be proven wrong but this scenario I described should you make you sleep well at night, again. ;-)
How do you know this is the reason? Couldn't another reason (like bitcoin getting the most press/hype) be true instead?
(I do not know the real reason, I'm just wondering why you think the one you stated is the real reason - care to elaborate?)
If proof-of-stake or something else actually works, then bitcoin's algorithm can be changed to that.
And, hence, miners’ energy use does not correlate to their carbon footprint directly. That’s often overlooked.
Furthermore, there is a strong economic incentive for Bitcoin miners to save energy to stay more competitive. Bitcoin mining is done on specialized hardware (ASICs), nowadays, and these devices will get more efficient since the market is still in its infancy.
BTW: What do you think is the carbon footprint of Netflix, YouTube or Pornhub? And what’s their economic utility? If we start critizing IT projects for their energy usage, I don’t think Bitcoin & Co are the biggest culprits.
In other words, concentration of wealth in the hands of a tiny group of people.
Crypto is here to stay, it will take a few years, but they will be useful in some form or another. Hopefully it is useful for everyone, not just the 1%
Was there ever an expectation that cryptocurrencies were going to solve the concentration of wealth and/or inequality? Bitcoin's whitepaper only talked about being able to transact without a trusted third party (banks) and the famous genesis block message of "Chancellor on brink of second bailout for banks" seems to be more against government interventionism (ie. "too big to fail") than inequality.
Well, Bitcoin and Defi already serve the poor in countries where they are being denied access to financial services.
You also need to distinguish between the concentration of wealth and income. The reason for why the wealthy seemingly getting wealthier and the poor getting poorer is in fact the low interest rates payed to savings account holders. Rich people invest in equity or housing. Poor people have no safe means left in Europe and the US to save money and grow their wealth. Apart from the inflation tax the reason for this situation are indeed economic policies of our central banks that have lowered interest rates to almost zero for decades.
Using DeFi services like “Compound.finance” today you can earn significant interest on your Dollars (yes, Dollars not Bitcoin) and that’s exactly because these services are detached from the financial System governed by the Federal reserve or European Central Bank.
I would go so far and argue DeFi and Bitcoin are liberating the poor from economic suppression even in the wealthiest of nations.
Also, there is no such popular narrative. Your argument is like saying, "so we're supposed to buy stocks until we're all rich, that's a scam". Everyone makes their own investment decisions based on the available information. Brushing off good investment opportunities as a pump scheme is not very wise.
Also one could say cash dollars promote crime. Most terrorism is cash funded.
The difference is that while regulations and tech advancements are improving power efficiency everywhere else, proof of work systems incentive ever-increasing wastes of electricity.
What other system is designed to get increasingly less efficient over time, while paying people to be inefficient, as a core principle of how it operates? Cryptocurrency almost stands alone in this regard.
It just seems like groupthink to me. Where are the armies of people against air conditioning or disposable medical tools? Both are pretty wasteful yet clearly worth it.
Contrast with Bitcoin, where the inefficiency increases with each new miner that comes online, all without producing any more transactions per second. Ironically, the mining power only seems to become more centralized over time, which was the opposite of what was intended by going to proof of work.
More power consumption also doesn't mean the efficiency is reduced. You would have to quantify the value that users are getting from it to judge the efficiency. If the value goes up with increased power consumption, then the efficiency hasn't changed.
Because then he'd need to name an actual different reason to hate on bitcoin that hasn't been debunked
I just don't get it - we're all holding pieces of this stuff because it keeps going up in value because we're all holding pieces of it? And that's somehow worth the enormous computing cost to maintain the network?
Yeah, I'm sure that BTC is great if you're a Syrian refugee or a billionaire evading capital controls but it feels like the majority of the stuff is just... sitting there...
I'm actually really thankful that exchanges are in the picture because ledger-only transactions aren't nearly as wasteful as on-chain transactions, but still don't understand why people want it. A cryptocurrency seems useful to me, inflationary crypto-assets seem like their only use is to reward early adopters?
The value proposition of BTC seems more-or-less like "there is a limited supply and more people will want some in the future because it has made some people rich".
It gives you the ability to actually save your money for a future use. If you need liquidity, you can borrow against it to spend money in other endavors.
Nobody wants to bring their coins to their grave, but whatever you spend it on needs to bring more value than this just sitting there, which means you would expect a lot of unprofitable or very low profit investments to go away (ex: empty housing used as real estate investment in Vancouver).
Emeralds are not digital, they are not that fungible, you can't easily divide them, no guarantees on supply, etc, etc.
Also if you look at it historically, it has been the best performing asset in 10 years out of it's 12 year existence which kind of reinforces people's beliefs.
Mayyyybe. I don't think that's why most people are buying it, though. I think it's your last point.
> Also if you look at it historically, it has been the best performing asset in 10 years out of it's 12 year existence which kind of reinforces people's beliefs.
Yeah, this is what gets me. BTC is valuable because BTC is valuable. I don't understand why that loop doesn't unroll, and it breaks my brain a bit. I can't think of anything else that has value _only_ because it has made other people wealthy, and that has so consistently appreciated off of that fact.
The idea that an asset needs _no_ intrinsic value in order to be valuable, or that the intrinsic value may have been defined a long time ago and is now irrelevant to its current value just doesn't compute to me.
If you want to, you could argue that the energy spent in mining the coin is the intrinsic value.
Intrinsic value isn't as important in my opinion, what matters is what other people think and agree on.
It's not a very constructive use of time to criticize how the free market allocates resources. People are going to buy and run basketball teams, Ferraris, bitcoin mining rigs whether you yell at them or not.
If cryptocurrency becomes commonplace, it likely won’t look anything like our current crypto infrastructure. The problem is that this isn’t what all of the current holders want to hear, because they only want people to buy into whatever crypto they personally hold. This makes it difficult to have honest conversations because so many of the participants are biased toward convincing others to buy into their investment while ignoring anything else.