A better comparison would be gold versus Bitcoin, as they’re both similarly decentralized. Just comparing energy consumption between the two probably wouldn’t make sense, though, as gold mining e.g. ruins vast areas of land.
Naturally, a summation of the energy expenditure of all of the related components of the existing fiat system must be included, from the totality of all people operating the various functions that facilitate the existing fiat system; i.e. their commutes, aggregate expenditures due to needing to operate physical banks, power usage at these physical banks, etc. are all factored into this calculation... right? All the way to the minting of new currency (probably almost negligible in the aggregate), to all of the security apparatus that ensure that bills are legitimate, to major parts of the US Secret Service that verify that bills are legitimate (including all of their expenses scaled to the proportion of agents dedicated to this task force)... I honestly don't believe that the electricity usage of BTC is higher than fiat currency operation, in the aggregate.
Please share any sources if you have any information that contradicts this. It's an interesting area of open research + I'm curious if I've missed any publications recently.
Does Bitcoin assess credit risks of governments, companies and people and then extend+manage credit?
What does Bitcoin offer in regards to risk management/hedging for operating businesses?
Maybe Bitcoin has some liquidity management feature for real businesses that I am not aware of?
Bitcoin has very low uptake in payments, so trying to compare its energy consumption to all retail branches and the oil burned by the employees on their commute strikes me as misleading and ignorant
Modern banks and financial institutions are much more than a long list of payments. Please learn a little bit about what a company like Bank of America actually does
It's not misleading at all. It's important to consider that a large group of human operators, using a separately large set of semi automated processes, are a large component of the current energy spend of aggregate financial activity - all those busy worker bees are using energy.
Not really interested in doing some super thorough calculation, hopefully this general outline makes a little bit of sense. I'm just asserting that if we are going to criticize one thing's energy spend, you need to actually define what you are measuring and determine a baseline with respect to what the current thing's energy consumption is, ideally as line items and then sources for each input component.
Looking forward to some sources. (If you are referring to the Argentina article, please just identify that as your source). No need to be antagonistic, we're all friends here.
A lot of that is compliance though. Some (or maybe even most, I'm not in the industry) of that doesn't need to exist for the system to function - the banking system would work just fine without suspicious activity reports. I don't think it's an apples to apples comparison as these checks don't and can't exist in cryptocurrency.
That's just scratching the tip of the iceberg, as mentioned above the traditional financial system provides lots of services that cryptocurrencies can't provide or don't provide at any meaningful scale.
Take a simple thought experiment. Someone makes a transaction with VISA. That requires updating the seller's bank's ledger, the buyer's bank's ledger, and VISA's computer. Let's round that up to a dozen computers who need to know about that transaction. Now consider Bitcoin. Those same three computers need to know about that transaction... and so does everybody else who runs a full node. We haven't considered a picojoule of energy consumed by proof-of-work yet, and Bitcoin has already consumed far more energy than VISA.
So how about that proof-of-work? Well, let's compare a bank's energy consumption. Go to their financial statements, and pick out the line item that includes energy costs. If you're not sure which line item that is, add all of the plausible ones together (and round up, because what's the harm in overestimating here?). I don't know how much they pay for energy, so let's say it's 1¢ per kWh because what's the harm in rounding up? Crunch the numbers, and banks still use far less energy than Bitcoin's proof-of-work, even by our wastrel overestimation numbers. Oops, I forgot to account for the different volumes. Doesn't matter--banks are moving more money on less energy than Bitcoin.
Much of the ancillary functions you want to include to make Bitcoin's energy consumption seem less embarrassing would still exist even if the world magically switched from USD to BTC overnight. The loan officer evaluating how much interest to offer on a mortgage to a first-time home buyer would still be doing exactly the same thing. The loan shark driving to bust someone's kneecaps for not paying back loans on time would still be doing exactly the same thing.
Tangential thought...
I might be mistaken, but how can one even collect on defaulted debt denominated in BTC? I thought that the BTC owner still has to transfer BTC themselves, since only they would know the private keys.
Wouldn't the collector literally have to physically threaten the individual to transfer the BTC back, since it's not like they can get a court to order the bank to do it.
I know that ETH supports smart contracts that could in theory automate the terms of the loan, but then what happens if the debtor goes bankrupt?
What makes you think the court can't order the bank to do it? The court can order you to give some assets up, and if you refuse, they can order your employer to deposit wages directly into creditor's accounts, or the creditor can seize other assets for nonpayment. (For example, some creditors managed to temporarily have an Argentinian Navy ship seized after their default.)
The bank doesn't have the private keys for the wallet
Also, it's important to consider that commercial banks do much more than just keep track of "who owns how much USD". Banks are primarily middle men in the credit markets, and this is not related to establishing people's balance (which is all the Bitcoin network does). If Bitcoin persists then BTC credit markets will also develop, which would be very different from just keeping track of "who owns how much" (which is all the Bitcoin blockchain does).
The largest single asset within the category is bitcoin + the majority of crypto-assets (in market cap terms, in aggregate) are currently PoW based systems (exception of Eth2 if you're just looking at top 5 but the bridge isn't live yet to my knowledge) so it makes sense to take a step back and really try to understand whether we are measuring the same things across both systems - the terms (in a linguistic sense) need to be defined for any serious discussion/analysis can be undertaken. Basically the Fed Reserve system's budget (some % of their budget) + cost of operating basic banking operations across all banks needs to be part of the calculation, at a minimum. Any other terms (in the equation that represents the relative spend across the two systems) could add greater accuracy, but the record keeping seems like the biggest cost that needs to be factored in to accurately reflect the energy consumption differences between the two systems.
Where is it?
Ponder, for a moment, the way in which governments use the "printing" of fiat money to fund wars (for private sector profit, revolving back into that private sector's lobbying those governments for even more war and military spending).
Ponder, for a moment, the amount of energy and Earth's resources expended to materialize these wars and military spending.
Bitcoin (or, the proof-of-work cryptocurrency concept as such) by its design prevents (or at least very severely inhibits) this type of governmental hijacking for a mere fraction of the resources spent.
This applies to other heavily-subsidized sectors/areas/industries with a powerful lobbying influence/revolving doors/etc.
Imagine if we could vote by paying our taxes in Bitcoin (in a Bitcoin full-blown, mainstream Bitcoin economy) in proportion to specific Bitcoin addresses/accounts allocated for specific policy issues or target governmental groups, and thus have an actual, real and direct democracy instead of a 4-year theatre of false puppets and promises.
If you imagine that people wouldn't lend BTC to the US, remember that, when Standard&Poor's reduced America's credit rating, US bonds shot up in price (even though technically they were the one asset that S&P's rating was about the most).
You could say that money printing and counterfeiting are similar things on opposite sides of the law. But that is still a shallow, high-school level understanding. When a con artist pays for things with counterfeit money they don't typically invest this back into the economy and produce more value, so counterfeiting is virtually guaranteed to produce inflation if it is not curtailed.
But governments print money in huge quantities all the time with minimal inflation.
This seems like a novel claim: that bitcoin would reduce world conflict.
They have an extremely detailed explanation and process to determine the footprint of Bitcoin transactions.
Anyways, they also have the numbers for Visa based transactions, which can start to give you an idea how efficient the old system of digital transactions are. Its 980,000+ Visa transactions to equate the energy used for 1 bitcoin transaction.
Apples to oranges. VISA can't do those things, it is a centralized settlement layer for US Dollar transactions. So when we selectively compare the transactions per energy metric, we are conveniently ignoring the fact that VISA is not responsible for securing the stability of the global US Dollar network.
There was an article on HN regarding money laundering in the past week. Lots of people were surprised and denounced how easy it is to launder money... so... with Bitcoin's features making it a beautiful means of money laundering... if it becomes truly adopted as a currency, those features are going to go bye-bye. Stealing bitcoin hasn't been rare either. Search engine of choice look up, "bitcoin stolen". It doesn't really seem that much better that current systems. There's always a way to steal from someone. That xkcd comic on security makes a good joke on it. The best hash doesn't protect you from someone hitting you with a $5 wrench.
So what visa isnt responsible for securing the stability of the dollar? Who in their right mind thinks they are responsible for shit other than skimming off the top when communicating between two banks? Seriously? You think a mainstream bitcoin transaction service is going to be a non-profit? Visa is simply part of the network. If they go down, there are other services that still function. Best part, if all telecom goes down, paper money still works. Crypto doesn't. Anything that affects visa, Mastercard or any other high or low level merchant service, affects crypto too. Generally, crypto is just another merchant service using it's own chucky cheese tokens instead of an multi organization agreed upon one.
Most of the "benefits" are either rare, extremely niche or just brute forcing a wall that just requires stepping around it.
Compare Bitcoin to the energy usage of federal reserve and resources spent on securing the US Dollar (implicit and explicit), because that's what the Bitcoin network does. It secures immutable property via a decentralized, open source protocol.
If you want to compare layer 2 solutions, compare Coinbase or Paypal's internal settlement of Bitcoin transactions to VISA. Those metrics are much more relevant.
You must be living under a rock then, because bitcoin just had a sizable correction last night. Sounds too volitile to protect any savings.
>also to send anonymous donations to causes I support.
Nope. The ledger is public and your transactions can be seen on it basically forever and, with some sleuthing of the ledger by interested parties, you could be deanonymized.
If you invested less than a month ago, you are down. If you invested any other time in the last 10 years than you are up. You might be the one under a rock.
As the old saying goes "Past performance is no guarantee of future results." Bitcoin could get legislated into oblivion causing a massive decrease in the value of your holdings (especially if world governments take climate change seriously, they may see Bitcoin mining as a major threat), a quantum computer could literally "break" into wallets and steal, Satoshi's wallet could suddenly move and expect billions of USD to be extracted out at once.
Too many variables here to suggest that your savings are secure. You're a braver man (or woman) than I would be.
There is a big difference between necessary and inevitable. Crime is inevitable. Is it necessary? I believe a civilisation could exist if the people decided to outlaw money. There are so many other ways to allocate resources: bartering, contracts (which get you asynchronicity), centralised allocation (which can be at a national level, e.g. communism or a local level, like a feudal system), gift economies. All of these have existed and worked for a time.