With a climate crisis the last thing we needed was to make the most effective energy consumption system ever constructed. The whole thing literally works on competing on consuming more energy. No other system works so efficiently towards such goal.
What's scary is that the whole thing was designed to be unstoppable.
My utopian hope for the future is that we start sending rigs in orbit close to the sun. Since we only need to send a few bytes back to earth this becomes the only competitive way of doing mining. Space travel thus becomes dirt cheap. Humans are finally able to explore the solar system.
But that's just a dream. Realistically, we are screwed.
The worst part is that according to Cambridge some 40% of that is coal power [1]. Frequently the dirtiest coal power in the world, between Xinjiang (no longer, probably...) and Kazakhstan. Coal power causes excess mortality of anywhere between 25 and 278 deaths per TWh generated depending on how you're counting it and (most importantly) where it's generated. [2,3,4]
Bitcoin's addiction to dirty coal killed between 1500 and 15000 people last year.
To process 4 transactions per second.
In a few years Bitcoin mining will kill way more people than the number of political dissidents it could hope to save through the magic of decentralization.
[edit] Energy is not free people. Not even renewables. Making electronics isn't free. E-waste isn't free. This isn't WoW.
You really think that China banning bitcoin means they no longer use those dirty coal power plants? For a country that has such a huge demand for power that it's had blackouts and struggled to keep businesses powered even AFTER they banned all bitcoin mining[1]? Maybe that might even have to do with why they banned it in the first place?
It sucks that bitcoin uses so much power, but these countries using fossil fuels would still use them with or without bitcoin mining. We need to keep the pressure up to get these countries (and our own) to convert to 100% green renewable sources.
Right now China has only promised to reduce its fossil fuel to 20% of its total energy use by 2060, which is still 38 years away and way too late. In fact they're planning to keep INCREASING fossil fuel use up through 2030!
"China is targeting a clean energy goal of reducing fossil fuel use to below 20% by 2060, according to an official plan published by state media."
"The cabinet document, released on Sunday, follows a pledge by President Xi Jinping to wean the world’s biggest polluter off coal, with a target of peaking carbon emissions by 2030 and achieving carbon neutrality 30 years later."
There's no bitcoin mining in the country now to use it as a scapegoat either.
> No, but banning the miners meant they didn't have to build a whole pile more.
I wasn't arguing that it was a bad thing that China banned bitcoin mining, just that banning it didn't reduce fossil fuels at all (maybe slowed down how fast they expanded in the future, sure). And they're still planning to build 43 new ones[1] in addition to what they already have.
So now what? Can't ban bitcoin mining in China twice. How are we going to get them to reduce emissions now?
> "Heartbreaking: The Worst Person You Know Just Made A Great Point" - they have the moral high-ground on this issue.
You are neither the worst person I know, nor did you make a great point, nor am I heartbroken. Thanks for the snarky reference to a Clickhole article[2] that's just a slight sidestep from an ad hominem attack.
I also don't know who you mean by "they" or what moral high ground you're referring to. I already said it's shitty bitcoin used this much energy this year, and also what percentage was generated by fossil fuels. But it's not the only reason the world is still using so much fossil fuels, and energy demands around the world have been increasing rapidly even if you take out all of bitcoin's usage. Most of that is driven by economic growth in Asian countries[3], not bitcoin. You want those countries to ban economic growth too? How are we going to do that? Hell, how's anyone going to get the political will to do it in the U.S.?
For the record, I'm all for degrowth worldwide to help reduce the looming climate/biodiversity/water catastrophe, I just don't see how it's going to happen. Pretty sure we're doomed to have a major collapse forced upon us by the world in the next 20-30 years.
> So now what? Can't ban bitcoin mining in China twice. How are we going to get them to reduce emissions now?
Indeed, they have a lot of work ahead of them. I will not disagree. I'm hopeful their huge push towards nuclear power will help them bridge the gap. They are one of the biggest sources of carbon emissions and all sorts of other pollution in the world.
> You are neither the worst person I know, nor did you make a great point, nor am I heartbroken. Thanks for the snarky reference to a Clickhole article[2] that's just a slight sidestep from an ad hominem attack.
I sincerely apologize, but that wasn't directed at you! The heartbreak was mine, and the "worst person you know" was directed at the PRC government. I was implying that while they do not have a particularly stellar track record in the ethics department, in this case, they made a good (TM) choice.
I suspect our positions are closer together than they are far apart.
Fair enough. Sounds like we're mostly on the same page on this issue after all, except I don't want to see bitcoin eliminated, just somehow figure out a way to significantly reduce how much electricity it's started consuming and for it to be run on 100% renewables someday (hopefully sooner than later).
Its energy and resource consumption cap is proportional to its unit price times block reward. For the foreseeable future, as long as number go up, consumption will go up. And this is the most critical time for climate change in our lives. Any green energy we generate must go to displacing carbon-intensive processes or we'll be trading bitcoin for citrus from rafts on waterworld.
The worst part is, once we run out of block reward, there's no guarantee people will be willing to pay enough per transaction to actually secure the network to any meaningful degree, so all this resource consumption today may well be for nothing.
Indeed - from my understanding those power plants, the cheap energy, was cheap and available, in excess, because they're located in areas with little development or use for the energy otherwise.
Or even on a more basic level - it's like you see someone who's left the water running in their bathtub, and the water is flowing over the sides, through the floorboards and down the stairs, and they come back with:
"You don't think we were using lots of water in this house before I decided to take a bath today?"
I was just being glib - but in an ideal world that number should be 0. Any political dissidents that are willing to write their entire transaction history in plaintext on a slow, small public ledger are going to end up in political prison in a hot minute. They're just waiting for automated tooling to file a report with the secret police.
Bitcoin is not the tool you should be using for that. It's just poor opsec.
Edit: I don't have direct evidence of saving lives (e.g. somebody bribed a guard with bitcoin in order to escape execution), but it's not hard to argue that these resistance organizations do save lives.
There are no new dirty power plants like coal or nuclear built specifically for bitcoin mining.
There are definitely new renewable energy sources built for bitcoin mining. So dirty energy would be used anyway!
The rate of new renewable energy sources created because of bitcoin is higher overall than without bitcoin.
Source? To what extent has this been quantified? Of course there's some anecdotes that someone puts a couple of solar panels on a mining cluster, but for all the numbers I've seen around this, it's lipstick on a pig. The climate balance of the thing is horrific.
It does of course cost far less energy to extract than it produces. It’s extraordinarily energy dense. It only takes 19,000T give or take per year to produce 20% of US energy. The US alone consumes 731,000,000T of coal per year (40,000X).
With breeder reactors we can cut that down by several hundred times - it’s just that uranium is quite abundant and very energy dense so we haven't really bothered to.
Further there’s a few billion tons in the ocean we’re working on extracting.
If we’re willing to accept extracting rare earth metals from Mongolian hellscapes like Baitou and calling wind green, it’s pretty disingenuous not to extend the same treatment to nuclear. [1] There is no free lunch.
Nitpick: the place is apparently the city of Baotou 包头市; pinyin: Bāotóu; Mongolian: Buɣutu qota, not Baitou; source: linked article, https://en.wikipedia.org/wiki/Baotou
An unfortunate accident, and basically the worst case scenario for that reactor design. Not to mention there was an earthquake and a tsunami.
And the fact that the current death toll stands at 1 (likely to increase though) and Fukushima is perfectly habitable now (and has been for a while now). Almost 20000 people died due to the earthquake and tsunami. Only 1 due to the nuclear disaster.
Fukushima disaster should be a footnote in history. It’s not a valid representation of safety of nuclear power.
As a European, I’m far more concerned about the dependence on Russian natural gas (Germany completely abandoning nuclear; Nordstream 2) than I am about a reactor blowing up.
> What's scary is that the whole thing was designed to be unstoppable.
It’s only unstoppable within the game theoretic model of crypto itself, not within the larger societal context. Once Bitcoin power consumption enters the common discourse, my guess is that politicians will step in and simply outlaw PoW systems. There is no real downside for politicians. The average voter hasn’t yet invested their life savings into Bitcoin, and once PoS systems exist at scale proponents can’t use the innovation argument anymore. Especially in Europe, politicians are serious about climate and are pondering much more draconian changes than outlawing some forms of crypto.
Tragedy of the commons is often due to ineffective or free pricing of government regulated items. Parks look free and become an appealing place to make homeless encampments. The free market with enforceable property rights fixes this government problem.
If you don't like that people run computers to play games or wash laundry or watch videos or hash strings, re-pricing electricity fixes that. Germans are experiencing this experiment with increasing electricity prices right now.
Arguably, not all of those consumptions are equal. I'd compare that to paying a supermarket tax because it sells alcohol and alcohol is bad for the health.
> Once Bitcoin power consumption enters the common discourse, my guess is that politicians will step in and simply outlaw PoW systems. There is no real downside for politicians.
Will we? I am not convinced. In the pandemic, many countries weren't even able to efficiently mandate masks or vaccines, despite the fact the majority supported these measures. The libertarian-anarchy minority is very loud, and will fight the right to Bitcoin tooth and nail.
Not everywhere, and likely not in America. In Europe it’s not as unthinkable. Climate regulations are having real impact on people’s lives, and yet there is support for them. Spun by the right politician as a ‘free’ savings of XX megatons of carbon, outlawing PoW would be an easy sell. And with a massive bloc like Europe not participating in a certain crypto will definitely reduce the global attractiveness of that crypto.
I don’t have a crystal ball and of course I can’t say this will definitely happen. But I think it’s plausible.
Mask regulations in the parts of Europe that I’m familiar with were largely followed.
I have a son who is just about 10 years old, and he’s getting to the age where he’s beginning to realize how irrational our world is.
We recently had a conversation discussing the fact that we could eradicate hunger and the need for clean water globally, but for a whole host of reasons we have not yet done it.
He continues to probe “why“ and all I can say is, essentially, because people are greedy and unmotivated generally, and unwilling to sacrifice a modicum for others (not to mention corruption and other collective action problems).
> We recently had a conversation discussing the fact that we could eradicate hunger and the need for clean water globally, but for a whole host of reasons we have not yet done it.
It depends at what level you mean ‘could.’ Yes, agro-technically we can produce enough food to feed everyone. The issue with world hunger is mostly due to non democratic governments preferring power over feeding their people. At that level, the ‘could’ becomes difficult and maybe impossible.
I think the real answer is that human nature has a dark side that, unless kept in balance by a culture of accountability, will cause harm to others.
A related realization is that, I think, cultures of accountability can be traced back to just luck and a small number of enlightened people that set things up in the past at the right time in the right place. So let’s not pretend things will always get better automatically, and, for those who enjoy freedom under a democratic government, let’s make an effort to cherish and invest in our culture, starting with educating our kids how special this really is.
No, the first post implies that the problem is that [the West] is too greedy, and the second post implies that even if [the West] were generous by any measure, it still wouldn't fix the problem.
Just think about it. The lay man definition of rent seeking is making a profit without putting any effort (i.e. letting someone else carry the burden of earning the profit). Who doesn't want to earn a profit from doing absolutely nothing?
All you need to do is tax the rent seeking and it goes away. The reason why that hasn't been done is that those who would be impacted have good connections with elected politicians. The most humble example is a homeowner who is involved in local politics at the expense of the renter.
I agree with your sentiment but I have to disagree with that phrase. The vast majority* of people of people pay quite a lot of money in taxes, which ostensibly** only exist to help others.
(*) I know the billionaires have their wealth as unrealized gains; I chose my words carefully
(**) I know we all disagree on how that revenue should be spent, but the purpose of taxation is all the same
>(*) I know we all disagree on how that revenue should be spent, but the purpose of taxation is all the same
The purpose of income tax is to avoid taxing land. You're basically paying taxes twice. Once to the government and again to the owner of the land who is making a profit off the services your government has provided via income taxes.
Also, almost all welfare systems are designed to make poverty sustainable, which is why simply getting rid of them solves nothing, they are just a symptom of an unequal society that wants to keep it that way. Getting people back to work is a more effective way to reduce welfare than cutting welfare spending.
E.g. farmers get paid by welfare recipients, cutting welfare may end up costing farmers a job that is absolutely necessary to society so farm subsidies are increased to maintain food security. If people get a job they still need to eat, so getting rid of the farmer and all the other people that are getting paid via the welfare recipient is nonsense.
> I know the billionaires have their wealth as unrealized gains; I chose my words carefully
That they use as collateral to get loans from banks that actually have that money. "Billionaires don't actually have that money" is peak bootlicker logic.
No, the banks don't actually have the money. Banks are regulated and licensed to print money based on undercollateralized loans.
A house mortgage with 20% down is designed to be undercollateralized.
When the regulators and debt rating agencies don't do their jobs, it is easily apparent those loans were not fully collateralized. Therefore, the loans created money out of thin air. The banks are licensed to print money.
It doesn't matter if what your bank gives you isn't paper money. That's not the point. The point is, you go to the bank, you can buy absolutely anything you want with your loaned money, even if it's just a line in a database called fake_money_literally_just_printed.
If you give food to poor areas for free then their farmers go out of business, the area becomes more poor, and they become dependent on aid. Breaking systems always has consequences. It’s not easy.
Yes, USA corn subsidies are obscene and often encourage over-use of fertilizers and pesticides. Governments should stop manipulating price signals.
If government was moderately okay at setting prices and production, there would not have been starvation of tens of millions under Mao's rule. If government manipulation of production worked, today North Korea would be the bread basket of the world.
I absolutely can't say whether current subsidies are too high or too low or just at the right level for that purpose, but at least to a certain extent the subsidies and the resultant overproduction are intentional as a safeguard against harvest failures, because you really really don't want to end up with a famine as soon as you get an only even just marginally worse harvest.
It's the same issue we're now running into with renewable electricity production: You either need lots of storage, and for what you cannot store you need to significantly overbuild your production capacity.
Then the rich countries cannot dump their chronic surpluses on the international markets and kill the local markets of developing countries for small-scale farmers.
Oversimplified beyond the point of usefulness. The effects of reducing farmer subsidies are enormous and far more wide reaching than dumping implications in developing countries.
The original question was why can’t we just feed everyone.
Adam smith wrote a short philosophy book about this back in the day about this very topic. (something like: what is worse: stubbing your toe, or a natural disaster somewhere remote which kills thousands but doesn’t affect you personally).
I wouldn’t say it’s “the answer” but it is “a candidate answer”
I'm quite fond of the YouTube channel Kurzgesagt which has deep videos that are targeted at a "you don't need to be an expert in the subject to understand."
you are speaking in a fictional "we" .. the wealthiest economies are built on pure selfish action, and grew like ivy in the garden in the last 500 years of expansion. Meanwhile, plenty of other cultures teach their children to compete with others based on language, "tribal" affiliation, other reasons.. You are trying to explain half of a world-view, and your ten year old easily finds the dissonance in that.
source: a person raised in the fictional "we" whose neighbors were not
One day a swarm of self replicating probes will turn up and start building a Dyson sphere around our sun. The purpose is to power the alien equivalent of Bitcoin mining.
Another storyline I came up with is this: Imagine that an alien civilisation has the ability to send electromagnetic signals faster than light by some mechanism such as a micro wormhole but not ships and such.
They still want to destroy other civilisations before they become a threat. They are able to connect to some unsecured wifi networks and start posting on forums. The username: Satoshi Nakamoto
Consider a Blockchain where proof-of-work mining takes place by solving a hard problem: for a given set of parameters, determine how long life will last in a realistic ancestor simulation. Consider also a play-to-earn game in the form of a realistic ancestor simulation where players grind menial portions of the game and sell the artifacts of their progress in a market backed by the aforementioned Blockchain. With apologies to Bostrom, we must accept exactly one of these as true:
- that this is not technologically possible with current or future tech
- no one would possibly do something this stupid
- it is nearly 100% certain that our universe exists in someone's hair-brained web3 Ponzi scheme
Wow this is so weird, I've had this exact same idea before! I don't know if you're familiar with Dark Forest strikes from the Dark Forest book, but in the book, or the one after that, aliens use bombs that slow the speed of light in the space of single solar systems, to prevent civilizations from becoming threats. Always thought it would be funny if actual dark forest strikes were just the bitcoin whitepaper and bitcoin/crypto eventually use up all available resources before civilization can become a problem lol. Hope someone makes this an actual story someday.
Considering Humanity's capacity and even drive for destruction (entropy incarnate, that's us), by having handed us this concept they will have certainly accelerated the destruction of potentially hostile civilisations... but also their own, the rest of the universe, and whatever surrounds it.
> Welcome to decade eight, third millennium, when the effects of the phase-change in the structure of the solar system are finally becoming visible on a cosmological scale.
> There are about eleven billion future-shocked primates in various states of life and undeath throughout the solar system. Most of them cluster where the interpersonal bandwidth is hottest, down in the water zone around old Earth. Earth's biosphere has been in the intensive care ward for decades, weird rashes of hot-burning replicators erupting across it before the World Health Organization can fix them – gray goo, thylacines, dragons. The last great transglobal trade empire, run from the arcologies of Hong Kong, has collapsed along with capitalism, rendered obsolete by a bunch of superior deterministic resource allocation algorithms collectively known as Economics 2.0. Mercury, Venus, Mars, and Luna are all well on the way to disintegration, mass pumped into orbit with energy stolen from the haze of free-flying thermoelectrics that cluster so thickly around the solar poles that the sun resembles a fuzzy red ball of wool the size of a young red giant.
>My utopian hope for the future is that we start sending rigs in orbit close to the sun
... Thats your utopia? How about we figure out a way to store/transfer wealth which doesnt need to perform arbitrary calculations and cause massive power consumption
Does heat dissipate well in vacuum? Won't having it so close to the sun result in more heat? I guess the only way to dissipate so much heat would be via radiation. Outer space seems to be really really cold so that might help.
The 16-minute round-trip delay would wipe out any energy benefits, for bitcoin. Maybe you could come up with a consensus mechanism which allows people to somehow amortize recent calculations, though.
>My utopian hope for the future is that we start sending rigs in orbit close to the sun.
My utopian idea is crypto fund with the sole purpose of hiring assassins and special operations squads to eliminate biggest mining data centers and holders. Every successful hit would inflate its own holdings thus fund further raids.
> The whole thing literally works on competing on consuming more energy.
I know this is pedantic, but the competition is about computational power. Energy is a significant input. Let’s not ignore the benefit that the more computational power that is spent in the competition the more secure the blockchain is from 51% attacks. Maybe 134 TWh is too high of a price for such a limited use technology such as bitcoin. Maybe we could do the same or more with the less energy intensive PoS technology that ETH 2.0 will bring to the mainstream. Blockchain is the single largest threat to banking, and that doesn’t come without a price.
> Blockchain is the single largest threat to banking, and that doesn’t come without a price.
That's an interesting statement. The first question that occurred to me was: Why does banking have to be threatened? In other words, is this a solution looking for a problem?
I feel like lots of people forgot about 2007/08 and the impact on so many people around the world. It was truly painful and destructive. And very clearly people responsible got off free, with bonuses and some even ended up with jobs in the treasury.
A lot of people I know working in crypto saw their families hurt badly by that crises and will happily spend their lives trying to build something else (even if the odds are stacked against them). They protested at OWS and saw little political will for change.
Eventually we are left with the question: Do we just sit around voting every few years for another colour to be in charge, or do we try build something else, maybe it’ll work, maybe not, failure is ok we already live in a failed state, maybe all we need to do is threaten the existing political/financial institutions so that they do things differently or risk irrelevance. Who know. Trends and forces.
Much of the 2007/8 crisis was caused by derivatives and other margined (leveraged) financial contracts between banks and other institutions
meaning there were huge liabilities that were not well understood, or even understandable (no global ledger or database, public or not). When the crisis hit, no one knew how exposed anyone else was and thus nobody wanted to extend credit to anyone else, margin requirements went up, and margin calls got more urgent.
Given time, things were nowhere near as bad as you could have been forgiven for thinking at the height of it. But the risk created by the fact nobody knew that caused the credit “crunch” and liquidity to dry up, and while banks were bailed out and recovered, the downstream impacts were horrendous.
That scenario simply isn’t possible even with the craziest, risky-as-shit defi protocols. You can see how much is at risk in every contract for every address, reports could be built automatically, and the risk is defined by the code, there is no ISDA agreement or OTC contract that might cause someone to come along and say you actually owe a bunch more money than you put at risk, and every cent (or satoshi, or whatever) of collateral is accounted for.
So it’d have helped a lot. Albeit the whole financial system would look quite different to how it does today (that’s the goal!).
Also, although the general principles are good and the primitives are increasingly in place, the protocols (financial products) in defi are mostly still “toys” and not, for the most part, ready to replace the current system. There is no technical reason why they can’t though, and progress in that direction is happening even if a lot of defi doesn’t make it look that way.
I’m not an economist or banker. Other people will have better answers. I’m sure there’s a lot of excellent stuff we can use in existing systems. But I just don’t hold it as a precious untouchable thing. People tell me they are scared crypto is dangerous, but we’ve already been badly hurt by the current system I’m not gonna apologise for trying something else.
I think a key idea to pursue is how we could provide privacy for individuals and transparency for institutions/corporations.
And I think it’s important to try ideas. Try something, anything. Accept that most things will fail, that 90% will be shit. Break things, take things apart and rebuild them, remake old ideas anew. Take the same energy i have to getting mods to run in a game, or monitoring the rain in my garden and doing it to money and banking and lending, community currencies, universal basic income, trust networks, etc.
That’s not to say don’t be critical, there is a lot to question and weird speculation(imo a result of the abusive financial system we live in, it didn’t just appear with crypto) but hackernews could do with more hacker mentality on crypto imo. It’s a massive design space for people to try out their ideas for money and debt and gift giving and public services and taxes and where digital worlds and communities meet real world politics and institutions and economies.
I’d like it if my bank was hentai death metal themed not hsbc blandness. And that I can build my own savings account logic on top of it that automatically sends half the profit to animal charities. I’d like to be able to spin up an instant bank account for my new guild of strangers around the world at the click of a button so we can share materials and grow together. I’d like my money to be pictures of dogs not pictures of a president or queen.
I don’t think these ideas are silly, dangerous, or impractical. And it doesn’t require the permissions of tradfi. Just public and private keys. Wild.
It wouldn’t have. CoinBros don’t understand that IOUs (debt) have existed across human history and will likely continue to exist. And that most economic activity is done through debt.
Once a set of “trusted” actors can issue debt, you have monetary expansion.
In Crypto, we have Coinbase, Binance and Tether - the defacto crypto banks. They have the ability to expand the crypto money supply and promise IOUs multiples in excess of their true deposits.
Coinbase, Binance, Tether are a problem to decentralization. They are far more centralized than the fiat alternative. Imagine if the stock exchanges, brokerages, payment processor, private and commercial banks were all controlled by one or two companies.
The success of these centralized exchanges ought to give anyone pause with regards to how truly decentralization crypto really is.
Regardless, defi exchange won’t stop monetary expansion. People with a currency will want to gain a return on those currencies, since they don’t do anything productive sitting in a wallet. Therefore, banks would emerge with deposit accounts who would then lend out loans in excess of deposits. I don’t see a defi way of doing that which would replace institutional banking, because individuals and algorithms are not equipped or financed to analyze the lending risks, fraud, take legal actions, etc..
If you do want to learn how this works with defi, look at DAI and those loans which are based on overcollateralization and incentives for people to hunt for and liquidate others who don't have enough collateralization.
2008 was caused by starting with undercollateralized loans enabled in part by fake rating agency ratings, and failure of regulators to regulate. That system failed and the backstop FDIC can only write checks up to around a 3% failure.
The stablecoin tether is a great example of how cryptocurrencies do not solve this problem. Tether claims to have a 1:1 dollar backing for its token and yet investigation after investigation found absolutely nothing backing their coins. Tether is the most popular stablecoin out there and has a "market cap" of 78 billion [0]. This proves that whatever issues the current banking system has, cryptocurrency has them much worse.
Not sure how that proves CEFI is good. If you like tether you can use it. I don't.
USDP appears to be the most sound, with USDC after that. You may use any of those or none of those or make your own. You are free to choose. Your body, your choice.
> I feel like lots of people forgot about 2007/08 and the impact on so many people around the world.
To be clear, banks did not cause the 2008 economic implosion. If you run through root cause analysis, what comes out on top as the trigger event for the avalanche was US politicians distorting markets through legal action that enabled giving mortgages to people who would have never been able to buy a home otherwise. Sounds altruistic, yet, in reality, it ended-up being a destructive force. I remember a documentary where they interviewed various people who bought homes around that time. This one woman worked at McDonalds, essentially made minimum wage and was able to buy a $500K home due to laws that allowed such distortions as "no docs" loans with full federal guarantees.
That and other legal components that eventually resulted in the creation of derivatives where banks could package small fractions of thousands of mortgages into investment vehicles. The game, then, was to write mortgages, slice, dice and package them into CDO's and sell them as quickly as possible at a profit.
Sure, one could blame banks and investment firms for this. No doubt. However, I think the important element to understand here is that, if the government tells you that, not only it is legal to do these things, but they actually want you to --because they want everyone to own a home-- well, what do you do?
Not a good analogy, but, on our roads we have speed limits set by government action. Around where I live it's 65 miles per hour. People drive anywhere between 60 and 80. Lots of people (most?) drive well above the limit. In other words, there's an argument that says it is human nature to push things a bit. Absent enforcement, some people would drive 100+ on a regular basis.
The genesis of the 2008 crisis is related to the removal of financial speed limit signs by government. Not only that, they also effectively said "we want you to drive at speeds we all know are dangerous and irresponsible". Politicians got votes when people were happy because they could buy homes. When the house of cards they created collapsed, we all ended-up paying for it.
I don't blame banks. There is no way in hell 2008 would have happened --no way-- without government removing the speed limit signs. This business of buying votes with handouts has destroyed many countries. The 2008 economic implosion was just one example of this. Latin America and other nations have lots of examples in their history of governments using money and economic policy to buy short-term happiness from the masses in exchange for votes...only to drop them on their heads after the fact.
The fundamental problem is the belief that money is a thing that can be owned and stored when in reality it is just a relationship or a contractual agreement among humans.
The fact that you can own cash and get a guaranteed 0% interest rate even though nobody has signed that contract. E.g. nobody promised that you will get exactly $1 of value in the future. The 2% inflation target is just an expression that this idea is flawed from the start. Think about it this way. The inflation target reduces the effective interest rate that cash holders can demand without anyone agreeing to them receiving 0% interest.
What I am getting at is the fact that everyone, including the economists, assumes that money should be nominally durable. Money is not durable in real terms. It's a market distorting fallacy.
If we assume a barter economy with the option of having money denominated loans but no way to "own" money via cash then interest rates would be dictated by supply and demand and nobody would find it strange that interest rates could be negative when there is an oversupply of grains as the excess grains start spoiling and a negative interest rate could still be more profitable than the spoilage of grains. It's only once you introduce cash, that people perceive the right to pass the cost of spoilage onto everyone else as god given.
Now lets go back to how the modern money system actually works. You go to a bank and you basically promise payment (e.g. through work which ultimately boils down to your time) known as debt to the bank. The bank grants liquid credit which is basically a divisible claim to the debt and thereby a claim to your time. So money is an accounting system for abstract time/labor units.
Well, the unemployed still need to eat and they still need a place to live in. If we are going to be very cold hearted we can call these the storage costs of labor. If you don't pay them, your labor is gone (person is dead). Money lets you pretend that this is someone else's problem, e.g. the government is supposed to take care of the labor (welfare) that you haven't decided to utilize and keep maintaining it.
It's only logical that your money becomes worth less over time (if you assume it is durable). Keeping something in pristine condition requires an external energy input.
Okay, now onto the actual point I am trying to make. The assumption that human needs are endless is wrong, it was only true on a societal level because of endless population growth that is massively slowing doing. Human needs are no longer growing as fast as they used to. There are very few growth opportunities left that let you paper over the inability to express negative interest rates. This also means that the need for investment is going down significantly. Markets are starting to become saturated. Almost nobody but the government is borrowing anymore and this borrowing is meant to raise the interest rate above zero through fiscal stimulus.
If you are a company and you expand production in this environment, then your additional capacity will not earn a profit and even currently unused production capacity is becoming a drag to the economy as it requires staffing and periodic maintenance. Strictly speaking, there is more financial capital in the economy than there are investment opportunities. If saving and investment are balanced, then interest rates must be at 0%. If there is excess saving then the interest rate must go down (even below zero) to encourage people to pay off their debt and get rid of excess capital as the interest on loans slowly approaches 0%.
So there was this final last ditch attempt. Corporations and the rich became net lenders and they simply lent to (risky) households who were buying homes. Bankers noticed some regulatory loopholes and stopped caring about who they are lending to. After all, they are being flooded with money.
A -6% negative interest rate on cash would basically make QE irrelevant and allow price level targeting i.e. perfect price stability with zero inflation.
Because liquid money is now freely circulating there is no risk of deflation which means governments can pay off their debts to reduce the supply of money which stops inflation. Unemployment would be very low as the cost of financing in a saturated market becomes 0% and no longer acts as a profitability gate that keeps people unemployed (e.g. growth dependence is gone). I am optimistic enough to believe that any further productivity growth would simply reduce people's working hours rather than keep them unemployed.
Also, if long term interest rates are near 0% then short term interest rates (e.g. on cash and deposits) must be negative to maintain a steep yield curve. Even if all you believe in is a 0% interest rate on loans you'll still need negative interest on cash to encourage people to lend their money out for a longer duration (certificate of deposit). When you think about it, a bank is using your short term deposits to stay liquid, while writing loans that can last many years. You can, without notice, pull out your deposits and the bank is then basically stuck being insolvent for the duration of those loans. That is what threatened banks in 2008 and this is why we did the bailsouts and are still doing QE. To pretend the damn banks are solvent when they aren't. They are being flooded with an endless amount of short term deposits that can disappear at any time.
I know the only attempt at demurrage went so well that they shut it down after not to long, but what do you think this would have an effect on assets over time? Would the demurrage keep the money supply in check long-term? Would people still do what they do now and take out loans to buy assets? I fear that Cantillion Effects would lead to the same cycles we see today. Is your stance that there should never be an interest rate above 0%? Going to have to think more about this, but my gut is thinking is you don't need demurrage except to fix the system we're currently in, in which case it does a great job. But once it's fixed holding cash would go back to 0%.
> It's only logical that your money becomes worth less over time (if you assume it is durable). Keeping something in pristine condition requires an external energy input.
If there was one thing that was going to be durable, it should be financial in nature. I'd much rather see people hoarding cash than houses. PoW coins on the other hand, totally agree with you here. So I suppose I think the demurrage would be based on the upkeep required, and typical currency upkeep is small while PoW is large.
Yes there are lots of problems with banking. Cryptocurrency does have a reason to exist, though of course we went and fucked it all up. It can help ordinary people outmaneuver oppressive regimes. It can perform that same core functions that banks can (i.e. keeping track of and moving around money) in a public and distributed way. The banking industry (often metonymically known as "Wall Street") is literally the canonical example of greed. There are problems with banking. In a better world, crypto can distribute the power of money. But, since it's a technology born within the system, it is instead used as a way of amassing value, and in the end only making the rich richer.
I saw a great, pithy tweet recently, and I won’t do it justice, but I’ll give it a shot.
Crypto, and Blockchain, are like little fiefdoms that are being created, and the people who create them, and in the process mine the first couple million blocks, will be the Lords.
As you say, the rich getting richer. And doing it all by hijacking this message of the “little guys” banding together against the establishment.
Certainly bitcoin is designed that way, and it’s one of a few reasons why although BTC has a good chance of succeeding as “digital gold”, it has almost no chance of being a general purpose currency. Other chains and tokens have they problem, too, to a great or lesser extent.
However that is an implementation decision for each individual project, mostly around how supply is distributed and redistributed, and the inflationary mechanics of the asset. These can be innovated on by forking the original. They are also changeable (technically even in bitcoin, though in reality it seems unlikely), with the risk of forks acting as pressure to make beneficial changes.
What I’m saying here is that it is possible and even desirable to design a cryptocurrency which doesn’t work that way, either from the start or perhaps via an “exit to the community” that over time devalues the stakes of founders and early investors and prioritises the users and value creators within the network.
There are lots of mechanics that can be used for this, and most experiments so far have been limited or naive but I expect to and we need to see more of this if cryptocurrencies etc. are to succeed.
I keep reading versions of this assertion and have yet to read anyone publish a clear list of these "lots" of problems. I am trying to understand. So far, I don't.
In other words, so far I still think crypto is a solution looking for a problem.
Even worse, to me it feels like early entrants and those with millions to throw at crypto made out like bandits and everyone else is in the grips of a Ponzi scheme that will end badly at some point. I could be wrong, of course, I just know too many people who jumped in and got hurt.
In theory, using Bitcoin as payment infrastructure is perfectly legitimate. However, the store of value myth is what everyone believes in and it is what is driving the popularity of Bitcoin. It's not very logical. No, you haven't invented the financial equivalent of the perpetuum mobile. Someone must work hard for all those gains or they disappear into thin air.
This is really more of a political question than a technical one. To me it’s hard to separate modern cryptocurrency from the historical context of it’s launch in 2009.
> Perhaps you deem this a stupid question? Not sure from your comment. Still, we have to be able to ask stupid questions or we don't learn.
Ok I agree here.
> Well, what is it then?
Banks connected to the political/government controlled currencies tend toward corruption. Banks are part of corruptible scheme. Humans are too greedy with the power of money control.
Can you give examples of this in modern first world economies? I am sure there are plenty of examples of banking issues and corruption in third world countries. I am interested in understanding your conclusion that banks tend towards corruption. In other words, it seems you are saying that all banking asymptotically (and inevitably?) end up on the corrupt side of the equation. Not sure I know how to identify that or point out examples myself. Can you help with this?
History just shows that the insanity of not being able to represent a saturated market (negative interest) with your money system leads to war where people try to get rid of market saturation.
The broken window fallacy is an answer to getting positive interest in an economy that isn't growing. They are both equally illogical and for the same reason.
The idea of a god given right to 0% interest is the reason why currencies collapse and Bitcoin is sharing that flaw instead of getting rid of it.
I don't really see how cryptocurrency is supposed to be a threat to banking. You can still implement banking on top of cryptocurrency. You know, through loans.
Of course there is the caveat nobody is insane enough to agree to Bitcoin denominated debt. Dogecoin might work though.
Energy isn't scarce, its actually abundant. At this particular moment, clean renewable energy capacity is more scarce than fossil fuel, but there is simply far more potential energy in solar, wind, nuclear, etc. Remember, our planet is bombarded by solar rays 24/7 and will continue to receive this energy for billions of years.
Human energy consumption has been exponential over time. We started by harvesting crops with our hands; then we we figured how to attach a plow to an ox, which increased our productivity, but required us to house, feed, and maintain the ox (energy). We figured out engines, electricity, interconnected computers, low earth orbit satellites; all requiring increased energy expenditure, but increasing our collective well-being and productivity.
Rather than scapegoat Bitcoin for our climate crisis, start by addressing: 1) externalities are not captured by fossil fuel prices (you need a carbon tax for that, to fund research and to de-incentivize fossil fuel consumption), and 2) governments actively subsidize fossil fuel industries.
Do those things, and Bitcoin will literally subsidize and accelerate clean energy infrastructure investment.
y'all need to accept that PoW is a terrible, ghastly thing. I've even heard a theory that Satoshi didn't like it but published Bitcoin as is because he couldn't find a suitable alternative.
if you find a way to make PoS viable and secure, you'll have saved the planet. work on that.
I have no notion of what metaphor you are referring to.
In real life, POW is a waste of electricity that produces nothing external to
proving that CPU cycles were wasted, with an ever-increasing difficulty in the case of Bitcoin (getting worse with time, on purpose)
Not a metaphor. The general theory of relativity is proof of work, so is a bridge. Being too big to fail is an example of proof of stake in a system and how it can be gamed.
> an ever-increasing difficulty in the case of Bitcoin (getting worse with time, on purpose)
This is not how Bitcoin's difficulty adjustment works. It increases/decreases with the value of the block reward. This is proportional to the value of bitcoin, transaction fees paid, and decreasing new bitcoin issuance. Bitcoin users pay miners for their PoW because they find the value of using such a system to be worth the cost.
> Rather than scapegoat Bitcoin for our climate crisis, start by...
I too enjoy whataboutism to distract folks from the environmental impact of my favorite Ponzi scheme.
> Do those things, and Bitcoin will literally subsidize and accelerate clean energy infrastructure investment.
If you invest in massive solar and wind plants then use that energy to roll rocks up and back down a hill forever like Sisyphus, that's just more waste. Different waste, but more waste. Any energy you spend rock-rolling is failing to de-carbonize the existing grid.
Bitcoin isn't incentivized to chase renewables. It's incentivized to find the cheapest power it can get its hands on anywhere on earth and then waste it. That's why PE firms are re-opening fossil fuel plants to mine with.
> > Do those things, and Bitcoin will literally subsidize and accelerate clean energy infrastructure investment.
> If you invest in massive solar and wind plants then use that energy to roll rocks up and back down a hill forever like Sisyphus, that's just more waste.
Yeah this is what I don't get from the PoW-is-actually-a-good-thing camp. Presumably if Bitcoin were to incentivize the production of clean energy it would be by using it to mine bitcoin. And even if it makes it cheaper to produce due to economies of scale or whatever, that would just translate into increased mining profits. Bitcoin is an uncapped demand on energy that will soak up all energy production up to a certain price (based on the value of bitcoin) so I don't think it can possibly be net positive for energy production/use.
> Bitcoin isn't incentivized to chase renewables. It's incentivized to find the cheapest power it can get its hands on anywhere on earth and then waste it.
And now renewable energy is the cheapest source of power as of 2020[1].
You do have a point on how there's still emissions generated in the building of wind and solar plants, though, but building wind and solar plants is still our best solution to our electrical emissions other than asking everyone around the world if they would kindly stop using electricity.
"Almost two-thirds of wind & solar projects built globally last year will be able to generate cheaper electricity than even the world’s cheapest new coal plants, according to a NEW report from IRENA"
I mean, ok, you could make that argument about literally anything. It's a tautology. Thing has value to people who value it because people value it. Neat.
It's intrinsic value is zero. It's economic value is negative, because it's a Ponzi scheme. [1]
All money that enters into circulation via fractional reserve lending is backed by demand for that same money, and enforced by the legal system. The repayment of the issuing loan. That’s where it’s value comes from.
Unlike bitcoin fiat operates on a pull model - demand driven. It doesn’t start by creating supply and having people shill it.
Fiat required trade to be based on gold first, a peg which was then broken.
Central banks can create infinite units arbitrarily. "Enforced by the legal system" perhaps means controlled by the FOMC, a dozen central bankers who make decisions behind close doors, nominated and chosen by congress I believe.
>Central banks can create infinite units arbitrarily.
They literally cannot. Central bank reserves aren't money in the sense of legal tender. Only borrowers can "create" money and they create an equal debt in the process which means all money in existence will have to disappear one day. Money has zero value throughout the entire process, the provider of value is the borrower, human being made out of flesh and blood.
It's like matter and anti matter that balance each other out.
Yeah, and? That comes with consequences. If the creditworthiness of the US is not maintained internationally (i.e. by inflating the currency to evade insolvency) then it will lose its reserve status as significant global clout and domestic welfare. The risk of the US doing that is reflected in its credit rating which is reflected in the interest rate the US has to pay on its bonds. The interest rate is the compensation to bondholders for the risk of default.
Ditto the core team raising the supply cap.
Ditto the US initiating a nuclear missile strike on Iowa.
That was my rebuttal to the response that central banks can't create infinite money.
You agree they can service an unlimited amount of debt (with consequences), but you refuted that they can create unlimited money. But they're the same operation.
I do not. Under the current model, it can't really happen. However Congress could change the model to make it happen. I was just entertaining your hypothetical.
> Fiat required trade to be based on gold first, a peg which was then broken.
Fiat is by definition not based on gold.
The term is [...] usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver. [1]
What you are describing is the switch from commodity money (gold standard) to fiat, an objectively better system for many reasons. This happened in 1933 under FDR in the United States, not under Nixon as many of the tinfoil hat crew are wont to say.
What you're describing is at most - at most - a default on the government's obligations 89 years ago. Not a Ponzi scheme lol. Everything folks are suspicious of is a Ponzi scheme these days.
> Central banks can create infinite units arbitrarily.
Central banks do not create money. They at most indirectly affect the money supply via adjustment of interest rates and reserve requirements. [2] However their mandate under which they operate is to maintain low, predictable medium-term inflation targets and maximize employment.
This is like saying "well, actually, the Bitcoin core team can adjust the 21M coin limit up to an arbitrary value!" They could, technically, but there's a ton of reasons they won't.
> "Enforced by the legal system" perhaps means controlled by the FOMC.
No it does not. When you borrow money from a retail bank, say to purchase a house, they create new money that enters the system, paired with a negative balance on their books. The new money is backed by the demand of the issuer to re-pay that loan. As the loan is re-paid the new money is destroyed and leaves the system. The legal system enforces payments in these contracts.
> ...a dozen central bankers who make decisions behind close doors, nominated and chosen by congress I believe.
They are nominated by the president and appointed by congress. The Federal Reserve is an independent organization explicitly to separate capricious fiscal policy from the kind of stable monetary policy necessary for businesses to plan into the future.
They were created by an act of congress and can be repealed by act of congress. They act on behalf of the American people and are accountable to the American people. All decisions are published and documented along with full audits. Like the post office.
There's nothing more sinister or shady about the Fed than there is about the USPS.
As imtringued also pointed out to you, the central bank in no uncertain terms cannot create money.
QE is not carried out by creating money. It's carried out by creating bank reserves and exchanging them for assets at primary dealers, increasing liquidity. That article you linked elides a number of key intermediate steps. QE indirectly increases the money supply as I explained to you. Not directly as you seem to continue to imply. [1]
If the fed wants to buy $100b of assets tomorrow, it can do so, despite not having that money. The interbank mechanics are unimportant, the point is the value is created at will, creating inflation, and is a decision of a few powerful individuals.
Bank reserves are not circulating money because they cannot be spent. [1]
> The interbank mechanics are unimportant...
They are literally the only important thing. That's all we've been talking about.
The bank having these reserves frees up room for the bank to lower their interest rates and in turn create more loans. See, it's this lending process that creates new circulating money. The Fed issuing 100T of reserves and giving it to BoA would not change the circulating supply one iota in and of itself.
> ... the point is the value is created at will ...
Again, no, no value is created by this operation. It's entirely neutral. What happens is these lower-interest rate loans (coupled with the obligation to repay same) increase the viability of business models, fund productive activities in the economy and back the newly created money. This is where new value is generated. Not in creating reserves.
> ... creating inflation ...
Again, no. Inflation is a measured effect. It has nothing to do with supply per se in the federal reserve model. Just ask Japan. They went absolutely ham on QE since the 1980s and they haven't seen inflation since 1995. [2] So much so it's actually been very problematic for them.
> ... is a decision of a few powerful individuals.
Yeah like every Supreme Court decision ever. These individuals are accountable to congress. This is called representative democracy.
Scottie, and I'm going to assume your name is Scottie - I mean this without disrespect. Please audit an economics class. And maybe a civics class. Thus far everything you have suggested is trivially wrong.
Quantitative easing (QE) is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to
increase the money supply and encourage lending and investment. Buying these securities
adds new money to the economy, and also serves to lower interest rates by bidding up fixed-income securities. It also expands the central bank's balance sheet.
I don't know why you don't think creating money and buying bonds and mortgage securities on the open market counts as money creation. Or if you're being particularly semantic about the mechanical flow of this money. None of these occur without the central bank changing digits in a database which magically allow new money to exist.
Your article you keep referencing is wrong in context scotty. They're not buying them for money, they're swapping them for reserves. It's not the same thing. It's an edge case operation, that the Fed will unwind in time, as they were happily doing between 2009 and the COVID pandemic. You're reading a babies-first-economics article. We're not in 101 territory anymore. At least read the Forbes one I linked you that goes into more detail.
You are wrong on this one, and you do not understand enough to even want to challenge your assumptions. We're done here, and I once again, implore you to audit an economics class.
PELLEY: Fair to say you simply flooded the system with money?
POWELL: Yes. We did. That's another way to think about it. We did.
PELLEY: Where does it come from? Do you just print it?
POWELL: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.
He's just incredibly confused because central banks officials avoid saying the word "money printing" or "creating money" so that the public doesn't panic or accuse them of creating something out of nothing. Instead they use technical words like "Quantitative Easing" and "Asset Purchases" and then dumbasses like him buy into the wordplay whole heartedly.
Scottie even in that video you linked me you stopped short of the next sentence which says:
NARRATOR: But by law, Chairman Powell's Federal Reserve can only lend money that must be paid back.
Which is what I've been telling you.
Powell was providing a simplification, an analogy, so that folks such as yourself without a meaningful background in economics can understand. Obviously he did an insufficient job, and I strongly suspect this clip was out of context.
No, you seem particularly focused on a technical detail concerning the flow of money rather than the larger theme at play; that is, the value of money is at the whims of the central bank. I'm imagining those who lived to see the Zimbabwe dollar devalue from dollars to trillions of dollars would have a hard time believing you when you say central banks can't create money.
Furthermore, there are some that believe an interest rate should be determined by markets rather than policy makers.
And on the personal note, I have a minor in economics, my bachelors was finance. Economics is a broad subject, and even if you study monetary policy at the undergraduate level, the mechanics of central bank asset flow is not a subject well covered. But hey, thanks for the elitism and insulting the 99.99999% beneath you.
Just copying another comment abotu the energy consumption of online adverising
"The online advertising ecosystem resides in the core of the Internet, and it is the sole source of funding for many online services. Therefore, it is an essential factor in the analysis of the Internet's energy footprint. As a result, in 2016, online advertising consumed 20–282 TWh of energy. In the same year, the total infrastructure consumption ranged from 791 to 1334 TWh. With extrapolated 2016 input factor values without uncertainties, online advertising consumed 106 TWh of energy and the infrastructure 1059 TWh. With the emission factor of 0.5656 kg CO2e/kWh, we calculated the carbon emissions of online advertising, and found it produces 60 Mt CO2e (between 12 and 159 Mt of CO2e when considering uncertainty). The share of fraudulent online advertising traffic was 13.87 Mt of CO2e emissions (between 2.65 and 36.78 Mt of CO2e when considering uncertainty)."
The paper was: "Environmental impact assessment of online advertising"
Yes but if we start playing the “which energy use is more valid” game then quickly we realize energy is in the eye of the beholder, and the solution is a pollution tax. Bitcoin shouldn’t be outlawed anymore than video games (a totally useless tech from a society viewpoint) but HNers love their video games and Google paychecks.
I partially agree with the eye of the beholder argument. But video-games, useless? Hard disagree. How about movies, books, theater, paintings? We should not move into a soulless society that only cares about "productive" activities.
Meanwhile, crypto and PoW are cool concepts that do the same as existing applications, just slower and at an enormous cost to everyone.
Would you consider having USA impose environmental parity tariffs as a way to tax over-polluting countries (which are used by Apple because of the lack of environmental and human protections which make things cheaper to manufacturer over there)?
I have nuanced and specific views on this, but to summarize, I don't think we can ever rely on that as a solution. I think a more realistic solution is more exotic - chemicals in the atmosphere, giant mirrors in space, some sort of carbon sequestration, etc. The majority of environmental damage is to the immediate vicinity (air / water) of the factories, and the citizens of the nation will have to demand change from their leaders, just as happened in England and then America throughout the industrial revolution. The global environmental risks we need to solve in more advanced ways.
When do we auto-organize as a species and ditch these primitive blame games and Mutually-Assured-Destruction madness such as competitive wasteful economics systems that cause people to drive hours to a place they don't like to "work at a job" doing something that is useless for the overall group and displeasing for the person doing it, simply due to dumb plumbing not organizing us. Maybe we should ask some machines how to run ourselves... (partially joking, but you know what I mean...Where is our group common sense and ability to hive-mind when we need it?)
Given the context I can only assume that this is intended to be a defence of the energy consumption of mining, but even so it's the most tone-deaf defense I can imagine. Excusez mon français, but gently caress the online advertising industry, and gently caress proof of work cryptocurrencies. Scourges of the modern world, the both of them.
My personal opinion is that whilst Bitcoin is not the answer, many seem to miss the point of cryptocurrencies, which IMHO is, to enable a permissionless electronic cash system. Being decentralized is an important aspect of it, and TPS and time-to-finality etc are important metrics for any practical use, but the appeal of cryptocurrencies is that you don't need the permission of others to open an account nor have to pay premiums to send or receive money. It is also truly global so there is no difference whatsoever between splitting a bill in a restaurant or sending remittances to your family back home.
I guess many people live their lives on the "happy path"[0] thus never really experience how difficult the simplest tasks can get. In the country I have emigrated to, to open a current account you need a proof of (permanent) address, and to be able to rent a flat, you need a bank account to pay the deposit---a Catch 22 that I was able to break only thanks to TransferWise and Revolut. Another example is cash being deprecated for convenience and hygiene reasons, yet banks being just as difficult to give a POS terminal to self-employed and small businesses (hence the emergence of Stripe Terminal and Square) yet alone marginalized groups such as sex workers. Neobanks and fintechs really make life easier for many, but they are still not as free as cryptocurrencies aspire to be, and to be fair, cryptocurrencies are not there yet either... I am looking forward to the day I can spend my stablecoins as easily as using my Visa/MasterCard.
Hence, in the end, it may not matter as much whether some chains are more centralized than others or if stable coins are backed by the assets of some central custodians. Bitcoin is far from providing that, I think, but let's not throw the baby out with the bathwater.
Generally, if your system can handle the vast majority of cases easily and most edge cases with some effort, you don't think about tearing it down to replace it with an entirely new one that's far less efficient and far more difficult for the end user.
The appeal of cryptocurrencies for most buyers is that Bitcoin dectupled in a year and people seem to be getting fabulously rich off of them everywhere you look. No more and no less.
Two things: (1) No one is tearing anything down as far I am concerned, rather people are working on a new system that is intended to complement, surpass, and eventually perhaps even replace the current one in a distant future. For instance, I do not put my savings in neobanks nor would be able to get a mortgage from them anyway, but they are absolutely fantastic for day-to-day use. Is it really impossible to imagine a similar future with stablecoins and better wallets? (2) Isn't what you describe the curse of "good enough"? For a counterexample, WireGuard exactly did tear the current systems down, started with a blank slate, and replaced them with an entirely new one---but it was far more efficient and far easier for the end user. I wholeheartedly agree with you that Bitcoin is not it, but disagree with you that there is no chance of seeing an actual solution aimed at actually serving the needs of netizens in our lifetime.
Part of my point is that cryptocurrency as it stands really doesn't complement the normal financial system.
Your landlord isn't going to accept crypto for your deposit because it would require them to invest a great deal of time and effort to learn about how to use crypto, force them to accept additional risk (of e.g. having their coins stolen, of losing access to them), and give them marginal-if-any benefit.
And that issue generalizes to most cases you can think of: big institutions could figure out how to do Bitcoin, but won't want to (financial risk, legal risk, complexity, institutional conservatism), and most individuals won't or can't do it (are the sex workers excluded from the normal financial system supposed to figure out how public-key cryptography works?).
For these problems of interfacing with the normal system to disappear, crypto would likely need to become the predominant way many people exchange value - and that would be bad.
Or, alternatively, you could have most people do crypto through centralized platforms that abstract most of these problems away, which gives you many of the disadvantages of crypto without any of the permissionlessness.
> Your landlord isn't going to accept crypto for your deposit because it would require them to invest a great deal of time and effort to learn about how to use crypto, force them to accept additional risk (of e.g. having their coins stolen, of losing access to them), and give them marginal-if-any benefit.
That's not an effective argument against crypto itself but more it's UX which is granted, awful, but is improving over time. An argument for "better tech for crypto" is actually pro-crypto -- I fully agree that innovation has been really slow in the last near-decade on actually progressing the user experience of owning crypto. The answer lies in effortless multisig and better API<->protocol interaction, and while it doesn't look great now folks are working on this.
Solve this problem and crypto becomes easier to hold than even a credit card, let alone a full-on bank account.
Tech failures actually imprison crypto a lot more than people realize. If Bitcoin could (a) scale and (b) not be terrifying to hold large quantities of, there'd be no debate here; what's more, volatility would _improve_ with the drastically increased usage. FX market has just as many negative actors (and indeed far more powerful than crypto whales and corrupt projects), but the reason currencies are less volatile is because they are _used_.
The average HN crypto-hater now says "yeah well bitcoin can never scale". Bitcoin doesn't have to, _crypto_ does, and it's been a lot slower going than I think folks realize. Proof-of-Stake slowed things down significantly by encouraging huge centralization of ownership across almost every project (Cosmos being one of the few exceptions). But POS doesn't actually scale very well -- it has fast finality but once you hit the TPS limit it starts looking like subnets etc.
The point being, there ARE worlds to conquer in blockchain tech still.
PoW mining (at least), must be made illegal. I have no doubts that it will end by becoming illegal, the question is how and when.
It boggles the mind that there is now essentially a worldwide tax on semiconductors, which is used to do... nothing of any value whatsoever.
And this thing just keeps growing. The effects will be felt in more and more economic sectors. Something will have to give.
So, the only question is: Will we be smart enough to ban it soon and avert the worst consequences, or will this thing blow up in a huge way and we ban it afterwards.
I'm making a different argument. We may not like ads, but all sorts of real things happen in the world in order to make ads, and as a consequence of ads. The ad industry is not on a trajectory to turn every last grain of sand into an ad-making machine.
I also made a prediction: It will be banned eventually. Not because I or anyone else doesn't like it, but because it is a disaster in the making. PoW currencies are already a significant drag factor on, for example, ML research. The drag factor is increasing, and it will be felt in more and more industries.
You can only replace so much real economic activity by literal hot air production before it causes an acute crisis.
There's lots of ways to turn electricity into money. Bitcoin is one of the easiest but you're not going to stop climate change or make a reasonably impact on the growing energy demands of civilization by banning it.
Better to focus on replacing all energy production with green sources and taxing polluters rather than trying to ban specific energy uses you don't like.
This seems like a fair solution that could have the same impact - if the pollution tax is high enough and the mining profits are low enough then mining would no longer be profitable. At a minimum it at least makes sure people are "cleaning up after themselves" by paying to mitigate the damage they cause
This is totally how I feel, and it's even worse than that - we're still subsidizing fossil fuels, so we're not only NOT taxing the pollution, we're actually helping to make it cheaper for companies to do. I think step 1 should be stopping all the subsidies.
I haven't actually seen the numbers before but this is pretty absurd:
> Globally, subsidies remained large at $4.7 trillion (6.3 percent of global GDP) in 2015 and are projected at $5.2 trillion (6.5 percent of GDP) in 2017
> coal and petroleum together account for 85 percent of global subsidies
Unfortunately, that won't work. Bitcoin is designed so that material/energy approximately equal in value to mining revenue is wasted. What you waste it on is ultimately irrelevant.
Bitcoin can be designed however it wants, that doesn't magically grant it value.
It's value is only based upon how much value people ascribe to it. And for that, I don't really care how what people ascribe to it, so long as they pay for the pollution they produce in the process.
What else would you make illegal? High fidelity 3d graphics in gaming? It is clearly wasteful and games are hardly any better because of high polygon count, right?
Why would you want that? There isn’t a cheaper centralized system of rendering 3D graphics that uses 1/1000 the energy.
We can handle transactions with quite little energy using traditional means. It’s not pseudonymous or decentralized and it’s not extremely efficient. But compared to Bitcoin it’s a wonder of efficiency.
I wouldn’t take anything off the table when it comes to banning energy use. But rendering in particular seems like a strange choice.
Incandescent bulbs were banned because there was a good alternative. PoW cryptocurrency is the incandescent bulb.
Yes, for example. Or any other way that has worked more or less well throughout history. Few people are buying the “but the dissidents” argument of cryptocurrency. It’s a valid use case in theory but little so far shows that has been a use case.
The thing about Bitcoin is that it’s mature tech now. Whatever promises it has should be materialized now. If it’s to be a currency rather than a store of value and instrument of speculation - it ought to show already. But it doesn’t. It hasn’t materialized. And we shouldn’t be sinking resources into something that is perpetually a few years from being a currency.
Not using any currency which depends on an internet connection anyway since that makes it rather easy for the government to deprive those rebels of their funding - just block the 'net and jam satellite-borne access methods. I'd fund my guerillas with armaments, food and medical supplies. Gold and silver maybe. No digital currencies for the stated reasons.
None, yet, for lack of a cause as well as a guerilla army to fight for it. Should I ever get the urge to find a cause and an army I know I'll go long on tools of war and short on digital currencies. As stated, an SD card full of hitcoins will hit no harder than a card without such a load, i.e. not at all. Any digital currency which relies on an internet connection suffers from this problem.
thing is, you can't fully block internet connectivity in your country. Unless you want to destroy it fast, of course. And if you don't completely block all internet access, people will find ways to send a transaction.
Of course you can block it, what a silly statement. Remember that many of the participants of this forum were alive when the 'net was but a glint in the eye of some future greybeards, things worked just as well/badly as they do now and they can be made to work just as well/badly in a disconnected country. Also realise that the situation we're talking about - a country on the brink of war - has more important issues than whether its inhabitants can get on the 'net. Would such a block inconvenience the populace? Sure it would. Would it cause some of them to riot? Sure it would. Would it cause the country to be destroyed? No way, it wouldn't. Riot police would quickly put an end to those internet riots like they've done to many other riots in many countries. Is it possible to keep network connectivity for the happy few while blocking it for the rest of the country? Yes, even that is possible, have a look at the self-reliant "Juche" [1] paradise of North Korea for an example of such. Assuming that the guerilla financier is not one of those anointed few he'd be sadly out of luck in trying to buy that crate of Kalashnikov's without tangible funds.
There's a false equivalence here between proof of work consensus and actually doing work. 3D renders aren't done by a bunch of independent render farms in competition with each other where their work is discarded if they aren't the first to produce the render.
Once anything becomes a significant amount of our energy being used, sure. It should be examined and we should see if we can reduce energy consumption.
How would you enforce energy efficiency mandates on blockchains? We do it with fridges, why not with Bitcoin? E.g. a single transaction may not consume more than 100kWh of energy.
Yes. Nationstates very much want to make the proven distributed mechanisms of consensus that allows people to exchange value without their oversite illegal. No significant cryptocurrency has gone proof of stake, and certainly none just starting out. Etherium will never actually switch. Making proof of work illegal would make effective cryptocurrency illegal.
The violent standing armies (and their logistics networks) that protect other international currencies from manipulation and attack use far more energy and do it in very violent, centralized ways.
The only way to beat Bitcoin or other proof-of-work cryptocurrencies is to remove the need for them. Bitcoin and other cryptos have a use-case; it may not be apparent to someone living in a developed country with access to a good banking system or it may be one you don't like and involves criminal activity, but there absolutely is a use-case.
The only way to stop this is if the traditional banking system catches up and covers all these use-cases, including undesirable ones. As the war on drugs proves, prohibition is expensive and doesn't work even for a physical asset, let alone something completely virtual that just needs software and a network connection.
We know that technological history is full of situations where the inferior technology prevailed for some reason or another. The classic example is Betamax versus VHS.
All that is to say, as much as I’d like to believe it is true, there is some naivety to suggest that a superior solution will simply up end cryptocurrency, when there is a lot of money to be made by a lot of very wealthy people in cryptocurrency.
Or consider:
'there is a lot of money to be made by a lot of very wealthy people' in continuation of the petro-dollar system.
Many high-paying white collar defense contractor jobs are wrapped in patriotism and sell munitions to middle east dictators.
Then, We should make money laundering, drug trafficking, ransomware, blackmail etc legal?. Banking system is regulated precisely to make illegal activities more difficult. Sooner or later, crypto exchanges will get regulated in the same way as banks. It just takes time for regulators to catch up.
> Banking system is regulated precisely to make illegal activities more difficult.
But at what cost? I'd argue that the costs outweigh the benefits. It hinders competition and innovation, makes it hard or impossible for some people and businesses to access the banking system, increases fees on consumers due to the immense cost of compliance (>$180bn a year worldwide), puts innocent people behind bars ("guilty until proven innocent" is the typical standard with AML), is a privacy nightmare, puts police investigative work into the hands of private sector employees, makes operating globally almost impossible, etc.
Meanwhile, has it really deterred any crime? How about we just go back to catching criminals the good old fashion, with police investigations, for actual crimes, just like we did pre 1989. Hell, use financial data to inform investigations if needed.
> But at what cost? I'd argue that the costs outweigh the benefits. It hinders competition and innovation, makes it hard or impossible for some people and businesses to access the banking system, increases fees on consumers due to the immense cost of compliance (>$180bn a year worldwide), puts innocent people behind bars ("guilty until proven innocent" is the typical standard with AML), is a privacy nightmare, puts police investigative work into the hands of private sector employees, makes operating globally almost impossible, et
Benefit greatly outweigh cost. You can put your credit card details in random website, and it is relatively secure. When someone steals your card, you can get bank refund or do chargeback. For most consumer, making online payment is free of charges. You have sophisticated security, limits, monitoring, fraud detection and when bank is hacked or defaulted your money have government guarantee. My bank would ask me for additional authentication when making bigger payments, and even once blocked a transfer I made because it was a scam.
Meanwhile, in crypto world:
When your exchange is hacked (Mt. Gox) you lose everything. When someone steals your wallet you lose everything. You need to figure perfect personal security or you will get hacked and lose everything. Payments are slow, expensive and nobody protects you against scammers.
> Meanwhile, has it really deterred any crime? How about we just go back to catching criminals the good old fashion, with police investigations, for actual crimes, just like we did pre 1989. Hell, use financial data to inform investigations if needed.
Financial data is provided by banks as part of this regulation. Most of the cash transactions and trades in stock market are reported to multiple organizations that use that data to prevent/fight financial crime. This regulation make hard to create bank account for illegal activities because banks are liable for this[1].
It's mind boggling that 12 years later, people like the parent poster are still claiming bullshit like that when there's literally zero evidence, rather the opposite. No country with underdeveloped banking and payment systems is interested in something like Bitcoin. They need something cheap and efficient, federated and... centralized! Many African countries are perfectly fine using M-Pesa.
There are a lot of countries where people need anything but centralised money. Because they have every reason not to trust the ones who would run the central authority.
It's hard for some first-world country citizens to imagine that.
Any arguments against bitcoin are shattered by one simple fact: currently bitcoin is the least risky and simultaneously the easiest way for russian citizens to fund anti-Putin opposition. Any first world do-gooder who wants to ban it because 'it is bad for environment' should first ban himself from existence because humans are bad for environment.
Seeing how well the ransomware industry is faring, it seems Putin doesn't feel too threatened yet.
But what happens when he bans all exchanges that off-board cryptocurrencies to Ruble? Will the opposition be happy with tokens that are suddenly useless for day-to-day expenses?
You haven't seen such activity yet because they don't think you're worth the trouble. If you ever are, it will change, and the exchange will become useless.
I'm a crypto hater as much as one can be, but there are many countries in Asia and S.America where locals may not want to stick to local currency due to sky high inflation, and getting foreign currency is not easy or illegal, and/or making international transfer is not possible or expensive.
Which is a political problem and has nothing to do with their banking systems.
These people don't want to use Bitcoin, like they didn't want to use USD or EUR before.
And using Bitcoin as a workaround against authoritarian governments sounds pretty risky to me. Everything leaves a trace on the blockchain and it's fairly easy to control (and ban) conversion to/from fiat currency. Going back to peer-to-peer barter is something, I guess, but I don't think we should celebrate that.
to think like this is mind boggling, try to relax, do some research (no, not reading news or opinion articles), and you will find your evidence
also: if smarter people than you are mostly pro-something, perhaps there is something else to it, stop thinking like a 5 year old trying to save the world from some made up monster no one else can see
You can have money laundered or you can have money laundered and the environment destroyed as a byproduct of an intentionally wasteful proof-of-work system. Pick the least worst option?
> DePaul University suggests that this number should be closer to 35 tons of CO2 for jewelry, which accounts for roughly 50% of global gold demand. It is assumed that refinement uses a similar amount of power to recycling; therefore, a total of 79.9 MWh is used for the mining and refinement of each gram of gold used in jewelry. Each kilogram of recycled gold produces 37 tons of CO2 and uses 31.3 MWh of energy. This brings the gold mining industry’s 2020 total to 265 TWh of energy used and 145 Mt of CO2 produced if we use the DePaul study’s numbers and account for 1750 tons of jewelry.
That's generally not true with transaction between countries:
> when countries exchange money for goods in other countries, the gold bars aren't even moved. they bar just gets recorded as belonging to another country
And I don't think individuals or companies make transactions with gold that often.
Bitcoin energy expenditure is not entirely independent from block creation.
Transaction fees already make up a nontrivial fraction of the block reward and can be expected to dominate block subsidy within a few decades as the latter keeps halving every 4 years.
Investment. 46.64%
Jewelry. 36.83%
Central banks. 8.58%
Technology. 7.95%
According to the stats you shared, less than 10% is used by central banks (currency), about 37% in jewelry, and about 47% for investment.
I don’t think it’s fair to lump in jewelry with currency and investments. Much of the discussion I hear argued around cryptocurrency is in comparison to fiat currency. Investments are something again different in my opinion, though I might be convinced otherwise if I saw the those making the comparisons to, say, gold, and making cogent, nuanced points.
But that 46% used for “investment” can still be used for something tangible at a later date and so has something other than speculation setting it’s price.
Frankly I was pleasantly surprised it was only 46% used for investment.
there are multiple generations of people at this point who don't draw the line of utility at “tangible”
now that population has irrevocable possession as well, which still doesnt exist for digital tradable goods outside of this system, and all those people can use their digital property for multiple things too
even if it only does any one of those multiple thing moderately well, instead of anything exceedingly well, thats still value. it relies on cognitive negligence to make a separate higher standard for this, that could not apply to any asset under supply and demand pressure.
Even if gold were exclusively used as an investment, it would still be lower-carbon than Bitcoin. The energy spent per dollar of gold mined is much less than the energy spent per dollar of Bitcoin mined.
We are rapidly depleting our remaining carbon budget. Can a bitcoiner please explain to me why this is a necessary technological development right now?
Sure, if you are serious, the Bitcoin Standard book is a worthy read. But what’s important is that Bitcoin solves the inflation problem, and proof of work is the only system that we have for getting rid of the Cantillon effect of modern banking: the closer people get to the top of the central banks, the richer they get and destroy life for those who don’t have access to the inner layers of central banking. With Bitcoin it’s really hard to make profit with mining, as there’s a perfect (otherwise useless) competition. Some altcoins are reintroducing the Cantillon effect using proof of stake, and of course the market will decide on which is the more efficient system.
On a philosophical level, I think the flawed premise you’re presenting here is that inflation is a problem that needs to be solved. Inflation is unpopular because it’s effectively a tax on unproductive wealth. Inflation incentivizes investment because idle wealth will lose it’s value at the rate of inflation.
On a technical level, Bitcoin is worse than a currency because it’s value can fluctuate wildly constantly and transaction fees are high. I don’t know what’s going to happen when we get a “Run on the bank” type of scenario but I suspect it’s not going to be good for the little guy.
The ability of central banks to manage a crisis isn’t a bug, it’s a feature. The trade off is one we’ve made throughout history, we have to give control to other folks who may not have our best interest at heart.
I fundamentally believe Bitcoin will collapse the next time we have a global economic catastrophe and it’ll have no tools to handle it.
This is where market competition is a great thing for people who believe in market competition. For people who like the central banking based financial system and think that inflation is a good thing can stay in it, and for people like me having an alternative is great, and it changed my life totally. I understand people who can’t bear the price fluctuations, as I have seen my net worth drop 80-90% 3 times in the last 8 years, and it wasn’t easy on me psychologically. I still use it, as I see a debit based financial system more honest than a credit based system.
Regarding the transaction fees it’s not higher or lower than the current system, but very different. For me it’s actually much lower than my bank fees (sending a wire transfer from Europe to US is usually $20 charge for me, while Bitcoin fees are usually about $0.8, but it’s changing over time depending the usage of the system).
> On a philosophical level, I think the flawed premise you’re presenting here is that inflation is a problem that needs to be solved. Inflation is unpopular because it’s effectively a tax on unproductive wealth. Inflation incentivizes investment because idle wealth will lose it’s value at the rate of inflation.
Inflation is a tax on those without assets or the available capital to invest in assets. It's a form of wealth transfer to those with assets. Increasing economic inequality is not good for anyone, and some would say the US is already close to a breaking point.
Inflation induces investment and consumption. Ultimately, central bank wants to create GDP growth through inflation because any GDP growth is good, that's the basic dogma.
Since we're talking about climate change, it's clearly morally wrong for the central bank to print money to create arbitrary GDP growth because GDP growth creates emissions and furthers climate change. It's a deathtrap really, and the most sinister mechanism ever created. We should probably ban it along with Bitcoin.
Bitcoin doesn't solve the inflation problem. Nothing can solve the inflation problem in real terms because the real world is decaying.
Also if the Cantillon effect exists, then it applies to every single dollar spent inside the economy, not just to "printed money". E.g. if there is a mechanism that sucks out "printed money" to the top, then there is also a mechanism that sucks out not "printed money" to the top. If you understand that, then the "printed money" exists to replenish money at the bottom of the economy where it inevitably gets sucked back to the top.
With a cool little 300% increase in the value of single BTC over the single year, with some years seeing it go over 1000%, you're right, it solves the inflation problem by making it a ponzi scheme! Sweet!
> Wouldn’t we be giving up an essential lever to adjust to changing economical conditions?
Who’s we? You, I, and most people have zero ability to move those levers. The question is should they have access to those levers and I firmly believe the answer is no. I’d rather have a world with sound money and no one in control than the people who have dominated the west for the last 100+ years.
If nations no longer control their money, does it mean they can go bankrupt? They can no longer adjust their money to influence their commercial balance? Would have the EU and the US been able to create stimulus packages? What about adjusting the inflation to the economic growth rate of a country?
> If nations no longer control their money, does it mean they can go bankrupt?
Yes, happens all the time where countries default on their debt obligations even when they "control" their money.
> Would have the EU and the US been able to create stimulus packages?
Yes its called taxation, and maintaining a reserve. Just like how normal people save up for a rainy day. They can even borrow money (bonds) from the public like they've done for hundreds of years.
> What about adjusting the inflation to the economic growth rate of a country?
The vast majority of failed monetary systems in the last hundred years is due to central banks printing too much money. So maybe we should stop letting the central banks attempt to control something they barely understand?
We could replace the contract company 'Federal Reserve' (not gov't agency and no gov't employees) with a growth rate formula. Let me know how readily they take that idea.
The only thing that changes is that governments have to raise the taxes from people explicitly instead of a hidden inflation tax. I think it’s great for goverments as well, as it gives them more responsibility over how they are spending money. Norway of a great example of people paying high taxes because they see the government as responsibly spending and reinvesting its tax revenue. I never asked money from other people in my life, I was spending only what I earned, and I feel this way of living is a more honest and sustainable way of living.
How do you keep inflation within an economic zone between 2 and 3 percent without control over your money? No matter if the economic growth is between -1% and 10%?
Bitcoin has a built in inflation schedule. If you believe that over long term price inflation of scarce assets (like New York real estate) will follow the inflation of the emission of the currency (which I believe), Bitcoin will make sure it will stay under 1% in the future.
Right now Bitcoin is in the adoption phase, that’s why people are seeing the crazy price moves, but I expect it to normalize in the future (maybe 10 years from now).
I am not talking about scarce assets but of the entire economy of a country. Concretely, how would bitcoin would manage to keep inflation in a healthy range (1.5%-3%) given that we can no longer decide to emit or remove money from the system as the situation evolves? If the world goes into recession vs know an economical boom, you don't want to emit the same amount of money into the system.
Also, if two economic zones have very different growth rates, how does that work with a global currency like bitcoin?
Can you tell me a period of time from history when governments were removing money from the system (spending less than they were raising taxes and paying back their bonds without creating more debt)? It never happens. What governments are doing is unsustainable, people are not happy with the trillions of dollars they are printing and buying up scarce assets (which are the most imporant things for people…good luck living in an email inbox for free).
If by inflation you mean the rise in general prices, or the destruction of the purchasing power of the monetary unit, then the track record is that btc will continue to be deflationary in that your purchasing power will be increased. If you don't like increased purchasing power, there are alternatives such as holding most any government issued monetary unit.
thanks for responding. why does bitcoin remove this cantillion effect? Remember that Roger Ver, who was in the room when Segwit 2 was discussed, decided to go forth with the bitcoin cash fork, which pleased the miners. It appears to me that miners are able to turn profit, that's why we see new mining facilities popping up around the world.
also, does the market actually select the most efficient technology? Anecdotally speaking, crypto "investors" en masse appear to know very very little about the underlying tech - most appear to invest because "number goes up"
Finally, there is legitimate risk of societal collapse on the table due to climate collapse. Is that something you factored into your perspective?
The segwit+bitcoin cash fork was a technically very complex situation. Miners loved the Bitcoin cash fork as bigger block sizes centralize the system (makes block transfer time longer, which makes it easier to do selfish mining and harder for small miners to take part of the system, especially through TOR relay). Read the blocksize wars book (I listened to the audiobook and loved it) for an in depth explanation, it’s awesome.
Also Bitmain was using covert ASICBOOST: the Merkle-Damgard construction allows reusing the first part of the SHA256 computation, but Segwit broke that unofficial internal optimization that Bitmain was using for mining.
In that fork companies and miners thought that they can change the verification rules, as many people are just looking at the chain with the longest proof of work, not real full nodes. What they didn’t realize that with Bitcoin people who are long term holders with significant amount of money understand how crucial it is to run their own full nodes to verify all the rules, and just use miners for deciding the order of the transactions (instead of the rules to follow as well).
I personally sold all of my Bitcoin cash the first time I could make a Bitcoin cash transaction and bought Bitcoin with it (which wasn’t easy, as it had problem with difficulty adjustment).
The market is working slowly: people right now don’t understand how difficult is to run their own Ethereum full node (I wanted, but it’s incredibly hard to even get a description of how to do a full verification from the genesis block).
The main problem with the altcoin ecosystem is that exchanges make money of people transacting altcoins instead of just holding 1, so people get into the altcoin casino, losing lots of money (I have friends who have done this sadly). Sadly market works by smart and patient people taking advantage over other people (I try to help people to stay Bitcoin only, but it’s incredibly hard with some people, especially men…my female friends invest less money, but hold much more patiently, and get rewarded).
Lastly about the societal collapse: it is happening with fiat currencies anyways. I see the current CO2 emission problem as a $10T-$50T problem, while the inflation of fiat currencies as a $500T problem. Bitcoin will solve the inflation problem in 10 years (it has a yearly 2x adoption rate), and I believe people will care more about the environment after they don’t have to worry about paying their rent every month while working off their ass.
And how do you calculate that the C02 problem could be solved with $10T - $50T? And over what time period could an investment of 10T solve the problem? And how would it be done?
Moderate inflation is good for debtors and keeps money circulating around the economy: those with savings can invest it in a way that keeps up with inflation. Deflation causes hoarding of money and economic collapse (like the Depression of the 1930s). Central banks try to manage inflation to keep is low but nonzero.
Can you explain how that Ponzi scheme works? I read parts of the source code before I invested in Bitcoin, and it looked to me like an open, honest system with easy-to-understand, clean code (unlike what Ponzi was doing, which is basically lying about customer deposits).
I had doubts about elliptic curve digital signatures being safe enough to hold my money (I’m still thinking of using Lamport signatures in a multisig, as I trust them more), but I don’t see other serious problem with the system.
It’s a Ponzi scheme cos it’s not being used for purchasing goods and services.
Bitcoins only value is it’s value relative to dollars, euros etc, which have purchasing power.
So ultimately all the Bitcoin has to be converted back to dollars, euros etc for people to see a return on their investment. The only way to do that is to sell the Bitcoin to someone else who has dollars (presumably for more dollars than you bought the Bitcoin originally).
So as the cycle continues each new generation of investors needs to find another bunch of suckers to offload their Bitcoin to and get their dollar reward. And they need that next set of people to consistently pay a higher price than they did.
Eventually people will struggle to find buyers and be left holding the bag.
This wouldn’t necessarily be the case if Bitcoin got used as a real currency. But that’s clearly not happening at this stage, people laugh at the idea of buying Pizza with it or whatever. So it’s just a Ponzi-like scheme. Tbh it’s more like a penny stock scam of old.
If you are already rich then you are forced to invest your money for the benefit of workers. The fact that the rich own assets is not a mistake. They're supposed to own them. Savings must be invested, directly or indirectly or else people end up unemployed.
I’ve never understood the BTC purists. I’m generally anti-crypto in any variety, but As far as cryptocurrency‘s go, bitcoin is really bad compared to so many alternatives.
I’d just as soon see it all go up in smoke. But why does BTC reign?
Because they don't give a single shit about the technology of it. All they're happy about is that their speculative asset keeps going up. They're grifters.
This is what I find strangest. At least coins like Ethereum and Solana have entire ecosystems of complex projects being built up around them (no matter how skeptical one may be of those projects), Bitcoin seems like an incredibly spartan ecosystem with basically one use, and the sole advantage of being first.
Because it was first, and the word itself has permeated the psyche of society in ways that the other currencies haven't. People who know nothing at all about crypto buy into BTC because they've heard of it and heard it turns into money.
But they aren't using BTC as a replacement for the financial system. Most buyers of BTC are using it much like the Dutch were using tulip bulbs: buy because the price (in real money) is going up. The exceptions are for illegal transactions or to pay off ransomware, and it isn't the best choice to do those either (other coins are better at hiding transactions).
Because it's not actually happening, if you look at the amount of money invested in cryptocurrencies and their transaction volume for goods and services compared to fiat currencies.
A low velocity financial instrument is still useful if it stores value, even if it has no other utility. Gold locked in a vault, rolex watch that is stored in a safe, stock whose voting rights are not utilized, a house that nobody lives in, pokemon cards that isn't used in a card game.
The list is endless and I guess if you're really asset poor you wouldn't see a value in these things.
The comment I was responding to was "People ... are fleeing for the exits," which is clearly not the case. The picture given is a stampede, where what's really happening is a few people going to the ATM and placing chips at a roulette wheel.
Very few people watched videos online in 1999, but some people predicted video sites like Youtube back then already. Traditional media called them crazy. Nowadays, people are using barely anything else than the internet for watching videos.
The blockers back then were bandwidth and CPU/GPU power to watch online videos.
As soon as the technology made it practical it took off like lightning.
Bitcoin payments don’t have any such fundamental blockers. Anyone with a smartphone can send or receive Bitcoin easy. Yet acceptance of Bitcoin for payments has not taken off at all. If anything it’s declined in recent years.
This is true when it comes to businesses accepting crypto for non-financial products or services. Even though there are scalability, security and UX issues with crypto, I don't think that the main blockers for business adoption are technological or that people don't want to use it, but related to business risk.
Crypto regulation has tightened over the last couple of years. Depending on local laws, businesses have to follow KYC and AML laws, complicated bookkeeping procedures, check received coins for a potential history of criminal activity and more. It looks like the regulatory risk for accepting crypto payments seems much higher than just using a commercial third party gateway. That's probably why crypto fintech companies are exploding, while many other businesses cannot deal with the complexity.
For the near-term future, I would expect that many of the third-party gateways allow you to use your existing coins, while they deal with most of that complexity and export relevant tax data for you. Many people now own crypto assets, so a subset of them will want or have to use them.
Maybe we will see a push for more crypto-friendly regulation, once regular use of crypto through middlemen is normalized and only then direct use of p2p crypto can really bloom.
It amuses me how cryptocurrency boosters invariably point to other actors being the reason why relative adoption is low, instead of looking within to its own weaknesses, like the user experience sucking. It always has to be someone else's fault.
I don't know what you are talking about. Many people are working on inherent problems, such as UX issues, blockchain trilemma, regulatory integration and so on. That does not mean that there are no external factors too. Why can't we have a discussion about crypto without labeling people as some kind of dishonest idiots?
But back to the point, do you think the external factors that I mentioned do not count?
I mean darknet markets prefer monero over paypal, since they are ignoring regulation anyway and need an anonymous payment method..
> Why can't we have a discussion about crypto without labeling people as some kind of dishonest idiots?
Because 99% of crypto boosters make the other 1% look bad. Admit and address the money laundering, scamming, cult behavior, and planet-destroying aspects of it first, then let's talk.
It's relative, not absolute. No system is perfect, but cryptocurrencies have demonstrated themselves to be far worse than the alternative on each of these dimensions.
I think there is a citation needed here, because I don't see how crypto has proven itself to be inherently and fundamentally worse. I think that fiat is the ultimate war money that has cost more human lifes than any other monetary system so far.
I don't see any actual arguments, just strawman attacks.
Edit: since the end of the thread is reached and I cannot reply to your reply - funny how you proved my point as well, by still avoiding actual reasoning. Have a good day.
You'd have to be blind to not see that the "mainstream system" is the one flushing the climate down the toilet.
Bitcoin is just a byproduct of the "mainstream system". It was created by it. It's like the waste product that comes out when refining toxic ancient sludge into oil. And Bitcoin will never go away until the "main stream system" itself dies.
I’m not (only) talking about things like fractional reserve banking and central banks, but of regular nation states that can collect (and do succeed in collecting) taxes.
Bitcoin can simply be banned. It’s not that complicated. Note that the ban wouldn’t be on the tech itself, mining or possession. It would simply be a ban at the points of contact with the regular economy. Basically you can’t exchange currency, goods or services for BTC.
I am not sufficiently convinced of the benefits of the existing system to fight for it, so I am ok with some experiments. Should they really replace the status quo, then only because they have proven to be superior. If not, then probably other experiments are needed, because one thing is obvious to me: the existing system has terrible issues that we should try to solve.
I’d be willing to bet over the next five years we see the biggest most impactful developments for reforestation/carbon offsets/political lobbying for change/rewilding programs /etc will come from crypto groups, funded and organised by daos. It’s brewing already. I also think we’ll see bitcoin become a smaller part of crypto and pow being banned in some countries. It’s going to be an interesting decade.
I had an interesting conversation with a friend a few days ago. We both installed larger solar systems than we need. We are net exporters of energy. And we are both disgusted by how the energy company takes this energy and, effectively, pays us nothing for it while charging our neighbors who use it full rate.
One of the ideas that was floated in the conversation was to setup a Bitcoin (or some other crypto) mining system that would be design to only operate on excess energy. In other words, we become export nothing or very little energy and consume the excess mining crypto.
The idea, of course, is to make more money with that energy than what the power company pays us for it. I haven't done the math. I have no clue if this is fantasy or reality. My instincts tell me it would be an exercise in futility, which is why I won't waste any time on it. I could be wrong.
Ignoring the bitcoin mining idea, which despite being a bitcoin skeptic I kind of like.
The mistake is believing that domestic solar will ever provide better value for money than industrial scale solar or other green sources. The people making money on domestic solar are the companies selling it to the consumer.
That’s not to say that there aren’t valid reasons for installing domestic solar: ethical, emotional, off grid, resilience.
It would take decades just to recoup the equipment costs. It currently takes about 12-18 months to recoup the equipment costs ignoring electricity costs This assumes running the miners 24/7. If you only run your equipment a few hours a day in the summer months when your excess solar power is most abundant, then a decade feels about right.
While I never took the time to quantify this, as I said, I always had a sense that this was not a viable idea. In other words, my educated guess told me it would be a waste of time to even evaluate the concept.
> If you only run your equipment a few hours a day in the summer months when your excess solar power is most abundant
As a point of interest, in my region (Southern California) the point of peak efficiency is shifted into the March-April-May period. Most people assume summer is when you do best. I too made that assumption before installing my array.
There's an interplay between available solar radiation and panel temperature. As panels get hotter they become less efficient. This negative temperature coefficient is about 0.4% per degree C. Baseline specification are given for a panel operating at 25 degrees C. In the summer panels easily reach more than double that temperature. Which means that, in round numbers, you lose at least 10% of your generation capacity. A system that peaks at 10 kW in April might only yield somewhere in the 8 kW to 9 kW region in the summer.
There's also how the energy is used. In the summer we have to run the air conditioning system nearly all day. That's about 5 kW for, say, ten hours a day. The AC system is off outside of the hottest months of the year. Which means we have a lot more excess energy during that time, in fact, if the AC isn't running we could run mining equipment consuming 5 kW for about 8 to 10 hours per day and still come out net positive in terms of energy costs to the utilities.
Also as @Nbox9 mentioned, miner heat could be used for heating the home. This means that using excess energy outside of the period of the year during which air conditioning is necessary could be used for both mining and some nominal amount of heating. I can imagine a fully optimized system where you can use this to heat water and perhaps some of the home. Crazy, I know.
For reference, a mining rig that pulls 5kW will likely cost you around $20-30k and will generate a significant amount of heat. You would likely need to install a ventilation system to deal with the heat even in the winter months.
It is also worth mentioning that in places with net metering, the excess electricity isn't "free". Excess electricity gets sold back to the grid at retail rates, and the proceeds from that are used to offset consumption during non-daylight hours. So unless you have a significant credit on your utility bill every year that you cannot utilize (most utilities will not pay you cash for the excess), then mining crypto with you "excess" solar would just result in paying for more electricity when your panels are not producing.
> We are net exporters of energy. And we are both disgusted by how the energy company takes this energy and, effectively, pays us nothing for it while charging our neighbors who use it full rate.
Solved in other countries by passing a law forcing the energy companies to either subtract the electricity you produce from your bill (in kW mind you, not $), or if you produce more than you consume, make a record of the surplus for later (again, in kW). This way you get to produce more during summer and use that excess to offset during winter. And since it's in kW, it's independent from the electricity price.
Even if you only use excess energy for your own personal mining, the only way it has any value is if the rest of the network is running and mining.
In the end, whether you're disconnected or not, there's one market connecting everything and if incentives decide it, business (in general) and here electricity specifically will flow across whatever boundaries you've set.
Worldwide Total final energy consumption is around 82,000 TWh/a, or 10 MWh/a per person (a bit more than 1 kW on average per person).
So, Bitcoin consumes more than 13 million people, or 0.16% of world energy consumption (total final energy, not only electricity - it's a higher share of electricity consumption).
Edit to add: Put yet another way, one BTC transaction burns as much energy as a person needs per month. Can't wait for the utopia where BTC is universally adopted!
Slightly tangential question: Couldn't Bitcoin be implemented on something other Blockchain, since Blockchain is so computationally intensive. Like why not use a SQL database instead. It's definitely not technically infeasible, and you can reliably achieve all objectives of Bitcoin by doing so.
The idea of independent financial system is great, but the inefficiency of it's usage is something I am very doubtful about.
I think technologically a blockchain like DB could be implemented I Cassandra: every person has a node which replicates n% of the ledger. We implement a "block-chain" verification system by hashing the content of each previous transaction and there you have a ledger.
The main issue is concensus in a distributed system were we dobt trust each other (i.e. no central source of truth/authority) If 2 transactions collide/conflict with each other, who do you trust? Who has the last word? How do you prevent double spending? (Given the eventual co consistency of the DB and an adversarial environment).
The truth is that these questions and more are answered to a certain degree by different Blockchain protocols. Delegated Byzantine Fault Tolerance is one, PoS is other, PoW yet another and we even have crazy ones like Chia (proof of space time).
It's like the token ring vs star topilogies ir ipx/spx vs tcp/IP or http vs gopher vs ftp vs nntp vs smtp.
Did you know that around the 90s there were a lot of us purists that made a lot of noise because people were sharing files in a very inefficient way through SMTP? you've got to base64 or uuencode it... its wasteful. FTP instead was made for file transfer.
The same thing will happen with blockchain technology. Inefficiencies will be ironed out.
You could use a centralized blockchain to ensure immutability but there is then a central trusted party such as a central bank.
This seems to me like the “proper” way of managing digital currency, but obviously those that like Bitcoin see the independce and decentralization as a feature.
The blockchain model is designed to be immutable, a block of transactions are locked in place by the blocks before and after it. A traditional database structure wouldn't have that form of baked-in security, though I'm sure there are other models that could work.
You, that’s the word I was looking for. There are solutions out there which achieve similar objective. It’s like they the benefits of blockchain are being used for bitcoin, but if you designed one with bitcoin in mind, there is efficient solution there.
A decentralized application requires you to download all of its data so that you can verify it yourself. An SQL database on top of a blockchain doesn't really change anything except make data storage less efficient.
Yes for Ethereum but Bitcoin will never adopt it, for ideological reasons. The community is extremely resistant to big changes like this. It took what should have been a small and uncontroversial change (where to store the witness data for transactions in a block) years of vicious debate and led to competing forks.
Hmm, how does this work exactly? Is my money locked up for 13 years while we wait for the result? That seems like a poor return on investment. Do I have to trust this website will still be around 13 years from now?
The world used about (12,000 Mtoe = ) 140,000 TWh [1], making this 0.1% of world consumption. OP claims 64 MtCO2e of associated GHG emissions, which is also about 0.1%. I'd call these figures under "troubling but not yet material to the climate."
I believe that your info makes it sound even worse than the headline if you take into account how few people use cryptocurrencies vs. the amount of people worldwide using electricity directly or indirectly.
> the next time you read that Bitcoin consumes as much electricity as Sweden substitute Bitcoin spends as much on electricity as Americans spend on Halloween costumes.
A slightly tangential question, in regards to Bitcoin and Blockchain, that I (surprisingly?) haven't seen answered/asked: Blockchain is computationally intensive, but why does it has to be used for Bitcoin. There could be another solution, which achieves all its objectives, but isn't necessarily as convoluted. What am I missing? Why not just use SQL databases?
SQL databases work well when all parties already agree with each other. With a distributed public "database" like blockchain you need a mechanism to prevent fraudulent transactions from being written to the database. That's how you end up with solutions like proof of work and proof of stake.
That’s actually a good question and most bitcoin people don’t know the answer. Bitcoin actually does solve a real technical problem but it’s kind of subtle.
The problem is that an SQL database isn’t distributed and trustless, but bitcoin wanted to be. But how does bitcoin accomplish this?
Bitcoin is backed by a blockchain, which is like a linked list of blocks. (Each block containing a list of transactions.) By looking at the history of the chain, you can learn the current balance of every wallet.
Anyone can add a block to the chain, and because bitcoin is distributed it’s possible for two people to add blocks at the same time. When this happens, the chain forks, and there needs to be a way to decide which fork is the “true” one. That’s because the chains associated with each branch of the fork will have different wallet balances, and it’s no good if there’s uncertainty about what your balance is.
In practice one of the two branches is picked randomly, but there’s an attack where someone spends bitcoin to buy something irl, then forks the chain at a point before they bought that thing. If the attacker’s fork were picked as the “true” one, the seller would find the bitcoin they received has disappeared. All the computational work of bitcoin to mitigate this problem.
Whatever way of deciding which fork is the true one must have one very important property: “the current true chain is always the descendent of a previous true chain”. But anyone can join the bitcoin network at any time, and when they do they need some way of knowing what the previous “true chain” was. You can’t just ask, because the person you ask might lie to you, so you need a way to tell which branch is “true“ just by looking at them.
Bitcoin solves this by introducing “proof of work”. To add a block, you need to do some computational work, and the true chain is the one with the most computational work behind it. That means that as long as more than half of the computing power in the bitcoin network is honest (always adding their computational work to the “true” chain), the chain with the most work behind it will be the true one.
Bitcoin goes further and rewards people who add blocks. This incentivizes people to add blocks (and therefore, computational work) to the longest chain they can find. The goal of doing that is to increase the chances that more than half the chain is trustworthy.
There are absolutely other solutions. The problem is they don’t allow existing participants to extract as much money out of newcomers as PoW, so the artificial hype being generated around alternatives is much lower.
Tell me one solution that would make blockchain technology obsolete. I would bet there is none even close because other solutions will require trust to some degree or have rather big security concerns but I am always open to learn new things.
If we are talking about blockchain tech PoS is a possible (not perfect) solution to replace PoW but this is even more hyped then PoW in my opinion.
I don't doubt the number, but it does make me genuinely curious. How does this compare to other software? How much energy does running, for example, Facebook require? How much extra energy is required if you use a language like Ruby, PHP, Python, etc. versus a language like C?
It will be interesting to see how energy consumption will be a part of software in the future. I wonder if we will see something like "green" programming languages.
I feel this is the wrong comparison. PoW intentionally raises the difficulty by making computer do more "work" finding useless hashes as the price of crypto goes up. The "work" isn't used for processing transactions, which is why the number of transactions per second is stuck at a pitiful 7 transactions per second for BTC, and 15 for ETH. Programming languages don't have a mechanism where Ruby, PHP or Python have features to intentionally burn more CPU cycles in order to accomplish their objective of making programming easier.
I agree that the raising of difficulty is problematic. But is it not that running arbitrary javascript in advertisements, and the ever growing scale of said javascript chunked in, is also growing ever more?
You state indeed that it's a mere 7 transactions per second, yet I'm settling transactions over 2nd layer networks like Lightning and Liquid.
Javascript advertisements bring me nothing but distraction and a settled state of mind. I find this a far bigger harm than commodotizing international transactions, how slow they might be.
I'm gonna skip the obvious whataboutism of your argument, but your 2nd layer networks have just re-invented centralization of federated and trusted peers, congrats.
International settlements aren't a technological problem. SWIFT has been commoditizing international transactions for many decades. When there's still friction, it exists by design. International transfers are pretty fast and cheap between countries that agree on the same rules and regulations regarding capital flows.
Sure you can use Bitcoin to avoid these regulations. But most people and businesses aren't actually interested in illegal ways to move money.
Increasing the hash power makes the blockchain more secure by raising the amount of work that has gone into it and making it harder to falsify. Also the “work” not being used to process transactions isn’t “why” the transaction rate is 7 tps, the tps is kept lower to keep blocksizes lower and allow more participation from the community since smaller blockchain are more accessible for download (for total verification)
It's worth remembering that these figures are calculated based on the efficiency of known bitcoin miners.
However, I believe it is likely that a good chunk of bitcoin mining is done on privately designed, owned, and run machines which are likely to be substantially more efficient. Since the main cost of bitcoin mining is electricity, anyone who can design a more efficient miner has an incentive to keep that design to themselves.
I actually think the very opposite, that massive amounts are mined with very old and inefficient hardware, while those calculations seem to always over represent more modern and efficient miners.
What bitcoin is trying to fix is decentralized trust and uses Proof-of-Work for that. So, you're wasting energy to solve some cryptographic puzzle to proof that you did some work.
Traditional banking does not need that, it uses social networks to establish trust.
except that bitcoin doesn't replace any traditional financial systems. in the real world, crypto holders also have banks and buy and sell cryptocurrencies with/for fiat.
very few retailers of any quality/price/repute sell physical for bitcoin, let alone denominated in fixed prices in bitcoin, even at peak hysterical hype (right now)
apples priced in bitcoin would fluctuate wildly and you wouldn't be able to count on being able to eat any given day of the week buying food denominated in bitcoin.
the reality is that bitcoin is an unregulated security.
It's a volatile investment and it's fluctuations make 'fiat' currencies inflation/deflation pale in comparison.
The world's biggest EV market is China. 60% of their grid runs on coal.
It would be interesting if there's any climate savings from what they're doing with EV vs ICE given their infrastructure. I'm doubtful it's much if anything.
China's urban population is like 61% at the moment. Considering that EVs are more efficient in urban environments since they don't actually need to spend much energy when idling, I imagine that it's still more efficient to burn fossil fuels centrally for electricity than everyone in their own car.
I like to think of bitcoin as solving the sybil problem via proof of work. Because if you just gave every "account" coins, then somebody could just make multiple "accounts" and get more than they are entitled to. (I know bitcoin doesn't have "accounts" but bear with me.) By it's very nature it is wasteful.
Question: Has anybody tried to replace proof of work with social proof? Let every participant create their own fiat or scrip out of thin air. The different kind of scrips are not fungible with each other. Often scrip would be used like a voucher. You acquire it on the market and then return it to its emitter for goods and services. I can imagine digital companies or successful streamers to have their own scrip, but also local and national governments, or banks. If Joe normal emits their own scrip, well then it is at first worthless. Same as if you make your own shitcoin.
BUT the twist here would be that you can endow other scrip with your scrip's value. If you are a celebrity with a lot of value, you can put a little bit of your coins in the coins of, say, an environmentalist project you want to support. Suddenly their printed money can buy things they need.
In a way, it is the anti-bitcoin. Bitcoins are hard to generate, and the algorithm is strict with no room for negotiation. If somebody has a lot of coin but the majority doesn't like what they are doing with it, tough luck. Social scrip would be trivial to generate, and it's value is due to the services I provide to others, or the value transferred by others to my scrip, so a part of it is permanently up to negotiation.
Probably it is a crazy idea. I'm still thinking about how to make the "imbueing" work exactly while keeping the value stable (the current idea is some kind of page-rank algorithm). I'm also not sure how to incentivize people to keep the ledger running if there is no mining. But maybe somebody is already further along with this idea.
Not a crazy idea! I think this is the only decentralised system that can work long term. I’ve spent a long time thinking about it. Figuring out how to manage reputation is key, which you allude to with your comment about needing a page rank type algorithm.
For reputation + value, I was hoping to piggyback on external exchanges. Your coin is just worth what people are willing to trade for it. If you mint more coins, you have to sell them for something real, or they are not worth anything.
The hard part is the reputation transfer (or voting, or embuing). If you have 30 A coins and B puts 10% "juice" in them, does this mean you can use them like 3 B coins? Or can you convert them somehow? What happens when C puts "juice" in B? Or A puts "juice" in C? The potentially recusive nature reminded me a lot of Pagerank, but basically you will end up with coins that are a mixture of different coins, and you have to find an algorithm that converges.
I also think the economics are going to be really funny because suddenly price does not depend just on supply and demand, but your coins are going to be better or worse for certain purposes depending on how the emitters vote. (They are basically giving out vouchers to a bit of their surplus depending on what you buy.)
At 10c/kWh which is cheaper than anywhere in US it's the cost of 13.4B USD. Miners get the electricity cheaper than that but still, that's a crazy amount.
We often are told to save on energy consumption because of climate crisis but 134 TWh was used for Bitcoin.
What is Bitcoin useful for?
I use energy to cook, to get a shower, to work, to watch TV, and a lot of other things. But Bitcoin is used for financial speculation, get rich schemes, and all sort of scams.
And I am told to save energy otherwise I am a contributor to climate change, but Bitcoin scumbags can use whatever energy they want to cheat people and take their money.
This is what people call civilization. A good f#cking civilization.
To put this into a context, we must look at the problems faced throughout human history: Major conflicts for resources, starting with a small tribe vs tribe conflict, going up to a full world war.
A globally distributed permission-less system is a great step to decouple force and resource acquisition. The majority of the world energy consumption could be spent on it while still yielding a net positive.
If Bitcoin mining ends, then it's because Bitcoin ended too.
The block reward is lessening, yes. But miners also get the fees from the transactions in the block they mined, which incentivizes them to keep mining (mining is also what secures the whole thing).
I'd speculate that energy usage will go down somewhat in the future, but not significantly.
I can explain my own downvote, if you like: the article is calling for reform of Bitcoing to make it more sustainable. You're pretending it's calling for bitcoin to be abolished - i.e
a total strawman. You're also downplaying the enormity of the statement made by the post - including that Bitcoin has singlehandedly negated any climate gains we're making by electrifying cars. That's appalling, given the extremely low social or economic utility of Bitcoin at the moment.
I didn't see an article. I saw a tweet with statistics. I had to look for the article, it's further down past a few hidden tweets. I appreciate your written explanation, I'm not a fan of the "downvote as disagreement" mechanism.
Better for whom? The upfront investment is much higher. If the market buys energy from you, they give you money. You can turn bitcoin into money instantly without having to store energy. You don't care about the value of bitcoin fluctuating, you care about the instant profitability of mining vs storing the energy.
Sure, we get the arguments why people prefer Bitcoin mining to other possible uses for energy. We just don't see it as remotely plausible that this leads to a net increase in renewable energy available for things which are not Bitcoin mining (especially since Bitcoin demand for energy which costs less than expected block rewards is inexhaustible by design and gravitates towards the cheapest power source).
Difficult enough to find real world examples of places whose existing power demand became more economic to convert to renewable sources as a direct result of cryptomining, never mind to assume the scale of these ventures plausibly exceeds the amount of fossil fuels burned to mine Bitcoin or provide power for other activities which needed to find additional power as a result of Bitcoin mining.
From my limited experience as an observer of the cryptocurrency world, my impression is that mining hardware usually has a certain time period after which it starts paying itself off (6-18 months range). You can probably turn it into money relatively quickly assuming that there's enough real money coming into the system, but the cost of the hardware and the fact that all this custom silicon and electrical components present in the ASIC-based mining hardware results in additional cost, especially the environmental kind of cost that has to be taken into account. Those ASIC-s aren't much good for anything else once they've been made obsolete by generational improvements.
The cost of mining equipment makes it only economical to mine bitcoin if you can run the hardware 24/7, at least until the difficulty rate levels off. We can talk about hypotheticals or small mining operations, but the reality is that the big miners (Riot Blockchain, Marathon Digital Assets) are using coal and natural gas and are putting out hashrate that blow the “green” miners (dubious anyway) out of the water.
I'm usually a market proponent but bitcoin is a clear example of a market pathology.
It also clearly illustrates that government/regulators are incapable of acting quickly and efficiently, especially with interest groups involved, it's been over a year where it's plainly obvious that allowing institutional investments in BTC is a terrible idea.
> What we do know is this: if the latest efficiency improvements in data center hardware and infrastructure continues apace, it should be possible to accommodate a 60 percent increase in demand for both traditional and hyperscale data center services over the next 12 months, without an accompanying increase in the energy they consume. But in order to achieve this feat, it is imperative that data center operators follow energy-efficient design principles.
> The report by the Lawrence Berkeley National Laboratory has an encouraging conclusion. It states that improved energy is almost canceling out growing capacity. In 2014, data centers in the United States consumed 70 billion kilowatt hours. If energy efficiency levels remained as they were in 2010, the energy consumption by data centers today would be 160 billion kilowatt hours. The surprising reality is that the estimate for 2020 is only 73 billion kilowatt hours.
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Data center power consumption is a big topic, and a lot of people are talking about it and working on improving its energy efficiency.
At least data centers aren't designed to burn as much electricity as possible. Amazon is even giving me like a 20% discount to switch my services to run on the more energy-efficient ARM machines.
? data centers are a net negative for carbon emissions.
1. no need to drive to a bank/govt office/business when it has been digitized
2. watching a video on youtube, netflix or tiktok is basically carbon emission free compared to other forms of enterntainment that would be consumed if the internet wasn’t available
3. emails instead of paper snail mail, billions of trees saved since the 90s
In my darker moments I've come to believe that accelerationism is the only viable pathway to save the planet, since nothing short of civilizational collapse seems to be capable of seriously reducing our carbon emissions.
The 'planet' doesn't need saving - the planet is fine. No matter the damage we do to the planet through our predatory ecosystem exploitation, it will recover in a few million years. The most difficult step - the one that took almost 2.5 to 3 billion years, was eucaryotes and multicellular life. It's pretty unlikely we can do enough damage to undo that, even if we nuke the whole planet. The planet still has some 3 billion years until the sun turns red and that's plenty of time for another species to have a go at sentience.
I've also been hoping for the same thing. The faster the current system falls apart, the less painful it will be.
The years of daily grind combined with a feeling of hopelessness is what hurts people the most and causes lasting resentment.
The problem is that with the current system falling apart that will be it for modern human civilization. I wouldn't be surprised if the technological level fell back a few hundred years.
Our civilization is too interdependent with no place being able to sustain any level of advanced technology on itself. We traded all the resilience we had for "efficiency". Our current system is very brittle and if it fails, it fails globally. Expect hundreds of millions to die if it does.
I disagree with this. IMO, it's just propaganda that the elites use to maintain control. Look at all the economic 'miracles' in Germany, Japan, South Korea, ... Pretty much any time a developed, highly educated country had fallen, it managed to return to even more prosperous levels than before.
I have issue with the massive cost in other peoples lives you seem to be ok throwing away with such pronouncements.
We have to FIX our system, not make it worse.
The reality of trying to force our entire civilization to commit mass suicide is a slow horrible intensification of all that is wrong with the world.
Please do your part to spread the word to your fellow nihilists. (by definition, not my opinion nor an insult)
How much energy did the standing army for the dollar and it's logistics network consume during 2021? Much, much, much, more. And yet the energy expenditure to defend the Bitcoin network from attacks both succeeded using far less and the energy was used completely non-violently. Bitcoin's efficiency and morality stands head and shoulders above nation state based mechanisms for defending the integrity of their currencies.
And no, bitcoin doesn't depend on one single country. If, say, China made it illegal (hmm!) it'd still keep working. So no, a nation state going down does not actually kill bitcoin but it would kill that nation's currency. We'll see how well the Ukrainian hryvnia holds up this spring.
The counter argument is that Bitcoin is a battery [1] so that if you live in a place like Iceland with plentiful energy, so much that even exporting it as aluminum leaves extra, then you can turn it into Bitcoin and export it that way.
But most Bitcoin mining is not that. I feel like Joni Mitchell in the Big Yellow Taxi: "They paved paradise and put up a parking lot" [2] Why are we allowing this to happen? (Well, at least outside China)
Bitcoin is a sink, not a battery. You can dump excess power into it, but you can't take it out.
The aluminum analogy is apt, but at least I can cook eggs on aluminum pans and wrap my leftovers in tinfoil, even if I can't turn it back into electricity. Bitcoin and other PoS schemes have no such upside.
The "Bitcoin as battery" analogy fails for at least two significant reasons, IMO:
1. If you spend energy to produce, say, charged batteries or aluminum or biodiesel, that allows you to do something useful with those resources without needing corresponding energy consumption later. When you spend energy to mine Bitcoin, there's no way to use it to decrease your future energy needs; you can only use it to pay others and induce them to produce something you want, spending even more energy in the process.
2. With most energy production methods, you can get at least a bit of extra efficiency by scaling up. But the Bitcoin economy in aggregate can't produce coins at a higher rate; the best you can do is compete for a larger slice of the fixed pie. So even though each individual miner is incentivized to spend more and more energy, the economies of scale are negative.
When Nick Grossman's article was posted 9 months ago [1], there were people who argued in favor of Bitcoin as a battery, but now it seems Bitcoin is so hated that my original comment is headed into negative territory and I'm arguing alone, so I'd use this as a sell indicator if I had any Bitcoin.
I don't like the energy wastage of Bitcoin anymore than anyone else. This needs to be fixed and firing up old fossil fuel plants, for example in upstate New York, needs to be outlawed.
I just thought the Bitcoin as battery was interesting and I stand by it. I can imagine cases where abundant renewable energy sources are not being utilized because they are geographically remote and Bitcoin mining is a way to get some value out of it.
If you use energy to process aluminium at the end you have aluminium.
If you use energy to move bits in a computer at the end you have heat and the result of a calculation. If that calculation was just to proof that you did the calculation, well, that doesn't sound very efficient to me but that's just my opinion.
The thing about battery is that you can take the energy out of it. It stores energy. That's the entire point of a battery. How on earth can you do that with Bitcoin? If you can't, Bitcoin isn't a battery, it's a black hole.
Yep. At best, it's a black hole that pays money to the people lucky enough to have spare renewable capacity.
But the extra money is of no help to the climate. From an Iceland's point of view, the alternative to using excess geothermal to Bitcoin mine is (i) build smaller geothermal power plants which have even smaller carbon footprints to build/maintain or (ii) reduce the carbon footprint of other countries by courting their energy-intensive industries with low cost renewable electricity.
Not just a black hole, but a black hole that rewards people for using spare renewable capacity in a profoundly wasteful way.
The bitcoin network (and all PoS) schemes incentivize waste beyond merely throwing away power: they incentivize e-waste, frivolous cooling and refrigerant use, &c. It's strictly better to just dump excess capacity than it is to use it on PoS schemes.
Ideally, you would mine your Bitcoin in Iceland or Chile [1] with geothermal or hydro and buy corn from Iowa with it and the farmers there use it to buy power from the local windmill grid, so it's a battery in that sense.
That's not a battery -- that's a form of economic triage where you burn power to produce tokens that allow you to buy power somewhere else. To use the analogy: nowhere is the battery being "drained".
Edit: to make the analogy more complete: a bitcoin is, in effect, proof that energy has been wasted. Using a bitcoin to purchase renewable power from a windfarm is tantamount purchasing that power with empty batteries or empty oil drums.
You are literally correct, but if I use excess energy in Iceland to create Bitcoin, which I electronically send to Chile to finance a hydroelectric power plant, thus making electricity available in Chile that previously wasn't, how is that not like charging up a battery in Iceland and sending it to Chile?
Because you've expended the energy twice: once in Iceland, and again in Chile. The "battery" analogy requires a transfer of power, not a transfer of proof that the power was spent.
Except it’s not really like a battery because you can’t get the energy back out. The energy ultimately turned into resistive heat and was lost. It’s more like something you manufacture using energy, which is most (all?) things.
I like cryptocurrencies but this high electricity usage has kept me away from Bitcoin in the early days. I've since come to forgive Bitcoin for this ridiculous energy usage because of how important a problem Bitcoin is solving (the world desperately needs provably scarce, deflationary hard money). It's just unfortunate that people chose to focus on Bitcoin and not some other PoS crypto which uses less electricity... Unfortunately, now there are all sorts of false narratives around how PoW is more secure than PoS and the Bitcoin tribe will not accept any argument which says otherwise, no matter how logical.
I think we are stuck with Bitcoin for now. It's unstoppable. The delusion is too strong. But on the plus side, it will likely solve major economic problems once it reaches mass adoption.
So that the richest people don't have unlimited money. Compounding returns yield unlimited money for those at the top. The real economy does not experience compound growth like the economy of numbers does.
Those at the top of the pyramid have unlimited money due to compounding returns facilitated by infinite money printing. So long as the real economy treats those unrealistic numbers as if they represent real economic value, everyone else is enslaved to those at the top.
What's scary is that the whole thing was designed to be unstoppable.
My utopian hope for the future is that we start sending rigs in orbit close to the sun. Since we only need to send a few bytes back to earth this becomes the only competitive way of doing mining. Space travel thus becomes dirt cheap. Humans are finally able to explore the solar system.
But that's just a dream. Realistically, we are screwed.