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A faster, more efficient cryptocurrency (news.mit.edu)
584 points by salvadormon on Feb 18, 2019 | hide | past | favorite | 815 comments



I have long wondered how cryptocurrency fans would answer the question:

‘Would you be happy if the crypto-utopia you bring up happens in the next 10 years, and all value is stored/transacted through a cryptocurrency, but it was a coin that you do not possess now, nor could you transfer any of you current currencies into it?’

Say tomorrow someone releases the one true coin, but no one notices. All other cryptocurrencies drop to zero value, then a crypto miracle occurs - the one true coin is uncovered and almost overnight becomes the defacto monetary standard. Would crypto fans be satisfied?

This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?


How do you think bitcoin started ? You'd had to be crazy to believe in it 9 years ago, and spend time and energy in the community, nlt to lention monney, to foster the project.

My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things.

Btc was banana money at first, and only people believing it would be a great thing as a concept made it work. We didn't expect to make banks, it was a happy side effect of a mad naive bet.

All great things start like that. Comics are now the thing, but 20 years ago were still for pationate nerds.


> My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things. ... All great things start like that.

"But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright Brothers. But they also laughed at Bozo the Clown."

-- Carl Sagan

https://www.brainyquote.com/quotes/carl_sagan_163043


“First they think you're crazy, then they fight you, then you change the world.” - Elizabeth Holmes


Elizabeth Holmes, who is currently on trial for fraud charges for covering up the fact that her magic blood testing machine was too magic to work in the real world.


I think that was the joke (although admittedly sometimes you can’t tell on HN).


I can confirm that that was the joke :)


It's not exactly same but the quote credit goes to https://www.brainyquote.com/quotes/mahatma_gandhi_103630


That's the joke.


I don't think she is the original author of this quote.

Going to share another quote, which I think is relative here -

“Those who are crazy enough to think they can change the world usually do.” - Steve Jobs


If Jobs had been just a little less crazy, he might still be changing the world.


She's not, that's the punchline!


The irony is that she was a Steve Jobs fangirl, or copycat if you will.


Sadly those you think are too crazy to change the world, usually are


s/Sadly/Thankfully/


I feel like the "usually" is pretty important here.


Did he actually write that piece of the commercial? Or any Apple commercial becomes a Steve Jobs quote.


But they were right to laugh at Columbus. He was right for the wrong reasons.

Of course, if you don't ever try it, you can never be right for any reasons.

Bitcoin is IMO likely somewhere in between. It kickstarted a new concept in IT but money is a really simple (although powerful) usecase. I'm more interested what will be done with the concept in the future.


> But they were right to laugh at Columbus. He was right for the wrong reasons.

He wasn't even right. He was wrong in his estimation of the earth circumference, and lucky that America was there between both oceans...


He didn't say he was a genius. He seemed to imply he's the one laughing at people with all his well-earned money now :)


It's a little ingenuous to use the word 'genius' for people who put gas money into a meme currency 9 years ago


We were talking about being genuine, and here you come implying I brag that I was smart.

That's really rude.


You're rich now, so you have to get used to this.


Bitcoin doesn't work in any meaningful sense. It can't be used for purchases in most contexts and you can't use it as a stable store of value. It is also controlled by dubious actors and mining is a horribly destructive practice, both in terms of environmental waste and the constant nuisance of people stealing CPU time. But you were saying?


If you're saying "Bitcoin doesn't work in any meaningful sense" you simply just haven't used Bitcoin. It works absolutely fine, even great most of the time, and accomplishes what I personally see as its purpose.


In what way?

* Mining has become highly centralized, the opposite of its original intent.

* Transaction fees are too high to justify its use in every day transactions and small transfers.

* Very few merchants accept it for every day transactions, and the number has decreased over time.


Yep. Perfectly fine as tech beanie babies.


As a POC of an alternative medium of paiement.

As an idea, a hope, the starting point for iterating on the future of money.

As a way to make the society think and debate.

And as all that, I think it had been successful.


What exactly are your measures for success?


It can be used for purchases via services like Bitpay which can automatically give a fiat value for the cryptocurrency amount, hence shielding you from price volatility.

Generally though, merchants wouldn't bother accepting it. Alongside the fees and whatnot, adoption is too low, fees are too high, time to confirm is too high, and it can complicate some legal stuff (like issuing VAT invoices).


Mining is the most harmless use of botnets.


It does not really matter how it started but how it is now. I would bet that all these selfless visionary nerds who believed in bitcoin from day 1, now are less than 0.1% of the people who deal with bitcoin today. The rest 99.9% are there for the easy money. At least, this is what I see from my surroundings and the feeling I get from the internet. It might have started great, but it got alienated along the way.


You’re quite noticeably not answering the parent’s question, while simultaneously proving their point.


20 years ago marvel declared bankruptcy because of major missteps following a speculation bubble in the early 90s.

Despite being a dominant force in film, they're selling poorly today.


BTC will always be banana money.


I disagree, one day it will be a footnote in a history book about banana money. Sooner than some think.


Let's add this to the list of Bitcoin obituaries that countless people have declared over the past 9 years. Every year that goes on and the network is still kicking is just building its base value. Bitcoin network will out live Hacker News.


> This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?

That is a brilliant question!

Instead of all the endless bickering between crypto-fans and -haters reaching from technology to fiscal policy to society, it reduces the conflict to one simple test, as a sort of precondition.

Anecdata, but just going through my set of acquaintances, personal profit was always a factor. And I never even thought to question it. In hindsight, however, it seems (1) such an obvious thing to do, and (2) makes it clear to me that my acquaintances probably wouldn't give a damn about crypto if there wasn't a chance to profit from it.

I mean, the only reason Bitcoin went mainstream in the first place is not because of the technology (which existed for a decade), but because there was a extreme bubble (again) and mainstream people wanted to get rich quick.


I always have been excited about Bitcoin because allows me as a developer to do things with money in the internet. I could create a service like PayPal without the need of having deals with hundreds of banks all over the world. A homeless can have a btc wallet but probably not a bank account. I could automate transfers and payments. In countries like Argentina there are a few banks and they're really bad quality, both in terms of services and tech, so there are not things like stripe, etc.

I'm talking just about the positive potential of Bitcoin as a technology. There are many downsides and the current landscape of cryptocurrencies is not so great.

My vision is that crypto is going to be used like credit/debit cards, as a way to use money digitally, but it will backed against fiat.


> I always have been excited about Bitcoin because allows me as a developer to do things with money in the internet. I could create a service like PayPal without the need of having deals with hundreds of banks all over the world. A homeless can have a btc wallet but probably not a bank account. I could automate transfers and payments. In countries like Argentina there are a few banks and they're really bad quality, both in terms of services and tech, so there are not things like stripe, etc.

But the problem is not the technology (it is there and exists for decades), but the laws. Better concentrate on that problem.


It's also the technology, currently outside of crypto you're always going to be connecting to some company's servers using their API after you get their authorization.

There's no way the current system can have a stable and uniform API that works globally.


For me it's like asking, would you want Amazon to succeed if you did not profit from it?* Obviously, if I am not personally invested in Amazon, I don't really care that much. But it still could have value for society for other reasons than getting rich off of speculating.

For example: https://www.coindesk.com/crypto-gaza-west-bank-bitcoin-pales...

* To those people who say, "You can't compare crypto to a company because companies pay dividends," that is specifically why I chose Amazon as an example, a stock that does not pay dividends.


Don't compare a company to a tech.

As an example of a tech, if someone asked me would you want self driving cars to succeed if you could not profit off of them, I would say that's a resounding success. A lot of people are excited about this tech because of the improvement in their daily lives, not because of a profit motive. Compare that to crypto


Tech: would you use git if it wasn't popular?


The right question would be: (assuming that there isn't already a monopoly) would you want one specific VCS to gain a monopoly if it was one you have no experience in it? (and all your mastery of other VCS would so become worthless)


To answer both questions:

1) I would want Amazon-like businesses to succeed -- in the sense of "someone who finds a sustainable way cut the fat out of retailing" -- even if I could not profit as a shareholder. But I still think I would benefit (as a buyer) from that success.

2) I would want decentralized, arbitrary-money-printing-proof cryptocurrencies like Bitcoin to exist as a shield against governments that inflate away their money (like Venezuela or Zimbabwe) or abuse their central bank status for bailouts (in the first world), even if I could not profit as a holder (sorry, HODLer) of the currency. But I still think I would personally benefit as a prudent saver and (non-politically-connected) investor.


I am a cryptocurrency fan and developer who wants to build services on top of cryptocurrency networks.

I want a cheap, fast, decentralized solution for token ownership with a great user experience. I want to build back-end solutions for crypto-tokens representing digital collectables, in-game items, etc.

I need a critical mass of users before these services start to become viable as a business model. Thus I need a cryptocurrency for tokens to succeed in a meaningful way. And I want this regardless of whether I own the native token of this network.


The anarchist in me wants to believe that cryptocurrency will diminish the power of the state but I don't actually have enough faith in humanity that we will come up with something better than crypto-oligarchy.


Why the surprise? BTC is a shallow clone of the bad parts of commodity currency. Nothing new, no new values. Just tightening the same old screws another notch.


We'll just see the same powers that be gain power in any specific crypto except now we have less protection laws in place.


When new technology or some other fundamental change makes enforcement of the rule of law harder, We The People will grant enforcers more privileges to make sure that they are still able to do their job. It's a job We want done. The road to police state is paved with anarchist intentions.


Sort of. Baudrillard seems to argue from a anti-fragility standpoint and asserts that acts of terrorism have the opposite effect as intended and only seeks to strengthen the hold of the incumbent system even more (see PATRIOT act, new TSA screenings). I agree that technology generally amplifies the power of those that already have power, but I wouldn't go as far as you. I think that banking on any one thing is not the way to go, you need to abandon anything that becomes coopted and always seek destabilization in whatever form it appears.


The story of cryptocurrency over the past couple years has been a really interesting case-study in the application of Libertarian principals.

It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.

To me it's evidence that some form of governance is required to build something which can actually serve the greater good. I also would like to see a stateless currency work out, but there are clearly still quite a few problems to be solved before that will even seem like a possibility.


> It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.

Care to elaborate? Some examples?


Well, as one other commenter mentioned, with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.

Another example would be exchanges: a vast majority of people do not use cryptocurrency in a peer-to-peer fashion, but instead go through a small number of centralized exchanges, which have been known to freeze withdrawals, have been riddled with theft, fraud, and a playback of all the financial schemes dreamed up in the last few centuries which have not yet been regulated against in cryptocurrency (pump and dump, Tether etc.).

On top of that, the crypto media sphere seems to be completely unreliable: I've seen many headlines which are deliberately misleading with the intent of stoking a one-sided, glowing narrative about cryptocurrency (I.e. a crypto startup opens their account at Chase bank and the headline reads: "X Coin Begins Partnership with J.P. Morgan Chase", and related online communities are heavily moderated to support the official viewpoint while silencing others.

Long story short, when I bought a little bit of Bitcoin to play with a few years ago, I could buy a coffee with it, and I could even make purchases with it on Amazon. Since then it's gotten much less useful to the average user.


> , with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.

>Another example would be exchanges

Interestingly enough, with regards to bitcoin, there was a huge powerplay that happened a couple years ago. And this debate proved who had the real power.

A couple years about, almost every major exchange, bitcoin company, merchant payment processor, and bitcoin miner, wanted increase the bitcoin blocksize, in order to reduce transactions fees to users and help adoption.

(Even though this directly hurt the miners, the miners still wanted it, because they supported adoption. Crazy, I know)

But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.

And this was in spite of the fact that almost every single major player in the space wanted this change.

So crazily enough, the central authorities of the bitcoin protocol, are the couple people who hold the keys to a github repository.


> But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.

This is blatant re-writing of history.

A fork was written, Bitcoin Cash, but most people/miners/companies didn't want to use it. It was widely known and the differences/advantages/disadvantages were discussed ad nauseum for months/years.

A Github repo can't force people to run it's code instead of another.

> And this was in spite of the fact that almost every single major player in the space wanted this change.

So why did they keep running Bitcoin Core instead of the fork?


> So why did they keep running Bitcoin Core instead of the fork?

Because it turns out that controlling a github repo is a very powerful power.

> A fork was written, Bitcoin Cash

This has nothing to do with Bitcoin Cash. This has to do with 2XSegwit. An initiative that was supported by every single major miner, all of the exchanges (coinbase, gemini, kraken, ect), as well as the major merchant payment processors (IE, bitpay, and all the others).

There are statements after statements made by all of these players, where they stated support for it. Unfortunately, it seems like the people who control the bitcoin protocol, the developers, had too much power, though.

Did you disagree that every major miner, and Bitcoin business like coinbase and BitPay, put out messages in support of the 2X Segwit agreement?


The ten MB block size limit lowers the number of transactions that can occur in a single block therefore inflating what miners can charge for a transaction. Increasing the blocksise would require miners to choose to mine a hard fork. See the DAO hack for what can happen with strong governance.


The Bitcoin block size limit is not 10 MB.


Without a small block size you would end up with a centralization of nodes onto datacenter servers.


We anyway have ended up with a centralization of nodes onto datacenter servers, so it's hard to argue that it would have made a difference.


> design has given way to a clear power structure

Example? Community decision making when forks occur.

> largely used it to pursue their own personal enrichment

I'll let someone else provide examples of that one :)


Sorry to be "that guy", but libertarianism != laissez faire, it's a principle about governance of people. The gold standard is just as libertarian as cryptocurrencies, and that doesn't require governance to function, and governance through a private centralized bank that everyone opts into is also libertarian. Governance certainly helps in making things more convenient, but it's not required or necessarily desired.

For example, if there are problems with scams or whatever (e.g. impure gold scams, or cryptocurrency manipulation), people may choose non-coercive governance, like banks (e.g. through something like GNU Taler with a bank-backed currency). You could do this with any currency you choose, so which currency you use has little impact on the structure of government and how it interacts with the population, provided the government stays out of it. Because of this, fiat and resource-based currencies are equivalently acceptable for libertarianism.

So yeah, maybe cryptocurrency is tangentially related to libertarianism in that many libertarians are interested in them as an alternative to central, coercive banking, but that's about where the relationship ends. Libertarianism doesn't care if you have governance, as long as that governance doesn't use force.

And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.


> And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.

They used to be. I made online purchases and bought coffee in real life using Bitcoin just a few years ago. The evolution of Cryptocurrency has been away from any real-world usefulness, and toward its current incarnation as a largely speculative instrument.

And I would argue that in fact this has been the result of a Libertarian experiment playing out. Everything about Bitcoin has been opt-in: in principal anyone is free to own a node, and the community would have been free to opt-in to a governance structure which would have discouraged actions which made Bitcoin less useful to the majority of users, but this is not what happened. Instead power was consolidated in the hands of a few, who chose their own self-interest to the detriment of the larger community.

I am not a fan of coercive government, but I struggle to see how the story of cryptocurrency to this point does not provide evidence that some strategy is needed, beyond maximal personal liberty, to discourage bad actors from causing disproportionate harm to the collective.


your definition of libertarianism is off by a century


> those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole

You say this like it's a fact but I feel like it's the opposite. There aren't many compelling examples of this. And to the extent that there are, they exist in a competitive market and their fate is determined by users and investors, who weigh the cost of the greed vs the benefit of the technology and reward/penalize accordingly.


What decentralization of power has occurred in a way that significantly different than any other market? Exchanges presumably control most of the coin. Pump and dumps seem to been extremely likely.

It might not be worse but IMO it hasn't proven to be better.


How are you going to hold any amount of digital money without entrusting another organisation to hold it for you?

That's the decentralisation of power that has occurred.

You don't have to prove your identity. You don't have to prove anything to anyone. You just download some software and generate a private key. Bitcoin is to money what the internet was to book publishing.


Its not anonymous. Its the opposite, in fact. Every transaction is recorded and traceable.


I didn't say anything about anonymous.


Absolutely — I would gladly trade all my gains for a world where governments have no control over the creation and regulation of money.


> I would gladly trade all my gains for a world where governments have no control over the creation and regulation of money.

In that world, there would also be nothing to stop anyone else from just taking your money by force and without any consequences.

The loudest voices against government regulation of finance usually belong to those with the least understanding of it. Most of the regulation is just there to protect market participants.


Why do governments have to simultaneously be in the business of (1) securing people’s property and (2) creating money and regulating the monetary supply?


Because regulating it is an important part of securing it. They're not separate things.

If I am a victim of fraud and lose my money, I have the concept of the rule of law to help me get my money back. In a decentralized world there is no way to get my money back.

Besides, it is the government's job to help society function well, in part by making the economy successful. Money is just a tool to do that.


> If I am a victim of fraud and lose my money, I have the concept of the rule of law to help me get my money back.

The governments ability to print money has absolutely nothing to do with its police force.

If someone steals money from others, then the police should go in and arrest them. The police don't need a printing press to do their job.

It is perfectly possible for the rule of law to exist, and for decentralized currencies, to also exist at the same time.


The government doesn't have to supply my shoes for me to be able to go to the police when someone steals them.


They have to supply the money so that they can have something which can be collected with reliable value for taxes. If your government allows you to pay taxes with monopoly money, then Hasbro becomes King. If the government supplies the money, there is no external organization which can inflate the supply to gain control.


Because to most people, stability of said property is just as important as possession of it.


> without any consequences

there are going to be consequences. It's just that they will be enforced by smart contracts instead of governments..


> by force and without any consequences.

if that 's the only problem with cryptocurrencies, it can easily be solved with insurance


A predetermined monetary policy would be great when a financial crisis or credit crunch hit, causing a collapse in the velocity of money /s

While I have invested in crypto and believe it has great potential, one of its touted benefits by its supporters is also one of its biggest pitfalls, namely that its money supply is predetermined. The inability to actively manage a money supply given exogenous shocks to the economy is a big problem.


I 100% disagree, the central planning of money is (1) what causes inflation, and (2) greatly exacerbates (and in many cases creates) financial crises.

Any supply of money will do, the idea that money should increase in supply along with population growth (or some other arbitrary metric) otherwise we’ll permanently live in a deflationary disaster is an imagined monster — we live in the here and now, therefore people have to spend some amount of money to live (food, housing, entertainment, etc) regardless of whether they perceive the purchasing power of money to increase in the future. By centrally planning (and thus inflating) the amount of money in circulation during financial crises the only thing that is accomplished is a re-inflation of the bubble — essentially they’re sowing the seeds of destruction again, causing the next bubble in an attempt to cure the last one.

Please read this explanation of the financial crisis, I’d be happy to comment further if you have specific critiques on this article (and no I didn’t write it):

https://www.unqualified-reservations.org/2008/10/misesian-ex...


A low, but positive, inflation rate is of critical importance.

> Any supply of money will do.

That is just nonsense. If you have a fixed money supply, given that economic growth is happening, would result in a naturally deflationary currency. That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.

The problem then is: if you want a low rate of inflation but there is a natural variation in the growth rate due to the cyclic nature of the economy, then how to create a system that could do that without a monetary authority.


>That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.

In what world is this true? Time preference is a real thing, and it is unrealistic to assume that 100% of the population will put off non-essential consumption and investment because the price of a Ferrari will decrease by 2.353% next year. Time is a very important factor in the consumption/investment decisions that people take, and modern mainstream economics neglect this fact both on the micro-level and on the macro-level, which is why crazy theories about the neccessity of inflation-rate targeting are able to arise. Most people put their savings in a bank account which the bank lends out to businesses to invest in projects - if anything more savings will lead to more investment than otherwise, which is more important to the bedrock of an economy than spending on consumption.

Also worth pointing out that the period during which the United States experienced its most significant economic growth (mid to late 1800s) was during a period of severe deflation of the dollar.

Keynesian economics (and more generally monetary policy) and inflation-targeting (i.e. the neccessity of having a positive inflation rate) is both theoretically disproven by the existence of time preference (a time preference of zero is literally impossible, it means starving to death) and its heterogenous distribution in a population, as well as empirically by looking at the periods of deflation in the U.S. dollar during the 1800s and the associated economic growth.


Nice to see a handful of people have seen through the Keynesian idiocy they inculcate everyone with in public education!


Prove it, show me the world where we had a stable monetary supply that resulted in people having no incentive to invest in anything — where’s the experiment?

Again, you HAVE to spend money to live (otherwise you die). It’s impossible to live without food and water, most people want to live in a house, most people want entertainment, etc. None of those things can be had without spending money.

Also, if your argument is correct, why don’t people put 100% of their money into the stock market (which reliably goes up over long periods of time) and instead choose to spend it?


Money is fundamentally used for two different things, as currency to help trade and to store value.

Once it becomes too useful as a value store, it stops being used for trade, which hurts the economy.

So therefore some inflation is a good thing, it means the money keeps moving. If you want to store value you do that with assets other than money.


I think it makes sense. You have an economy built on an economic model rather than an economic model based on an economy.

With the latter you're constantly guessing and tweaking the model and roughly every 10 years there's a crash and the economists say okay, NOW we have it perfect and we'll never get it wrong again.

Why do you need an unlimited money supply? The only thing causing these shocks is that the economy is doing whatever it wants and then the economic model collapses.


Economic growth is very heavily tied to increases in the money supply less inflation for developed countries. Without this debt, the cost of doing anything in our economy would be way too large and it would be very difficult for our society to operate. Additionally the need for economic solvency to protect the current social structure is what necessitates government involvement.


Exactly, any supply of money will do, no need to permanently increase the amount in circulation — this is why the market settled on gold (which has an inherently low inflation rate due to the difficulties of mining) and impossible to pass off counterfeit gold at scald.


You need inflation for proper incentives. It's like a tax on the entire network to keep it supported. Without proper incentives, the game theory collapses.

The difference here is that inflation is predetermined and set instead of printing money on demand like we do in the traditional financial system.


“You need inflation for proper incentives. It's like a tax on the entire network to keep it supported. Without proper incentives, the game theory collapses.”

What, specifically, do you think the consequences of a stable money supply are?


Deflation, which given a growing population would always be a given. In turn deflation makes the entire debt system collapse , which is the backbone of economic growth especially in the developed world.


Why should debt support an economy? Without such massive inflation people wouldn’t need to take on much debt to make large purchases such as cars/houses because the prices of cars/houses would be much, much lower.

It only makes sense to take on debt if you have a productive way to put that money to use (Eg a business) that has a higher rate of return than the interest rate.


Debt is the backbone of US GDP growth, money enters the economy as debt, is used to purchase something like a car or a house, subsequently it then reenters the banking system as the person who is being paid deposits their check, and then gets re-loaned out only to often immediately end back up in another domestic bank account that then loans out even more money.

This cycle can continue forever, and the faster this cycle occurs the higher our GDP.


No incentive to support the network if there's no block rewards. The transaction fees are not sufficient and just meant to prevent spam. It's also better to tax the network as a whole (through this set inflation) than to tax for each usage.


I misunderstood you at first.

That’s an interesting speculation, but it remains to be seen what will happen when inflation is near zero.

If people value transacting on the network, then they will pay the necessary fees to keep it running. If they don’t then it will go down.

I suspect this isn’t the big issue people think it is, regardless there’s no way to “prove” that transaction fees won’t be enough — everyone from miners to speculators by owning mining equipment and Bitcoin are specifically betting that transaction fees will be enough.


There's an assumption here that the network will be used and valuable.

If the network is used more it will be more valuable, which means the reward value will increase as the inflation decreases. If nobody uses the network then it'll be worthless, which at that point it doesn't matter since nobody is using it.


There are crypto currencies with built in inflation.


The market has settled on gold? For money? What?

The market moved on to other forms of money centuries ago.


This is categorically false. The gold standard (albeit a reduced version of it established under the Bretton-Woods monetary regime) was abolished in the United States as recently as 1971. In Switzerland this link was abolished in the early 2000's AFAIK.


It was only loosely linked to gold even at that point, fractional reserve banking has been going on for a long, long time!


Yes, but using it as a symbolic backing of fiat currency is not the same as using it as money.


>this is why the market settled on gold

Gold, which, by the way, has an extraordinarily high energy and environmental cost to extract.


That’s not a bug, it’s a feature — if it were easy to extract (like aluminum), it would have been much more inflationary and thus not a “good” choice for money.


I didn't claim it was a bug. I was trying to make the point that all the tree huggers that scream bloody murder because of Bitcoin mining costs never look at the actual environmental cost of existing systems.


Gold is a fringe commodity valued by a similar small subset of the population that values bitcion. And yeah, I'd say that those people are also causing similar problems to bitcoin because they incentivize significant environmental destruction. Even worse than bitcoin, they also increase the costs of real commercial use cases for gold.


> Gold is a fringe commodity valued by a similar small subset of the population that values bitcion.

https://en.wikipedia.org/wiki/Gold_reserve#Officially_report...


Ah gotcha, misunderstood your comment — good point!


> The inability to actively manage a money supply given exogenous shocks to the economy is a big problem.

Have we seen this to be a problem within the context of Bitcoin?


> I would gladly trade all my gains for a world where governments have no control over the creation and regulation of money.

Indeed. And not just because they're absolutely terrible at it: giving control over money creation to a government is like giving a drug addict the keys to the heroin factory.


Don’t know why you’re getting downvoted, your comment is spot on. Governments can’t be trusted with money, the incentive to cheat is too great.


What would you call the near-daily exit scams, pump and dumps and ponzi schemes in the "crypto" world if not "cheating"?


They're the same, but when your government does it, it's not really opt-in, unlike with all the crypto frauds.


I've never once been forced into anything resembling a pump and dump, ponzi scheme or exit scam by the government.


If you do live in a country where there are compulsory contribution to a retirement system, then you are forced to contribute to a ponzi scheme. You may just not realize it.


You realize people do that with fiat money too, right?


Bitcoin is giving heroin dealers the keys to the money factory, which is obviously much better.


Outside of what others replied to you with, there is another aspect I find about it, that truly resonates and excites me, despite not being a holder. To me, Bitcoin is also a large experiment where laws and rules are written as open source code, which any1 code fork and run their own version of it, or any1 can submit a proposal for.

This is what traditionally legal system with the power of violence used to deal with before. Now we see it implemented as a code. This part is more exciting to me than trying to sidestep whatever misguided government (not just US) rules and actions are.

EDIT: Perhaps proof of work based on burning energy, which is expensive and tends to bring centralized parties, is not the best way to ensure rules are enforced, but the fact the whole thing is open source is great in my opinion.


I don't accept this assessment of how Bitcoin's consensus fundamentally works. Yes, anyone can fork the code, but consensus comes only when the miners choose a fork.

As far as I can see, there's no significant incentive to mine other than money, so miners want money, so you can persuade them with money.

The "consensus" is fundamentally an auction.


Unless people really use bitcoin to pay for stuff. Then, whatever token can be exchanged for something of value is the one everyone wants, doesn't matter if the miners fork


Unfortunately bitcoin becomes steadily less useful for actually using and paying for stuff as time goes on. Back in the day, it could be used on amazon, buy a coffee etc. Now its just a bizzare experiment in markets without consumers.


yep and therein lies some power. There have been a few wars within bitcoin already. In the real world, people would have died. In the coin world, people just voluntarily chose different pastures.


Yes. I think there's value in reducing the politically privileged's means to dominate their power over the general populace. It is my personal belief that people are in poverty because they are politically disposessed, as opposed to the opposite causality arrow (ok obviously it goes both ways but my belief is that it's mostly the other direction).


> I think there's value in reducing the politically privileged's means to dominate their power over the general populaced

Cryptocurrency doesn't do this.


Cryptocurrency hasn’t done this yet but it certainly has the potential to do exactly this.


How?


The simple fact that you ask this question tells me you don't live in india, where a few years ago the government straight up deleted quite a lot of personal wealth by declaring the two largest notes worthless with mere hours of warning:

http://time.com/4567605/india-currency-change-queues-delhi/

The original statement was:

> I think there's value in reducing the politically privileged's means to dominate their power over the general populaced

We can argue whether there's value in that. But if you're asking /how/ bitcoin et al can do that, the answer is that it removes direct control over the currency from nations and parliaments.

They may still be able to wield indirect control through a variety of other means, but that /is/ less control than simply being able to declare 500 and 1000 rupee notes valueless.


As long as you can't buy food or pay your electricity bill with any cryptocurrency, you haven't achieved any of these things.

So the question becomes, why should the supermarket or the utility company accept crypto payments instead of dollars, when they know the former can lose 20%-99% of its value overnight, while the value of the latter is guaranteed to be kept stable by the government?


The key word in this discussion is potential.


Ah, but you don't need crypto to have that potential. Anyone could issue their own currency, and try to convince people to use it for actually buying and selling stuff. But that convincing part is really the key, and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.

People and companies want to have a central, stable issuing authority they can trust.


>Anyone could issue their own currency, and try to convince people to use it for actually buying and selling stuff. But that convincing part is really the key

Absolutely true, see EcoCash. It's a fascinating case study.

>and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.

Trust is a relative thing. EcoCash is issued by a mobile phone provider. That should be crazy (who would trust verizon to issue currency?) except that _literally no one_ trusts the Zimbabwean government to issue currency any more, so the phone provider won by dint of a) being in the right place at the right time and b) being relatively more trustworthy.

Actively building trust is something you need to do if you've got a pile of venture capital burning down that you need to pay back before you go broke. However, cryptocurrencies are usually not VC-backed products, and therefore don't have time-bombs strapped to them. Bitcoin is doing extremely well in Venezuela right now as faith in the bolivar drops through the floor. Cryptocurrencies are at this point extremely well position to be conveniently accessible any time people's faith in their national currency drops enough for them to start looking elsewhere. This is a slow burn situation.

>People and companies want to have a central, stable issuing authority they can trust.

I'd love to see a citation on that. People trust a wide array of deities and insist that the deities other people trust don't exist. This is a Homo economicus argument, it seems unlikely that we can quantify what people want and how they trust so easily. My anecdotal observation is that people want to have something that sounds plausible enough that they feel comfortable not researching the details. If people wanted a central stable issuing authority they wouldn't accept fractional reserve banking.


> > People and companies want to have a central, stable issuing authority they can trust.

> I'd love to see a citation on that.

Didn't you just provide two examples yourself (Zimbabwe and Venezuela) that alternative currencies are being adopted precisely due to the lack of a stable central issuing authority?


It's not just the stability but also the direction of the change.


Where I live is irrelevant to my reasoning so I'm not sure why you brought that up.

Cryptocurrency doesn't diminish a government's ability to enact financial policies within their sovereign borders.


Typically, states control the money supply, and typically in the direction of impoverishing laborers to fill the pockets of privileged interests. Diminishing this power alone could be transformative.


Cryptocurrency doesn't cause a government to lose control of its money supply.


It doesn't, but it does bring competition to the government controlled money monopoly. Competition is generally seen as a good thing for the majority of people


I guess it technically qualifies as competition because it exists, but in reality it isn't at all competitive. If it were, and the government cared to stop it, it could just make its use illegal. That wouldn't kill it, but most people wouldn't use it because there's nothing to gain using it and only to lose (unless you were doing something illegal already).


Good question. Definitely yes. Why would I pay middlemen (banks) when there is no need to? Also why would I trust them, when there is no need to?


> Why would I pay middlemen (banks) when there is no need to? Also why would I trust them, when there is no need to?

Payments are only relative small function of financial sector. Much more important is to act in credit markets, i.e take deposits and issue loans. How did you think that crypto removes need for fees (interest rate) and trust in those applications?


I see this as a disadvantage of using banks. They act as if you can freely access your money in your account, but actually you can't. That money is loaned out for the most part, and it's a trick that keeps the current system going. But once you have a bank run, reality will kick in on how banks really work. At least the cryptocurrency that you own is really yours today. The numbers on your bank account are yours some day.


Most people I've spoken with about crypto prefer the way banks work. The idea that losing your keys means losing your money, with no recourse, terrifies them.


> no recourse

Recourses:

- Backed up dat file - Backed up wallet password - Recovery phrase

There, now you have 3 separate ways to not lose your btc!


you also have 3 ways for someone to steal it !


> The idea that losing your keys means losing your money, with no recourse, terrifies them.

All the more incentive to not lose them!


So, how would you then like to arrange your mortgage if banks are not allowed as intermediaries managing the credit risk between depositors and yourself?


Banks could still lend out cryptocurrency, but in that case you know it is lended out (because you don't have it).

In other words, banks multiply money right now, but you cannot multiply cryptocurrency.

It's much more honest and clear.


But I would still as a depositor have the promise from the bank that the bank will give me back my cryptocurrency when I want?

If I do, there is practically zero difference how banks would work with crypto and fiat. And that promise can be used as money just like it can now with fiat. Thus banks would be able to monetarily multiply crypto at will as well.

If not, well, how exactly are you planning to stop me and my bank making such a contract? You know, the bank can pay me some interest on my savings is I let them lend the money forward, so both banks amd my incentive is to allow the lending of my deposit.


In practice, there would be 1 big difference: payments are made in cryptocurrency, not in bank credits. And this difference has an impact on all the rest.

We use bank money now because it's more convenient than paying with gold. But imagine that paying with gold was more convenient and preferred. In that case, we would see money in the bank as an investment, not as a wallet.

Your employer does not wire transfers money to your bank, but to your wallet. He pays you "in gold" so to speak. Same when you go shopping etc. There is no bank involved in transferring money anymore.

If you put money on the bank, you cannot use those credits to pay other people, as you are able to do now. Because people expect "gold", not bank credits.

You are correct that in a cryptocurrency world, banks could still have fractional reserves. But the main difference is that there will be a clear distinction between "real money", which is cryptocurrency, and "bank notes", which are a promise of the bank to pay you cryptocurrency. Right now, you cannot make the distinction between the two.

This is also the reason why they were able to let the gold standard disappear, because nobody would notice. If everyone trades in gold, the gold standard cannot just be abolished.

Basically a cryptocurrency world is a gold standard, where gold is the preferred way of paying.

This would also mean that banks will go back to how they operated when there was no central bank. And even further back than that, because payments are more conveniently made with "gold".


Basically everything you just said is already possible with USD instead of Bitcoin. You could demand your employer pay you real cash instead of bank credit, and so on.

The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.


I live in Europe, so no, I do not have USD in my bank account.

What if my real employer doesn't live close to me because he's in a different country? Should he send cash in an envelope? Which cash? The one from my country? From his country?

What if you live in Venezuela, would you still trust the government money?

So no, this is not possible with USD bills.

> banks in the US are extremely reliable and trustworthy

https://en.wikipedia.org/wiki/List_of_banking_crises#21st_ce...

"Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system."


Cryptocurrencies are not a replacement for banks; they are a replacement for gold.

If cryptocurrencies ever become mainstream, banking services will be built on top of them, just as they were originally built on top of gold.

The only thing I can think of that cryptos let you do cheaper than banks is rapid, relatively frictionless funds transfer, so I’ll admit their utility there. But other than that, what banking services do cryptos give you?


Loans, money transfer, storing your money are all things that can be replaced. Seems like a decent chunk.


Loans no, not at all. Money transfer for coin is extremely inefficient. Volatility makes crypto a terrible place to keep money.

Besides, you're paying for the legal and institutional protection anyway. If crypto made money transfer more efficient, they'd use it and still have the value add of a large institution backing transactions.


I thought we were talking about the hypothetical situation where crypto becomes amazing and not at the current state? Of course, crypto can't replace banks as it is now…


> Loans no, not at all.

https://makerdao.com/dai/

$80M DAI issued so far...


That's only useful as a hedge for ETH. A mortgage where you have to put down 373% of the value of the house in liquid currency as collateral is not competitive in the slightest.

https://mkr.tools/


Sure, but I'm responding to the disingenuity or possibly the ignorance of saying "no loans, at all."


absolute control over your money


Again, nothing stops you from keeping gold under your bed. The reason people don’t do this is because most people don’t actually need, want, or care about having absolute control over their money. And the probability of your home being robbed is much higher than that of your bank (and the FDIC) becoming insolvent.


A government can steal your gold an outlaw it, as the US government did in 1933.

They can also try to outlaw bitcoin, but they have a bit more trouble stealing it.


> Again, nothing stops you from keeping gold under your bed.

Can I transmit my gold in any quantity that I want to anyone in the world with an Internet connection for a few dollars in fees?


> Also why would I trust them, when there is no need to?

Because your alternative is to trust the crypto infrastructure, which is far less trustworthy.


what do you mean by crypto infrastructure? you mean the code or the miners?

actually banks have failed in the past, this infrastructure not yet


>actually banks have failed in the past, this infrastructure not yet

Man, what are you talking about? There's a new "$100 million in coins go missing" story every 6 months.


Crypto 101: never let anyone have your private key. No-one who religiously followed that rule has ever had their crypto stolen.

Coins go missing from exchanges, which break the basic private key rule. People use exchanges for convenience because as clever as cryptocurrency is, it has no answer to the exchange problem.


> never let anyone have your private key. No-one who religiously followed that rule has ever had their crypto stolen.

Bullshit. No "religious" following of rules can protect you against a zero day exploit somewhere in your system.


I didn't say it always will, just that it has so far.


>it has no answer to the exchange problem

Actually, there are smart contracts which act as exchanges. Not for all currency pairs yet, but it's on the way.


Crypto 102: regular people will never use cryptocurrencies if they have to guard their private keys without a fallback in place.


The infrastructure of both payments for goods and services, and for storing your assets.

As of now, paying for goods and services with cryptocurrencies is relatively risky; it's hard to get recourse if you're scammed; and the standard credit card infrastructure with chargebacks and fraud protection is comparably more trustworthy.

As of now, storing cryptorcurrencies is risky. And I'm not even talking about the shady brokers/exchanges that can steal or lose their customer's money. You can store it yourself as well as you can - but, as it turns out, most people aren't that good at storing it securely, so all kinds of risks and breaches (e.g. hacking your devices to get access to your secrets) are more common than for bank accounts but, also, the consequences are more severe - if your bank account gets drained in an identity theft attack, very often these funds are recovered or compensated, not so with crypto. So again, the existing financial infrastructure with regulation, FDIC or similar insurance in case of fraud or insolvency, mandated consumer protection in case of scammed credentials - it's more trustworthy than the commonly used processes&procedures&infrastructure of crypto storage.


I don't understand you are talking about theft? like what happens to banks and jewelry stores? like what was happening every day with dollars on far west? and somehow this invalidated the cryptocurrency narrative? how?


I mean all of it in aggregate, and it has failed many, many times.


First link on Google for "Bitcoin Hack":

https://www.coindesk.com/crypto-exchange-zaif-hacked-in-60-m...


I believe they were talking about the Bitcoin network and protocol, not an exchange that someone built.


But muh decentralization! /s

In reality most of the exchanges and sites dealing with crypto were (and probably still are) built by absolute amateurs with no checks and balances on their apps from a security perspective. Its scary as hell that people trust those sites with their actual money.


The recent QuadrigaCX fiasco shows this very clearly. The entire exchange (one of the biggest in Canada) was somehow just running on the encrypted laptop of this one guy, and after he suddenly died in December, there is 250 million Canadian Dollars owed to 100k+ customers that nobody can recover, because the guy with the password is dead.


Minor correction: the exchange wasn’t running on a laptop. It was run on systems you’d expect it to run on.

What was stored on the encrypted laptop was all of the cold storage wallets containing the majority of the digital assets.

No less idiotic, but an important factual distinction.


Aha, this makes sense. (Wikipedia states that the exchange was running on his laptop, which I did indeed find curious/impressive.)


I'd answer in the negative here.

Most cryptocurrency fans seem to be optimistic investors looking to join in on the massive returns seen by investors in 2016-2017. Most of them care more for generating 'hype' and seeing an increase in the value of the coin they hold, just so they can dump their holdings later. I don't think they'd be too interested in a coin that inflated in value that they didn't hold (they'd probably instead promote something they did hold). Most cryptocurrency fans do not hold one particular coin, and generally change which coin they advocate for pretty often.

Cryptocurrency communities are generally pretty toxic and non-constructive environments. I've been part of a couple, and I've noticed multiple times a massive decline in the quality of the community (and, sometimes, in development as well) as the cryptocurrency got more popular (and more people joined the community).


Yes, as far as I am concerned. There has been a nontrivial number of instances of the payment processor oligopoly wielding its power against things that I care about (by preventing certain companies/institutions/organisations from using it) in the past decade, and I want that sort of thing to become impossible.


Why does everyone, especially within crypto, seem to believe a One Coin theory?

Plurality is the name of the game. History has endless examples. Yes nothing would last but...the better monies would move to a better monies. It's called competition. There is very little competition when it comes to monetary policies. Crypto will foster more of it. It can get messy but hopefully it won't get deadly.


The question also presumes that all cryptocurrency fans want cryptocurrency to replace fiat currency in general. I mainly want cryptocurrency to get a niche like what PayPal has. A decentralized PayPal sounds good. It doesn't need to overthrow governments in order to useful.


Anyone who answers no isn't a fan of cryptocurrency; you're asking the wrong people. Those people are just fans of getting rich on the latest fad.

Those of us who have been here since the beginning just want cryptocurrency to succeed and flourish and fulfill its roles, and we already know Bitcoin won't be the answer so we're all waiting on The One True Coin.


Looks like a True Scotsman to me (https://rationalwiki.org/wiki/No_True_Scotsman)


I mean, if your thesis is something like "the embarrassing truth is that the vast majority of Scotsmen is actually people born and raised in Kazakhstan", then yes, you will get the response that Kazakhs are not true Scotsmen and there is nothing particularly fallacious about it.


No, there is a real distinction here.

Someone who is a fan of cryptocurrency itself is a fan of the ideas behind it and what it can bring to the table. People who are only satisfied in the outcome if they become rich are clearly not interested in the real benefits of cryptocurrency. So asking fans of cryptocurrency this question is a waste of time because the answer should be the same.

The point of my comment was to highlight to OP that they have a categorization problem. Just because a division exists doesn't mean you get to call No True Scotsman.


Yes, although ironically I might not end up using it much if at all. But it'd be good to have it even so.

The reason is that I think that while governments can be better at monetary policy, they need competition to keep them in check. Other currencies technically provide that competition, but they can be suppressed via legislation in a given jurisdiction, and this is, in fact, commonly done precisely where such competition would have practical sense (e.g. countries with hyperinflation often try to regulate and even outright ban currency exchange; or the various historical bans on private ownership of bullion gold in many countries).

Bitcoin is always there, available to anyone who has Internet access and can get past "great firewalls" (and when people's money are at stake, they are surprisingly good at learning such things). Consequently, the government can only do so much to its own money before it starts losing that competition - Venezuela is one ongoing example.


Yes, if it means that my government cannot create inflation anymore.


Why do you think moderate inflation is bad?


I don't think the issue is controlled inflation. I think the fear is of rapid inflation caused by governments struggling to make interest payments, which could cause the value of any cash or bond positions you have to effectively go to 0.

Similar reason people find gold appealing I suppose.


Intentional debasement is one way of getting out of very serious national financial problems. It is unpleasant, but it's chosen (or, more likely, can't be prevented) because the alternatives are worse. If you make this option impossible for your government, you're setting up your country for some very bad consequences the next time in some economic disaster it would have needed to have that rapid inflation, but can't have it.

Hyperinflation is a symptom of economic problems, not the origin of it. If you find a way to prevent nominal inflation by crypto, it doesn't prevent the related problems. There's a good reason why we got rid of the gold standard, which had all the same problems as a crypto-based economy would have, and was unsustainable because of that.

Since you mention bond positions, if they'd were denominated in non-inflationary crypto, in any such scenario they'd drop anyway - if it wouldn't be possible by inflation, then it'd happen by defaults. Which would also mean a default of all credit institutions. Which would then mean the disruption of most businesses who rely on these institution. Which would then mean nonpayment of salaries. Which would then cause a lack of demand, causing even more economic problems. Compared to that, a semi-orderly inflation (up to the extent that is required) is preferable to a cascade of defaults. The vast majority of the money in economy is anyway in the "I owe you" form, and crypto doesn't change that; even if all the economy would move to a cryptocurrency, only something like 2-5% of it could be in the form of "hard coin that I control" and the rest of it is in debt relationships between various businesses.

It sucks to get paid in some paper that's now nearly worthless - however, the alternative isn't to get paid in hard crypto, in such a scenario the possibility to get paid in full doesn't exist. So if we don't have the possibility to get paid in a devaluated currency, then people either don't get paid at all, or have to suddenly invent a new worthless paper currency and build an infrastructure for it, at a time when they don't really have the time and resources to do it. This isn't a hypothetical example - such "currencies" have developed in e.g. various long-term conflict zones.


> Intentional deflation is one way of getting out of very serious national financial problems.

How so? For a net debtor, deflation is potentially ruinous.


My bad, I meant intentional debasement or "printing extra money" or intentional hyperinflation scenarios, not deflation.


Why do you think his government stopped at "moderate"?


Because moderate inflation can very easily turn into high inflation or out of control inflation if left up to imperfect humans.


you can create a crypto with some pre-set amount of inflation to make up for e.g. lost coins. or create inflating derivative securities. though, having inflation in a single globalized market doesn't make much sense, as there are no competing economies.


YES!! Emphatically Yes! I travel quite a bit. I would much rather have 1 wallet no matter the digital currencies than have 10 physical currencies at dubious future value.


Generalizing to be applicable to any utopias: ‘Would you be happy if the utopia you bring up happens in the next 10 years, but you lose some or most of your savings?’


When Bitcoin first appeared I thought it was some fly by night scam. Their talk of it being anonymous seemed to be at odds with the technology that put every transaction on the public record forever. Like you could buy drugs with the money, but as soon as you tried to convert it to real money you'd be busted. Or if you ran it through one of those money laundering services, then you'd still be busted as soon as you withdrew the laundered money. For that matter, I expected at least one of the laundering services to be run by the feds so they could get a wealth of data about the people who need to launder money and where it is coming from and going to.

I guess I put too much faith in law enforcement.


I think that's a fair question; A good litmus test is people who had bitcoins prior to 2012 (arbitrary date), I had friends who mined bitcoins because they thought it was "cool" and because they liked the idea, not because it was an investment.

Personally the computational overhead makes me weep a fair amount; we're simultaneously trying to save the planet while making our payment methods several orders of magnitude more expensive in terms of power. But if there was a "coin" that was comparative in terms of energy expenditure with what currently exists then I'd be more than happy to "lose" my wealth in other coins. That is a very low price to pay for such a system.


There’s definitely a net loss from mining (at least while PoW coins are still en vogue), but I think it might not be as large as you’d think, since there’s a rather large energy reduction in the form of criminals and others who move money around without governments’ consent, no longer requiring secret boats and planes and air-conditioned vaults to transport physical cash in.


Proof of stake is likely to make that energy expenditure obsolete over the next several years.


It's not like gold's price went to 0 (more precisely, to the level of other noble metals) after the end of the gold standard. Bitcoin might well remain forever as a sort of digital gold with its (entirely stochastic) ups and downs. And why would people invest in a currency just because it is circulating? People invest in dollars because it's stable, not because it circulates a lot (more accurately, in derived products such as bonds, anchored to the US State, not on the dollar printing machines).

and yes i think most cryptocoin loonies want any one of them to succeed , the potential is so crazy high, that wishing otherwise would be foolish


This articulates pretty well something that I've tried to express about how I feel about cryptocurrency before. I don't own any, even though I've worked on a distributed application based on Ethereum and love the concepts because I was worried that by owning any coins I would be less trustworthy as a true believer. On the other hand, without any, I'm worried that I may seem as if I don't really believe in it, as I haven't put my money where my mouth is.

Anyway, I would love cryptocurrency to succeed, and in an efficient manner (say we get all the problems worked out of proof of stake).


Great point, not to mention the fact that big banks and investment corporations have dabbled in existing crypto. Those big organizations are even less likely to support the one true coin you speak of.


I'm into cryptocurrencies (Bitcoin, actually) because it solves a very specific problem that might apply only to my country.

So, anecdote: I live in Argentina, work for an UK based company. been doing that for the last 10 years.

Before I could trade bitcoin in an almost frictionless way (I.e., before I discovered Localbitcoin.com) my routine was to go to the ATM after the payment got into my european bank account, do a few extracts per day, rinse and repeat until I got all the money I needed.

Rate per extraction was around a few euros if I didn't hit minimum, to a certain % (That at times could be 5%, but can't quite recall as last time was 6 or so years ago). Minimum depended on the current economic situation of my country at the time (I suppose I don't need to explain that).

So, why not wire the money to your local bank account, you might ask?

Well, last time I checked (I moved a year ago to Buenos Aires and haven't checked how it goes here because I don't need to) the process for wiring money to my local bank account was as follows:

(Argentina is not inserted into the international SWIFT system !!!) I had to wire the money to a specific bank account in the US, that belonges normally to the bank I was checking, but couldn't really say. I had to wire the money there from my european bank account with certain conditions, so it could be recognizable that the money belonged to me.

Then, after some time (Could be as short as 2 weeks, but no bank would assure it would work like that every time, and wait times of 1 month or more were totally possible, considering how the Argetinian banks operate, i.e., mob-like) I would get my money _in the local currency_ with the corresponding loss due to exchange rates. AND (that's kind a really big AND, I need bigger caps) the "charge" for the operation was around 100 bucks. PER OPERATION.

"Thats too much" I said. "Yeah, people tend to group operations in half years so transfer is justified" was the answer I got.

I tested this at 3 different banks, got the same reply in all 3. Seriously.

So, now I trade bitcoin. I buy them in the UK, transfer them to my wallet, and use a broker to get the money in my account. The broker takes 2% on all operations, plus their rate is around 2% below of the current BTC price, but I don't mind. At least I'm getting ripped by somebody I want to get ripped by.

And then we have the speed issue: Since Segwit, it can take as little as half an hour to do the whole operation.

2 months ago I woke up with the money in my EU bank account (I'm not an early raiser, may I say), and by noon I had completed all operations and was just waiting for the broker to deposit the money in my local bank account.

BTW, the reason for me using a broker, is that minimum operation volume in LocalBTC is 0.2 BTC, and with the price hike at the middle of 2017 that became a problem; that, plus mostly everybody in Argentina that deals in BTC are fucking histerical trying to do a quick buck, so they start getting nervous if they don't close the operation in under 30 minutes.

And just in case you want to know how the banks operate here, another anecdote:

The dollar fucking doubled it's rate between May and September last year. The measure the gobernment used to stop the rate rise was to take the credit rate to above 70% (Yes, that's a seven followed by a zero).

Then, a lot of people here manage their finances both with credit and debit cards, because it's a lot easier (Unless you want to be carrying a lot of bills in your pockets).

So, what do banks do? They fuck merchants over, by delaying as much as they can transferring the money, because they put that in the financial market (We're speaking in the weeks here, above 3 of them). Even with the fines and shit, they are making shitloads of money. So, that mean that merchants get fucked over twice: they don't get the money in time, and when they get it prices might have changed a lot, so in a lot of cases they end up losing money.

Regarding the questions re:cryptocurrency I'm here for a long time, not a fun time. I mean, I have no problem if I have some fun with it, but it's not the end goal. And it's going to be fun if crypto takes off, as countries / governments are going to have to deal with the implied loss of power.


Are you sure Argentina isn't part of SWIFT? That's insane if true. A quick google search suggests otherwise:

https://www.theswiftcodes.com/argentina/


OK, right. You are totally right, I under explained. Even thought _theoretically_ Argentina is part of SWIFT, it's not being activelly used. I.e., bank accounts do not get assigned a number in the SWIFT system, thus making it impossible to receive an international transfers.

The banks where I checked where #52, #55 and #77

All in all, I received the same information in all 3, even thought they all have a SWIFT code assigned (So that probably mean they don't even have a registered account for the bank).

Here's a page from a rather large bank, where the process is exposed:

http://comex.bancogalicia.com/optimice-su-operatoria/bancos-...

It's in spanish, but if you click in either "Dólares" or "Euros" you get some bank icons below (3 in "dólares", 2 in "euros") with the details of the bank accounts where you could send the money. For any other currency, you have to call to get the instructions.

Can't get any more clearer.


Here are 2 other documents form another bank. These are pdf documents, the 2nd page of each document is in english:

Deposit in euros [1] Deposit in dollars [2]

[1] https://www.santanderrio.com.ar/banco/wcm/connect/d475bed5-9...

[2] https://www.santanderrio.com.ar/banco/wcm/connect/08c65dcd-d...


Transferwise does £ to pesos. Fees for £1000, £11.88. Rate 50.06 vs google saying the market rate is 50.07.

By the way if you are buying BTC, Kraken is much cheaper than 2% (more like 0.2%) and I think they take GBP.

It does sound like the banks are iffy.


Transferwise does £ to pesos, to where. As stated, bank accounts in the country do not have a SWIFT code assigned. You have to triangulate the money (Please check my other comments below). Re: Kraken, the 2% I'm talking about is in the local broker I'm using to convert BTC to pesos. I doubt Kraken can help me there. Not to mention that that Kraken is an exchange. A completelly different bussiness model to Localbitcoins.


To Argentina https://transferwise.com/gb/send-money/send-money-to-argenti...

I'm not sure you need a swift code, probably just a bank account number/sort code.

>The recipient gets money in their currency directly from TransferWise''s local bank account.

I have not tried Argentina as I have no business there but have sent money to Indonesia which is another tricky place and it worked fine. Fair enough re Kraken - they do GBP to BTC, not BTC to pesos.


> probably just a bank account number/sort code.

Dude. Each country has their own way to sort stuff internally. For instance "sort code" is not something you find in countries like Spain (I have a bank account there; sort code is something found in the UK).

Nor are they found in this country. Here, we have what it's called CBU (Uniform bank key).

Again, when you go to a bank branch, _IF_ there's any relation between your bank account and a SWIFT account, they never tell you that information

And, considering that even in the cases you agree to do the transfer, you do not do that to a bank account in the SWIFT system that belongs to the branch but to a bank account in another country, I doubt we are integrated.


You can call me a fan, I at least think they are cool and clever, and I like the idea. If a magic coin comes along and is the one true coin that elegantly solves all current problems, I'd think that was great. I don't currently hold any amount of crypto with any hope of getting rich off it.. so it wouldn't really matter to me.


Absolutely. When I first read about Bitcoin back in 2010 I loved the concept but didn't buy in until 2013. I've happily supported and followed other crypto projects. I've bought into about 5 but follow about 10-15 of them closely.

An overnight crypto miracle won't happen, by the way. Money is too important and requires too much trust for an overnight success to occur.

Every year that the BTC network runs without a major exploit, is another year of confidence in the network protocol's security. Unlike some software categories that are prone to rapid disruption, money is not one of those things.

Disruption occurs a lot slower for very important reasons. People have to trust in a crypto currency in order to store value in it and exchange value for it. That takes time, to test in production if any major exploits exist.

It's not trivial what Bitcoin has accomplished this far.


I would be fine with that, but I am not hugely into crypto. I have a bit of BTC somewhere. I considered the money gone as soon as I got it. Had gotten a chunk of money and wanted some of it to go somewhere where it could theoretically make me money. I did increase it at one point by going from BTC to Tether after prices went up, then back again on a dip. I don't even check its worth anymore, it's $100 or less I think. Just a little fun thing. Crypto as a concept still seems interesting to me even if it's not a major interest of mine. Similarly I think ipfs and freenet and such are cool, but have yet to get involved with them.


That's fine with me as long as it maintains the purpose of the original; to disintermediate the state and political authority from money, and to create a ledger which they cannot tamper with, confiscate, or spy on.


>This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?

You seem to be assuming that anyone interested in crypto is in it for the money.

I assure you, that's not the case. To me, getting the money supply out of the clutches of governments is the most important aspect of crypto-currencies.

To answer your question: Which crypto wins and how much it'll be worth are the last of my concern, as I will profit, along with all of society, from getting the govt to surrender management of something they're basically terrible at.


You don't have to ask that question. If they really cared about the tech, they would make sure their tokens are not deflationary.

Deflationary tokens are not much good as a currency but they are good as a Ponzi scheme.


I think here's your answer: It isn't just about the tech.

This is what most "blockchain" enthusiasts get wrong. They think it is just about technology, and thus, they can come up with "a better bitcoin."

They're missing that the predetermined monetary policy is the key innovation of Bitcoin, and that by creating a new "blockchain" which prints new money, they are shooting themselves in the foot, because they can't ever be "a superior bitcoin" when they have inflation as part of the parcel.

A free market does not really care about whether some people have the opinion that deflation is bad. At the end of the day, nobody can change Bitcoin's monetary policy, and it will be left to the free market to decide whether or not they are going to put their money in this, or whether they're going to bet on inflation.


A predetermined monetary policy is fine but the fact that it is predetermined to be deflationary is a fatal flaw.

I would have much more faith in a cryptocoin's potential as a currency if the predetermined monetary policy was something like Friedman's k-percent rule: https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule

Of course this would vastly reduce the Ponzi aspect for early owners which might remove most of the appeal.

And I still wouldn't have much faith in it since I doubt being decentralized is enough of a benefit for people to switch away from government currency and normal banking.


> At the end of the day, nobody can change Bitcoin's monetary policy

A majority of hashing power in the network could change Bitcoins monetary policy.


No it couldn't.

A majority of hashing power attempting to change monetary policy spins off a forked coin which does not have economic value because it does not have economic users.

If the overwhelming majority of bitcoin users (98%+) wished to do so, they could possibly change the monetary policy. Of course this will never happen, because there are die-hards like myself who will always stick with the non-inflationary bitcoin.

And then, the market decides whether to stick with the non-inflationary coin, or to use an inflationary one.

The worst that a majority of miners could do the the non-inflationary bitcoin is temporary denial of service, or attempted double spending of their own money. It's going to cost them an awful lot in electricity to try either, and they're not going to get that money back unless they're generating coins that are in demand to buy.


People need to stop misusing "Ponzi scheme" for anything they think is a scam. A Ponzi scheme is quite specific, if you're just thinking of people trying to sell something to "the next idiot", call it a Pyramid scheme (although I still disagree that it applies to Bitcoin).


Yes, and I'm heavily vested, mainly in ethereum. I would be bummed, don't get me wrong, but it would give me hope for us all to get along more internationally.


The counter is that if that crypto really became that used, you'd begin being paid in it.

There was a brief moment where companies began paying employees in crypto.


you are describing an impossible scenario where nobody notices but overnight it becomes a global standard. if you actually make a scenario that is possible you will see most people would have time to switch to the other and the original will slowly fade. no problem with that. dollar will sometime fade too for something else as all other currencies have done in the past (google some charts online)


Yes. I'd be quite happy with that. I can generate value; the hard part is keeping that value safe. That is what crypto offers.


> do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?

If the cryptocurrency was at least somewhat open and efficient, then I would be extremely happy. If it was more like a payment layer that only a few large banks could use, I would be still be happy, but much less so.


I would assume you would get mixed responses as cryptocurrency "fans" are not of one mind.


Can we focus on an interesting discussion instead of the usual


That highly depends on the amount (in USD) at stake:

$100: Absolutely.

$1000: Tough, but I'd do it if it meant the promised change to financial services

$10000: Unlikely, I'd rather keep my non-perfect coins

$100000: No way.


I would be delighted because imho it would make the world a better place.

However if there is a slight chance I might profit from it, I'll gladly take those odds.


Speculation is not really a point. It's a temporary method of popularization, because people can't be reasoned with in other ways.


Yes of course! But it needs to be a proper cryptocurrency. Which means worldwide, feeless, instant transactions.


Yes, a million times yes.


Most of us involved since early times ( <$1 / BTC ) were intially attracted to the libertarian ideal of a decentralized currency. Like gold, it's truly yours, and nobody can take it from you if you control the private keys.


I want a cryptocurrency which is egalitarian - evenly distributed among people in the world, rather than one in which a few people own the majority and profit hugely.


Yes! And I think there is one aspect of Bitcoin that is precisely backwards in relation to both this and the energy crisis: proof of work is a substitute for proof of identity so it can be anonymous.

Imagine a currency that everyone is born with a certain amount of, with the only price of admission your ability to prove your identity. Suddenly, we have solved the problem of proof of work for allowing this to be a distributed ledger since the trust can be based on reputation. Also, we can impose limits such as perhaps a logarithmic scale of wealth interpretation, where ten million dollars isn't all that much more than one million, if it's all in the hands of one person.

The digital age could be an age of fairness, if we choose to use these tools to design a fair game instead of an unfair one. Note that I mean "fair" not in the sense of two people starting out exactly equal, but where the winner can use their advantage to win more over time until the "match" is over, but one that tends towards a fairness equilibrium, where the advantages gained by one person or group over others are minimized over time or at extreme scales.

This is how I write when I have gotten less than 4 hours of sleep, but hey, I can dream. :)


Okay, let's "imagine a currency that everyone is born with a certain amount of". Assuming that I predict that this currency is going to be valuable, then I can invest $100,000 to organize a shipment of rice to some poor African areas where this thing isn't gaining traction yet, and offer to trade everything that they've been born with for a hot meal. And it (or similar strategies) would plausibly succeed to some extent. See the biblical example of Esau's birthright for an obvious analogy.

Would that be a new age of fairness?


I don't think you could possibly have a decentralized proof of identity though.


The discussion is not about cryptocurrency anymore at this point


Actually Dogecoin was a major hit.


An early adopter will always have an advantage over somebody who gets on board later. The only way you could prevent this is by actively punishing early adopters. Good luck achieving adoption if you try this.


It suffices to not punish the late adopters (something that admittedly the vast majority of cryptocurrencies do).


Bitcoin doesn't punish late adopters, it just does not give them the same advantage as the earlier adopters. Somebody who adopts Bitcoin today will still have a major advantage over somebody who adopts it in 10 years from now, but it might not be of the same magnitude as the people who adopted it 10 years ago have over the people who adopt it today.

The decline in rate of inflation is what prevents punishment of the older adopters. Inflation is inherently punishing of people who are saving an asset, because it steals value from them, or at least would do if demand didn't outpace supply.

If bitcoin offered the same reward to newcomers as it did to the people who adopted it 10 years ago, then nobody would've adopted it 10 years ago, and the result would be that everybody is punished, because the world at large would've ignored a great innovation.

You can't have both! Either you punish the savers by taking value from them and giving it to newcomers, or you let savers keep their value which pushes up the price for newcomers as demand increases. Socialist ideology fails to understand economics as usual.

Now you might argue that the rate of bitcoin's reduction of inflation is just too high, and should've been more gradual, or over a longer period of time. There might be some merit to that idea, but nobody could've accurately guessed the rate at which adoption would occur for a brand new technology.

After everyone is aware of what Bitcoin is, it doesn't really matter how long you make the halving. There will still be risk-takers and there will still be laggards. Some of the laggards will leave it until they can no longer go around with their eyes closed and must acquire some Bitcoin in order to make some purchases. Others will acquire it now (and 10 years ago) even when it is an extremely risky investment. Most people are somewhere in between.

So you have the option right now that you can either: Acquire some Bitcoin while it is apparently still cheap (relative to where it may be in a few years)

Or you can: Chose not to acquire some bitcoin because you think it is overpriced, and in a few years, complain again that bitcoin is overpriced, when it is worth significantly more than it is today.

Late adopters punish themselves by ignoring economic reality, either intentionally (because they are driven by ideology), or accidentally (because they don't take the time out to learn). Once you grasp it, there is only one direction which bitcoin can go over the long term.


What happens on Day Two?


The people with businesses get a lot of the new currency from the people that need to work for a living and we're back on track to be right where we started.

A currency is just a measurement device, it's not a replacement for resources, I don't know why people forget that so often.


Way to hit at the heart of so many issues.


A problem, imo is that these cryptocurrencies are pieces of software developped by anybody.

This means a new one popping up every month... Which in turn means that they are useless as currency.


Just like clone of Facebook is instantly as valuable as Facebook?


Are cryptocurrencies any use as currencies? No.


Exactly. Cryptocurrencies are a pipe dream unless they can be effectively and fairly distributed first.


Care to link those two unrelated concepts together a bit better?

Money isn't effectively and fairly distributed and it's obviously not a pipe dream.


money have replaced values already owned by people

it didn't pop-up from nothing

crypto currencies need to be acquired using either real currencies or through some form of mining, that requires real currencies to acquire the resources needed to bootstrap it

the crypto space is already a place where rich got richer, less rich got sometimes more rich, most of the times nothing changed for them, really poor individuals from really poor countries couldn't even get started


Couldn't get started on what?

The point of cryptocurrencies wasn't to make people rich. Anyone can buy in at market value and start using coins for their stored value. That is the point. Your anger in the fact that crypto didn't magically create money where there was none before is misplaced.

Really poor individuals from poor, economically wrecked countries had quite a lot to gain from the accessibility of cryptocurrency. Look at Venezela's attitude towards Bitcoin.


> Couldn't get started on what?

On owning them.

> Anyone can buy in at market value and start using coins for their stored value

Not everybody can, that's the point.

Almost nobody can, expanding the first point.

It's not really a democratic and open process.

It involves a lot of prerequisites that are usually not met by the general population.

> Look at Venezela's attitude towards Bitcoin.

You mean Maduro's?

AFAIK Maduro made bitcoin mining illegal in Venezuela and arrested more than a few miners.

Or do you mean the Petro Coin (a total scam currency) that Maduro tried to force down Venezuelan's throats?


> Almost nobody can, expanding the first point.

Now expand on this point. What about crypto is preventing people from owning some that isn't also preventing them from owning regular money?

> You mean Maduro's?

It's pedantic to differentiate between a State and its actors when discussing policy like this. I mean Venezuela.

I'm talking the Petro Coin, the raids, everything. The whole policy was a response to fears of increased economic freedom for Venezuela's poorest citizens at a time when the government was trying to offload the pain of its bad economic decisions onto them.


> The whole policy was a response to fears of increased economic freedom for Venezuela's poorest

No, it was a scam.


Money is more fairly distributed than cryptocurrencies.

Credit Suisse found that 97% of bitcoin is held by 4% of addresses (though some may belong to exchanges): http://www.businessinsider.com/bitcoin-97-are-held-by-4-of-a...


Addresses do not necessarily correspond to people or institutions. Those 4% of addresses could represent any number of holders. The other 96% of addresses could be someone's buggy script gone wild.


If you compared apples to apples, then, instead of people "all legal entities", aka corporations and sovereigns, would your analysis hold up?


And the top 1% of the American population controls around 40% of the wealth. In accordance with the power law, the top 20% of the population owned 86% of the country's wealth.

Still doesn't seem like a pipe dream.


Wealth, not money.

Money is heavily regulated.

Crypto are not.


That's circular logic. Wealth is equivalent to money.


Not really, the vast majority of wealth isn't in the form of money (cash or direct debt), it's in the form of ownership of non-money assets such as real estate and productive companies.


What is fairly distributed in this world?


[Using U.S. law as a convenient set of terms of art, not to be geocentric.]

The internet is a technical embodiment of the First Amendment (freedom of speech, freedom of press, freedom of religion, right of peaceable assembly, right to complain about the government).

Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, and even life/liberty if you accept the unremarkable proposition that it's hard to live freely if you can't buy anything).

Having these technical protections in place are important regardless of their impact on or benefit to any one person.


> Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, ...)

How is it in any way different than having money in your bank account? If the government wants to, they can decide to take all your money from all your account, but they can also decide to throw you in jail until you hand over the keys to your Bitcoins. In the end there is no difference.


In the second case, the money didn't move, and the government didn't get it.

Meanwhile, the Technological Singularity people are working on the other half of the problem you describe.


Ok, so how is it any different than having your money in a numbered account in Panama or Switzerland, which the government can't seize?

And what's this Singularity nonsense of which you speak?


No need for the hostility.

And if you want to have a discussion whether there are alternative ways to achieve specific valuable outcomes, count me out. This thread is about whether cryptocurrencies have any potential valuable outcomes besides the potential of lottery-style winnings for early adopters.


Sorry if I seemed hostile, but I couldn't find any better word than nonsense to describe what I presume you meant to invoke by "Technological Singularity". It's about as realistic and scientific as religious extremists telling us to repent and prepare for the Rapture.

Ah, but this unwillingness to consider "why couldn't we do this without crypto", leading to rejection of study of centuries of useful economic and monetary theory development, is precisely what predicates the failure of cryptocurrencies to achieve potentially valuable outcomes.

That's precisely why I bring it up. If a thing is a) valuable/useful and b) possible without cryptocurrencies, why has it not been done before? The fact that it has not, suggests that either a) or b) is false.


Full disclosure: I work on the cryptocurrency in this article, Algorand.

There are a lot of questions and speculation here about this paper and Algorand. I would be happy to try an answer them to your satisfaction. Some context may be helpful first, though. This paper is an innovation about one aspect of our technology. Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.

The Algorand pure proof-of-stake blockchain and associated cryptocurrency has many novel innovations aside from Vault. It possesses security and scalability properties beyond what any other blockchain technology allows while still being completely decentralized. Our website, algorand.com, and whitepaper are great places to start to learn more.

If you learn best from videos then I suggest you watch Turing award winner and cryptographic pioneer, Silvio Micali, talk about Algorand: https://youtu.be/NykZ-ZSKkxM. He is a captivating speaker and the founder of Algorand.


OK I'll bite. Nothing about the article or YT video is innovative, some of it is laughable.

Algorand's consensus per the YT video you linked is step 1. 1 user is randomly chosen to propagate a new block (can user make up a fake block? let's assume not) step 2. 1000 users randomly selected vote on that block and if they agree, it's DONE. (what if 1000 users are in the same country/company, etc. how do you prevent collusion on fake blocks)

This is hilarious. So the only thing you rely on for consensus is 1001 random 'users' input weighted by stake? What happens when your network is bombed with 1000tps and you need to contact 1001 staked users for every block? There are also vulnerabilities such as the recent "fake stake" bug that affect pure POS coins which I won't go into.

Now about the article referencing Vault. I believe NANO came up with this bootstrapping feature:

> Each user account only ever stores the balances of the accounts in its assigned shard

Yes they are replicating NANO's block lattice structure using "shards" with an insecure way of trusting any future chain that includes your old tx's but gives no guarantee on the state of any other account. As I understand it, I can be fed a fake chain while bootstrapping and accept phony funds as long as my balance shows up, right? ...Assuming this feature worked without any security holes, what's to stop other coins from implementing it? You don't need an entire cryptocurrency for it, it's just a feature and if it worked everyone would be using it. The sharding problem has not yet been solved and there are coins like Ethereum that are trying really hard to make it happen.

It's really sad to see this low-quality content come out of MIT. This looks like someone trying desperately to get a piece of the Crypto pie using MIT's reputation as a get rich quick scheme. Just for kicks I looked through reddit/r/cc and found only 5 dead posts mentioning Algorand with no comments on any of them. Their website makes all these claims about "pioneering a sortition algorithm" that looks "totally legit" if you ask me.


Can you provide more detail because from the article this doesn't seem so impressive.

> Vault reduced the bandwidth for joining its network by 99 percent compared to Bitcoin and 90 percent compared to Ethereum, which is considered one of today’s most efficient cryptocurrencies

1) Since when are these considered efficient? I don't think anybody in the know would say this. They're the most popular, but no means the most efficient.

Bitcoin is 250GB, so 90% of that is still 25GB to join the network, which is still ahhh enormous amount. And what's the baseline for comparison here? Were all of bitcoin's transactions replayed on an Algorand test network for this comparison? Or is this a metric from some test usage? If the latter then that's a huge issue since it grows in size.

2) On top of that you're saying it could accrue a terabyte a month in data. What type of usage is this under? Is that on current bitcoin transaction levels? 2017 transaction levels? A steady state tx/s? Is a backup of this data needed or is it throwaway and summarized in the latest blocks? If it's still needed then that's a decentralization issue because not many people will be maintaining full nodes.

3) What type of specs are affected by these changes? Can you still perform atomic swaps? That's a pretty standard requirement nowadays and would hinder the Blocknet and exchange interiperability.


Are there reasons that e.g. Bitcoin and Ethereum and Stellar could not implement some of these more performant approaches that Algorand [1] and Vault [2] have developed, published, and implemented? Which would require a hard fork?

[1] https://www.algorand.com/

[2] https://dspace.mit.edu/handle/1721.1/117821


My understanding is that PoS approaches follow normal byzantine agreement theory which states that adversaries cannot control more than 1/3rd of the accounts (or money in the case of algorand). You can also delay new blocks more easily.

Ethereum is scared or that so they are implementing some hybrid form.

Bitcoin is doomed from my perspective, because of the focus on proof of work and the confirmation times. When you realize that algorand is super fast, there is no "confirmation time", and there is no waste in energy to mine, then it is hard to back up any cryptocurrency focusing on proof of work.


And what of decentralized premined chains (with no PoW, no PoS, and far less energy use) that release coins with escrow smart contracts over time such as Ripple and Stellar (and close a new ledger every few seconds)?

> Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.

What prevents a person from using a chain like IPFS?

Ethereum Casper PoS has been under review for quite some time.

Why isn't all Bitcoin on Lightning Network?

Bitcoin could make bootstrapping faster by choosing a considered-good blockhash and balances, but AFAIU, re-verifying transactions like Bitcoin and derivatives do prevents hash collision attacks that are currently considered infeasible for SHA-256 (especially given a low block size).

There was an analysis somewhere where they calculated the cloud server instance costs of mounting a ~51% attack (which applies to PoW chains) for various blockchains.

Bitcoin is not profitable to mine in places without heavily subsidized dirty/clean energy anymore: energy and Bitcoin commodity costs and prices have intersected. They'll need any of: inexpensive clean energy, more efficient chips, higher speculative value.

Energy arbitrage (grid-scale energy storage) may be more profitable now. We need energy storage in order to reach 100% renewable energy (regardless of floundering policy support).


Ripple is not decentralized. I don't know enough about Stellar to answer.

Bitcoin is software and can easily implement these features but the community is divided and can't reach consensus on anything. Lightning Network as layer two solution is pretty good from what I know.

Ethereum improvements are coming along very slowly and that's good. They're the only blockchain with active engagement by thousands of multiple parties.

Aragaon and Vault's papers might sound good, but who knows how they'll turn out in production.


People argue this all day. There's a lot of FUD.

Ripple only runs ~7% of validator nodes; which is far less centralized control than major Bitcoin mining pools and businesses (who do the deciding in regards to the many Bitcoin hard forks); that's one form of decentralization.

Ripple clients can use their own UNL or use the Ripple-approved UNL.

Ripple is traded on a number of exchanges (though fewer than Bitcoin for certain); that's another form of decentralization.

As an open standard, ILP will further reduce vendor lock in (and increase interoperability between) networks that choose to implement it.

There are forks of Ripple (e.g. Stellar) just like there are forks of Bitcoin and Ethereum.

From https://ripple.com/insights/the-inherently-decentralized-nat... :

> In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied. Of the approximately 150 validators today, Ripple runs only 10. Unlike Bitcoin and Ethereum — where one miner could have 51 percent of the hashing power — each Ripple validator only has one vote in support of an exchange or ordering a transaction.

How does your definition of 'decentralized' differ?


How does the speed and scalability of Algorand compare to something like nano?


How do you plan on addressing the nothing at stake problem?


What do you think of the lack of privacy of algorand, compared to something like Zcash or Monero?


Zcash, monero, dash, mimblewimble and quisquis have big challenges. It is not trivial to solve the encrypted coins problem because:

- it is very hard to audit the chain for bugs. If someone finds a bug to create coins through thin air you probably won't notice it.

- regulations by states is made hard. If you are required to pay taxes, and you live in a society, then these things do matter.

If you want cryptocurrencies to work, we need cryptocoins that are not encrypting transactions.


A terabyte a month! Wow. At this point, it seems like reducing this for most clients would help. Have you looked into recursive zkp like what coda is doing?


Q: How erosive is it to the image of cryptocurrencies that there's so many coins? It seems that every week there's a new coin that does XYZ better. Often, it has no infrastructure (hardware or software) other than a limited number of exchanges that are used as speculation.


Is that really a good question to ask someone who is pushing the state of the art in this domain?


Yes - isn't that obvious? You need infrastructure to use a 'state of the art' currency as a medium of exchange.


Without the marginal energy cost of mining blocks from proof of work, what do you think would drive the value of such a currency?


This question seems to assume that the cost of electricity and mining sets cryptocurrency prices, but I'm not sure why that would be the case. I think it's the other way around. Demand for Bitcoin doesn't increase when electricity gets cheaper / mining becomes more profitable. Mining becomes more profitable when demand goes up. If electricity became more expensive or mining otherwise became less profitable, demand for bitcoin does not go down; most traders and users of bitcoin probably don't even notice. The only direct effect is that some miners stop mining (and the network becomes a little more vulnerable to 51%-attacks).

Another way to think about it: if Bitcoin somehow worked without mining, that's no reason for demand or usage of Bitcoin to go down. The value of bitcoins comes from network effects and scarcity.


Utility


I'm shocked and disheartened by how infrequently environmental concerns are brought up when discussing crypto. Proof of Work vs Proof of Stake, security, storage size - these are problems for the network and those that want to see it become a real part of our economy. (I am one of those)

But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.

Of the 203 comments (at the time I am posting this), there are only two uses of the word "environment". One of these is about the "regulatory environment".

Let's say Bitcoin, Ethereum, or another coin achieves an economic value & level of efficiency that makes mining an accessible investment for low-income people. Instead of server farms in Iceland, mining would be done by millions of people around the world. Some of the energy used for this would be renewable - but plenty of this is going to be coming from coal. In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)

My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.

I'm not here with an answer. There are many problems that I think crypto can solve and I'm glad it is something on the horizon.

But we need to talk about the environment.


No, we don't.

Bitcoin is one way to use energy. There are hundreds of thousands of other ways.

When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".

That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.

Which is great, but I could say the same thing of Ferraris for show-off producers in LA, or Hello Kitty backpacks.

What justifies focusing our attention on Bitcoin per se, and not those? Do you plan to publish a universal, agreed-upon list of things whose social value doesn't justify its environmental cost?

The real problem is energy users not bearing the full environmental costs of what they do.

The thing is, we have a well known solution to that: cap the total carbon emissions, or tax them in a way that reflects the harm.

Yes, Bitcoin creates an incentive to use energy. And it will be spent by miners who weigh the costs of the energy against the value of the Bitcoins produced. Like every other good on the market, it will respond to incentives created by laws.

If the damage of energy isn't priced in, then there will be too many resources spent on mining relative to the environmental cost. But this is true of every other good as well.

All Bitcoin does is amplify the problems of the existing failure to appropriately price energy. But this is true of literally every other energy-using good in existence!

There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.

"I don't want wiggins at my university. They cheat!"

'Well, a certain percentage of any demographic is going to ch--'

"Irrelevant! We're talking about wiggins!"

EDIT: Should probably add the disclaimer that I'm long Bitcoin.


An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.

You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.

That said, I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.

We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.


> You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals.

I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.

> I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.

It sounds like you're projecting what you think Bitcoin should be.

> We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.

10 transactions per second on the L1 network (averaging $10k-20k each), and many thousands possible today on L2. Plus a way to securely store the transacted value.

To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.

You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.

It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.


> I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.

Technically the brain is just another layer of encryption to the data. And that level of encryption can often be solved by the purchase of a $5 wrench.


> I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.

No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.

> It sounds like you're projecting what you think Bitcoin should be.

Probably, yes. Bitcoin is a failed project. It spawned many others, some of which may be successful. I am interested to see how they do.

> To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.

That's assuming that banking is JUST storing and sending value. Banking does a whole lot more. I understand the drive behind taking that power away from banks, but it's just not going to happen until one can fluidly exchange USD for some for of highly-stable distributed currency. And once that happens, banks are still going to exist and handle most of the transactions! Please, take a stroll in r/cryptocurrency or r/bitcoin and see how many people are whining about how their private key got lost or stolen or etc etc. Banks exist because they not only store value, but protect it in numerous ways. They will continue to exist past whatever cryptocurrency-revolution people envision.

> You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.

Great? So a fraction of the energy would have been wasted anyway. Fine, use that for bitcoin mining. For everything else, it's pouring carbons into the atmosphere so idiots who don't know how investing works can leverage 100x on margin while the exchange they're betting on is manipulating the price to call their bets and wipe them out.

> It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.

Really? "Let's buy a bunch of toxic waste and dump it into the river because the government will be incentivized to not output toxic waste" isn't the best argument for why bitcoin is useful.


> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.

Yes, for those amounts. But for several purposes, unfortunately most of them 'evil' (money laundering / terrorism), this works fine. I know it's used a lot for people in countries where getting currency out above a certain threshold is very hard unless you are at the highest level of corruption with great success. They are not so bothered with losing a few 1000$ by fluctuation as their goal is getting it out and converted to something else (safer) (USD/EUR) asap.


And when the internet was first a thing, shortly after, most traffic was porn, until fairly recently porn was surpassed by social media. And since then, there have been world changing social movements enabled by the internet, and the exposure of horrible abuses (police, clergy, dictators).

Tomorrow, who knows. if North Korea or Russia or China turn half of the US into a nuclear wasteland, the banks are unlikely to function very well for those who remain. There are hundreds of such scenarios that could play out in the next 50 years -- Bitcoin is a great disaster hedge, if nothing else. Everyone should have 1% of their portfolio be crypto, IMO.

The criticisms of its fluctuation are valid, but like you said, there are plenty of people today for whom the fluctuations are tolerable for their use case. As the fluctuations get less, it will become tolerable for even more.


In response to stability criticism, chadski on Lobsters told me about so-called stablecoins with MakerDAO and Dai being in active use:

https://makerdao.com/en/whitepaper/

It's an Ethereum-based scheme that's tied in value to the U.S. dollar. That sounds good. The methods to achieve that look... complex... to say the least. If they work, then there's at least one of them that's stable so long as there's no serious problems in it and/or Ethereum. Well, that sounds promising. ;)


I'm aware of Maker.

It's a bunch of math that uses market mechanisms to try to solve the problem of stability when the only real answer for the question "how do I stabilize a cryptocurrency" is "for each unit you issue, you have a bank account with $1 matching USD in it."

Maker essentially banks on the fact that a bundle of cryptos (ETH and a few others) will not drop past a certain amount in relation to USD over a given amount of time. They've been correct, so far, but that doesn't mean there won't come a time when the markets drop past whatever magical threshold they've set.

I'm not putting down the project, I followed it closely for a while and a lot of work went into it. My point is you can't really have a stablecoin unless you have the USD to back it up.

An interesting plot twist will be if Maker derives from other stablecoins (ones backed by USD reserves, like GUSD) and not ETH.


I would think that, regardless of the math, the token prices might remain stable just because people think the algorithms are doing their work. Kind of like an "invisible hand" situation.

Circulating supply fluctuations don't seem to have much of an influence on crypto prices (as seen with quarterly Binance Coin burns for instance)


>If they work

That is a big "if". Stability is a principle which has been tried time and again in fiat money and failed. Too many times to count. See GBP peg etc. for examples.

If something is unstable, it is because the market deems it to be. Adding an artificial support goes against that same market.

Cryptocurrency circles like to talk about government control being a bad thing. But in the same vein cheer stablcoins which exert near similar control - by algos or by adding coin supply. They want to have their cake and eat it too.


> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.

From an outside perspective, I don't think it's worth continuing the discussion as is. Perhaps you should both come back in a few hours when everyone is a bit calmer.


> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.

No, this is an important distinction. Bitcoin isn't liquid enough to count as actual money and proponents of the idea that sending bitcoin is the same as sending money are glossing over the cost to buy bitcoin, and the cost of transferring it back to actual money on the other side.

Having access to 30K BTC doesn't do you much good if nobody is willing to trade you goods or real money for it on the other side.


You can exchange 30k bitcoin with less slippage than you think OTC.


Give it a few years.

Seeing how Americans Elected Trump, I can't imagine the USD being better than BTC over 10 years.


Have you already converted all your savings to bitcoin?


For what it's worth, I disagree. I also think Bitcoin's energy usage is an existential issue and agree it's ridiculous we think things like "I can memorize my wallet passphrase" are at all at the same level of importance.


> An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.

Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."

Removing externalities of electricity pricing solves this. That's the point. If a kilowatt of electricity usage costs enough to offset its environmental impact, then who cares if a tiny minority of people are doing some wacky confusing things with their computers?


> If a kilowatt of electricity usage costs enough to offset its environmental impact

The day that markets actually price externalities into the costs of goods and services, whether by benevolent owners or force of regulation, I'll gladly declare Bitcoin useful.


This seems like a completely arbitrary and absolutely biased place to draw a line. Why Bitcoin and not luxury cars or Hello Kitty backpacks? How about we shut down Six Flags and Disneyland?

This sounds very much like you've decided that you don't like Bitcoin (and that's fine, with good reasons) but you have rationalized it with an argument that is almost certainly inconsistent with the rest of your worldview. Bitcoin isn't any more bullshit than countless other systems/goods, the argument based on environmental externalities is a very weird reason to draw such an absolutist line given all the other (arguably) bullshit systems that incur the same costs.


Perhaps orthecreedence would also support shutting down all kinds of other useless services. I know I would, but since we're commenting on an article about cryptocoins, the discussion about Bitcoin is more relevant than a discussion about luxury cars.


My real point is that there is no such thing as a "useless" service. It is a completely subjective distinction. At what point do cars become "too luxurious"?

Either we have a fully managed economy (which I'm pretty sure the historical consensus is clear on) or it has to be guided by attaching costs to externalities.

All this is doing is just picking on Bitcoin because people don't like it. There is no principled economic or environmental argument here, just a biased rationalization applied inconsistently.


That is the point you should declare Governments useful. Bitcoin is already useful.


The point is that the environmental argument is completely irrelevant if externalities are removed, which they absolutely should be.

It doesn’t make sense to make the environmental argument for things that you consider wasteful, but not for other things that other people may consider wasteful.


> The point is that the environmental argument is completely irrelevant if externalities are removed, which they absolutely should be.

Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens.

Until then, I'd rather see some form of distributed currency that doesn't rely on pissing finite resources away to function.

I get where you're coming from, but our planet is at a critical point right now objectively. Pouring pollutants into the atmosphere so people can play with FunBux is an incredibly stupid use of resources. Yes, markets should price in externalities. That would solve SO MUCH MORE than just bitcoin's energy usage. But unfortunately that concept is at odds with market capitalism, and as such, I believe my critique of bitcoin stands. Markets are not rational, prices are not accurate, bitcoin is a polluting waste of energy.


I don’t think anyone disagrees that reducing the energy requirements of cryptocurrency without any capability loss would be great. The trouble is when people who don’t like cryptocurrency for other reasons, or just don’t care about it, focus specifically on complaining about its energy usage.

Say you don’t care much about professional sports. Of course you would think that any innovation that reduces the energy requirements of professional would be great (more efficient arena lights, climate control, etc.). But I think it would be inappropriate to single out sports as a waste of energy, because it is only a “waste” because you don’t happen to receive and of the benefits.


Damn bro, you are missing the point. As has been described, pure market mechanisms do not and cannot price externalities correctly.

That’s why we have environmental regulation, as imperfect as it is.

This implicitly means a society does make choices about how energy is used. Therefore, a discussion about societal priorities amongst individuals is essential.

Likewise with regulation related to finance and money.

Energy and money. Among the most highly regulated things in all societies.

I agree with the poster that POW cryptocoin systems are a shocking waste of electricity.

In addition, the only use cases that have proved viable are illegal or highly destructive to the social fabric.

When you look at the sheer amount of money transferred from losers to winners, it’s clear that this is not a benefit to anyone. The scams, the hacks, the thefts. Bitcoin and it’s ilk are parasitic systems that weaken the host.

To compare to Ferraris, well Ferraris are a niche product, are already regulated, and have a historical component that accounts for their hedonic properties.

To compare bitcoin to hello kitty backpacks is just a category error, which belies that the argument is disengenuous.


Perhaps you’re misunderstanding my point. I’m not against environmental regulations and I don’t expect market mechanisms to eliminate externalities. On the contrary, I want environmental regulations that reduce (ideally eliminate) externalities in the cost of energy. This should, almost by definition, be the goal of environmental regulations. Cap and trade on energy producers, for instance, can and probably does do this.

As for the stuff about cryptocurrencies being associated with scams and wealth inequality, to me that’s entirely independent of environmental impact and should be dealt with (and probably can be dealt with using existing laws) regardless of the environmental impact.


Yeah, this makes sense.

I guess the issue I have is such a tiny minority of people are using such an excess of energy to do something that adds very little value to society. Even if the value of bitcoin is subjective, there's still a tiny minority of people consuming vast amounts of energy to derive what value it does bring them.

It just feel disproportionately harmful at a time when our top scientists are blue in the face from telling us to reduce carbon emissions.

I understand that it's not my place to judge what people derive value from. I also would argue that energy should be neutral (similar to my views on internet access). I guess my biggest gripe is probably something you and me share in common: the understanding that market mechanisms allowed this waste to happen in the first place. So you're definitely not wrong, and your argument about externalities is well-taken.


I’d rather not have environmental regulation that needs to decide the value to society of every activity. If the regulation just internalizes the costs of energy production, then I don’t care what you use your electricity for (up to some obvious and less-obvious limits, which can be and are handled by completely separate laws).


"Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens."

The same could be said for people changing their behavior because you complain about it on a message board that the people in question don't even read. Nobody's going to stop using Bitcoin because you don't like it, so why bother?

That said, I think the cryptocurrency world is moving in that direction anyway. Most of the more exciting new cryptocurrencies use non-PoW consensus mechanisms, eg. IOTA = tangle, Ethereum Casper = PoS, EOS = DPoS, Stellar = SCP. And there's a strong economic incentive for that: when you reduce the cost of computation, you can use those computations for more applications, which drives adoption, which increases the value of peoples' cryptocurrencies. The challenge is that the fundamental benefit cryptocurrencies offer is computational trust, so until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.


> Nobody's going to stop using Bitcoin because you don't like it, so why bother?

Perhaps someone who did actually read what I wrote will realize that there are many, many things that do what Bitcoin does without the power usage of Bitcoin and perhaps seeks those as an alternative (like, PoS coins). And originally, the argument was "this is an environmental crisis," someone said "no it's not because of ferraris and backpacks," and I countered and said, yes, it's an issue. Why does anyone argue on an internet forum? I guess in the hopes of changing minds. I hope you would not find debate a waste of energy, at least not in a democratic form of governance.

> until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.

Yeah, that's the real meat of the argument, I suppose. We know PoW is at least difficult to attack. I am very happy that other consensus mechanisms are being explored though. I'm also not convinced existing non-PoW consensus mechanisms won't be as secure trust-wise as PoW.

I guess the overall point of this is that, yes, there's nothing I can do about people doing horribly wasteful things. But let's not pretend that bitcoin isn't horribly wasteful. Let's call a giraffe a giraffe. And maybe it's ok to be a giraffe if you're aware of the trade-offs, but it's certainly not a gazelle just because you're uncomfortable with the properties of giraffes.


I have bad news for you, which may or may not be fake: in the future, we all live inside. Our houses aren't self-sufficient bio-domes at first, we pipe in fresh air and water from centralised facilities; then we use it, and pipe it back. At the centralised facilities where air and water is recycled and power is generated, waste just goes outside. Some modicum of theatrical effort is put into loading the particularly radioactive stuff in steel drums and telling the concrete trucks cover it over, but nobody really cares. As we approach the limit of a dead planet, the externalities of energy production cease to be negative -- there's no harm in beating a dead horse. This is when the cost of energy will accurately reflect all externalities, not before then. A society which slows down energy production will be outcompeted, and then they won't be in charge of the inside. The outside is already a lost cause.


>Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."

You just proved their point. The beneficiaries of Bitcoin – like you – have a subjective viewpoint. You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders (the relatively few people who hold Bitcoin and actually profit from it). Objectively, it's largely a method to siphon real wealth from many to few, bearing a striking resemblance to Tulip Mania. That doesn't mean that all crypto and blockchain tech is somehow inherently evil, it's just not doing a lot of public good in this particular incarnation. One can argue it does the opposite by facilitating criminal enterprise.

Your point about externalities is correct but moot, as no one is successfully passing on the full cost of electricity production to the consumer.


> You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders

That's a different claim, and I agree with it. In fact, the entire point of my comments in this thread is that I want environmental regulations that internalize all the costs of energy usage.


>...transact without overly-censorious middle-men who take a cut while adding nearly no value. We have the internet, now. Payment networks should have died years ago.

nearly no value = many more transactions per second for much less energy cost.


The "value" is the payment network itself (plus stupid things like rewards which are taken from the businesses and distributed to the consumers). However, the payment network can easily be superseded by the internet, and all that's really needed is to build a ledger on top of it (and using something like PoS it could use an amount of energy probably on par with Visa, or at least comparable to it for the same number of transactions).


I mean, it's at least not "easily"... I'm sure in 5 or 10 years looking back it might seem easy, but looking back over the past 5 or 10 years it doesn't seem like it's easy.


>pathetic ~10 transactions per second.

It's only an artificial limit of Core fork of Bitcoin.

Increasing it to 10 000 transactions per second doesn't use more energy for mining. https://www.reddit.com/r/btc/comments/7nn5wa/bitcoin_cash_is...


Right, so bitcoin main stands out as especially terrible, even among the ecosystem of terribly inefficient PoW cryptocurrencies.


I can use bitcoin to buy things on the internet, or send money across borders, or bring money across borders, all without anybody's permission. So it's pretty successful in my book.

Oh wait, you're bringing sin into the argument. My bad, I thought we were being rational.

And just a side-note, it irks me when people say that bitcoin uses as much energy as the country of Iceland like that's some kind of horror. Iceland is pretty damn small, with a population smaller than the mid-sized city I live in.


It also doesn't use as much energy as the country of Iceland (living in Iceland here). You what we use the MOST electricity for here? Aluminum smelting. No one seems to care a lot about that waste, it seems.


Making aluminum isn't a waste! You can build airplanes out of aluminum. You can also relatively easily recycle aluminum into more aluminum things, so it's not like you have to pay that smelting cost every single time you want to purchase anything.


It's still subjective. We can argue all night about what does or doesn't deserve to have energy used on it, that doesn't change the fact that Bitcoin is a rounding error in terms of global warming.

If the purpose is to limit environmental impact, why are we choosing by subjective value instead of actual impact?


> An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.

You're just describing capitalism there ;)


To be fair, I feel the same way about the stock market as I do about bitcoin, so yeah some of the sentiment is shared. At least with capitalism, for better or worse, just about everyone participates.

That said, I don't think a complex economy can really operate very well without some form of market (at least not until we're at 80%+ automation). And with markets come waste.

I guess I'm not saying anything should be done about bitcoin, but rather that I personally believe it's a complete waste of energy when there are already many better alternatives.


> using a country's-worth of energy to support a pathetic ~10 transactions per second.

does this number include off-chain transactions?


>An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste. You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.

This is begging the question.


> “However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.”

Great! I look forward to seeing your solution in action.


Nano does it in action.


Nano claims to do it in action. So do others. Some of them might even be proven right, the vast majority will not, so acting like it's some kind of trivial solved problem is disingenuous. Ethereum's PoS has been in development for years and there is still no consensus that it will be a better mechanism than PoW.


> acting like it's some kind of trivial solved problem is highly disingenuous

I said it's possible. I didn't say it was easy. That said, PoW on a small scale is an interesting experiment. On a large scale, it's a horrible way of allocating energy usage. So while the databases running on PoW are working, they are a stupid waste of energy.

I welcome any alternative.


That's like saying space travel is a stupid waste of energy because it costs more than driving. Some things are expensive, sometimes they get cheaper. In the meantime if you want to get to Mars you either buy the proven rocket or the cheap one.


" it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second."

I think it's more accurate to talk about the amount of value the Bitcoin network is storing than the transactions per second.

Bitcoin currently has a market cap of $68B. I'm not aware of any other distributed system that's worth that much money. It's definitely interesting that a fully distributed system has been able to achieve that valuation without any centralization or governing authority (debates over developer and miner power aside).


If bitcoin users went to make withdrawals en masse, I suspect they'd quickly find it's not "storing" anything like USD 68 billion of value.

Market cap is a farcical number to look at for a thinly-traded asset on unregulated markets. If I make my own new cryptocurrency, print 100 million tokens, and then talk my friend into buying one for $10, does that mean my token has $1 billion market cap?


While I agree that the valuation can rapidly fluctuate. Bitcoin is successfully storing a large amount of value in a distributed manner. More than any other system that exists. There is a huge incentive to create transaction fraud with that much money on the line and Bitcoin is working and intended and acting as a distributed, transaction fraud free public ledger with a trade-able currency.


> "Bitcoin is successfully storing a large amount of value in a distributed manner. More than any other system that exists."

No it isn't. The market cap of bitcoin, which is a bullshit number anyway as already explained, is dwarfed by other forms of distributed wealth storage such as (but certainly not limited to) old fashioned pieces of gold. Gold is distributed. If you revise your assertion to be distributed and digital then perhaps you're correct. But the more qualifications you tack on, the less impressive your claims to fame become.

Don't bother mistaking me for some sort of gold bug either. Real Estate is another form of distributed wealth storage that blows bitcoin's pathetic market cap out of the water.


>[Bitcoin] is dwarfed by other forms of distributed wealth storage such as [S.A.] old fashioned pieces of gold

Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA. Also can you let me how how I can costlessly assay gold when I accept it as payment? or make the supply of gold only dependent only on time and not how it currently is (price and time)? Whenever the price of gold goes up, they mine more of it :C this makes its Store of Value property worse than bitcoin. Looking forward to your reply and our future endeavor together. /s


I think it's absurd to think that it should be possible to package 150 years of median US household labor into an easily transportable, easily securable form. That simply will never be possible. It's not a technology problem.

Even if you could somehow do this, you would be incredibly vulnerable to extortion, and I doubt you would actually really want to do this even if you had the capability. There are people that have significant wealth that exists outside of "official" legal capacities (drug lords, dictators of small nations, etc.). They have to spend incredible effort on maintaining security of their assets. Pretty much the only thing that works is giving an army of people a better deal than they can get from someone else to steal your wealth from you.


>Even if you could somehow do this...That simply will never be possible

You already can: bitcoin.

>I doubt you would actually really want to do this even if you had the capability

If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.


> If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.

I didn't disagree with any of that. My position is that if you are actually in that situation, bitcoin doesn't help that much, and no technology can. If you attempt to actually execute this plan, the risk is extremely high that you will be detected, and a corrupt government doesn't have any shortage of ways to force you to comply with whatever they come up with.

Are there any examples of a Venezuelan moving a significant amount of wealth out of the country via bitcoin?


I don't think you're going to find any specific examples, because nobody is going to boast of moving a lot of money under the radar.

But judging by the trade volume in Venezuela, they're clearly using it for something.

https://www.cnbc.com/2019/02/14/venezuela-crisis-bitcoin-tra...


Here is a great article. The size of the /growth of market is interesting.

https://cointelegraph.com/news/how-venezuela-came-to-be-one-...


> Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth?

I guess you mean "how can I violate capital control laws"?


> Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA.

You're supposing that the vast majority of people using bitcoin are using it to exfiltrate money out of countries. That niche application is very far from the reality of what most bitcoin advocates are doing.

But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.


>You're supposing

It's a single example of the value of decentralized property rights. Say I'm an alcohol maker in Sharia-law country, I want to be able to make wine but prevent the state from expropriating my wealth because they ban alcohol. Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.


> Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.

The moment Bitcoin becomes a viable way to subvert the state, they'll just change the laws. And if people actually start using it to smuggle money internationally the feds will get involved. The entire idea that Bitcoin can subvert the state is absurd.

And if you don't believe me, look at the evidence. ICOs got regulated. Silk roads got shut down.

And furthermore, while it's convenient to use oppressive regimes as examples for this Bitcoin "feature", it's way, way more likely the 1% (you know, the people who actually have money) will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.


>The moment [cryptography] becomes a viable way to subvert the state, they'll just change the laws.

Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.

>if people actually start using it to smuggle money

If? People already use bitcoin to evade capital controls in China, Venezuela etc

>the 1% will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.

You're confusing equity (something you own) and equality (rights that you have). Bitcoin promotes equality (each client has the same rights). Arbitrarily making certain people unequal (different people have different rights, some have their wealth stolen, some don't) always leads to more inequity. Voting about who to steal from doesn't legitimize theft. If people who generated wealth through voluntary exchange want to protect their property rights from theft, I won't deny them that. Agents who use the state to expropriate wealth through artificial privilege (the real enemy here) want to perpetuate the existing system, not encourage a neutral rights network such as bitcoin.


>> The moment [cryptography] becomes a viable way to subvert the state, they'll just change the laws.

> Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.

Your argument is that Bitcoin will let you subvert existing state monetary policy and other regulations. My argument is that once that happens on a significant scale, states will change their policies and enforce them more or less with state violence.

A good example is anonymous payments via a tumbler. As soon as these payments start seriously foiling law enforcement, states will outlaw tumbler services. If that doesn't solve the problem, and the problem is severe enough, they'll outlaw Bitcoin. The way they would do that is to outlaw exchanges and pursue them over Tor the same way the pursue dark web markets, by enlisting banks, employing cyberwarfare and other espionage, and ultimately with on the ground law enforcement.

It's very, very hard (maybe impossible) to solve a political problem with technology, unless that technology is weapons. It's immoral in a democracy because it by definition subverts the will of the people.

>> if people actually start using it to smuggle money

> If? People already use bitcoin to evade capital controls in China, Venezuela etc

I mean "on a significant level minus state actors".

> equity vs. equality.

I think if you're a "taxes are theft" person then we have deeper disagreements, because I'm a "property is theft" person. But those antipodes aside, Bitcoin no more promotes equality than regular currency does, in fact there are lots of services that only let you do certain things with certain account balance amounts.

Furthermore, I have no idea what you mean about a "neutral rights network". Do I get to vote on things because I hold Bitcoin? Did I miss the votes on various forks? Does my vote count equal to one of the Winklevoss'?

I think the exact opposite is true. Not only is there no voting, but holders of lots of Bitcoin (which you can only accrue with actual currency or mining, which you need to spend actual currency to get the equipment for) have far more power over the Bitcoin network than I do. I have no idea what "rights" you think I get through Bitcoin, but I'm pretty sure the answer is "none".

EDIT:

Also, come on, I'm fine with "crypto" meaning "cryptocurrency" now, but it absolutely doesn't mean that "cryptography" means "cryptocurrency" now. This is a hill I am willing to die on.


I thought "taxes are theft" was bad enough. Is the new galaxy-brain "inflation is theft"?


That's not a new position. "Inflation is a regressive tax" has been around for a while.


I’m confused. How is it regressive? Inflation is essentially a tax on idle wealth.


Many lower income individuals struggle to see their income increase faster than inflation. By contrast when you have immense wealth, it's pretty easy to achieve extremely stable returns on that immense wealth well beyond inflation. In cases where this is true it means the net effect is that the poor effectively pay more while the rich effectively pay less.

There's also an issue of debt differences. One of the big 'benefits' of inflation is that it makes old debts worth less. This is a major incentive for pursuing investments on debt. Not only can you see investments on money beyond what you presently have, but the debt that you took on becomes worth less - meaning it takes a smaller share of your profits each year assuming the principle is not growing. For instance during the government auto bailouts Ford took on a loan for billions of dollars of debt from the government. The interest rate on that loan is sub-inflation. Unsurprisingly, they aren't paying it back since each year it becomes worth less, and given enough time, it will become worthless.

By contrast when a lower income individual takes on debt, it's often 'consumed' such as in the case of education. And the debt becoming worth less over time is not true if an individual's income is not keeping pace with inflation. And another big issue is that lower income individuals are also often going to be seeing rather high interest rates on their loans further diminishing any theoretic benefit of inflation.

---

This is not to say inflation is bad. You can create a comparably negative argument against deflation. I don't really have much of an opinion one way or the other. We've seen how depressive systems can end. And while our current inflation and debt driven system has not yet collapsed, it's not looking as stable as it once did to put it very mildly. I think in 20 or so years (and especially once the petro dollar is 100% dead) we'll have a much better idea of the pros and cons of each system.


> But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.

Given that some forms of cryptocurrency can be stored using only a memorized passphrase and nothing else, (ie. a brain wallet), it's pretty much guaranteed that getting cryptocurrency put of the country would be easier.


You're supposing the government doesn't know you bought those bitcoins (or at the least doesn't know that you are somehow hiding a lot of money without knowing the details) and isn't willing to beat it out of you.

Most cryptoanarchists are deluded nerds who would fold in less than 5 minutes of waterboarding. Do you think these thugs who are willing to look up your ass for a few pieces of gold aren't willing to violate you in other ways? Of course you don't believe that, you've merely failed to seriously consider that possibility.

The only reason smuggling BTC sometimes works right now is because they're not looking for it.


Tell me how anything you just said shows how it could be easier to smuggle physical currency out of the country than digital currency, which was the point that I was refuting.


> it could be easier to smuggle physical currency out of the country than digital currency, which was the point that I was refuting.

Then you were refuting a position I never espoused. My point wasn't that gold is easier to exfiltrate, but rather that BTC isn't necessarily easier to get out. If the border agents of the tyrannical government you're fleeing know you to have wealth, and are informed about bitcoin, they have many options available to them to prevent you from leaving with your wealth, including simply forbidding you from leaving at all. At that point, you'll have to smuggle your body out, so smuggling a few pieces of gold along with your body isn't a huge inconvenience.

If on the other hand the border agents don't know that you're trying to smuggle wealth out of the country, then it shouldn't be to hard to get through the border no matter what method you choose.

The one scenario in which BTC seems clearly superior is when the border guards are simultaneously alert but ignorant. Looking very carefully for money, but totally oblivious to the possibility of BTC. This might work during the present, but don't count on this remaining true forever. If enough people start using BTC for this, tyrannical governments will wisen up pretty quick.


Here are a couple of other scenarios where having BTC works as an advantage:

1. The government doesn't know you have any money, but you are targeted in a random search.

2. The government does know you have money but doesn't know how much. Simply give them X out of Y cryptocurrency keys. They won't know you have any more.

I don't know how much exposure you have to tyrannical regimes, but they aren't as efficient as you seem to think, in that they don't really have much grasp on how much money people own, nor are able to find out instantly.

They also do care about how they are perceived and aren't going to grab some tourist and with no proof whatsoever, torture him to death because he might possibly have some cryptocurrency.


Real estate is likely the best storage of value there is. It's only distributed across governments though. When you own a piece of land you actually trust your government to protect your right to it.

Gold is fantastic. Apart from its physical properties, we all agreed to assign value to it and it's been working for thousands of years.

But wouldn't it be great to have gold in a digital form? Something easily divisible and transferable, yet as gold is, not dependent for its value on some 3rd party? Something that is truly yours not just IOU. Which can keep value.

Forget about Bitcoin, how would you envision something like this?

Apart from technological problems, we have a problem of initial trust and distribution. Please stop here and think for a moment, this is a hard and interesting problem. I'm not saying you can solve it with a few minutes of thinking but just after a few moments some things clarify.

Now imagine we do have it. We did it. Because it would be a cool future where we do have this digital gold. Is it a safe storage of value? What if some better digital gold 2.0 comes along? If people would prefer to move their wealth to it then the 1.0 would become less desirable, so its value should drop. But if it does, then it's not a good storage of value after all.

You can devise a system in which 1.0 tokens can be exchanged to 2.0 but then you cannot change the initial distribution.

If all that thinking is not enough, it is interesting to ponder impact of an actual perfect storage of value system on society. Wealth can be leveraged to generate more of it.

Not that it's something completely new, we had a few close enough matches throughout the history. That's what most wars are about. Although it's easier to go get something if you know where it is.


You may be interested to learn about the commodity derivatives market.


I sympathize with the dream, but the dream is very far from the reality bitcoin has realized.


Both gold and real estate require massive amount of physical force to secure. Nation state level force and law and order.

Bitcoin just needs electricity.


Oh come on. Bitcoin uses the same amount of energy that the country of Iraq [1] uses, home to 38 million people.

Bitcoin has about 500k active bitcoin addresses [2], most of which contain less than $100 [3].

So what are we actually getting for all this energy usage, and couldn't we get that same result for a fraction of the energy usage?

[1] https://digiconomist.net/bitcoin-energy-consumption

[2] https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

[3] https://bitinfocharts.com/comparison/bitcoin-activeaddresses...


You think bitcoin is bad?

https://drive.google.com/file/d/0B1s8219SGDIjMnkzdFI2QjhwNm8...

My gut instinct is that the vast majority of all computing cycles used by humanity are completely wasted on irrelevant tasks and inefficiencies.


Bitcoin is wasteful because of its energy profile not because of an arbitrary value judgement regarding how energy should be used.

Rendering images is useful work. Processing transactions is useful work.

With gaming computers, increasing energy costs means increasing detail and complexity in the images that can be processed.

Bitcoin is wasteful because the increasing energy costs does not increase the total number of transactions that can be processed.


No, it increases the trust of the system. Is it the best solution? Perhaps not, but it is not without utility.


Run that one by me again? If tomorrow, a manufacturer announced the new Super Duper Quantum ASIC for Bitcoin that can perform hashes at 10 times less energy cost, everybody would switch over to it, and the total hashrate would increase 10x. Neither the number of miners, the proportion of mining held by each person, the distribution of mining rewards accumulated, or the total power consumption would be affected at all. Therefore, the amount of trust in the system would not be changed at all.

Cryptocurrencies are not secured by the hashrate, but by the cost of exceeding the hashrate of the network.


I'm probably way out of my element here (I don't own bitcoin or play video games). Are you telling me that the power consumption of the bitcoin network is constant and based solely on the most popular bitcoin mining hardware?


I wouldn't say that it is constant, as the energy consumption has been increasing. However, it does not depend on the efficiency of the hardware being used.

Think of bitcoin mining as a raffle. You can buy as many raffle tickets as you want, and so can everybody else. Each raffle ticket costs $1, and so people buy tickets until the prizes start getting spread out too much. The next day, though, the raffle tickets are only 10 cents apiece. However, the prizes are still the same, so the break-even point is still the same when expressed in dollar value. As a result, the same amount of money is spent, just buying 10x as many raffle tickets.

In this analogy, each hash performed by the miners is buying a raffle ticket. The block reward is the prize at the end of the raffle. Going from CPU mining to GPU mining to ASIC mining each increase the efficiency of performing a hash, analogous to lowering the price of a raffle ticket. Just as lowering the price of each raffle ticket results in an increase in the number of ticket sales without changing the total value of ticket sales, so decreasing the cost of each hash results in an increased number of hashes performed, without changing the total amount of electricity spent to perform those hashes.


Okay, I think I get it. So the power consumption of the network is based only on the power available to miners, which is probably reasonably constant since the mining pool doesn't change much? So putting aside market hype the main thing impacting the value of a bitcoin should be the cost of this power?

I agree it doesn't sound like the most efficient system and these incentives are somewhat perverse, but there weren't any systems like this before bitcoin. If cryptocurrencies do have valuable attributes that cannot be attained by conventional currencies and bitcoin introduced these concepts to the world in the first viable way and the popularity of these networks has lead to people researching more efficient analogues such as proof of stake and the techniques mentioned in the original article then can't we still say that the existence of bitcoin had a utilitarian benefit for the world? If the popularity of bitcoin goes down and these more efficient networks supplant it then the total energy-expenditure should be minuscule compared to the total energy usage of all humans over all time. Given the the rate at which these technologies seem to be maturing it will likely still be a lower expenditure than bootstrapping many other equally useless human endeavors.


It is a new application, but I'm not sold on it at all. I don't see anything that cryptocurrencies do that fiat currencies do not do better. Irreversible transactions, for example, is touted as a benefit, but I believe is a major disadvantage. As a result of them, consumer protections against theft and fraud are impossible to implement. Any reverse payment requires the cooperation of the fraudulent actor.

Furthermore, the decentralized nature of bitcoin cannot last indefinitely, and arguably has already ended. All mining nodes need to have a record of all balances, in order to verify that incoming transactions are valid. This places a limit on the ability to contribute to trust by mining, and will result in further centralization of miners. If a cryptocurrency were to replace fiat currency, it would not be a change from centralized currency to decentralized. Rather, it would be a from a centralized currency controlled by an elected government to a centralized currency controlled by conglomerations of miners.

I have done my best to understand their use, their applications, and their limits. With that in mind, I believe cryptocurrencies to be a obfuscated form of pyramid scheme, with additional externalities of heavy power use.


The trust in the system doesn't scale with hashrate, it scales with required cost to attack it.


"Increasing trust" doesn't add value if the system is already sufficiently trustworthy for the task of processing transactions. Based on that reasoning the cost should ('should' meaning: it is beneficial) increase forever because an infinite amount of energy burned is infinitely trustworthy.


> sufficiently trustworthy

Trustworthiness always depends on your use case.

If you are transacting small amounts of money (less than is spent on mining a block) then waiting for 3 confirmations is probably sufficient to consider the transaction settled. But what if you send a transaction with a 100 times higher value than goes into mining a block then you will need to wait for over 100 confirmations till you can be sure it doesn't make economical sense for anyone to try to double spend your transaction by orphaning the first block your transaction was in (with a very simplified incentive model not taking into account other transactions in these blocks).

Thus the money spent on mining blocks determines how much value can be transferred in one block. Allowing for higher value transactions is good thing imo, is necessary for its success as digital gold and therefore justifies the higher energy consumption (especially since there don't seem to be any alternatives with similarly good or better robustness against attacks yet, proof of stake can't work under the same assumptions bitcoin does [1]).

[1] https://download.wpsoftware.net/bitcoin/new-pos.pdf


The fact that larger transactions require more power to transmit securely only demonstrates my point further.

> Allowing for higher value transactions is good thing imo

PoW systems are the only ones where "higher value transactions" need security proportional to their size.


@root_axis (since I can't reply directly):

> PoW systems are the only ones where "higher value transactions" need security proportional to their size.

Every other currency is either backed by men with guns and transactions are reversible (fiat) or you have to spend a roughly proportional amount of resources securing it (e.g. gold). I didn't look at the data, but judging by US military spending I'd guess that the strongest economies also have to spend the most to keep their system safe.

You can still argue that the assumption of pseudonymous actors in bitcoin makes the proportion factor larger (=system less efficient) than for systems that can use identities and attribution and I'd agree with that. But that's only because it can operate with less assumptions (no identities), which I see as a feature.


> Every other currency is either backed by men with guns?

So what? Men with guns are also the foundation of property rights, law and order, and national sovereignty; they are not an extra cost of fiat currency, they underpin the government's ability to maintain order and structure within society. I shouldn't have to explicitly point this out.

> transactions are reversible (fiat)

Cash payments are not reversible. Reversible payments are also a feature that nearly everyone wants.

> spend a roughly proportional amount of resources securing it (e.g. gold).

Gold is not a currency.

> that's only because it can operate with less assumptions (no identities), which I see as a feature

Untrue. A centralized anonymous payment system is technically possible, the limitations are strictly legal.


> Gold is not a currency.

It was for millennia.


Is bitcoin sufficiently trustworthy without proof of work? I'm not a bitcoin expert, but my understanding was that this is an integral part of the trust model. If so then we're just back to talking about inefficiencies.

I can't imagine the processing being done by my computer right now is all strictly necessary to read and post these comments, and I'd wager this site is more efficient than most these days. Still I accept reality and pay these costs in order to talk with you on the internet because this is the world we live in. It looks like these nice people at MIT are working on some of the inefficiencies of cryptocurrencies, so let's rejoice.


> Is bitcoin sufficiently trustworthy without proof of work? I'm not a bitcoin expert, but my understanding was that this is an integral part of the trust model. If so then we're just back to talking about inefficiencies.

Yes, that's exactly the point. Bitcoin is insanely inefficient because PoW is insanely inefficient. Unlike other "inefficiencies" where there is a logical relationship between "energy spent" and "useful work accomplished", with PoW there is no such relationship since the energy isn't spent doing useful work (i.e. processing transactions). Yes, more power into the network makes it "more secure" by making it "more expensive" to perform a 51% attack. The increased expense is distributed across the network in the form of increased difficulty. If a 51% attack was already implausible (which most bitcoin enthusiasts would say is true), then making it even more expensive doesn't actually do anything useful.


Mining gold gets harder over time. If you want more gold that's the price you pay.

Trust-less consensus may be the same. Nature doesn't care either way.


Nature has nothing to do with it. Bitcoin is a poorly-engineered human-designed, human-built system.


Math has everything to do with nature.


Endlessly re-calculating SHA-256 over and over is not some beautiful mathematical principle.


Find a better way of guaranteeing trust-less asynchronous consensus then talk.


>the processing being done by my computer right now

Well it depends what you are considering. Arguably, yes, your computer finished the HTTPS connection long before you got around to reading the words on the page itself. But the scale of an idle CPU compared to a 100% CPU is not even close. Mine is sitting at 2% use while I type this.

You could put that money into mining actual gold, and literally make 4x as much as mining bitcoin [0].

[0] https://www.theguardian.com/technology/2018/nov/05/energy-co...


>Bitcoin is wasteful because the increasing energy costs does not increase the total number of transactions that can be processed.

Are you saying the number of transactions the market will demand of a system is independent of the trust of the system? If I need to move $250,000[1] in one hour with ~100% certainty are you saying an IOU from a bank janitor is equivalent in value to a bitcoin transaction? An increase in attack costs increases the types of transactions that can occur safely on L1. The number of L2 updates are unbounded by L1 transaction capacity, increase attack costs gives the market confidence L2 updates cannot be erased.

A high cost to signal which money you're willing to use filters out fraud attempts. Which should I trust more, Malory Money who double-pinky swears to run her Malory Money servers 5 years from now but is signaling with no costs or Bobby Bitcoiner who signals by billions of dollars in single-use capex (ASICS)

[1] 12.5 BTC/block * 3850 $/BTC * 6 Blocks/hour < tx.value()


> Are you saying the number of transactions the market will demand of a system is independent of the trust of the system

No. I'm saying that if a 51% attack is practically impossible today, the increasing amount of energy consumed to secure the same amount of transactions is wasted. It's also a sign that the system is broken because the amount of energy consumed has no practical impact on security. Reasoning otherwise would suggest it is justified to consume infinite energy because that would be infinitely secure.


>a 51% attack is practically impossible today

It appears you think a 51% attack is when an external agent attempts to out hash the network. This is only one type of 51% attack.

A 51% attack means there is a almost equal amount of hash rate being applied to two divergent, consensus equivalent chains. This can happen in above scenario or when existing miners attempt to reorg blocks (See ETC 51% attack) There is nothing stopping this behavior from occurring at any point in time. The only check on this behavior is the cost to rewrite history, decrease this cost, and you increase the profitability of such attacks.


Is the American military wasteful because it provides too much security? How much should it be reduced to provide sufficient security? This is a legitimate question/ I don't have an opinion either way - but it seems to be a fair corollary.


Unlike bitcoin, every person in the US has an (more or less) equal vote to help decide that. Congress's job is literally to decide whether to spend more money on military, among other things.

And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens. What does bitcoin provide in terms of add-on benefits like jobs? The ability for power companies to maximize profits by having their supply used more fully?

Edit: Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe. There are numerous areas such that, if money was not a concern, could be made safer and more profitable by adding more security. Creating infinite trust in bitcoin would... do what exactly? Let nerds buy drugs on the internet?


> And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens.

Jobs are only useful if they waste people's time? Mining is a job. Mining can also become green much faster than constantly moving around millions of tons of vehicles can.

> Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe.

I would argue it decreases security, with all the wars and disruption it caused in the last decades.


Some would argue that it fixes the economic system so that we won't have booms and busts anymore and can start seeing capitalism in action proper. That seems to be a worthwhile investment, and may even help prevent wars (which are often financed by currency debasement).


You could generalize that to "the vast majority of all waking time used by humanity is completely wasted on irrelevant tasks and inefficiencies."


Good spot. Can I add photo-realistic GANs to the list of totally fucking useless computing tasks?


Digiconomist's figures are entirely fake. They've been debunked but the author (and hapless news outlets) continue to promote them.

https://hackernoon.com/the-reports-of-bitcoin-environmental-...


The author of your paper appears to be attacking another author and yet has nothing to back up their claims other than "Trust me I'm an expert and I know a guy in Hong Kong who tells me what's happening in China!"

The argument summary of your article is hand waving, claims that the sum usage of software designed to be increasingly energy wasteful (Satoshi's random nonce lottery as a means of increasing CAPEX and decreasing production output)

https://digiconomist.net/verify-dont-trust/


In what way does this address the parent post's argument that to the extent Bitcoin produces more negative externalities than positive effects, it is because the price of electricity is not set correctly by governments?


Those figures from digiconomist have been debunked.


> When you say Bitcoin "hurts the environment", what, concretely do you mean?

We mean that mining Bitcoin is extremely energy-intensive by design. This is to say that the energy consumed by Bitcoin's economic activity is deliberately and gratuitously significant, not incidentally so. Moreover, the energy consumed by Bitcoin mining scales commensurate with how many Bitcoins have been mined thus far.

So yes, that makes it categorically different from other energy-expensive activities like farming or hospital maintenance. We are actually economically incentivized to consume less energy over time in most energy-expensive activities. With most cryptocurrencies, energy consumption is a design imperative.


> There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.

It's not special pleading if I'm equally annoyed by Ferraris and other environmentally disastrous forms of conspicuous consumption. I don't know enough about Hello Kitty backpacks to have a serious reason to be against them.

It's perfectly consistent for me or anyone else to leave a negative comment about Bitcoin on an online forum and then as much or far more to tackle a different issue that I/they consider pressing. And this, largely, is how it seems to be playing out: nobody has been arrested for using wasteful PoW schemes yet, because we have bigger fish to fry.


Oh sure, buying fresh berries imported by plane from the other side of the world is no better than this bitcoin mining business! But it's not a competition to single out the worst offender.

I feel the parent comment shares this common intuition that there must be some way to design and code any crytocurrency to offer the same features without having to consume so much energy in the process.

I'm no expert on cryptocoins but we surely can agree that any hope to see them mainstream won't rely on countless power plants to brute force computational puzzles.


> When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".

Perhaps a more direct analogy is "literally miming gold hurts the environment (since I highly doubt renewable energy is significantly leveraged in the supply chain)".

> That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.

It makes me wonder if you couldn't somehow tie a renewable energy certificate (1) to a mined coin. I suppose green coin (2) is a similar, albeit indirect concept (i.e. value is from a unit of carbon sequestration).

1.) https://www.epa.gov/greenpower/renewable-energy-tracking-sys...

2.) https://coincheckup.com/coins/greencoin/purpose


This argument assumes that bitcoin provides some value and isn’t mainly used for speculation.


> When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment". That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.

For myself, that is not what I mean when I use the phrase.

Bitcoin hurts the environment because Bitcoin, by design, wants to use as much power as available to secure it - and conversely is vulnerable to anyone who has significant power available, and so it had to design itself so that the rational thing to do is to commit that power to Bitcoin itself.

Bitcoin automatically adjusts its difficulty based on the computational speed of the network over the past few thousand blocks. There is a target mining speed of one block every ten minutes. If someone throws more computational power at Bitcoin, Bitcoin itself will adjust to the additional available power, so that nothing more gets done, it just uses up the power. This is not a claim that the benefit is too low relative to the additional energy; this is a claim that the benefit is zero, by design, relative to additional energy, and that this property is inherent to Bitcoin.

There is a reason to single out Bitcoin and blame it for environmental problems. No other product, concept, or idea in human history (besides Bitcoin clones) has been designed in a way where it expands gas-like to all the energy available to it (... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change).

I'm supportive of other forms of cryptocurrency without this property (weakly supportive, given that I haven't used any of them in detail, but they seem promising). There seems no particular reason to use Bitcoin if alternatives exist without the burn-all-the-available-energy property.


Thank you, this is a very productive reply, and you are highlighting specific things that are unique to Bitcoin.

You're right that a core part of its design is making sure real computational resources are spent on it. That means the (total, social) cost network as such will scale with the size of the economy, not the number of transactions. So, in a sense, there's (something that looks) like an arms race going on, where more resources spent on it don't mean more transactions. Point taken.

But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked. At equilibrium, the cost will be some fraction of the economy, not all available growth or energy (like a gas). That amount of energy that this involves will decrease as energy is taxed.

That's pretty much the dynamic of gold mining under a gold standard: the larger the economy, the more money being spent mining (literal) money.

I agree that it's a high price to pay, but I don't think the benefits should count as zero. Being able to bypass financial choke points so you can donate to Wikileaks is definitely a positive.


> But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked.

Hypothetical scenario: a hardfork of Bitcoin is developed that maintains all of these wonderful properties — impossible for any one party to control, bypasses financial choke points, impossible to censor — but requires orders of magnitude less energy. It utilizes a variety of clever mechanisms to achieve the same goals without using Proof of Work calculations to secure the network. This sort of thing is what the exactly what the MIT team in the article is attempting to accomplish, it's not an intractable problem.

Would you support switching over to the new fork? I would. It does all the things I like about Bitcoin without this big carbon footprint. No downside.

But do you know who will never support the fork? Bitcoin miners. They've invested millions in custom hardware to let them process proofs of work as quickly as possible. They have a massive economic incentive to continue to use PoW. Forever. Even if there exists a better way.

Maybe in this world the price of BTC would go down as people moved to alternatives. I'd like to think people would be ashamed to use an unnecessarily inefficient currency. But when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy, it doesn't make me terribly optimistic.


> when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy

... You know, when you put it that way, there's another problem with this argument. "Bitcoin is good because governments shouldn't be interfering with my ability to give money to Julian Assange. They shouldn't even know that I'm paying him. And if it hurts the environment, well, that's the fault of governments not taxing energy usage appropriately. They should be paying close attention to what people spend money on and dissuading uses that have harmful effects for society, as determined in their sole opinion."


There's a few big differences between gold and energy. First, energy is consumable and gold is generally not. If I mine a bitcoin, the coin itself is reusable, but the energy is turned into heat and lost. If I mine an ounce of gold, I can turn it into jewelry and melt it back into gold, so the mining of gold serves to make the resource more accessible, not less. Second, gold has limited uses beyond being a store of value - while it's useful for jewelry, electronics, etc., most manufacturing processes have little use for it. Increased demand for gold does not compete with much. But energy (either as electricity, or as fossil fuels) is useful for approximately everything. Increased demand for energy drives up the cost of production of everything because everything uses energy. A shortage of gold does not hurt a working-class family earning minimum wage; a shortage of energy does. And, finally, that's assuming that the process of mining isn't inherently harmful. Mining gold has none of the environmental externalities that mining bitcoin via burning fossil fuels does.

So I don't think there's a comparison in how the economy correlates. As long as gold is mineable in the earth, a growing economy mines more gold. But a growing economy demands more energy, which can go either to the economy or to Bitcoin. Bitcoin has no way of saying "I want this portion of the energy in the world, and no more," the way that mines are naturally filled with resources other than gold; all it can say is "I want all the energy possibly available."

(If you could store energy and use it as the basis of a Bitcoin-style network, such that your limited resource was energy itself and not loss-of-energy-per-unit-time, it would kill basically all of these arguments. There would be other arguments about the fairness of OilFuturesCoin, but it wouldn't be these, and it would basically be the arguments about any natural-resource standard.)

And yes, the benefit of Bitcoin is a permissionless network, but the entire question is whether this energy-monster property of Bitcoin is required to have a permissionless network. You could donate to Wikileaks just fine with, say, Stellar's consensus protocol, could you not?


"(... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change)".

Also life. Evolution, birth, and metabolism also result in all available energy going into increasing the complexity of the system. The real reason we have an environmental crisis is because there are 7.5B of us, but few people recommend destroying all life on earth to save the environment.


The "real reason?"

It's not about how many. It's not about how many.

It's about how systematically detached we are from sustainable ways of life.


Sure. The claims about needing to avert climate change before it "destroys the planet" are not about the literal annihilation of the world itself, but about its inhospitability to human life.

Humanity, to some extent, competes with capitalism for resources. But while resources are not at their limit, we can grow together, and capitalism seems to bring us benefits. Humanity also competes with Bitcoin, which is a much newer system that has become seriously competitive very quickly, and it's much less obvious that it's the best or even only way to solve the problems it sets out to solve.


These tiny blobs of data with utterly fake scarcity consume more energy than whole countries. And you try to argue that they’re a good expenditure of energy?

The only reason to single out bitcoin is that it’s a highly visible waste.

But just because there’s multiple ways we waste a ton of energy, does not mean we shouldn’t fix any of them.


> you try to argue that they’re a good expenditure of energy?

I think his argument is that it shouldn't matter whether it is a good expenditure of energy or not. Environmental costs should be priced in the energy costs. Then it wouldn't matter for the society and for the environment how much energy you use or waste.


But apparently there is some point where a large enough majority converts an ethic from subjective into objective. For example "murder is wrong" is considered objectively true even though serial killers my disagree.

And at least in broad strokes, it is possible to determine benefit to harm ratios. It is esntially uncontroversial to say "Coal Rollers"[1] do more harm relative to good than candy manufacturing or face lifts.

And a cap/tax carbon emissions would be great. But that hasn't happened, effectively isn't going to anytime soon and is more complex than it seems. Consider that spikes in green energy use will drive its price such that petroleum becomes more attractive in spite of a tax. And there is no way to correctly price carbon emissions when the effect will be felt by hundreds of generations and the extent of the harm is still unknown. It is, after all, simpler to try to persuade a smaller interest just to stop mining (even though that too has almost no chance of happening).

I have no idea whether Bitcoin is being unfairly singled out or not. But since the thread is about mining efficiency, it is the logical topic rather than say deforestation.

So it's not a-priori impossible that it does more harm than good. And even if not a catastrophic problem, surely it would still be nice to reduce the harm if possible.

[1]https://www.businessinsider.com/conservatives-purposely-maki...


This is a long-winded argument that says only that Bitcoin shouldn't be singled out as a waste of energy. Fine, many things are also wasteful and pointless, but that doesn't absolve Bitcoin of anything.


Which is great, but I could say the same thing of Ferraris for show-off producers in LA, or Hello Kitty backpacks.

Just because one thing is bad doesn't mean the other thing isn't also bad.


No offense but this is some pretty strong whataboutism. The amount of energy that would be used by a crypto currency that gains mainstream adoption would be pretty substantial, certainly much, much more substantial than traditional currency/credit cards/etc.


> In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)

And that's also the solution.

The reason people are interested in decentralized trust is that the existing system of centralized trust is a dumpster fire. Politicians want to use the banking system to attack their enemies, but not all politicians are good and not all of their enemies are bad, and there is a vast amount of collateral damage.

You can't get your payments processed if you're a terrorist, but also if you're suspected of terrorism without any real evidence, or suspected of political heresy without any real evidence, or suspected of supporting someone else who is suspected of political heresy without any real evidence or due process etc.

People who are afraid to reveal their identities because they have powerful adversaries are impeded from raising money for their cause, or even just making a living, and it's really not obvious that this results in less radicalization. Things that make people angry and scared generally don't.

But it's all caused by AML/KYC laws. The promise of Bitcoin is that you can't have your accounts locked out and your funds stolen because a lazy or corrupt politician in a foreign country leaned on a bank that leaned on a corporation that decided your business was worth less to them than the effort required to resist, regardless of your guilt or innocence.

So now we have a choice. Either we stop using the banking system as a tool for surveillance and political pressure, which cuts the legs off the demand for cryptocurrency, or we keep trying to do that and then all the innocent and guilty people who it was impacting get together to build a workaround, and the rules are ineffective regardless but now people burn an extra billion tons of coal.


This is my primary motivator for supporting Bitcoin. No one supports criminal activities, but we underestimate how much AML/KYC laws have produced a chilling effect on an open society.

The relative ease with which your assets can be frozen, compared with how difficult and opaque it is to get them unfrozen; is something I have witnessed many times and I feel is absolutely unfair. This leads to self-censorship and dissuades the public free exchange of ideas.

If Bitcoin can eventually fund for example; a pro-democracy movement in China or a pro-secular movement in the Middle-East, then it is definitely worth all its flaws.


I find it baffling how much power Visa and MasterCard have over people's lives. I can't even imagine what it would be like to be banned from using or benefiting from one of them.


I'm not sure whether this is true, but I expect that electricity-from-coal for Bitcoins isn't a massive problem because doing so is simply unprofitable: the electricity costs more than the value of the Bitcoins, so it would be irrational to do.

I would expect that mining has become an arbitrage market that narrows in on the cheapest possible electricity anywhere in the world, and as such is dominated by excess "free" electricity from e.g. hydroelectric power that is generating more electricity than can be used (or transported).


Well, it's not true. Bitcoin has increased the demand for coal power in China. Bitcoin miners flocked to New York State for cheap natural gas power.

Green energy is not necessarily the cheapest form of energy. If it were, it wouldn't even be _hard_ to stop burning fossil fuels and prevent climate change.


Here's a NYT article about Bitcoin miners moving to New York State last year, but not for natural gas -- instead to a depressed ex-industrial town that has overprovisioned hydroelectric, as you'd expect:

https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-n...

When did miners go to NYS for natural gas power? Are they still there, or did they get undercut by hydro from somewhere else in the world?


Green energy isn't the cheapest source everywhere in the world, but Bitcoin mining has no geographic restriction. Instead of picking a location and then choosing an energy source once there, as most of us do, they can first pick a green energy source and then choose a location anywhere in the world that provides it.

Thus, there's no analogy to the challenge the rest of the world faces in moving away from fossil fuels.


What’s your source? From what I’ve heard bitcoin mining farms in China are located in regions taking pretty much all energy from hydro.


That might be the case in some countries, but in China for example much of the mining is done with stolen electricity, or bribing officials for an unreasonably low rate.


Ironically


> In that sense, the coin would create an economic incentive to pollute

I think if anything it creates an incentive to use renewable energy. If miners are able to pay less for power, they make more money. As the cost of renewables continue to drop, more miners will move to it.


Irrelevant. Renewable energy could be used to replace other sources, instead of peed away on this.

A larger demand for energy likely means more polluting forms of energy will come back into service/stay in service to meet the demand.


It's not being "peed away". It is being used to help people send money to each other.

That's like saying the energy used to run the security system in a bank is being peed away.


If it uses many orders of magnitudes more energy per transaction than all the existing ways of people sending money to each other, it's being peed away.


It's worse than that; there is essentially no relationship between the amount of transactions processed and the total amount of actual energy burned so the system is obviously wasteful (compared to other systems where e.g. less transactions = less energy spent)


Sure, but estimates for marginal energy costs for bitcoin transactions sit at around 150-250 kWh.

A 310L fridge [1] (random one I found) for context uses about 280 kWh per year [2].

I think it's pretty ridiculous to say that the average bitcoin transaction provides approximately half the value (in the best case scenario) as having the ability to refrigerate food for a year. I'd say "pissing away" is a pretty fair comparison.

[1] https://www.lg.com/au/fridges/lg-GB-310RPL

[2] http://www.energyrating.gov.au/calculator

With [2] you will need to put the model number in the "Brand or Model" box


And coal power shouldn't be replaced as long as it helps people have electricity. /s

Your comment misses the point that it is still a monumental and needless waste.


It's being used to help people send money to each other very very very inefficiently.

As someone else in this thread pointed out, there's only 500,000 active Bitcoin addresses, and yet the Bitcoin network consumes the same amount of electricity as the entire country of Denmark


> It is being used to help people send money to each other.

Probably 95% of it is being used for speculation/gambling and scamming the uninformed. 4% on drugs, and 1% on anything else. I'm being generous here. Bitcoin advocates are pool sharks, they want the rest of the world to be their marks.

Who the hell pays rent with bitcoin? Who buys groceries with bitcoin? Bitcoin could drop off the face of the earth this instant and I wouldn't shed a tear.


Larger demand, especially backed by pre-purchase contracts, also increases incentives for large scale solar projects e.g. https://www.inverse.com/article/34239-how-many-solar-panels-...

They generally have high capex and low opex, having a strong outstanding demand by a centralized consumer willing to build a data center nearby makes the business case for a solar farm more attractive.


It is not irrelevant. Crypto mining provides a very nice energy sink for inconsistent renewables to put their energy into, when that energy would have gone completely to waste.

It is a subside to renewables, where they can make money on energy that would have been thrown away. It allows better managements of the peaks and troughs that commonly plague reneweable energy sources.


This perfectly encapsulates exactly how wasteful and backwards PoW cryptocurrencies are. In a system that wasn't wasteful, adding in huge amounts of otherwise unused renewable energy would be a great thing because it'd mean more energy for doing useful work (i.e. processing transactions), instead, adding in all that extra energy actually decreases efficiency because everyone else must now work harder to process the same amount of transactions because of the increased difficulty rate caused by more people competing for block rewards. These new competitors don't actually add value to the network, they just make useful work more expensive from an energy perspective.


It's not a subsidy to renewables. Bitcoin miners don't give two shits about whether their energy is green or not.

You want to help level out peaks and troughs of electricty production: Improve battery technology, don't just waste the energy generating sha256 over and over.


It is a subsidy, in that this was free energy that renewables were unable to profit from, previously.

Before: The energy from a hydro plants gets wasted when it is night time.

After: Now they get money.

The hydro plant is now making money on something that they were just throwing away, previously, and thus it is a subsidy.


>Before: The energy from a hydro plants gets wasted when it is night time.

Hydro plants can usually turn off relatively quickly. They can be used as pump storage, which is an incredibly efficient way of storing energy - >70% efficiency [1].

[1] https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricit...


Energy is created to meet demand. It is not consumed to meet supply.

The exception to the latter is where excess energy is created because a method of energy production is created to meet peak demand, but generates more energy than is needed off-peak. While some of it could be stored, storage is inefficient and it is better to sell the excess energy cheap, so that you can continue to expand your energy production capabilities.

Miners take advantage of off-peak energy excess, whilst at the same time, increasing the on-peak demand. This means that the provider of the cheap renewable energy source needs to invest in producing more, and cheaper energy to meet the higher peak demand.


Nothing is created to meet demand. Goods are consumed based on supply, demand, and other factors.


I work in the FMCG industry, and we treat supply is effectively unlimited. You will constantly have suppliers begging you to buy more, and to buy new products as they expand their range.

However, as a trader, you will only ever buy what you expect to be able to sell. It would be pointless stocking up on goods which you aren't going to sell, especially in FMCG where you need to sell them before they go out of date, else you lose all of the money on your purchase. Sales are almost always the constraint under normal operation.

Suppliers are attempting to create new demand by creating new markets. They usually offer freebies or discounts for new products in order to gain penetration, but it is then up to the market to decide whether that demand warrants them to continue producing the good. Without demand, they cannot continue to produce, because it would be a loss making endeavour.

Electricity can be seen under the same lens. Like FMCG, it loses value with time rapidly, because it gets lost as heat through storage, and it also costs to store. An electricity producer is never going to create more than they expect that they can sell. They might produce a bit more than actual demand as the means to try and capture new markets for greater long-term profits. Mining is part of this - if they can capture a new market for bitcoin mining, they will generate profit in the long term by continuing to supply that demand.


> I'm shocked and disheartened by how infrequently environmental concerns are brought up when discussing crypto. Proof of Work vs Proof of Stake, security, storage size - these are problems for the network and those that want to see it become a real part of our economy. (I am one of those)

You know that one of the major motivations for Proof of Stake is environmental, right? Proof of stake eliminates the energy waste problem. That is one of its major motivating factors.


yes, definitely, and that's why I'm excited about it. What I was writing about when I posted that comment was more about how the environmental impact is often just left out of the conversation - and I was surprised that the original article didn't even give it a mention.


Ah, I guess I just assumed it was implied at this point. People in the space consider it pretty important, I think, and it's well understood as one of the principal motivations for the switch to proof of stake.


Proof of stake may not involve energy costs directly but it has far worse consequences - costs are just shifted into political plane. Which is essentially what bitcoin was designed to avoid.

You do know that idea of pos is older than PoW, yet nobody cared for it exactly because you end up with financial system run by politicians - exactly where you started.


I see people say this sometimes, and then provide no real evidence that it is at all true. PoS systems exist now, they don't have political problems to speak of any moreso than PoW coins. I see no reason to think that PoS would induce any sort of great political struggle that PoW wouldn't.


It’s natural way of life. If a system is subject to being controlled by political process, which PoS is unlike PoW, it will eventually be overrun by politicians. Just common sense.


And which political processes exactly is PoS subject to that PoW is not?


Ordering transactions.


Hm? How so? PoW miners can reorder transactions too. How is this different?


they cannot without expending large amount of energy and even then it will look extremely shady to both old and new nodes. in pos you can generate an entire new blockchain from genesis and new nodes won't have a clue which chain is "real" while old nodes will be very much confused having to make a decision on the split and reorg.

point is - pos is based on trust, pow is based on laws of physics.


A PoS that actually matters will turn into a political game as large stakeholders play negotiation games of where the project goes next. Much like stockholder corporations today.


How is that different from PoW?


It's not.

Bitcoin has a history of huge factional schisms over changes that should have been a no brainer (increase block size to increase tx throughput).

Instead political wars have been fought as the Core dev governance gridlocked and stagnated leading to the Bitcoin Cash fork (amongst others).


> you end up with financial system run by politicians

At least, in case of pos, it is run by politicians with skin in the game...


I feel the same way about the amount of energy used to serve advertisements & send marketing emails.


That's not very much.


Serving advertisements is certainly very bandwidth and energy intensive at least when talking about news/media sites.

The majority of the data that is getting pushed around during a page load is ad delivery or tracking code to inform the ad delivery. That is a lot of servers, load balancers etc etc working hard pushing around ad code. The actual text of a news article is a tiny part of the whole workload.

Once the site is being loaded by your browser (ie you have downloaded all the JS and your machine has parsed a few MB of ad/tracking code), depending on the site's ad provider(s) there is potentially a real time auction going on for every ad slot on every page load. Multiple ad networks hold automated auctions within themselves which are rolled up into an auction between the winner of each of those auctions. There are literally banks of big beefy servers scattered around the world bidding on ad slots 24/7.

A breath-taking amount of energy and bandwidth get used up to display an annoying 'sweater for dogs' ad next to a news article.


That's literally all Facebook and Google do.


It absolutely and obviously is not.

They do significantly more than this, even if you wanted to (incorrectly) classify all of their products like this, they actually do more than that to entice people in.


It seems remarkable to me that anyone can honestly hold the opinion that Google do not do anything other than serve adverts or send marketing emails.

They have a search engine. Does that really need actually pointing out?


Maybe they meant human energy (and potential).


You mention proof of work vs proof of stake, and then two sentences later you claim that nobody is paying to the environmental impact of cryptocurrency mining.

The whole point of proof of stake is to avoid the energy waste that proof of work requires to secure a blockchain. It's not just a technical challenge -- it's one potential solution to very problem you're describing.

Is proof of stake actually going to work at scale? I don't know for sure, and I don't think anybody else really does -- but the point is that not only are people talking about the environment, they're actively working on solutions.


Bitcoin does use a lot of electricity, exactly how much is hard to judge, most of the shock headlines seem to trace their way back to Alex De Vries who uses some questionable assumptions. He seems to calculate the energy use by taking the price of BitCoin and guessing how much profit is being made by miners and how much they pay for electricity.

Nevertheless it is safe to assume that the energy use is significant, even at half or a tenth of Digiconomist estimates it is still quite large. It is broadly true that the energy use of Bitcoin is related to the value of Bitcoin, via the mining reward.

The arguments against the energy use that are based upon the merits of Bitcoin are not valid. If Bitcoin is useless and doomed it stands to reason that the energy consumed is a waste, but that is true of anything. To argue specifically against the energy consumption you have to make the case that it is not worth the cost even if Bitcoin is a success.

If you assume that the costs and profit for mining are more-or-less static then the mining network will use roughly the same amount of energy if Bitcoin doubles in value every reward halving. That flattens out to about a 20% increase in value every year. To accept that the energy use will continue at this rate you would have to also accept that Bitcoin will increase in value at that rate. To date Bitcoin _has_ increased in value quicker than that, which is why the energy use has grown so high. Hardly anyone would argue that the increase in value will be sustained perpetually. If just holds its value the mining reward and power consumption will reduce accordingly. If Bitcoin ends up worth pennies, the consumption will be minima.

Furthermore, Bitcoin mining adds options to _how_ electricity is generated and consumed. Being able to convert electricity into money not only acts as a stimulus for cheaper energy generation but as a motivator for building new capacity. We are already at a point where Solar and Wind are becoming the choice not only for Environmental but also Economic reasons. Any new power plant needs customers, those customers take time to appear. If a power plant sold excess generation at cost to mining facilities the investment required to build a new plant is greatly reduced. This presents the possibility of developing nations introducing power generation to areas that currently have little or none.

If Bitcoin did end up stimulating the increase of carbon neutral capacity and efficiency, then people in the future might end up making the argument that Bitcoin ended up carbon negative.


Environmental costs are( to some minor degree ) included in the energy costs and payed by Bitcoin users. Markets tend to favor efficiency and bitcoins compets with less energy intensive crypto currencies. In the end, the most cost-efficient project should win - which will also reduce environmental costs. This process is slowed down by the fact that only a tiny part of the environmental costs is represented in the energy costs.


>"But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being ... But we need to talk about the environment."

Great, put it in context then:

A. What is the total energy content of the resources consumed each year?

B. What percent of A is lost to "waste" such as powerplant and grid inefficiencies?

C. What percent of the remaining is spent on crypto?

D. What other things are consuming the same order of magnitude or higher than crypto?

E. Which energy use described in D is easiest to make more efficient without harming the purpose/quality?

Then improve #1 discovered in E until it is below #2, then start work on #2, etc.

I think you will find stuff like getting everyone to use i.reddit.com instead of reddit.com and netflix to stop their annoying auto-playing previews should come before anything to do with crypto.


On the other hand I am shocked and disheartened by how infrequently environmental concerns are brought up when discussing the cost of maintaining the US dollar as a currency. Specifically, it takes a huge amount of energy to maintain the military and police power that backs the US dollar.


Your understanding of why bitcoin uses energy is completely skewed. Bitcoin doesn’t use energy to process transactions or ensure a functioning p2p network, bitcoin is the first time in history of money, that money can be expressed as energy units.

Bitcoin doesn’t use energy, bitcoin is energy, or more specifically bitcoin is as much energy as people value the function and security of money.

Trying to reduce it is absolutely misguided - if you figure out a thousand times more efficient way to generate sha hashes (mine bitcoin), it won’t matter in the slightest - bitcoin mining difficulty will rise thousandfold and exactly the same amount of energy will be spent going forward.


> Bitcoin doesn’t use energy, bitcoin is energy

Or a little more precisely a bitcoin is a provable record that a significant quantity of free energy was once turned into heat. So it does use energy, in the creation and once it is created, that energy is wasted unless the created also needed to heat something.


energy would be wasted if it wasn't possible to prove the thing you said bitcoin proves. proof is the product of spent energy, therefore it's not wasted.


...which is a trivial result, and could be reproduced by simple trust (which is essentially free)


that’s the whole point - bitcoin manages to do that without trust. Trust is dangerous, we’ve been dealing with trust based financial system failures for hundreds of not thousands of years.


> that’s the whole point - bitcoin manages to do that without trust.

Well that's nonsense for a start.

Bitcoin simply shifts trust from a middleman to a vendor I am interacting with.

A middleman that is highly regulated, with all sorts of protections and restrictions in place to protect me.

A vendor who has a financial incentive to rip me off, and thousands of years of history to show us just how much they do when given the chance.

The trustlessness of cryptocurrencies is a lie. They move trust from a small number parties you can actually trust most of the time, to a huge number of unknown entities with perverse incentives.


nope, you're the one talking nonsense. when your bank tells you you have $100 on your account - it's a lie, all you have is a record in a database and never actual $100 in a safe to back that up.

all you have is trust that the bank will provide you $100 when you ask for it.

when you have 100BTC, you actually have 100BTC.

how is that hard to understand?


> nope, you're the one talking nonsense. when your bank tells you you have $100 on your account - it's a lie, all you have is a record in a database and never actual $100 in a safe to back that up.

Don't care.

> all you have is trust that the bank will provide you $100 when you ask for it.

Yup, turns out this trust is pretty good, it's backed up by all sorts of regulations and insurance, all sorts of protections and security, and in the last resort by the state.

> when you have 100BTC, you actually have 100BTC.

Who cares? When I have $100 in my wallet, I actually have $100.

You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.


> When I have $100 in my wallet, I actually have $100

yeah, tell that to Venezuelans.

> You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.

that wasn't actually the point, or at least was completely off target, but sure, i can address it - banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies, they will just have to face the reality that nobody is going to inflate them out of their financial screw ups.

and finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc - i'm ok with your choice. just get off your high horse and don't claim nothing should be attempted to fix that by and for people who are fed up.


>yeah, tell that to Venezuelans

Or BTC hodlers who've seen an 80% crash, perhaps.

> banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies

Then they, and I, have no incentive to use cryptocurrency.

>finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc

So far the current sytems in western democracies have outperformed any other system, ever. Further, having a centrally controlled currency is a good thing, yes, it allows monetary supply to be altered and manipulated to support the economy. Unlike, say, gold, which turned out to be a bad choice for a currency.

I'd far rather have monetary policy set by a government, or a quasi-independent entity like the Bank of England, than by some geeks and a bunch of miners.

> claim nothing should be attempted to fix ...

Your 'fix' doesn't actually fix anything and it makes a lot of things worse. That's why you get called on it.


> Or BTC hodlers who've seen an 80% crash, perhaps

zoom out, you're embarrassing yourself.

> Your 'fix' doesn't actually fix anything and it makes a lot of things worse. That's why you get called on it.

that's just like your opinion man. no reason to continue, time will prove who's right.


> zoom out, you're embarrassing yourself.

Not really, I'm not the one pointing at other currencies and how much they've dropped in value, that would be you.


and where exactly did i do that? will you provide a link to your claim?


Missed the 'vendor' part. Most folks dealing in bitcoin, don't trade a whole coin at a time (which is what, $20K?) They use an exchange. Which is the same as now, except without any federal safeguards. In fact bitcoin exchanges have infamously been hijacked and abscond with everybody's coins.

So where's the safety there? Its imaginary.


Not how it works.

You can trade any fraction of a coin with or without an exchange. Exchanges facilitate trading, but they aren't required.

And btc hasn't been 20k for over a year -- in fact it never got there as I recall. It's been trading around 3k for the last few months.


oh boy..

not your keys - not your bitcoin. that's the mantra in crypto world. you're just repeating nonsense you've heard somewhere.

whether exchange gets hacked is irrelevant to bitcoin i own if i'm the only owner of the keys.

not true for any money you're currently holding (if we judge from the position you're arguing for), those are completely imaginary indeed.


And the other 'whole point' is, its ridiculously expensive to the planet. Its playing mind-games with the ecosystem, burning terawatt-hours to enable imaginary points to be traded without imaginary safeguards.


Why do you say “imaginary points”? Do you consider your bank account balance to be “imaginary points”?


Of course they are just like religion, law, right and wrong and on and on. You can tell what is real, and what is all in Sapiens' heads - ask your dog. They know what real is.


It costs way less than current financial system costs even normalized for market cap or transaction volume because it involves politics and military.


The internet depends on politics and the military too. Don't be fooled.


oh yeah, they have so much control, they've totally fixed the problem of torrenting, child porn and illegal markets.

don't be naive, you can't block bitcoin any more than you can block porn.

besides, internet is no longer the only information transfer medium bitcoin can work over.


My miner dries my washing.


I don't think you understand what you think GP doesn't understand. Bitcoin uses energy to establish distributed consensus. What's technologically missing from the protocol is an energy-efficient way to establish distributed consensus, not a faster PoW algorithm.


Bitcoin is the most energy efficient way to establish distributed and trust less consensus. Have better ideas - link me to your whitepaper, I’m sure you will become more famous than satoshi.


All we have to do is price externalities into power generation and we’ll be fine.


Every country would need to, or else all the cryptocurrency mining will just happen where the externalities aren't priced in.


The best way to make a service provider care about the environment is if trees can somehow be the customer.

A big part of a decentralized database's design is its protection against DDoSing. Proof of stake is very low environmental cost but you'll discover that the proof of stake networks with low fees can be DDoSed extremely cheaply.

Other networks use the networking architecture to protect against DDoSing.

> amount of energy being used to mine bitcoin is a real problem

Yes, it is. Although I'd like to say that if bitcoin energy use has a crowding-out effect, like an electric car does, then I'd favor mining bitcoin resulting in more hydropower dams being built than people doing business that can't be centralized like mining can and requiring liquid (dirty) fuels.

Datacenters as a whole can be made really efficient and are, in my opinion, a decent investment that can be repurposed better than e.g. an office building full of people doing traditional banking.

So it's not super straightforward even if on net we don't need cryptocurrency miners and I of course agree that it's bad for the environment.


Isn't the environmental concern temporary? Once all the bitcoin has been mined, the computational requirements for maintenance of the network will certainly decrease significantly.

One could argue that Bitcoin should reach the limit sooner, so that mining difficulty would not increase so much, but the mining incentive is mainly a bootstrapping strategy for a currency. Now that everyone is familiar with how the ecosystem works, another coin could launch that was identical in every way except a shorter period of time before all coins were mined.


The energy cost isn't exactly in creating bitcoins. The energy cost is in securing the network against people doing 51%-attacks, and bitcoins are set to be minted out of thin air and transaction fees are paid out in order to incentivize people to protect the network. Mining will still be necessary after all bitcoins are minted, or else anyone could 51%-attack the network and double-spend bitcoins.


What percentage of CPU power do you think will be mining bitcoin 5 days before vs 5 days after all of the coins have been mined?

If you think the amount will be roughly equal, then you are predicting that transactions that end up in blocks will need to voluntarily contribute an amount equivalent to the block reward in order for the system to continue functioning. This seems unlikely to me.


Transactions already include fees today. The minting rate of new bitcoins goes down over time, so when minting finally ends, it won't be a sudden change to the mining rewards. It's expected that the mining reward will be mostly transaction fees by the end, so the mining reward will only be a little affected by the minting being stopped.


> the minting rate of new bitcoins goes down over time

Isn’t the difficulty level calibrated based on 10 mins per block? I don’t see how your statement above can be true. Seems like it goes from one reward every 10 mins (on average) to 0 rewards as soon as the last one is mined.


There's a block every 10 minutes, but the number of bitcoins minted per block goes down over time. It used to be that 50 bitcoins were minted every block, but currently only 12.5 are minted each block. The amount minted halves every four years. (Personally, I think it's too extreme that it instantly goes from x to x/2 in one block. The mining rate generally dips a bit for a while when this happens. I think it would have been better for the minting to decrease in a much smoother way.)


Thanks for the clarification. Going to back-fill and update the rest of the logical conclusions I had drawn :)


What is the environmental cost of building and running physical banks?


If you care about the environment the best you can do is to stop using bitcoin and become vegan. And don’t use the Internet. Every single human wastes energy. Make something more efficient and it will gain currency, thus harming the environment even more. Technology and environment just don’t mix. You can talk as much as you want, but unless you become a full fledged Amish, that talk will always be hypocritical.


I am not going to make the argument that Bitcoin is energy efficient cause I know that it isn’t, but it is designed to be inefficient on purpose in order to provide trust in a decentralized way.

Does that make it a good use of energy? That is debatable, but energy is used for all sorts of things. How much energy is spent producing weapons, bombs, tanks, etc.? How much is spent producing addictive drugs? Cigarettes? Non-recyclable plastics? How much is spent on illegal surveillance of individuals? Why is it that no one ever talks about these examples?

It is very likely that Amazon, Google, Facebook, Apple, Netflix, Microsoft, etc. each use orders of magnitude more energy than Bitcoin does yet no one ever talks about that either.

Bitcoin gets trashed because people believe that the energy used to run the Bitcoin network is wasteful, but the energy used for other things is not. I am sure that opinion is shared by the majority of folks here as well, but that is what it is. It is an opinion. Does Facebook really improve our lives in a way that can totally justify the energy needed to run it?


The reports of bitcoin environmental damage are garbage. (https://hackernoon.com/the-reports-of-bitcoin-environmental-...)

Bitcoin mining will accelerate environmental friendly energy production because excess energy can be converted into Bitcoin instead of going to waste. Miners who don't use excess energy will be priced out and there is plenty of excess energy around the world.


> But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.

How much energy was used to establish and perpetuate the existing fiat currency infrastructure? Has any such comparative analysis been done? Without such an analysis, it seems a little premature to unilaterally declare that bitcoin is a real problem by comparison.


This canard is tiresome.

The exiting infrastructure does far, far more than cryptocurrencies do, including credit, investment, protection of funds and all sorts of stuff.


And you think the existing infrastructure for Bitcoin or other cryptocurrencies cannot support such services? The smart contract languages were designed for such things as far as I understand.


Currently? No I don't believe that this infrastructure comes close to providing the functions of the financial industry, and as such the energy comparison are completely spurious.

The smart contracts languages can have whatever intent they like, the fact is that comparing the power use of a full financial system to something which is effectively operating as a bad payment processor is so wrong it's funny.


You seem to be missing the fact that the infrastructure in place is sufficient to not only specify but also enforce the properties needed for all the functions you describe. So while you call the comparison spurious, the fact is that no additional energy would be required to achieve the functions you think are missing. So the comparison is not as spurious as you imply.


> So while you call the comparison spurious, the fact is that no additional energy would be required to achieve the functions you think are missing.

Really, none at all to, for instance, provide physical cash? A function of current financial systems and in some countries commercial banks?

Interesting.

No more to run mobile phone wallet apps?

No more to run PoS systems?

No offices full of traders?

No helplines, advisors or support for customers?

No teams of developers puttig together trading strategies and algorithms, and building smart contracts?

No datacenters opportunistically precalculating smart-contract outcomes to try to get ahead of the market?

You're once again only looking at a tiny part of a system, and comparing it to something much more complex.


Most* Bitcoin mining is done with renewables. Mostly hydro. Hydro power is often remote from cities and other main electricity consumers, and too weak to transfer over long distances. So they’re a natural place to set up Google data centers and cryptocurrency mining operations on-site, which is pretty much what’s happened with Bitcoin.

*Don’t have a citation but there may be some research on this being published soon, it’s an open secret in the industry.


Independent of whether this is true (and I'm sceptical), Bitcoin mining requires computation (and lots of it). Computation requires power. Even if that power is renewable and would be difficult to use for things other than computation, there is still a huge demand for computation. Hence it's still a choice to spend that power on Bitcoin mining rather than other computation tasks such as simulations for scientific research.


Yes that’s a thing. The problem for cryptocurrency is there’s no free lunch, and to gain significant security of a public ledger you have to spend some resources to do so. Bitcoin spends electricity, Chia.Network is working to spend unused disk space instead which is an interesting approach. Others like Algorand, Dfinity, Ethereum 2.0 etc are working to hopefully prove that rule can be overcome with less resource-hungry sources of cryptographic randomness. Hopefully they’ll succeed, but overcoming that rule would be a significant technical accomplishment, and not a given.


> The problem for cryptocurrency is there’s no free lunch

There absolutely is a free lunch.

In renewable energy, there is a massive amount of "free" energy that is not being used for anything, and is literally being thrown away, because it can't be stored or used during the time of day that it is generate.

That energy is free. There is zero downsize to spending it on guessing number. It might even be negative value energy, actually.

Did you know that sometimes energy prices go into the negative, and people will pay you to use it? Something to do with the electric grid, and difficulty of destroying energy, I am not sure.


You're asserting that there's a huge demand for remote offline computation by scientists, but no such market exists as far as I can tell. Cryptocurrencies might end up creating such a market eventually, since they're researching solutions to the problems of verifiable and secure decentralized computation (e.g. Golem) and incentive for file storage (e.g. Filecoin).


Are you claiming that crypto-mining is pricing out useful scientific research? If so, can you provide evidence for that claim? Keep in mind the geographic nature of electricity generation and transmission.


I don't have a citation either, but you can empirically determine this to be likely by just comparing the reward per kW spent and noticing that it has become less than the cost per kW of non-renewable energy.



The "blockchain is bad for the environment" argument has been shown to be grossly uninformed and overstated. It is pretty much all based on one source that has been thoroughly discredited. See this article for more information:

https://hackernoon.com/the-reports-of-bitcoin-environmental-...


How much energy does our collective banking infrastructure use? I'm pretty sure the number would be far bigger.


I'd like to see comparison with energy VS monetary volumes VS risk...


The energy bill is being paid by the users and holders of the currency. It’s an expense that will make bitcoin lose against its more energy-efficient competition.

Personal plug: https://www.konstantinschubert.com/2018/11/28/proof-of-stake...


Coal is to expensive to use as a power source for mining, don't worry about that one


Since many people including me compare bitcoin to gold in terms of it as an investment that is not based on any real-world usage, how does the environmental impact of mining bitcoin compare to the environmental impact of the total amount of gold mined from the earth that is only used for investment purposes?


Is that a real question? If so, I don't know the answer (I can guess that gold is better per value, worse in total). But phrasing it like this makes it sound like that would be a good excuse to pursue crypto anyway.


It is a good reason to pursue it anyways. Its environmental impacts compared to actual mining of the earth is little. And we can't just say that energy usage by humanity in Kilowatt hour is inherently evil. Why not power the mining equipment using nuclear power? Humanity in my opinion won't use energy at some status quo into the future. I predict we will use more and more as we venture into the solar system, and we may see energy as following some sort of Moore's law into the future in terms of cost and local environmental impact. Wouldn't that change the situation?


The only reality for the human race is space expansion. Make more energy.


Or... ITER.


Since the point of PoW is to consume your limited resource exclusively for it to avoid anyone from cheating the race, you can try to come up with a way to waste money in a fair way without environmental impacts.


In the greater scheme of things, how much energy use is mining bitcoin responsible for? 0.000000000001% of the world's energy use?

I used to be very skeptical of bitcoin and cryptocurrency, but I'm even more skeptical of the recent anti-crypto propaganda all over social media.

3 years ago, crypto was going to save the world. Now, we are talking about environment? What gives? What's with the relentless anti-crypto propaganda?


Bitcoin is currently estimated to be responsible for ~0.21%, more than either Hong Kong or Iraq use [1]. Criticisms of Bitcoin have been around as long as the hype - cryptocurrencies were never going to save the world.

[1]: https://digiconomist.net/bitcoin-energy-consumption


Way off. 32TWh last year in the US. As much energy as Denmark. Its huge and growing alarmingly. That's what this whole conversation is about.


Around 0.02% according to Wikipedia. It’s not nothing.


Banks do a LOT more damage than computers running.If cryptocurrencies get them out of the picture, it's well worth it.


Actually, cryptocurrency mining serves an environmentally-friendly function in energy markets because it absorbs excess capacity in the geographic regions where mining is done (i.e. where electricity is cheap) and allows it to be “exported” rather than go to waste. Interesting stuff.


Did you know that some governments subsidize energy prices to make it easier for their populace to pay the bills and to encourage businesses to come to their country?

If cryptocurrency mining goes to countries with subsidized energy and they become part of maxing out that country's energy output, the country may be forced to create new energy sources to provide to the population (aka, higher environmental impact + cost). This push may be partially blamed by the cryptocurrency servers.

In other words, not all cryptocurrency mining servers as utilizing just the extra capacity casually created by a city/state.


> and to encourage businesses to come to their country?

Bitcoin mining is a business and it comes to the country. Goal achieved.


> the country may be forced to create new energy sources to provide to the population

Do you have any evidence that this is happening and, if so, that its costs outweigh the utility of energy exported to the rest of the world?


nothing triggers me more than the superficial environmental concerns people bring up while talking about bitcoin. Very hypocritical.


Dude, who cares about the energy used. Just make MORE energy


I dont think we have any real evidence that cryptocurrencies are predominantly using polluting methods of power generation. The entire argument falls over if it is all renewable energy.


Then it's still using up renewable energy that could have been used on something else. Electricity is mostly fungible.


This is decidedly not true. Electricity transmission has substantial losses over long distances. Check out this article for more information about how the crypto mining industry uses electricity.

https://hackernoon.com/the-reports-of-bitcoin-environmental-...


Energy is a product on the market. Whoever wants to pay for it is free to do it, what’s your problem?

Besides you seem to be missing one important fact about energy - it is very expensive to store much of it, which is why many bitcoin farms use up available excessive energy because that way it makes them more profitable and the grid more stable.


> Energy is a product on the market. Whoever wants to pay for it is free to do it, what’s your problem?

Carbon output, on a global scale, which is already hard enough to keep under control. We don't need yet another massive source of energy use, particularly one that gives us virtually nothing in return.


How is electricity fungible? Conductors waste power proportional to the distance.

Bitcoin, like aluminum before it, can be used to "export" electricity from places where it's cheap and hopefully renewable, like a hydro power plant.


No it doesn't fall over as long we are still making "dirty" energy, which we absolutely do.


As far as I know, large bitcoin-mining setups usually include their own solar farms (or other energy production facilities), as it is cheaper to generate your own electricity than buying it from the grid.


I'm shocked and disheartened by how infrequently environmental concerns are brought up when comparing crypto and our current banking system.

We all want a faster, more efficient, cheaper cryptocurrency, and those features are linked to its ecological efficiency.


There is simply no comparison. The banking system is many many, many orders of magnitude more efficient and to suggest otherwise is frustratingly disingenuous.


No it isn’t, banking system is idiotically expensive using much more raw energy but also is open for corruption, is run by greedy bankers that governments have to bail out all the time for taxpayers money, etc, etc. current financial system is many orders of magnitude more expensive and dangerous.

Suggesting otherwise is not just disingenuous - it is malicious.


Let's try and run some numbers then.

Estimated energy consumption - 46TWh [0]. Average transaction rate seems lower than 4/s at all times so let's use 4 [1]. That makes 126M/year.

Visa process 111B transactions per year [2] and mastercard 65B [3] for a total of 176B.

If those transactions alone were as energy expensive, then that would account for about 64,000 TWh.

Global energy consumption (all kinds) is about 110,000 TWh

For traditional banking to be more expensive in energy per transaction, it would seem to need to account for more than about 60% of all energy used if all banking were only these card payment services and nothing else.

Appreciate any checking of figures or calculations, though unless there's something very wrong the rough outcome should be the same given that I've only included a slice of transactions.

[0] https://digiconomist.net/bitcoin-energy-consumption

[1] https://www.blockchain.com/en/charts/transactions-per-second...

[2] https://s1.q4cdn.com/050606653/files/doc_financials/annual/2...

[3] https://s2.q4cdn.com/242125233/files/doc_financials/2017/Q4/...


per Transaction calculations are completely flawed. If transaction cost was the primary goal - bitcoin would have been a centralized mysql database. Decentralized and secure ownership of your assets that doesn’t involve trust, politics and military is what important in bitcoin.

And by the way with payment channels all your numbers are irrelevant anyway because your assumption of 4 tx/sec goes out the window. Try again with 4 trillion tx/sec. And keep in mind that there is no upper limit.


> per Transaction calculations are completely flawed

They seem fairly important to me, but OK, what metric are you comparing on to claim that the current banking system is using far more raw energy?

Bitcoin has a market cap of $70B and daily volume of transactions of $10B.

NYSE covers about $20T alone for just 4000 companies. Scaled up, bitcoin would be over 10% of world energy use.

SWIFT seems to deal with about $5T per day https://www.fincen.gov/news_room/rp/files/Appendix_D.pdf so that'd be bitcoin taking about 20% of total global energy use if scaled up.

By what measure do you want to back up the claim that the current system is far more energy intensive? I'm trying to find one and honestly struggling.


> By what measure do you want to back up the claim that the current system is far more energy intensive? I'm trying to find one and honestly struggling.

how much damage financial and environmental have politicians and military have caused over the last 5 thousand years? yep, take that into account in your calculations.


You made a very specific claim which you seem reluctant to back up so we can leave that there. If you want to discuss in good faith, please try not to shift the goalposts so much. For example, your reply suggests that with crypto there would have been no military or political actions that were environmentally damaging.


i don't see a lot of good faith in your arguments if you keep sticking to 4tx/sec and measuring bitcoin costs in per-transaction terms.

i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.


> i don't see a lot of good faith in your arguments if you keep sticking to 4tx/sec and measuring bitcoin costs in per-transaction terms.

edit - I haven't, and my last comment contained nothing to do with per-transaction figures.

I've asked what basis you made your initial claim on, and provided several options where I've looked - transaction rate as currently happens with bitcoin, market cap and daily volume of transactions. None look even vaguely reasonable - so again, what was your initial claim calculated on? What measure were you using and where did you get your numbers? Have you actually tried to work it out?

> i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.

We have current use, how does that actually compare to the current banking system you were saying uses more energy?



I'm not sure how that's relevant to the calculation here.


This is by far the least productive HN thread I've ever been on. The article just isn't related to a raw energy calculation, as that is not impacted by where the energy comes from.

edit - noted. Avoid crypto threads on HN as they're like discussing things on reddit.


you're technically right that the article i linked isn't making the same calculation as you made. I'm not sure why you saw it as a rebuff or some kind of argument for/against. I linked it because i'd imagine that a big concern about blockchain energy usage is the environmental impact.


> banking system is idiotically expensive using much more raw energy

It uses much more raw energy because it services the financial needs of most of the planet. Bitcoin dubiously services the needs of a handful. This is so obvious that I suspect you're not arguing in good faith.


Yeah, way to miss the point. Bitcoin is money where security is expressed in terms of energy. Banking system uses energy and military to achieve the same job. Do i really need to elaborate further?


I am not missing the point, you're moving the goalposts

You: "the banking system is idiotically expensive using much more raw energy"

Me: "it uses much more raw energy because it services the financial needs of most of the planet".


No goalposts have moved. Banking system involves politics and military in securing your finances. It is therefore many orders of magnitude more expensive than bitcoin even if you normalize by market cap of transaction volume or pick your own metric.

Edit: typos


Politics and the military are the foundation of all society. Those things won't go away because of cryptocurrency, so repeatedly bringing them up doesn't help your point at all.


> Politics and the military are the foundation of all society

politics - maybe, military - not necessarily, just an artifact of infancy of our civilization.

> Those things won't go away because of cryptocurrency

those things will become irrelevant to financial system based on bitcoin, which is good enough for me.


> just an artifact of infancy of our civilization.

Just an artifact of all of human history.

>those things will become irrelevant to financial system based on bitcoin

I don't think there is any point in further discussion; we are simply living in two different realities. The military and the military industrial complex are not going anywhere, certainly not because of cryptocurrency, the notion is laughably absurd.


If you try reading my comments again you will realize I’m not claiming military and politics are “going” somewhere because of crypto.


> Banking system involves politics and military in securing your finances

I'm not a fan of the current implementation of cryptocurrencies but you have a point here. Plenty of wars and armed takeovers have been driven by the prospect of accessing financial systems and therefore plenty of resources are spent to prevent that from happening.


You’ve missed a few steps in your "therefore" there.


only for somebody not willing to think about how much damage corrupt (and not corrupt too) politicians and military have inflicted upon this world during short history of human civilization. financial and environmental.

if there's a chance to exclude them from the equation on security of financial system - it's a no brainer.


> My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.

Seriously?

By the way, the negative environmental impacts will be significantly reduced after ITER is ready.


You're saying that we just need to make fusion a reality in order for bitcoin to be environmentally friendly?


I am saying it will not be an issue in terms of environmental impact after fusion becomes a reality, as far as electricity goes.


I mean that's a bit of a tautology isn't it?

Once we have clean energy production for everything, bitcoin will have minimal environmental impact?

That's ignoring the fact that fusion is still a very long way from commercial availability.


Why is it a tautology, and why would it be ignoring the fact? I am not. I am only stating that it will be less of an issue, because well, it will be... that is, if everything turns out to be working as ITER "predicted". Isn't this correct? We are aiming for "cheaper" and "greener" electricity, some even call it "infinite electricity".


Maybe tautology is the wrong word.

I just feel like it's a bit ridiculous to downplay the environmental impacts of bitcoin mining by saying "it'll be fine when we have fusion!" because we don't have fusion today, and it's likely to be a very long time before fusion is commercially available.

Also, your initial comment said:

>By the way, the negative environmental impacts will be significantly reduced after ITER is ready.

ITER is not a commercial reactor. Even after it's construction is completed (expected to be, what, 2025?), we still have a long way to go before you can use fusion power to mine bitcoin.

Meanwhile, climate change is happening now. We need to be reducing emissions now.


> downplay the environmental impacts of bitcoin mining

I didn't, I just said it won't be an issue when ITER is ready, which it probably will, and in our lifetime. We don't need to have it available to us, it would be enough for those miners to use it and the impact would be significantly reduced. I am not saying that it isn't a problem right now, because it is, but it won't always be the case so there is a long-term solution in the happening, which is good to know.

I am not saying we shouldn't reduce emission and whatnot right now, of course we should.


No, we don't, because what it replaces is already much more energy intensive than it.


Anyone still believe this shit after the bitcoin pyramid?


There is no energy waste with Algorand's pos. It doesn't use bitcoin's pow. So yeah the environement doesn't matter here.


you've got it wrong mate. Bitcoin just reinforces the existing incentive to capture and utilize energy as efficiently as possible. The reality is closer to Bitcoin leading the push toward renewable energy than it is to Bitcoin destroying the environment. Your thinking is regressive


It's weird how many people only want to talk about the environment when it's Bitcoin.

Anyway - https://medium.com/coinshares/beware-of-lazy-research-c828c9...


I feel that people aren't talking about the environment enough when it comes to bitcoin (and many other topics). More in-depth research and knowledge on the matter (like this article, thank you for sharing) might be better known among those who spend more time reading about crypto, but most of the time environmental concerns are left out of the conversation.

Problematic topics are usually omitted from discussions when they are complex or not obvious and in the forefront. The conversation goes elsewhere, and we turn our heads to follow it.

From this article:

> As with many dubious claims, it shouldn’t come as a surprise that much of it is underpinned by a single, leisurely researched source: Digiconomist.

> In fact you’d be hard pressed to find many articles in the press pushing the environmentalist, anti-PoW narrative that do not link back to that one source. But hey, can you really blame them in today’s sound bite media environment? Research is hard and time consuming.

The author's POV is a little different in that he is addressing anti-bitcoin alarmists - but, underlying this is the argument that research and shared knowledge on the topic is scarce. This is the kind of content I want to see more of.

I'm happy this comment sparked some discussion here.


it'd be great if more people would read this link... but, since that's not where we're at on this forum here's the synopsis:

"""

The Takeaways

* Contrary to what you’ve heard in the media, bitcoin mining is not an environmental disaster. In fact, it is one of the cleanest billion-dollar industries on the planet.

* The combined total bitcoin mining network draws less power than global gaming consoles running 4 hours per day.

* Bitcoin mining is mainly powered on renewable energy, at levels more than four times higher than the global average (>77.6% vs ~18.2%).

* Every year, enough hydro power is wasted in Yunnan and Sichuan alone to power the Bitcoin mining network many times over.

* Bitcoin miners are highly mobile and can therefore serve as cornerstone demand for low-cost stranded renewables.

* By increasing profitability and lowering reliance on subsidies, bitcoin mining can positively contribute to the development and scaling of renewable energy projects wherever conditions are the most favourable.

"""


This gets asked often, but in case something changed recently - what are the use cases of cryptocurrencies that are not:

  - Attempts to side-step the law (however misguided the law is)
  - Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA)
  - Tantamount to waiting for a greater fool to buy out the current players
I am not looking for answers of the form "well whenever you want to avoid a third party...", I actually want to know what are those cases where you have to avoid a third party, and why.

The economist-in-me appreciates that non-legal activities are perfectly capable of both demanding and supporting a novel financial instrument on their own, I only exclude it from my question because it's a rather obvious application and I would like to probe beyond that.


> Attempts to side-step the law (however misguided the law is)

There are a lot of people in the world that live in places where the law is far more gone than "misguided." For these people, it's not a question of "whether" to side-step the law but "how." You may not care, but they do.


These people are already so far removed from the crypto infrastructure that it's a trivial case.

People who bring this up are almost always people who have never lived anywhere near real poverty or conflict. Barring individual cases, the vast majority of the world's less privileged have neither the means nor the knowledge to buy crypto in any shape


DASH and NANO had several initiatives this past year to achieve adoption in Venezuela due to their humanitarian crisis. It was small, but there were some good results especially by DASH if we believe the media they produced. There was a movement to donate DASH/NANO and get merchants to accept it in exchange for goods. All merchants need is a sticker that displays their QR code and a terminal that can confirm the transaction, which can be done by any smartphone/tablet/computer/IOT with minimal effort. Keep in mind, this happened while DASH and NANO are quite unknown and all crypto was in a bear market, meaning there were few people following the projects that could donate and promote the events.

The hard part is not adoption within poverty-stricken nations, rather adoption in developed nations with complicated tax codes and lack of incentives for merchants to invest in more payment processing tech is the true challenge ahead.


Venezuela is an interesting case in the sense that it is an otherwise well-off, decently well educated country going through a crisis.

My country - India - has the world's largest number of poor. Even if these people were to get smartphones, there are already deeply entrenched players (PayTM, Google Pay) who offer free and instant transactions.

This is true for a lot of African countries as well. No reason for anyone to use a new currency when there's already M-Pesa and UPI and PayTM that use the currency they already know and trust.


One possible use case: A notary for digital goods. Crypto currencies have a built-in incentive mechanism that keeps a ledger running and verifiable. This allows for a decentralized way to verify ownership of digital goods. More concrete, you could verify that you are the owner of a very rare sword you obtained in an online RPG. Even when the company goes out of business or stops the servers you could still prove that you own it. In other words, owners of valuable digital items might want their ownership to be stored on a public blockchain rather than a database by a private entity.


You don't need a cryptocurrency specifically to do this. Rather you can piggy back on a different consensus system: https://petertodd.org/2017/scalable-single-use-seal-asset-tr...

For example, while it'd be a bit of a hack, you could fairly easily re-use even the various Certificate Transparency blockchains to trade stocks.

Also, I wouldn't say that the incentive mechanisms keep the ledger running. Rather they keep the PoW consensus mechanism running; in all existing trustless decentralized currencies it's your node that verifies the ledger is working correctly, and other people are voluntarily distributing the data without a reward.


I've never heard of Proof-of-Publication ledgers. Any resources I should look at?


It's a very good question. There's an interesting argument that the greatest value is not in the ledger, but in a mechanism for reliable, unalterable history: https://www.ribbonfarm.com/2017/05/25/blockchains-never-forg...

It's also worth considering that crypto is effectively the greatest experiment the world has ever seen in free banking: https://en.wikipedia.org/wiki/Free_banking. Hypothetically, this could be done with paper+metal currencies, or centralized digital currencies; but for whatever reason, crypto is getting a regulatory pass where past "experiments" have been shut down hard by states who claim a monopoly on issuing currency, for better or worse.

Rather than viewing blockchains through the narrow lens of "Money 2.0", I think it's more relevant to view both money and blockchains as social technologies to solve coordination problems, and then inquire about those t