I am beginning to wonder if energy is what will eventually doom Bitcoin. Currently, Bitcoin consumes more energy than Argentina [1].
Another article suggests the carbon footprint of Bitcoin is equivalent to New Zealand [2].
It's not just the cost of mining new coins (which will ultimately end) but the cost of maintaining the network. The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
To the apologists claiming there's no other good use for that energy, it's not simple. Using too much electricity can raise the price that everybody pays [3].
Miners will keep chasing cheap power but I expect, much like ArbBnB, municipalities, states and even countries will increasingly clamp down on it.
The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies. Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen.
I realize there are corner cases (eg sending money to and from Venezuela). There's also a lot of illegal use cases.
Thing is, blockchains aren't really as immutable as pundits suggest. Bitcoin and Ethereum have had forks.
Just the other week an older relative asked me to help get them set up so they could buy Ethereum. Another friend asked me to help them setup an account to buy Doge. Neither have any intention of using it as anything besides a speculative store of value because they hear other people are buying it, which would be fine if it didn’t actually have such poor environmental externalities.
Around the time of the late 1990s Internet bubble, I read someone's observation that you can identify an investment bubble when barbers and nurses and taxi drivers start investing on the assumption that prices will just keep going up. That matched my own experience of having lived through the stock and real-estate bubble in Japan in the late 1980s: I knew shopkeepers and rice farmers who borrowed money to buy stock and land and condominiums, certain that their value would continue rising. The American real-estate bubble that led up to the 2008 crash looked very similar, as does Bitcoin now. It seems certain to collapse, though I can’t predict when.
The fable about Henry Ford has rarely been as apposite as now. During an American recession, the shoeshine boy on the sidewalk gave Ford some tips on the stock market. Ford's response: "When the shoeshine boy is telling you what to buy, it's time to sell!"
For what it's worth the first hit I got searching for it was from January 2008...
Same thing happened when it peaked at 20k - the hairdressers were talking about Bitcoin and altcoins. The difference this time is big time investors started gambling with it - so who knows where it's going to go.
Silver was a big bubble at that time too. I knew the end was near when the owner of a restaurant I frequented showed me the silver statue he had made of his dog.
Once you have real ETFs the crypto mania will turn into yet another debt fielded bubble. In the meantime, enjoy the ride!
It is the bed central banks have laid for ourselves. They did and continue doing everything in their power to prevent asset price deflation, and this is the result. And I imagine that when things will get even more out of control we will get capital controls.
Given that money supplies contract during recessions, which drives deflation, I would argue that they did everything in their power to prevent both asset price deflation, in addition to actual, main-street deflation.
Indeed, silver is actually useful in a huge number of ways, from electronics and technology, to making beautiful and functional items for the home, to defending against supernatural creatures, which brings us back to Bitcoin.
It will be interesting to watch silver prices in the long term (20 years),as it's supply will be getting lower,while some important industrial applications will unlikely to ne replaced quickly enough.
I think Silver is the straw that will break the camels back, it’s hard to know if it will be in 1 or 50 years but it’s fungible and affordable while also having increased industrial usage. At this point it is almost at parity for industrial consumption as it was in the 90s when silver was used to develop analog film. It’s certainly true that topological insulators may replace silver in many electron transfer applications. That being said medical uses due to the way it kills micro organisms through sulfur attraction, and it’s thermal properties, will possibly continue to expand industrial consumption.
I'm guessing a lot of people also tried to get in on the dot com bubble, does it mean we write off the internet as a speculative bubble that's not providing any value?
I mean sure, but this is sort of a straw man - of course bubbles can exist even if the underlying asset has fundamental value. The Internet, housing, and tulips are all great things with value. But it’s not entirely clear to me that Bitcoin provides more value than the energy cost it requires to sustain it.
Consider the costs, both environmental and financial, to mine, secure and transport gold.
How does it compare against Bitcoin? What intrinsic value (besides "ooh, shiny") does gold actually have?
I agree that BTC and cryptocurrencies generally are utterly wasteful, but what too many look at is the headline figure of energy consumed, and not what energy is being consumed.
Disclaimer: I think BTC is a total waste of time, and I am long BTC because I think it'll buy me a house one day too.
Shiny gold prevents oxidation on electrical contacts and makes your computer work. In most chips there is a bit of gold, not a lot, so there is value in that.
Gold can be used to make jewelry which is a big cultural thing in most of the Old World. It's still "ooh shiny" but it has value in being a tangible "shiny" good used to keep up appearances and show status.
I don't know how you can show status with Bitcoin though. Maybe show your server farm or something.
They may feel like they were able to differentiate, but without an actual explanation of how they differentiated, we can’t determine whether they differentiated or whether they got lucky.
That’s hardly fair. The world is full of unbanked people, people who are simply not interesting to the regular banking system and so have no access to it. Yet they have needs. Bitcoin is probably crap for this because transaction costs, but the need is still there.
My friend, this bank the unbanked meme is a tired trope that all the cryptocurrency apologists love to push. But does anyone really want to be their own bank? Consider the following...
- You could lose your wallet and have nobody to phone in to get your information back (regular banks often can help you here)
- Conversely, you may think "Gee, I should make backups of my keys!" which isn't a bad strategy, except if any one of your backups is compromised, you lose everything, and each new backup creates an inherent new risk in getting leaked
- You could get some trojan horse with steals your cryptocurrency, and once again, you're SOL
- There's a lot of moving parts that all need to be present to make cryptocurrency even remotely viable to so-called unbanked classes (I presume you mean poor people that have little means in the first place?)... like an active internet connection to talk to said blockchain, possibly even a vendor or other party even willing to deal with cryptocurrency in the first place
- The volatility swings are absolutely ridiculous
And of course let us not forget that those that simply want to transfer to someone, then have that someone quickly convert to their home currency of choice may not necessarily be possible, due to some exchange level ban by their country's exchange controls.
I wish cryptocurrency proponents would just be honest and just say they want to make a quick buck with as little effort as possible, and leveraging the peanut gallery to get here is the best way to do it.
Cryptocurrency/blockchain is a valuable concept the way the internet is, but Bitcoin? Bitcoin is a nice proof of concept, but as a currency it has big problems that look like they won't be solved. Pets.com was also a good proof of concept.
It's not fine even without environmental impact: getting yourself into an asset class with zero understanding about it is a recipe for disaster. There are tons of examples of real estate investors burning their money because they lacked fundamental knowledge and etc. Even the management meetings I attended are now peppered with crypto news and how x gone by y%, even by the sound of it everyone would have been better off just buying some ETFs, instead of pouring money on random peaks or troughs.
"they lacked fundamental knowledge"... you think people should get fundamental knowledge ? on _bitcoin_ ? It is fundamentally worth $0.
The only knowledge I try to spread is correcting anyone who uses the word "invest" and recommend the proper words of buy, speculate, or gamble when it comes to cryptocurrencies. I guess I will add "fundamental" too since I think you meant technical analysis. But even that implies brains when it really is just voodoo unless you are an influencer.
By fundamental in this cas I meant general understanding about how it works and how shady the ecosystem is,with endless pump and dump drummers,random kids selling 'tips',etc. An average person, with absolutely zero information advantage is losing the moment they buy it hoping it will bring fortunes.
USD, EUR etc are also "fundamentally worth $0". Fiat currencies and crypto currencies are just a median for representing value for real goods and services. What's unique about crypto currencies is the distributed method of transacting and therefore the inability for them to be regulated. The whole financial industry, is fundamentally a massive waste of humanity's resources. Fiat currencies are regulated, regulators are a target for bribery, deals are made etc... Cryptos are a massive waste of electricity. Decentralization is a great way to curb corruption and restore a natural economy but we need to solve the electricity problem. The electricity problem came from the mechanism chosen to "fairly" distribute the initial pool of cryptocoins based on mathematical effort.
Separate question. I was responding to a question about the value of things as measured in currency.
$1 is worth $1, tautologically. If you happen to believe $1 has no worth, just send me all your dollars. I can use them. I'll send you a loaf of bread, which you can eat to sustain life.
Nearly everyone believes $1 is worth something so it's not in my interest to give you $1, particularly with a snarky response like that. Dollars are not actually a measure of any physical thing, unlike metres or whatever. They represent what we perceive as worth. That only exists in our heads.
As I understand it, Doge works on auxpow now so it's not nearly as bad as it used to be, or as bad as eth/btc is currently (and asic mining is not as profitable as daggerhashimoto for retail miners; ASIC miners will already be located in a DC where electricity is cheap/likely underutilized).
>The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies.
Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
There is a reason every asset is going up right now. Real estate, stocks, commodities, and crypto. More money is being printed this year than ever before. The financial media and the fed can claim minimal inflation but the markets are exposing that claim as dubious.
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
I don’t think any of my family in Algeria are using Bitcoin, and same for my wife’s family in Bangladesh. In Algeria at least, generally you’ll go to a hawala money changer who gives you better rates than the banks and exchange your local currency into Euros. If you need to send money abroad you use the same old Islamic hawala system to send it to France or wherever else.
There will probably be some useful things built on top of blockchains, and I don’t think crypto has zero value, but I don’t think it’s going to reasonably fix a situation of a failing state.
Yeah, and how many citizens of these countries buy and use BTC? Particularly with how unstable it is compared to other assets like e.g. gold.
Mind you, I speak as someone who is a citizen in a country that experienced that. Not now, but back in 2016, our currency got halved. Nobody, and I mean absolutely nobody ever thought "I should have bought crypto."
When the 2017-2018 crypto rush happened, and people started mining ETH, well-off people* here got onto it and started mining ETH.... only to immediately sell it as they mined. Nobody held onto it.
*well-off because GPUs were absurdly expensive due to the inflation, and it only got worse when the shortages hit.
EDIT: I also want to add that very, very few people here in my country actually understand what bitcoin even is (or cryptocurrency or blockchain). The people that I have seen support mining here only really view it as a way to earn some money while doing nothing.
Cryptocurrency lately has become this techbro version of a white-savior complex, where we think this magic technology will somehow uproot the lower lesser classes from their eternal toil and discord, yet I've seen plenty of these kinds of folks either not bother to get in on this (because it's likely too difficult to comprehend) or lose their shirt because they didn't make it on the right end of a transaction and lost more money to some cryptocurrency-rich fat cat, laughing all the way to the bank.
“Techbro” “white savior complex”
Do you actually talk like this or is it just the party line you spit out for virtue signaling points?
I mean yeah, technology has magically elevated the toiling masses from shitty work.
When was the last time you worked in a factory for 16 hours a day? When was the last time you got scurvy as a sailor on a wooden ship? When was the last time you tilled a field with the trusty family oxen?
I'm dead serious. Your comment seeks to discredit my position, but I'm speaking my truth to what I see.
Sorry, but the bitcoin fans get condescending, acting like they can save us from those evil banks. Not a chance.
Technology that has improved society does absolutely exist though, like the world wide web, which has proven potential and has revolutionized the way we do business and commerce.
Cryptocurrency on the other hand is just an ancap wet dream. You are free to disagree with me, but bitcoin has been around for 12 years now and, yet, I see no killer application that doesn't involve some kind of grift. In the same period of 12 years, from the start of the WWW to around the early 2000s, so much innovation happened by comparison.
> Cryptocurrency on the other hand is just an ancap wet dream.
My exact thought upon reading the Slashdot article announcing the release of v0.3 of this thing called Bitcoin back in 2010. The last decade has only reinforced that view...
It scares me how much of a cult following Bitcoin specifically has. I just saw a post go up on /r/bitcoin about a butter who sold her house for freaking Bitcoin.
I'd hate to be her when (not if) this goes tits up.
Madness. I would hope that it's still a troll but it's not like we haven't seen people do the same thing for all kinds of get rich quick schemes past and present.
So the guy who uses the racist phrase “white savior complex” non ironically, who only admits technology is useful after it has undeniable global appeal, is supposed to be some barometer if a technology will be world changing?
Frankly, you can’t possibly know until the dice stop rolling. Just like the internet, or the barcode (look up the guy who invented it, his story is cool.)
Fact is it’s too early to tell what impact Bitcoin will have on history. Your self righteousness prognosticating just shows your ignorance of history, humility, and sound reasoning.
According to you something is only useful if it has already demonstrated its use, like the web.
Well duh, of course the web is useful. You’re not exactly Nostradamus with that one.
Will Bitcoin be useful? Maybe, maybe not.
Time will tell.
Edit: s/p
Eh, can you tell me what the killer app is supposed to be? I'd like to know. Because in 12 freaking years, there has to have been something better than "lets kill our planet as quickly as possible while early adopters get rich".
So to talk about the killer app we’ve got to differentiate the technology from the first use case, which is digital gold for now
Ethereum goal was to allow people to build different types of dApps by opening up the number of op codes on the virtual machine - this allowed people not only to build bitcoin on ethereum but also other types of apps - like Uniswap (Exchange), Compound (Lending) and dydx (derivatives). These are just a few. There’s a whole other world of NFT’s that is also bubbling up now. Aragon is building a DAO creator and launcher where you can build and run organisations in a digital jurisdiction.
Now as the World Wide Web decentralised the power to distribute information via a protocol, Blockchain’s can allow that for anything that requires trust - such as finance
Though the biggest limiting factor is still scalability of Blockchain’s but the Ethereum team and a bunch of other teams are solving that by being at the breeding edge of mechanism design. Ethereum realised Blockchain’s aren’t scalable and are bad for the climate long long ago - and already have plans to move away from PoW (energy intensive) to PoS (not energy intensive)
P.S - I got into bitcoin early because believe it was a hedge to inflation - realised it isn’t really a value add to society and have been dabbling with ethereum projects since 2016
I get the hate HN has for bitcoin - but deflationary assets are a use case especially when central banks believe they can pump infinite money. Nobody knows where this will end but your best bet is a deflationary asset
I love tech and finance - I believe the next decade we’ll see finance being disrupted by these protocols as ethereum moves to PoS
sumgame, I appreciate this long and detailed response, as well as your insights. That said, here's why I think cryptocurrencies (specifically the underlying blockchain concept) are mostly redundant to us. The answer might surprise you, because it's less about technology and more about human nature and social engineering.
For something like blockchains adding "trust" to finance, I have one big problem with this. Humans on both ends of the transaction still need to conduct their business honestly for this to work. Sure, the so-called smart contracts system, like the one found with Ethereum, allows you to write an immutable record to the blockchain that dictates whatever terms and commit it to what is essentially a distributed append-only database. Additionally, if you make a mistake on a smart contract, d'oh! You basically can't change an immutable record. You'd have to append over it with a fresh one, which, depending on how energy intensive this blockchain application is, contributes to unneeded waste.
Here's where my personal issue is at with all this. Say you decide to take receipt of a delivery from Timbuktu for some fine vases. You receive the items from said vendor and, despite the entry clearly describing what you were supposed to get, you in fact get scammed with a delivery full of sand. So, what do you intend to do? The ledger can be as specific about a transaction as you want, but this won't stop dishonest people from being dishonest. So then you can settle it in a court system, bring the parties to task, and... oh wait. Why did we not just simply use a regular database and time tested ERP systems that have done the job for ages?
I guess what I'm really getting at here is that blockchain isn't some magic bullet that will guarantee specific outcomes in commerce, and in fact, feels like a different way to do the exact same thing we've done forever, but we need to cater to some kind of NIH syndrome.
Back to cryptocurrencies, why do we need so many different tokens out there in existence? Aren't they all trying to generally accomplish similar tasks? That also adds a ton of confusion and consternation, with everyone claiming how their particular cryptocurrency project is truly the best and why you need to use it over INSERT PROJECT HERE.
Fintech is an interesting space to watch, but I see way more projects with less than pure intentions trying to see if they can make out like a bandit down the line.
The world wide web, by comparison, is (and by some sources... was) a truly democratic medium. I'm not sure the same thing applies with cryptocurrencies and blockchain, which all feel like solutions in search of a problem (or projects in search of money from FOMO-riddled folks with nothing better to do).
EDIT: To your point about Bitcoin being digital gold. Yeah... it's nice sounding in theory, but at least with real physical gold, it can survive till the heat death of the universe and doesn't require the constant consumption of resources to maintain it (which I find egregious and unconscionable), as well as not requiring an active internet connection. I'm not a goldbug either, but I can at least concede to gold having a handful of intrinsic properties which lends to it being a hedge in its own right, agreed on over thousands of years in human history.
You got me there.
I see a lot of cool possibilities, neat ideas, but no killer app. It’s all too complicated.
But how long was that the case for the web? Decades? Even circa 2009 when I last did public facing IT work, many people were still talking to their mice.
I’m not saying Bitcoin will be any more than a interesting diversion, but much like the web, it is far far too early to tell if it will just be a TempleOS style wet dream, or something that utterly shifts the landscape of the how we live our lives.
(I’m also fascinated with how COVID is reshaping our planet.)
When was the last time something changed how all of humanity lives their lives, globally, in a short period, before COVID?
The internet? Electricity? What were some other big ticket changes you guys can think of?
Ok so HN is a bit annoying as I can't really reply to things you said directly now... but let me break a few things down.
Firstly, did we like become best friends or something? I love how you described homeschooling haha.
Secondly, really just want to say, yes... perhaps my use of the phrase "white savior complex" is a bit cringy and social justice-y, which I'm actually not really part of that camp. I'm just applying that based on some observation of what I see. I just wish the socio-political crap would mostly go away and let the technology of blockchain/bitcoin/whatever stand on its own. Some of the proponents I mentioned earlier in the thread also just make my skin crawl a bit. There is inherent dishonesty in their gospel, I personally feel.
I'm simply trying to point out what I feel is a dangerous game they play, especially with the massive boom and bust cycles bitcoin and its ilk undergo.
I'd feel far less cynical if there wasn't some pyramid-esque (no, bitcoin itself is not a pyramid scheme, but the community and proponents surrounding it make it feel like one in many ways) action going on around it, like all the activity between BTC and tethers and other shitcoins that makes it all look like painting the tape.
I'm of the opinion that currently, this all feels like a redistribution of the wealth in a weird casino like fashion, and not a legitimate growth in real value. That's just me though. For every rich-on-paper cryptocurrency fan, there are also plenty that have lost their shirts in this experiment.
Hope this ramble made any sense. I really appreciate you chiming in, imwillofficial.
Btw read your new comment below mine. Thank you for being a good sport about all this. Please note, I will never personally attack someone I disagree with. I just get a bit heated sometimes. :)
You’re good! And I hope I did not offend. You seem like a kind and thoughtful person. Talking to you has been a lesson in going into a conversation without assumption. Thank you for that.
I can be like a bull in a China shop sometimes. Well meaning... but I sure hope you didn’t have any dishes you liked
I've only been adding content. I haven't changed any of my positions. Working on a mobile it's a bit hard when you return carriage and sometimes I post anyway.
I loved it because I got through differential equations and had something like 7 math credits...
::looks around suspiciously::
I may have... never written an essay.. Sometimes the free wheeling “do what you want” kind of home schooling can bite you.
But we’re figuring out this whole English thing pretty well between us!
::high five::
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight
At best, this argument turns Bitcoin into a massive subsidy by stable countries of unstable ones. A subsidy paid for in the form of higher energy prices, environmental damage and opportunity cost.
If you are arguing that bitcoin is a bad currency because of high transfer fees, very few merchants accept it and that very few people are actually buying things with it in any meaningful way, then that's wrong because it's an asset.
If you are arguing that as an asset it is purely speculative and has no fundamentals and zero return other than appreciation, then that's wrong because it's a store of value.
If you are arguing that as a store of value it's actually highly volatile and has experienced multiple serious crashes, then that's wrong because it's actually a currency.
This is the primary tactic Bitcoin seems to use to deploy to combat any criticism - if someone critiques its ability to do one thing you claim it's something else..
I'm at the traditional "first-time-homebuyer" age, and I'm personally saving a fair portion of my income primarily because assets, such as houses, are so expensive. Were housing cheaper, I'd be paying a mortgage instead of a saving account.
(And, I'd argue, sending longer doing so too due low interest rates.)
It includes home purchases, so that would not be a factor.
As per the earlier link:
> Personal saving is equal to personal income less personal outlays and personal taxes; it may generally be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences.(https://www.bea.gov/national/pdf/all-chapters.pdf)
There are other safe-havens against inflation which have existed for hundreds of years. Bitcoin didn't invent the concept of an inflation hedge, and the citizens you refer to had and still have standard alternate solutions. Which in all honesty are a lot safer than a digital collectible token with no intrinsic value that's primarily used for speculating and drug deals, which can be regulated, shut down, or taken over whenever your or another country wants to shut it down.
This is groupthink propaganda nonsense. Bitcoin can only do 1.5KB/s of transactions and the average transaction costs $26. Any rapid decrease in price will lead to rapid decreases in mining and thus transaction throughput. Does this seem like the future of financial transactions to you?
In the short term it does. The block difficulty adjusts but not immediately. If hash rate drops rapidly, the time between blocks will lengthen, the time to adjustment will lengthen and the throughput will drop.
Yes. Bitcoin adjust difficulty to hash rate every two weeks. So if you drop hashrate more rapidly than that you can have lower transactuon throughput for up to two weeks. One on average.
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
Yeah, it's almost as though they had invested in Bitcoin during one of its crashes. What do you think they will say next time Bitcoin crashes back to 10% of its value?
That they were foolish for holding onto Bitcoin itself. That's not what it's being used for.
Here in the West there's basically no barriers for someone like me sending $10k or $10 million wherever, for whatever. Just ensure I pay any taxes on investment profits, and don't fund terrorists or drug cartels. Many countries are far more strict. E.g., Argentinians can only move $300 a month out of the country legally, as I understand it. If they want to purchase real estate in Canada or Australia as a hedge against inflation, for example, that can be very hard even if they have the funds.
Getting around capital controls seems to be a niche for Bitcoin. I can think of few other ways to simply send $10,000 from Argentina to Nigeria in one hour, reliably and securely. Assuming people can exchange Bitcoin for cash or similar on both ends, it can be near-ideal for certain pairings compared to the legal and traditional financial system.
> Getting around capital controls seems to be a niche for Bitcoin
Q: If you pitch up in, say, Canada or Australia, and offer to buy a chunk of expensive real estate and pay with Bitcoin, who is selling?
Q2: ... or do you have to convert to AUD/CAD first, and if so, which bank(s) can you rely on to not worry about KYC?
Q3: ... or do you have to actually travel to Canada or Australia first, in order to open a regular bank account first, in order to have somewhere to move your Bitcoin to, in order to have local currency, in order to be able to pay the local seller?
I do know that people have transacted real estate in Bitcoin in Canada before, mostly as a gimmick, but no reason you couldn't do that legally on the Canadian end. But I assume one would convert to CAD. What's the problem with KYC on the Canadian bank end? Canada has no such controls and wouldn't care that the money was laundered out of Argentina.
Even if you had to do that, laundering the funds into Canada unfortunately does not seem it would be difficult in practice, given the apparent scale of money-laundering associated with the Vancouver housing market. And you do not have to be physically present to acquire property in Canada.
Of course some people get caught. (Though some of what I'm describing wouldn't be considered illegal under Canadian law in the first place. You can just buy property with BTC here if you have BTC.) Still, it's a huge problem:
I agree with you of the idea that Bitcoin's doom is going to be energy. In my case, I do think Cryptocurrencies are here to stay, and other approaches like the ones used in ETH2, IOTA, Nano, etc will come to replace PoW.
I think at some point, government is going to ban PoW mining in the same way they ban gasoline based cars or plastic bags.
> The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies
That's the key: citizens of stable countries are just speculating, but for people of not so stable countries (Mexico, Argentina, China, among several others) where people just do not trust their government & their banking system, Cryptocurrencies deffinitely have value.
In my case, I have part of my portfolio on Bitcoins, because there is no easy way to open a USD account in Mexico, and storing USD or gold is just not practial. And with our stupid president having 4 more years to go, the country is quickly going to a deep recesion. I don't doubt that when a recession come, the government will "lock" the banks to prevent a "cash run" as they did before (and as it has happened in other countries like Venezuela and Greece)
>but for people of not so stable countries (Mexico, Argentina, China, among several others) where people just do not trust their government & their banking system, Cryptocurrencies deffinitely have value
Fair point, but curious in how many shops in those countries you can buys groceries or how many landlords take their rent in Crypto? Because if you can't use it to feed or house yourself then what's the point of owning it other than going back to BTC's only real use cases so far: storing it for speculation, drug trafficking and ransomeware payments.
Plus, can you imagine paying a $26 transaction fee every time you buy a $0.30 loaf of bread with bitcoin?
You are right about the price of bitcoin transactions. I misused bitcoins when referring to cryptocurrencies. I actually dont have BTC but eth and other cryptoassets more sensible for trading (my initial comment about BTC inefficiencies might give a clue).
In Cuba there are 2 coins accepted CUC and CUP . The CUC was more or less pegged to the dollar and people preferred it due to distrust of their government.
It happens. And cryptocurrencies will continue to evolve to fill up that trust less requirement.
> Bitcoin is a store of value. When they need money to buy groceries or pay rent they will sell an amount of bitcoin.
Seems like a great way to lose any stored value in transaction fees. Transaction fees are $26USD right now, which is likely more than what most pay in those countries for their groceries.
It hasn’t failed at being anything. Bitcoin is still very new to this world. Just because at this moment it isn’t realistic to use as a currency does not mean it has failed.
It's been around for 12 years and nothing even close to a killer app has come and it's one promise of utility (as a currency) has proven to not be scalable.
A killer app would prove utility. Something that shows that it has use outside of the ideological and invested. In other words, something that someone on the outside can use. The internet is decentralized and produced "killer apps" that did just that almost immediately. People used the internet and their use of it only increased over time.
Cryptocurrency cannot sustain that. DApps are effectively useless. Blockchains are expensive and environmentally destructive merkle trees and do nothing that git couldn't do faster and easier and cheaper. Decentralization has not proven itself to be useful at all to anyone.
A killer app doesn't even have to be complicated, it only has to be useful. Nothing about cryptocurrency is useful. It is an ouroboros of busywork and self-justification.
So I would ask, why wouldn't a new technology need to demonstrate utility?
You're making the bold assumptions that landlords or grocery stores accept bitcoin in those countries.
Do they really? Or are you fantasizing a Cyberpunk future where they would?
Because fantasies are cheap, but food and shelter is not, and the ones who make the bread might be more into the cash in hand right now rather than waiting for your BTC transaction to clear.
> You're making the bold assumptions that landlords or grocery stores accept bitcoin in those countries.
The parent is clearly not making that statement.
Parent said ".. they will sell an amount of Bitcoin" which can be done either through exchanges or just as easily peer-to-peer through platforms like LocalBitcoin. If you have Bitcoin in a scenario like that, most definitely will not be a problem.
Pretty sure if you have your money tied into bitcoin, as the people above suggest as the killer use of BTC, then having your internet cut off easily becomes your biggest problem.
How else are you gonna spend your crypto to buy food or pay for shelter or pay for travel or smugglers to get you out of the country?
Crypto would be great if it could be used 100% offline, like tap your phones via NFC, and boom, coins transferred, here's your bread.
I'm sorry, this directly contradicts the principle of ever-increasing difficulty for the proof-of-work hash.
Bitcoin and other proof-of-work (no actual useful work being done here either, opportunity wasted!) based crypto-currencies increase the proof-of-work algorithms complexity factor as a means of controlling the rate.
Bitcoin cannot scale up without using an ever increasing literal waste of electricity. Want a better system? make a new crypto-currency trust basis... (proof of stake, etc.)
Yes, BTC is proof of work. Yes, complexity increases to control the rate. But that's it.
Complexity has nothing to do with scaling. BTC doesn't scale. It's fixed at 1 block per 10 minutes, 1MB per block. No amount of horsepower is going to give it more capacity, so BTC doesn't scale up by wasting more power. It stays the same.
You can see this in forks like Bitcoin Cash, which took the exact same algorithm, and forked the exact same chain, but gained less miners. After some time it readjusted, and BCH is perfectly functional with less miners than BTC.
I agree that BTC and its ilk suck in many, many ways. But saying that power usage must increase is incorrect. It can remain static or go down without changing the functionality or the capacity of the network to process transactions, because those things don't depend in any way on the hashrate.
The capability of performing a 51% attack and sustaining a 51% attack are very different. Performing a 51% attack by mining a single gets you nowhere (at most you can revert some transactions, that block will eventually be orphaned).
Today i believe, most usage of Bitcoin is for legitimate purposes. There is always lots of illegal use cases for anything with value, if it has value, people will do illegal s** to get it and will use as payment. Human nature.
The energy used since the inception of the network is what makes the network valuable.
Think of it this way: to create a cryptocurrency you need some "value" attached to it, Bitcoin does this by converting energy->work->bitcoin, you add "value" to the network in the form of energy and get bitcoin back (you get your "value" back in the form of money when you sell the mined BTC). Ethereum took a different approach (token sale + PoW) and now are moving to PoS.
Pure PoW seems the only way to launch a completely anonymous and decentralized crypto
Hedging for massive inflation of government controlled currency is a legitimate purpose. Are people that buy gold or silver doing it for illegitimate reasons ?
Look into how miners are making use of stranded methane that is otherwise flared and contributes greatly to global warming (23:00 to 1:11:00 in video below)[1].
Also, consider the massive dis-incentivization of consumption that BTC will encourage. The environmental effects are ambiguous, and probably not nearly as bad as mainstream media suggests. It could even be net positive.
> The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
I wonder how afraid one actually needs to be of 51% attacks. How would the attacker profit from a 51% attack? They might double-spend, or rewrite known history somehow, or decide to only include certain transactions in their blocks and leave other transactions stranded. In each of these cases, it would be clear to everyone that Bitcoin has been broken, and that it has lost its usefulness and the properties it became famous for. The attacker might then control a large amount of Bitcoin, but having lost everyone's trust in it, that large amount of Bitcoin would be worthless. It's not in any attacker's interest to actually break the system, since they would need a gigantic initial investment and get no return on it. (Except if it were very cheap and the attacker's motivation would really be to destroy Bitcoin.)
I don't think we need to fool ourselves that miners are in it to "protect" the network. They're in it to make money.
Interesting point, thanks. I wonder how one would settle a short if the network effectively ceases to exist, or at least ceases to exist as a single, well-defined chain that everybody can agree on. If you short the New York stock exchange, then blow up the building, do you win? :-)
If you short bitcoin-based ETFs on NYSE and Bitcoin subsequently tanks the value of the ETF goes to zero and you walk away with your proceeds from the original sale and with no obligation to give the original ETF back. There is no counter-party risk in a short sale for the seller.
Keynes said "The markets can remain irrational longer than you can remain solvent". Trying to short Bitcoin seems like a great way of becoming more anecdata for this.
It’s a clean energy subsidy. Be it hydroelectric, wind, nuclear, or cold fusion - create it and the returns are yours indefinitely.
Indeed, much of mining is already hydroelectric, and much is overage that can’t be stored. This is not just sugarcoating or PR. Miners are highly incentivized to find these situations and exploit them. The more that happens, the less “bad” miners can even compete.
"Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen."
I lived in a period without debit and credit cards. You dropped your cash it was gone. I'm not sure not having a reversal transaction is the killer missing feature.
I know what life is like with the existing feature of getting thousands of stolen dollars back by relying on the banking (and/or legal) system. I won't willingly adopt a system without it.
Wouldn't the same laws apply regardless of payment? If a store defrauds you or if you know who the other person is in the exchange (regardless if it's cash or bitcoin or gold).
If you don't know the other person then cash or bitcoin it wouldn't matter.
If you drop your cash it's gone. If you drop your bitcoin wallet and you backed it up you still have your bitcoin..
Bitcoin is just a way to funnel money from financial markets into energy production.
Since we need huge investments into renewables production, every mechanism for such capital reallocation should be welcomed. Our future is electticity. Currently we are producing a fraction of what we'll need.
It's not just Venezuela that is a corner case. China is another one, a one billion "corner case".
Lots of banking problems in your so called "stable" countries like your account getting blocked (try running a business on transferwise or paypal) because of some shit algortihm.
You know what else consumes more power than Argentina? Canada and Saudi Arbia[1] (among others) both countries with less population than Argentina but with higher overall consumption. Is that "good"? Is it "right"?
How much energy do all atm machines (on idle) waste compared to miners? At least miners have incentive (dependent on local regulation/costs) to find cheaper sources of energy because it directly affects their bottom line.
I think what will doom Bitcoin is the uncertainty around the identity of Satoshi. Imagine bitcoin growing by a few orders of magnitude, now it's 10s to 100s of Trillions. Is it close to becoming a world reserve currency? At this point, just who is Satoshi becomes a matter on the level of nation states.
Bitcoin grows by a factor of 100x, Satoshi is now a Trillionaire. He has vast reserves of money he can move around anonymously. Does he still exist? Well his coins haven't moved. Will the world be okay with the mystery?
So no one knows for sure of course but many suspect that early mining by likely Satoshi owned wallets (2009 era) yielded some 1.1m BTC, worth >$50B today.
So the likely reasons someone sitting in a notional value of $50B+ who hasn't cashed in any of it include:
1. He (or she) is dead (I believe the last confirmed post was 2012?);
2. He (or she) has lost access to these coins;
3. He (or she) has cashed in some wealth from wallets not linked to Satoshi; or
3. He (or she) is sitting on this mountain of wealth and not cashing any of it in.
There's the possibility of course that Satoshi isn't one person but several.
Let's consider (4). You would need to be an incredibly committed ideologue. We have ways now of essentially laundering crypto (ie by converting it to other crypto through a pooling mechanism that makes it difficult to identify the source wallet for what comes out).
It's stated that perhaps Satoshi fears government persecution (eg the tenuous connection to Wikileaks). To me that seems... unlikely. It's not like Satoshi controls the network. Lots of people hold crypto now.
Maybe Satoshi just really likes his, her or their privacy. But given that wealth... (1) or (2) become increasingly likely as time goes on.
Unfortunately, Ethereum did infact mutate its chain. Bitcoin never mutated the chain, but once a fork was done to abandon the original chain from a few blocks back, and start mining a new chain from there, thus invalidating some transactions. However Ethereum did something which is essentially a crypto-blasphemy. They reversed a single transaction without a valid signature. Ethereum-Classic is the original chain that still contains that transaction.
The fact that they created a new chain diminishes one of the main characteristics of a blockchain. That it can't be altered.
This has always been my biggest sticking point with cryptocurrencies. It doesn't take into account that sometimes you need to fix a mistake.
Cryptos also have a usability problem. If you forget your login credentials you lose access to your account. If you forgot your credentials at a regular bank, they have multiple avenues for figuring out if you are who you say you are. Eg post etc.
Bitcoin did not break any "technicality". Technically speaking, the chain with most work is to be considered valid. What they did back then was, a bunch of miners got together and created an alternate chain with more work. So it's still technically the correct/longest chain. On the other hand, Ethereum just plain broke the sanctity by basically creating a chain that contains a transaction without a valid signature.
Chains are amended, not mutated. Consensus about what new blocks to accept to the chain can change at any time. For example the chain following the original Ethereum rules is now called Ethereum Classic and its market cap is less than 0.5% of the new consensus.
The bitcoin mining equipment have no other purpose than mining bitcoin so eventually once the block subsidy halves these miners will be sitting idle until someone need to process a contentious transaction (paying high network fee).
Didn't read the rest, btw forks of a chain like bcash doesn't have much to do with immutability.
WARNING: BITCOIN MINING IS GOING TO EAT THE WORLD’S ELECTRICITY SUPPLY. READ WHY BELOW.
I realized something very sad this year.
I used to think that Bitcoin was a poor currency, and if someone just made one that was actually scalable and better, then this whole first-gen system would fizzle out, like Friendster or AskJeeves in the presence of better technology.
But no. You see, Satoshi had us all fooled with the title of his paper: “A peer to peer cash system.” FORGET about Bitcoin being a currency. It is a store of value. And it has all the features you’d ever need to store value and not have it be diluted. There is nothing that needs to be improved over and above those features, and that is its killer app: being a black hole of value. Constantly growing versus fiat.
You see, just like gold, Bitcoin is a store of value becaus others say it is. It has reached critical mass and mindshare for “storing value” even from companies now. From here on out, even if a better system arises, if it becomes a sidechain of bitcoin that locks up the coins, then there will be less and less “unlocked” coins, and therefore each coin will be more valuable. Also, bitcoins are constantly lost as dust or misplaced private keys or other things. And so the supply shrinks.
But bitcoin is divisible into extremely tiny pieces (satoshis) so this merely helps one bitcoin get more and more valuable. You can’t kill bitcoin by making something better because even if 1/1000th of it remains, it will actually just be more valuable. The scarcer bitcoin gets, the pricier bitcoin gets, like the Hulk.
Ok so what does it mean for electricity consumption? Here is where the sad part comes in! You see, bitcoin miners are rewarded in bitcoin, and as long as the price of bitcoin outpaces the halvings, mining rewards will grow.
Read the story again, and extrapolate. The year is 2035, and households are fighting for electricity against bitcoin miners, who are easily winning. Governments trying to ban bitcoin mining meet similar fate to Mexican governments trying to ban the drug cartels’ activity, that is to say their families are threatened and they do not have power anymore to stop it, etc. Their feeble attempts to print money fall short of the ever growing rewards.
Everything in the article about bitcoin using “only” 6% is misunderstanding the expontnential function. In 2021 those stats are outdated and the Bitcoin network consumes more electricity than half the world’s countries. We are five minutes to midnight. By the time we realize it’s consuming more than half the world combined, it will be too late to stop this activity. It will be “too sweet” and too financial lucrative.
If you think we can stop it as a society, then let’s see how we have done with killing off insects, reducing biodiversity and species, polluting the world with plastic and pumping greenhouse gases into the air. Take that last one for example — have we been able to make a reduction in the greenhouse gas emissions, or merely their rate of growth?
What exactly will change between now and 2035, or 2135 that will make bitcoing mining NOT be more economical valuable than, say, airconditioning homes?
It is clear that you don't believe in Bitcoin ("Bitcoin solves a problem for almost nobody") and thus want to use this energy angle to take it down. Good luck. But if you are more open minded read this thread and educate yourself: https://twitter.com/yassineARK/status/1360343382556483587?s=...
Isn't that the goal of all investmemts? Just admit to yourself that you lost the greatest bull of your lifetime because you weren't smart enough to take the time to understand it.
Another article suggests the carbon footprint of Bitcoin is equivalent to New Zealand [2].
It's not just the cost of mining new coins (which will ultimately end) but the cost of maintaining the network. The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
To the apologists claiming there's no other good use for that energy, it's not simple. Using too much electricity can raise the price that everybody pays [3].
Miners will keep chasing cheap power but I expect, much like ArbBnB, municipalities, states and even countries will increasingly clamp down on it.
The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies. Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen.
I realize there are corner cases (eg sending money to and from Venezuela). There's also a lot of illegal use cases.
Thing is, blockchains aren't really as immutable as pundits suggest. Bitcoin and Ethereum have had forks.
[1]: https://www.bbc.com/news/technology-56012952#:~:text=Cambrid....
[2]: https://www.cnbc.com/2021/02/05/bitcoin-btc-surge-renews-wor....
[3]: https://www.pbs.org/newshour/show/cheap-power-drew-bitcoin-m...