Nic Carter's rebuttal to a Bloomberg comparison between Bitcoin/Visa, including assessments of total and per/transaction energy usage:
"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.
Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."
Nic Carter's point is intentionally obtuse and belies his conflicted interests.
The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy) [edit or rather worded differently if each Visa transaction consumed as much power as a Bitcoin transaction], it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together. Obviously this is not how bitcoin scales because even if you did that it would still process 7 tps.
That is, however, proof that it is drastically less efficient on a per transaction basis even factoring in any and all possible externalities including the army and mining and the fed (lol). This is a proof by contradiction.
Anything else is a talking point and also trivially falsifiable. The US Army protects the US not the dollar and its budget would not be reduced in a Bitcoin powered world. Neither would its oil consumption because tanks don't fill up on bitcoins.
The ubiquity of the dollar specifically is also irrelevant as we're not comparing crypto to US Dollars but rather to well-managed fiat systems. Any and all. Not just one albeit dominant one.
This is obvious stuff if you think about it for a half second without trying to justify the unjustifiable.
That's not how Bitcoin scales. The amount of transactions doesn't matter. Bitcoin can have a limited number of on-chain settlement transactions and unlimited number of off-chain payment transactions (Lightning, Paypal, Visa, etc.) and it doesn't consume a single bit of more energy. Energy consumption is proportional to its value and the current block reward.
> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy), it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together.
It's fair to judge Bitcoin's energy use by its tps, but the above is not true. Energy use and tps are, as you then acknowledge, not related. It is possible to increase the number of tps by many multiples. The trade-off is centralization due to hardware requirements.
"if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa ... it would require a number of times more power than the entire world produces"
This is a complete fantasy - power consumption is driven by the desire to secure the network, it is not related to transaction volume.
There is an argument that power consumption would have to be significant because attacking the network has to be cost- prohibitive, and there are people working on POS and similar approaches.
Etherium is actually attempting to scale, their talks are very interesting .
How can you say "if you scaled up the bitcoin system" and "this is not how bitcoin scales" in the same argument?
Bitcoin could handle arbitrary scaling with little power-usage increase had it not been intentionally hamstrung by (for lack of a better term) "small-blockers". This is because the primary power usage of bitcoin (mining) does not scale linearly with transactions/block. The transactions to include are usually considered once by the miners who then make iterated attempts at solving by modifying the block nonce, not the included transactions.
> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa... it would require a number of times more power than the entire world produces
Scaling Bitcoin's tps does not increase its energy usage. The tps and energy usage vary independently of each other. Bitcoin does not require any more energy usage to handle more tps than Visa. In fact, if we include off-chain transactions which are settled on-chain it already can.
> The US Army protects the US not the dollar
What is the value of the dollar if the United States ceases to remain a sovereign polity? The dollar is part of the United States.
The first paragraph is a fair consideration. The second is a complete stretch. It's not as if America would suddenly stop providing military support to Saudi Arabia if we suddenly switched to bitcoin. An America that historically used Bitcoin would be even more incentivized to "secure" fossil fuel nations.
If the Saudis started selling oil in bitcoin they'd probably lose their military support and/or be overthrown.
It is difficult to justify why the US is providing militarily support to the Saudis without invoking oil and dollars. They are a pretty shady regime and not the sort of people the US wants to be supporting. And the Saudis don't seem to be trading with America as much as China [0, 1].
> including the externalities from the extraction of oil, which implicitly backs the dollar
This isn't true. Internationally the thing that backs the dollar is the U.S. economy. People know they can spend dollars to get anything they need. Domestically what drives the dollar is that it's the only way you can pay taxes.
I suppose you could say that oil is used to defend the U.S. economy but that's a stretch.
You still need to use oil, but you don't have to use dollars. The support for dollars relies on a lot of things including the government and thus the military, which are big costs and oil consumes. If the dollar didn't rely on the military power of the US, why is the Bretton Woods meeting and the post war monetary policy so important to it's dominance (something practically no one disputes)? Why is it that the US seems to care so much about pricing oil in dollars? You don't need a tinfoil hat (as other comments suggest) to notice the US government has a strong interest in everyone using our currency and that where the gov has a strong interest, it also uses it's guns.
For some reason the Euro does not need all that "grossly oversized military" to be a proper, stable and usable currency. That alone kind of contradicts the entire grossly overstretched argument of this Nic Carter guy.
While I am also skeptical of the parent comment's quotes. The Euro is still backed by a centralized state(s) which does indeed have a monopoly on violence and require huge amounts of resources to maintain legitimacy. Crypto currencies demonstrably do not need these kind of resources. The rest of what people preach about crypto might be Bullshit, in a strict sense, but they are right about the anarchism thing.
The European Union has a huge standing army if they were counted as one force? Over 1 million active personnel. The US by comparison has 1.4m and China 2.0m
This strikes me as a terrible argument. Yes, Visa is a small part of the whole system. It's also the only part that Bitcoin does anything to replace. Moving numbers from one column to another is trivial. If that were all the banking system needed to do we could run the whole world economy off my laptop with software I wrote in a month.
You can't do "non-final credit transactions" on Bitcoin.
You can't take out a mortgage.
You can't manage investments.
You can't pay for groceries without waiting a half an hour.
You can't buy a $1.25 pack of gum.
Bitcoin is complete and self-contained because it is inextensible and feature-poor. It cannot solve the problems the banking system solves. Its solution is the classic "you didn't need it anyway".
And then Bitcoin fans realize that yes, they did in fact need those things after all. We can watch them reinventing the entire modern banking system before our very eyes. The main differences are that they run everything on the world's worst database, they insist on calling their banks "exchanges", and that they think it's OK to have all their money stolen every so often.
(Bitcoin also lacks the ability to prevent money laundering or to enforce judgments. I'd consider that a bug. Other people might consider it a feature. In either case, it means Bitcoin is solving a much easier problem than normal banks.)
Unless your fiat money is not actually real and is just a made up number by the Fed. Bitcoin may not be useful in the local store, but if it can make fiscal, fair rules that the globe works within - I’ll take that.
The other mad comparison is that Bitcoin is globally distributed. If Argentina was globally distributed it would eat far more energy than Bitcoin.
What this really means is that Bitcoin is out of reach of a nation state attack.
For the local store, there’s always Nano currency.
At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery.
That's 350km/220 miles of range per charge. In total 1050km or 660 miles of driving.
So basically if you want to transfer money and the recipient is closer than 660 miles from you it's more efficient to just get a bunch of bills, drive there with a Tesla rather than send a Bitcoin transaction. Or alternatively 330 miles roundtrip. For each single transaction.
It is hilariously inefficient system. It is literally better to drive a full car and give things physically than use Bitcoin.
A small addenum: Visa apparently uses 146kWh for 100000 transactions. Coming at 1.46wH per transaction. That can drive a Tesla for 9 meters (0.4 seconds of driving at 80km/h) or alternatively keep a nice led lamp lit for an hour. And that includes everything the company does, not just the actual transaction but the upkeep of their offices etc divided by the amount of transactions they perform per year.
EDIT:
Apparently on 2020 it was 741kWh per transaction in practice and/or I made a tiny error in my calculation. Either way it's even better!
Say you want to transfer a billion dollars 3000 miles. A billion dollars is 10 million Benjamins, which weighs 10 tons. You're not fitting that in a Tesla. More likely, you'll put it in an armored car and hire a few armed guards to go along with it. If you need to transport it overseas, you need a freighter (and a week) too. Now the energy cost of that Bitcoin transaction doesn't seem so bad.
The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
(Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)
I'm not very well informed on the modern banking system, but I remember hearing an anecdote about banks flying people with bags of checks on airplanes to handle exchanges (before the system was updated in the 70s iirc). In your example of transferring a billion dollars in cash 3000 miles, couldn't that transfer be done using the banking system for much cheaper than the armored car and guards? Is the metaphor valid only for transactions that don't want to trust some third party? Is there some reason why moving a billion dollars cash is something that anyone other than the CIA would want to do?
I'm also curious about your claim:
> Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
Is this really true? I mean, what do large international exchanges use now? A majority of them certainly don't currently use bitcoin. Many large banks have a significant international presence, and most parties interested in exchanging can find a bank they both trust.
What percentage of transactions are 1 billion dollars? I'm pretty sure VISA has never had anything over $10M.
This is excessively hypothetical.
The more obvious benefit is that a Tesla can't drive 3000 miles in 15 minutes. But a VISA transaction is faster and uses 1/100,000th the electricity. And neither are "anonymous".
The problem w Bitcoin as a global reserve currency is that it cannot be manipulated by the nation-state. Manipulation in this case is not a bad thing it is actually a safety feature for society against pure supply/demand dynamics. The prevailing wisdom is that having a fiat currency which value and velocity can be manipulated by, granted the Fed Reserve is a quasi govt agency, in times of emergency helps preserve the social order and smooth fluctuations. So Bitcoin has no value as a reserve currency unless it could be manipulated by the state, which it can’t, so it won’t.
> The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency.
Aren't we losing the assumed federation in this system? A country whose banking system is under strain (Nigeria) or has collapsed (Zimbabwe) will have a bad-faith government acting to constrain the free-flow of money (because they want a transaction-fee cut).
Wouldn't that still lead to me wanting to go buy my groceries with BTC? Do we create a localised version/model where people can transact with each other without touching the blockchain (because of the low throughput), or how do we address this use-case; as it seems to be the most attractive one?
Has the energy requirement peaked, or is it still going to increase? Linearly or not?
So what? Almost all transactions are going to be significantly smaller than a billion people usd. You are just focusing on an edge case. Bitcoin is a horrible system for conducting the vast majority of transactions.
I can see smaller bitcoin transactions running on an alternative networks like Stellar, where assets (like bitcoin, USD, etc) can be issued by a trusted 3rd party.
> Say you want to transfer a billion dollars 3000 miles.
I don't. You don't. Nobody does. In the one-off case that you do, we can special-case it, instead of blowing energy on every single transaction as though everyone did.
You’re arguing we should be zipping around town in a car with a W12 engine in case somebody wants to drag race an airplane.
The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. It also pays for the security of all the value stored in the rest of the system, and that's actually where most of the revenue for mining comes from - inflation, not fees.
But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems.
But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin.
If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.
> The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction.
No energy "goes into a Bitcoin transaction". A block with 0 transactions and a block with 100 transactions will both take the same amount of energy to generate.
This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
People have this wrong idea that more transactions imply more energy consumption. That's just not true.
> A block could have 1 or 1000 transactions, but the energy consumption would be the same.
The calculations are based on the maximum throughput of the Bitcoin protocol, which is a fixed value due to the 10-minute block time and the limited block size.
> The proof-of-work is completely independent of the number of transactions.
Right, which makes this whole thing even more ridiculous. If number of transactions went to zero we'd still have to burn 120+ TWh per year just to keep the system going.
The 165kWh per transaction calculation is the best case scenario assuming every block is filled to the maximum with transactions.
> The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
I think the real value in Bitcoin is its immutability. I don't think there's any piece of information in the world as immutable as the first bitcoin block mined by satoshi.
This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered
You are leaving out significant amounts of energy consumed in the legacy financial system.
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
I’m not sure that any of this is meaningful in any way.
They include air travel and whatnot. Basically the whole energy consumption of the company. Also including building stuff etc.
Visa doesn't share that in order to poke at Bitcoin. They share that because enviromentalism is hip nowadays. So they want to tell how they're improving their CO2 emissions as a company.
The mining equipment needed to be produced. The mining rig needed to be installed, many factories needed to be produced. There are workers in these mines, did they spend energy driving a car? Did they use a gym bag? Where did that come from?
Then you might as well price in the cost of the computers and GPUs assembly into Bitcoin's cost. I don't see the utility in going down this chain of production.
How many people go speak to a bank teller to transfer funds? My bank can give me a mortgage for my home. The banking system is doing way way way more than counting how much people own and shifting that around.
If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
Which is also true on the opposite side or did your mining rig magically materialize out of nowhere? The difference is that a lot of the infrastructure for the traditional system is already built out which reduces the marginal energy costs to a degree that isn't the case for cryptocurrencies.
> Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag?
It's 2021. Carrying around duffel bags of paper bills received from a human bank teller is not how anyone manages their cash or transactions.
Bitcoin is not the only way to digitally transact. It's not even a good way. In practice, it's just about the worst way to handle transactions unless you have no other options.
This "legacy financial system" comparison isn't fair. I use standard banking and haven't been to a bank in years. I think a more reasonable comparison is with online only banks. Our current system doesn't actually need physical cash. You just need banks keeping score for individual accounts and a central bank keeping score of the banks' accounts.
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
Just like the mining rigs that produce bitcoin. It seems like you're conflating fixed costs (of plant and machinery) with marginal costs (of exchanging some amount of BTC vs fiat).
If you compare the money (resources) spent bitcoin mining and the money (resources) spent operating the world’s central banks, then the costs are similar.
It's misrepresentative to represent it just in quantities of number of on-chain transactions.
First, let's look at the actual transacted value: last 24h ~90 billion USD.
Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well.
One estimate of the current market cap of Bitcoin is ~800 billion USD.
Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions.
Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country?
If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.
Bitcoin transactions take negligible amounts of electricity to produce and validate. The fact that you can spin up a Bitcoin node on a Raspberry Pi is trivial proof of this.
Block production, on the other hand, takes as much energy as the market will bear.
At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery.
This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units.
It varies but over the past couple months a Bitcoin transaction has cost from $7-$20.
That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-)
It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient.
Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.
The downside of driving your tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
Well, it is irreversible to the extent giving any physical papers to another person is irreversible.
However, the upside of driving your Tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
Many would see that as an upside. Irreversible transactions are not very desirable to a lot of folks, particularly where it comes to the consumer side of things.
Without a doubt it is inefficient. Now US government can arm twist wist Visa and Mastercard to stop serving companies they dont like (Po*nhub). They can not do that to Bitcoin. This is the value the inefficiency adds.
The 4 transactions per second is an artificial cap that is not associated with the power consumption of Bitcoin. The answer was, and is, to increase the maximum block size parameter, preferably making it dynamic.
That is not true, when you have billions of dollars at stake you need to be a lot more careful with the changes you're going to implement, otherwise, it would jeopardize the whole network.
There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
This is like saying my car's engine uses oil as lubricant, not as fuel. It's true, but I still have to change the oil every 5,000 miles. So I can still calculate the cost of oil changes into each mile.
Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
You didn't include the production cost (energy input) to make the paper bills. I can only assume it's negligible but perhaps that should be stated.
The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear.
Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.
What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.
Not really. The network spends those kWh whether you send your transaction or not.
It's also worth to note that nobody really knows how many kW miners really burn. All the figures are more or less educated guesses from the efficiency of equipment sold publicly. If someone has a more efficient method they probably won't share it.
But nobody accused Bitcoin of being efficient, ever. That's what almost everyone notices when reading about it first time.
Analyses like this just take the energy cost of each block of transactions and divide it by the amount of transactions in the block. If the number of transactions in a block doubles, the average energy cost per transaction is halved.
Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
I have often seen people saying things like "Bitcoin is orders of magnitude less efficient than Visa". While true, it's kind of like saying "the Atlantic Ocean is orders of magnitude bigger than my swimming pool".
Bitcoin is six orders of magnitude less efficient than Visa. Six.
Indeed it does, but generally in industry and technology one goes from inefficient prototype that serves as proof of concept to a more efficient one. Do other cryptocurrencies not improve on Bitcoin in some way? If so, why does it continue to have value despite its agreed-upon flaws? If not, why do they have any value?
True - and even with this tremendous waste, it pays for itself.
We have never looked beyond monetary return to justify the existence of anything and i fear we are doomed to stay that way.
Thankfully, renewables are becoming more profitable.
If we built enough, we could power the USA.
Imagine that.
All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.
Energy is the ultimate currency. A bitcoin transfer is cheap considering the amount of energy it takes, and its also cheaper then a bank transfer. Visa is overcharging if it takes such little energy.
Now include the environmental impact of all visa employees. You can’t divorce the effects of the people who run the system (which are relatively very insignificant for Bitcoin) from the effects of the system itself.
The people making the transactions pay for that energy. At 10 cents a kWh that's $16.5 , right in line with the current transaction price. Some people are getting enough value from the transaction to purchase that volume of energy. Who are we to tell them how to use the energy they purchase?
Super pessimistic. I don't know why this comment is at the top. The analogy and calculations are fun, but nothing more than that. You are basically suggesting that we all should buy Teslas, right? 330 miles roundtrip is about 5-6 hours of non-stop driving. Not the best UX.
I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn.
People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin.
Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).
>You are basically suggesting that we all should buy Teslas, right?
Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim.
In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable.
It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.
In your estimation, how much Bitcoin is purchased in hopes of gaining freedom from the existing banking system, and how much Bitcoin is purchased in hopes of making money when it goes up?
This isn't exactly an rebuttal to your argument, but 74% of energy that Bitcoin used to power it's network was renewable energy [1], that's more than you can say for most countries. While the network itself is inefficient, I think the philosophy of "why bitcoin", is always amiss in these arguments. Everything can be made more efficient.
Edit: 39% of energy used is renewable, not really sure how that doesn't matter.
That article actually states the opposite: 74% of miners use some renewable energy. Only 39% of energy used comes from renewable sources, and most of it is hydroelectric, which is limited so miners demand for it is likely crowding out other users from it. The remainder mostly consists of coal and natural gas (there's a popular idea that miners use or can use the excess energy usage which occasionally comes from wind or solar, but the cost of the hardware they use prevents it: they will run the hardware 100% of the time to pay for it, so they represent a strong base load on the system, not a convenient energy sink for excess renewable generation).
>However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
Doesn't matter, really. Bitcoin is secured by waste. Maybe the money is burned in coal-fired power plants, maybe it's burned buying "mining" equipment, maybe it's burned building wind turbines. All of those things are polluting and all of them use manpower and natural resources.
If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
You can buy or send bitcoin in seconds if you're not trying to do it on-chain, the same way you can do it with stocks and other assets. But definitive settlement of a bitcoin transaction is faster than pretty much any other asset.
What? No. It happens instantly at a protocol level. Practically, about thirty minutes. Most people don’t send and receive wires and so don’t choose bank accounts that prioritise them.
Practically speaking, Venmo and Apple Pay and Zelle are frictionless and instantaneous and more widely adopted than Bitcoin. For heavy users of international transfers, there are usually better solutions.
There are absolutely edge cases, and so a legitimate use case for a cryptocurrency there, but that’s not enough use to sustain Bitcoin’s value. To say nothing of the transactional motivation having been long since abandoned when inconvenient for the current store of value one.
> Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
You would need to do the same paperwork with bitcoin.
I have UK and French bank accounts, transfers between them take seconds. Transfers from the French account to any other Eurozone account take seconds.
> Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
How much time would it take to convert, transfer to a bank account AND withdraw that same amount of money from Bitcoin to plain FIAT?
I feel like Iran and Venezuela are bad examples as they are typically denied access to much of the global financial system. It’s normally pretty easy to move gold around and this process is handled by banks. Of course you might not get the same gold bars if you move gold between countries (for one thing they tend to come in different sizes in different places) and it likely won’t even be physically the same gold, but the banks tend to handle the arbitrage of taking physical gold to refineries across to move it from one market to another (though there were some worries this might break down between the US futures markets and London physical markets due to coronavirus restrictions)
A bitcoin transaction never settles. If a longer chain is created without that transaction it will become the current state and that transaction will be effectively rolled back.
While I agree with him that Bitcoin is a terrible currency, I think the "store of value" thing is nonsense as well. Stores of value need to have relatively stable value. Bitcoin is hugely volatile. That's great for speculation, but nobody with any sense would use it as the equivalent of a savings account.
For many BTC enthusiasts the store of value narrative has been in place for a very long time.
“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.” - Hal Finney (2010)
But it doesn't have any value. Except that some people think it has. In times of truly global trouble, nobody will accept bitcoins as payment for bread.
It's going to take some pretty big balls to dump your money into bitcoin instead of gold or cash the next time the stock market crashes. Then we'll see how good a store of value it is.
I haven't received my official enthusiast talking points memo, but the obvious solution was proposed years ago: off chain transaction that use smart contracts for settlement on the public ledger. I vaguely remember "store of value" being used for what would more accurately be described as "trust anchor" or "root authority".
It will. Via second and third layers. It'll scale just fine. An example second layer that you can use right now is the lightning network https://lightning.network/
Some of us ask ourselves the same thing. NANO, for instance, has no fees and is basically instantaneous (<1s). But unlike Bitcoin, Elon Musk isn't hyping it, and you can't make money by using computer farms, so most people don't know about it.
Maybe people close to Bitcoin know it won't be a usable currency, but unless you closely follow bitcoin, it sure seems like it is built to be a usable currency. Even the name implies this relationship, and the idea of a 'wallet' does too. Tesla just recently bought $1.5 billion worth for exchange, no?
I have no position in Bitcoin, but isn’t it possible for “BTC scrip” to be the money used day to day. With actual blockchain transactions just being used to aggregate at the institutional level?
This is pretty much the way money worked in the 19th century, just with gold instead of BTC. Nobody physically carried or transferred gold to buy a beer. They just used bank notes that were backed by a trusted intermediary holding the physical asset. It might make sense for a bank, or even a very wealthy person, to pay the cost of physically transferring the hard asset. But most just used IOUs that were backed by the underlying hard asset.
It could, but why? The two things that BTC grants are trustlessness and the inability to enact fiscal policy. If BTC just becomes the backing for institutions, trustlessness is gone. So then it is a question of whether a backing unit that supports fiscal policy is better than one that doesn't. I think I know what institutions would prefer.
IMO it isn't. However, I do see a huge for sending large transactions. In that sense, I don't find it too crazy that Tesla is accepting Bitcoin, because buying a Tesla is a large transaction.
I can't see Tesla BTC as anything more than a marketing gimmick for their computer geek clientele and fan base. Even if it's a logistical disaster, they probably make it back in stock purchases from true believers.
I think accepting Bitcoin as payment was tried before - it never worked since people buying it are either not selling (and using to store cash that keeps on growing), or buying it for speculative purposes via secondary instruments (gbtc, ethe).
Not really sure what’s point is for Tesla but my guess its speculative for them, with an attempt to get some additional value on cash they are starting to swim in now...
A transaction takes ~10 minutes, to ensure that the block which the transaction is included in isn't orphaned some services institute a 6 block waiting period to ensure the transaction is stable. Should the block be orphaned, the transaction will re-enter the mempool on all hosts who'd confirmed the block and should be included in a subsequent block.
The transaction cost depends on the size of the transaction and the congestion in the mempool, the cost can be set by any sender depending on the urgency of the transaction.
It won't, but it's also not transferred as much because of cost, time, and transactions/second limit; I have no solid figures, but I wouldn't be surprised if 99% of actual bitcoin transactions are virtual, in databases on the exchanges. You can't do high frequency trading on the blockchain.
In theory, "lightning networks", which are basically a network of open transactions across wealthy, participating nodes (e.g. banks and exchanges.) A lot of smaller transactions can piggyback on the larger transactions basically for free.
I don't think these are widely used in practice yet, but I might be wrong.
It's already a usable currency. You overpay the fee to get your transaction confirmed in the next average 10 minutes. You use lightening (though support is still limited) to have cheap and fast confirmations and you settle later.
Also, it's still faster and cheaper than an international SWIFT.
The last years were the strongest indicator that bitcoin will not become any kind of usable currency. Seeing that it is as volatile as ever I'm honestly not sure what bitcoin can even still become except yet another abstract plaything to "invest" (bet) money on, the very thing it has been for a while now.
Also while it is decentralized, the reality of how it is used is very much not. The typical use case is buying and selling it via an exchange, not much else. Depending on where you live you have to reveal more information about yourself to "just buy bitcoin" than you have to when opening a bank account.
"Bitcoin Cash" is a fork of Bitcoin with larger blocks to solve the transaction fee problem, which it has been largely successful at.
In fact the original design for Bitcoin assumed larger blocks in the future, so it is perhaps a more accurate description to say that Bitcoin Cash is the "original" Bitcoin, and Bitcoin Core is a fork with an altered (small blocks) design.
It's about $7 at the moment to be included in the next block. A new block is added approximately every 10 minutes. Since bitcoin does not guarantee finality some services require you to wait for a certain amount of extra blocks after yours to reduce the chance of a change reorginaztion happening that doesn't include your transaction.
Bitcoin will not function as a currency due to it's high volatility. For a more usable currency look at DAI, USDT, and USDC which are stable coins pegged to the dollar. DAI is collateralized with on chain assets where USDT and USDC are collateralized with real life assets which are mainly regular USD.
USDT claims to be collateralized with real life assets. But their story keeps changing, they refuse to allow an audit, and they're under serious investigation by the NY Attorney General. It can reasonably be thought of as a fraud that hasn't popped yet: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
Question that came to mind after reading the headline: could this become a future reason for governments to criminalise the trading / use of Bitcoin because of negative environmental effects?
On the surface it seems the value of Bitcoin is directly tied to its energy consumption and thus environmental harm.
I get that Bitcoin itself is decentralised and cannot be banned outright. But could it be neutered in such a way that renders it more and more worth / useless?
I was thinking exactly the same. I would be in favor tbh.
If the government is allowed to dictate how my car must be built in order to make it more environmentally friendly, I don't see why it shouldn't be able to dictate how my blockchain must be built in order to make it environmentally sustainable.
This wouldn't mean banning blockchain altogether. It would entail banning only those forms of distributed consensus that are not energy efficient.
Proof of work (POW) is by definition inefficient from an energy perspective. You have to prove to have spent a lot of resources to be trusted. There's no excuse for this from an environment point of view, even if, admittedly, from a technological perspective is quite a marvel.
I wouldn't be surprised to know that those defending bitcoin on this front are biased because they hold some quantity of crypto based on POW.
Government regulation should focus on how electricity is produced, not how electricity is used. If Bitcoin created pollution or dumped toxic chemicals, I would agree with you. But Bitcoin doesn't do either of those things, the power plants do those things.
So save your regulations for the power plants and let the market figure out how to spend the electricity. If you wouldn't be in favor of the government regulating how much money can be spent on beef, or how much money can be spent on TVs, you shouldn't be in favor of the government regulating how much can be spent on Bitcoin's electricity bills.
> Is there no way to slim down the resource requirements to cut electrical use?
To put it bluntly (not meant to sound blunt, I just can't think of a better example without reiterating a technical explanation of how bitcoin works), that's like asking if people living in the Sahara can't simply drink less water to solve the unavailability of fresh water. And even that's a bad comparison because the human body actually can actually make due with less water. Perhaps it's like an electric heater (not heat pump, just a plain old heater), if you know how these things work: if you make it use fewer Watts, you get less heat, because there is no "waste heat" because heat is what you want in the first place. So fewer Watts is always less heat no matter how you spin it.
Similarly, putting more power into Bitcoin makes you earn more money (as a miner). If we make the hashing algorithm more efficient, then the hash rate will just raise proportionally to meet the new supply (supply being the block reward + transaction fees, both in bitcoin (or whatever proof-of-work currency you're mining) that you receive when finding a block as a miner).
No, the alternative is moving away from proof of work. I've been hearing stuff about proof of stake for years now, and afaik there are some currencies already using it. Not sure why Bitcoin doesn't switch to it, I'm not keeping up. Lost interest back when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? I guess people just don't give a fuck about their non-direct impact and see it as a way to get rich quick.
If governments banned the on/off ramps to normal currency, then yes it would be effectively neutered. There is an audience that wouldn't care, but it's a small audience.
Yes, but the narrative is that Bitcoin is innovation and any government against it is basically against innovation.
If I wanted to neutralize it, I would do something like Bait&Switch. Support banks running own cryptos until point where general public will see no difference between BTC and private cryptocurrencies and leave BTC users with their wallets and even when it will remain legal and everything, the "crypto revolution" would be taken by usual suspects (the establishment).
However, I wouldn't like to see it. I prefer world currency to be run by nerds over bankers and politicians.
I think both the article and this comment miss the point.
If we generated power cleanly in the first place, there would be far less environmental damage everywhere.
The fact that Bitcoin now uses half the power of Youtube (from a terribly unreliable estimate) should not be such a distraction from the real problem IMHO.
We can only hope so. There are new proof-of-stake cryptocurrencies that don't have this massive environmental downside. The only people who should oppose replacing BTC with some other technologically and ecologically superior coin are bitcoin bagholders trying to protect their "investment" in this Ponzi scheme.
>Will anyone criminalise the US army because they use lots of energy?
Ah yes, the old trope that people use the US dollar because they are forced to.
Meanwhile, back in reality, people around the world are desperate to get their hands on USD for commerce, because it's easily transacted, accepted and valued anywhere. You know, kinda like Bitcoin purports to be, but way more common.
> could this become a future reason for governments to criminalise the trading / use of Bitcoin because of negative environmental effects?
The whole point of Bitcoin is resistance to adversity. Bitcoin value is directly correlated to its resistance against governments/agencies/bankers/regulation or anything else that wants to shut it down. If you can wrap your head around that, you'll understand why making bitcoin more eco-friendly from a centralized government or organization will suddenly make it less valuable.
After all the Bitcoin is mined, it will be the greenest crypto currency, yes?. What if we just accelerated the mining, or made them all available at once. Problem solved? Truth be told, I really don't know what I'm talking about. It just sounded good in my head.
Nope. Bitcoin transactions require wasting energy. It is built into the very fabric of bitcoin. Currently, the energy wasters ("miners") are compensated by the minting of new bitcoins, and some transaction fees. As the number of bitcoins asymptomatically approaches it's maximum, the energy wasters are still compensated, but more and more through transaction fees.
Impossible due to how cryptocurrency works. In any cryptocurrency there is something called an "emissions target" which will only up to X amount of coins to be "released" on the discovery of a new block. This is also compounded by the fact that even if you did try to accelerate the mining by adding more powerful nodes into the network, the network would automatically adjust the difficulty in order to keep blocks spitting out at the predetermined time of 10 minutes per block.
If the goal is to educate the public on the scale of power involved, a comparison with a commonly used service would help a lot IMHO.
Something like 'Bitcoin consumes 14 times the energy of Google and half (according rough estimates) that of Youtube' would make things easier to grasp before hitting the reader with country comparisons.
FWIW here is my list of 'if a service were a country':
I think the average person would find it easier to imagine the consumption of a country than that of a an internet service.
Both are basically unintelligible, but at least the country one is something that one can _imagine_ from their experience, if wrongly (my house consumption:country consumption = 1:population).
I bet few people on hackernews itself have any clue what the energy consumption of google might be, and have no way of relating to it.
That is correct, but not a fair comparison, imho. Google, as a centralized entity, is one of a few companies devoted to go 100% green. Bitcoin consuming that much energy is akin to saying that production of wine all over the world is 14x what's being produced in France. Where's the logic?
There's lots of misdirected anger these last few days towards Bitcoin.
First, the only thing that's energy-intensive about Bitcoin is block production. Making transactions, relaying them, validating them and storing them have negligible energy cost.
Second, nothing about the Bitcoin protocol requires block production to use fossil fuels. Just like with every other energy-intensive industry, the problem isn't the industry. The problem is the fossil fuel use.
Therefore, if you want to get mad about the high energy use of block production leading to environmental pollution, you should direct that anger at the appropriate target:
miners who use fossil fuels to mine.
How do we fix this? The same way we fixed it in every other energy-intensive industry: through taxes and regulation. Let's get some laws passed to require miners in your area to use only renewable energy, and to require exchanges to impose a carbon tax on coins whose miners rely on fossil fuels to mine. Properly applied, these laws would make fossil-fuel mining unprofitable, which is exactly what we want.
Bitcoin and PoW aren't going anywhere at this point. So let's make sure it's continued existence doesn't make the world worse. Sound good?
> Let's get some laws passed to require miners in your area to use only renewable energy
Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
> Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
Never say never. Humanity has successfully banned itself from using CFCs in refrigerants, for example. I also agree that regulating pollution from PoW specifically isn't as high of a priority as, say, regulating pollution from coal-fired power plants or concrete production. But it's something that could, in theory, be regulated if we find the will to do so. And if we don't believe that we can regulate CO2 production, then we must also believe that humanity is doomed anyway, and thus PoW pollution ought to be beneath our concern.
> We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Why stop there? Why not impose a global carbon tax on all goods and services known to produce pollution? Then it doesn't matter what the goods are or how the goods are procured; what matters is that CO2 concentration stays steady or goes down.
My original point was to channel focus on what matters -- energy-intensive industries are in need of pollution regulation. But as you point out here, this need isn't specific to PoW.
It is impossible to regulate and tax miners; they live in various countries and in some it is impossible to apply such regulations, if some countries will do it then minim will move to other places.
When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
No, there is no misdirected anger, there are good reasons.
> It is impossible to regulate and tax miners; they live in various countries and in some it is impossible to apply such regulations, if some countries will do it then minim will move to other places.
Other countries can sanction them until they figure out how to apply such regulations. This isn't unique to PoW; it happens for other such dangerous pollutants as well (like CFC emissions).
> When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
Energy usage and product/market fit are both irrelevant to this discussion. What is important is the pollution PoW creates. If we can get a global handle on that (along with basically every other energy-intense industry), then it hardly matters that the energy is used for PoW. The point is to not pollute.
> No, there is no misdirected anger, there are good reasons.
You may not think Bitcoin has a right to exist, but it's not up to you, and it's not going anywhere anytime soon. Love it or hate it, we're going to be living with it for likely a long, long time, so we might as well figure out a way to get a handle on the pollution it could cause.
Slightly off topic, but does anyone have any good resources on how alternative consensus protocols work, like proof of stake and proof of importance? I either see really simplistic explanations or ones that assume a lot of domain knowledge. I also recently saw a crypto coin that claims to be energy efficient, and I don’t quite understand how that’s possible without the possibility of a 50.1% attack.
Proof of stake is relatively simple. You agree to stake a minimum amount of tokens (decided on by the network) and you get to run a node and validate transactions. If you attest to a malicious block and other validators call you out on it, you get slashed (i.e. you lose some portion of your stake, if not all of it): https://ethereum.org/en/developers/docs/consensus-mechanisms...
One of the problems with it is that it's difficult to bootstrap a network on a proof-of-stake system with a fair distribution. You end up with the pre-sale participants (i.e. VCs or founders) having the majority of the tokens.
I think what Ethereum is doing is a decent approach. They started as Proof of Work, so they were able to bootstrap the network for 6 years and now ETH is widely distributed and no single holder owns more than 1% of ETH, for example. So now they can migrate to Proof of Stake and they won't suffer from the centralized allocation problem.
Nothing about Proof of Stake is relatively simple lol. Not the incentives, not the threat model, not the trust model, not the impact on the economics, not the implementation, not the scalable byzantine fault tolerate research.
There are plenty of people who understand it well, I'm not saying it's outside of reach of a normal human being. But understanding proof of stake is not a 30 minute journey. (nor is understanding proof of work for that matter)
>no single holder owns more than 1% of ETH, for example
Curious about this statement. Is this something that can be looked up online? I know wallets/transactions are entirely public so I guess its just a question of whether someone has made a tool to do this with ETH or other cryptos. How do other coins fair in the same regard? What's BTC distribution? LTC? Or any of their forks?
You're perhaps thinking of https://nano.org ? A brief description of it's Open Representative Voting (ORV) consensus mechanism:
"A consensus mechanism unique to Nano which involves accounts delegating their balance as voting weight to Representatives. The Representatives vote themselves on the validity of transactions published to the network using the voting weight delegated to them. These votes are shared with their directly connected peers and they also rebroadcast votes seen from Principal Representatives. Votes are tallied and once quorum is reached on a published block, it is considered confirmed by the network."
I'm a huge Nano fanboy since the RaiBlocks days. It definitely deserves more attention, since it's a pretty solid technology and was distributed pretty fairly.
But even in this crypto bull market, everybody seems to ignore it, except for the fanboys on Reddit.
When arguing with a Bitcoin-fanatic, try this line:
"Yeah I agree that cryptocurrencies are interesting, perhaps some day one will replace the USD. It will probably not be Bitcoin, but rather some other cryptocurrency“.
Watch how they recoil!
For they have been found out, they do not actually care for financial freedom, etc., all these noble crypto goals which can also be achieved with a cryptocurrency that is not Bitcoin.
All they care about is their speculative investment in Bitcoin in particular, so it won't help them much if another crypto becomes the world standard.
It‘s probably <1% that are true believers and >99% that have missed out on a few bull runs and are now hoping to get rich quickly.
Really, try this line some time and you will come to the same conclusion.
Until I left in like 2015 when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? You seem to be right about the 99% idea, though the remaining 1% is not a true believer (you can't seriously be interested in the tech and miss this little fact) but rather people blinded by the additional promise of getting rich.
I am sure most cryptocurrency fanatics understand that volatility is not a good thing for a currency and do not expect bitcoin to be the world standard for payments. Just because you won't end up paying your bills with bitcoin doesn't mean that bitcoin will be worthless.
Again, let‘s assume you are right, and Bitcoin is in fact 100% useful for doing X!
Are you happy? Sure you are, since being useful for X made the price soar!
...
Now let‘s pretend it wasn‘t Bitcoin, but some other cryptocoin that actually became the world's standard for X. Are you still excited? If not, you don't actually care about cryptocurrencies in general but want to make a quick buck with Bitcoin in particular.
Readit News
"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.
Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."
https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...
The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy) [edit or rather worded differently if each Visa transaction consumed as much power as a Bitcoin transaction], it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together. Obviously this is not how bitcoin scales because even if you did that it would still process 7 tps.
That is, however, proof that it is drastically less efficient on a per transaction basis even factoring in any and all possible externalities including the army and mining and the fed (lol). This is a proof by contradiction.
Anything else is a talking point and also trivially falsifiable. The US Army protects the US not the dollar and its budget would not be reduced in a Bitcoin powered world. Neither would its oil consumption because tanks don't fill up on bitcoins.
The ubiquity of the dollar specifically is also irrelevant as we're not comparing crypto to US Dollars but rather to well-managed fiat systems. Any and all. Not just one albeit dominant one.
This is obvious stuff if you think about it for a half second without trying to justify the unjustifiable.
It's fair to judge Bitcoin's energy use by its tps, but the above is not true. Energy use and tps are, as you then acknowledge, not related. It is possible to increase the number of tps by many multiples. The trade-off is centralization due to hardware requirements.
This is a complete fantasy - power consumption is driven by the desire to secure the network, it is not related to transaction volume.
There is an argument that power consumption would have to be significant because attacking the network has to be cost- prohibitive, and there are people working on POS and similar approaches.
Etherium is actually attempting to scale, their talks are very interesting .
Bitcoin could handle arbitrary scaling with little power-usage increase had it not been intentionally hamstrung by (for lack of a better term) "small-blockers". This is because the primary power usage of bitcoin (mining) does not scale linearly with transactions/block. The transactions to include are usually considered once by the miners who then make iterated attempts at solving by modifying the block nonce, not the included transactions.
Scaling Bitcoin's tps does not increase its energy usage. The tps and energy usage vary independently of each other. Bitcoin does not require any more energy usage to handle more tps than Visa. In fact, if we include off-chain transactions which are settled on-chain it already can.
> The US Army protects the US not the dollar
What is the value of the dollar if the United States ceases to remain a sovereign polity? The dollar is part of the United States.
It is difficult to justify why the US is providing militarily support to the Saudis without invoking oil and dollars. They are a pretty shady regime and not the sort of people the US wants to be supporting. And the Saudis don't seem to be trading with America as much as China [0, 1].
[0] https://tradingeconomics.com/saudi-arabia/exports-by-country
[1] https://tradingeconomics.com/saudi-arabia/imports-by-country
Iraq started pricing oil in euros in 1999:
https://www.theglobalist.com/iraq-the-dollar-and-the-euro-5/
Iran started pricing oil in yuan in 2012:
https://www.bbc.com/news/business-17988142
What's our geopolitical relationship with Iraq and Iran now?
Imagine the headlines if Russia did that in US. Yet they are sill 'allies'
No, but now that the US is a net petroleum exporter, puling the plug on the whole Middle East is a real possibility.
Somehow I doubt BTC would lower military spending.
This isn't true. Internationally the thing that backs the dollar is the U.S. economy. People know they can spend dollars to get anything they need. Domestically what drives the dollar is that it's the only way you can pay taxes.
I suppose you could say that oil is used to defend the U.S. economy but that's a stretch.
>This isn't true.
Basic economics and the law of supply and demand says that it is true.
>when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa.
https://www.investopedia.com/ask/answers/033115/how-does-law...
BTC runs on fiat money.
But it's also unusual.
do you have a good link that explains how this all works and how these different components interact?
Something shorter: https://gendal.me/2013/11/24/a-simple-explanation-of-how-mon...
"Bitcoin isn't a replacement for Visa or for your checking account. It's a store of value. It's not for day-to-day purchases."
Bitcoin fans when you complain that Bitcoin is massively wasteful:
"If you compare it to every cost that can be attributed to the existing financial system as a whole, including military spending, it's cheap."
I might be in a bubble, but it seems my intake of bitcoin information is balanced enough that most things are not this polarized.
You can't do "non-final credit transactions" on Bitcoin.
You can't take out a mortgage.
You can't manage investments.
You can't pay for groceries without waiting a half an hour.
You can't buy a $1.25 pack of gum.
Bitcoin is complete and self-contained because it is inextensible and feature-poor. It cannot solve the problems the banking system solves. Its solution is the classic "you didn't need it anyway".
And then Bitcoin fans realize that yes, they did in fact need those things after all. We can watch them reinventing the entire modern banking system before our very eyes. The main differences are that they run everything on the world's worst database, they insist on calling their banks "exchanges", and that they think it's OK to have all their money stolen every so often.
(Bitcoin also lacks the ability to prevent money laundering or to enforce judgments. I'd consider that a bug. Other people might consider it a feature. In either case, it means Bitcoin is solving a much easier problem than normal banks.)
The other mad comparison is that Bitcoin is globally distributed. If Argentina was globally distributed it would eat far more energy than Bitcoin.
What this really means is that Bitcoin is out of reach of a nation state attack.
For the local store, there’s always Nano currency.
That's 350km/220 miles of range per charge. In total 1050km or 660 miles of driving.
So basically if you want to transfer money and the recipient is closer than 660 miles from you it's more efficient to just get a bunch of bills, drive there with a Tesla rather than send a Bitcoin transaction. Or alternatively 330 miles roundtrip. For each single transaction.
It is hilariously inefficient system. It is literally better to drive a full car and give things physically than use Bitcoin.
A small addenum: Visa apparently uses 146kWh for 100000 transactions. Coming at 1.46wH per transaction. That can drive a Tesla for 9 meters (0.4 seconds of driving at 80km/h) or alternatively keep a nice led lamp lit for an hour. And that includes everything the company does, not just the actual transaction but the upkeep of their offices etc divided by the amount of transactions they perform per year.
EDIT:
Apparently on 2020 it was 741kWh per transaction in practice and/or I made a tiny error in my calculation. Either way it's even better!
https://www.statista.com/statistics/881541/bitcoin-energy-co...
That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip.
The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
(Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)
> Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
Is this really true? I mean, what do large international exchanges use now? A majority of them certainly don't currently use bitcoin. Many large banks have a significant international presence, and most parties interested in exchanging can find a bank they both trust.
This is excessively hypothetical.
The more obvious benefit is that a Tesla can't drive 3000 miles in 15 minutes. But a VISA transaction is faster and uses 1/100,000th the electricity. And neither are "anonymous".
Aren't we losing the assumed federation in this system? A country whose banking system is under strain (Nigeria) or has collapsed (Zimbabwe) will have a bad-faith government acting to constrain the free-flow of money (because they want a transaction-fee cut).
Wouldn't that still lead to me wanting to go buy my groceries with BTC? Do we create a localised version/model where people can transact with each other without touching the blockchain (because of the low throughput), or how do we address this use-case; as it seems to be the most attractive one?
Has the energy requirement peaked, or is it still going to increase? Linearly or not?
I don't. You don't. Nobody does. In the one-off case that you do, we can special-case it, instead of blowing energy on every single transaction as though everyone did.
You’re arguing we should be zipping around town in a car with a W12 engine in case somebody wants to drag race an airplane.
But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems.
But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin.
If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.
No energy "goes into a Bitcoin transaction". A block with 0 transactions and a block with 100 transactions will both take the same amount of energy to generate.
This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
People have this wrong idea that more transactions imply more energy consumption. That's just not true.
The calculations are based on the maximum throughput of the Bitcoin protocol, which is a fixed value due to the 10-minute block time and the limited block size.
The average number of transactions per block is always around 2K: https://www.blockchain.com/charts/n-transactions-per-block
> The proof-of-work is completely independent of the number of transactions.
Right, which makes this whole thing even more ridiculous. If number of transactions went to zero we'd still have to burn 120+ TWh per year just to keep the system going.
The 165kWh per transaction calculation is the best case scenario assuming every block is filled to the maximum with transactions.
There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
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This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
I’m not sure that any of this is meaningful in any way.
They include air travel and whatnot. Basically the whole energy consumption of the company. Also including building stuff etc.
Visa doesn't share that in order to poke at Bitcoin. They share that because enviromentalism is hip nowadays. So they want to tell how they're improving their CO2 emissions as a company.
BTC is not magic dude, it has externalities too.
If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
It's 2021. Carrying around duffel bags of paper bills received from a human bank teller is not how anyone manages their cash or transactions.
Bitcoin is not the only way to digitally transact. It's not even a good way. In practice, it's just about the worst way to handle transactions unless you have no other options.
Just like the mining rigs that produce bitcoin. It seems like you're conflating fixed costs (of plant and machinery) with marginal costs (of exchanging some amount of BTC vs fiat).
First, let's look at the actual transacted value: last 24h ~90 billion USD.
Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well.
One estimate of the current market cap of Bitcoin is ~800 billion USD.
Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions.
Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country?
If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.
Protecting the value of the US dollar requires a huge economy with politics and military power.
Block production, on the other hand, takes as much energy as the market will bear.
No information on actual transactions performed. But in practice the lightning network is tiny and stagnant.
If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.
This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units.
It varies but over the past couple months a Bitcoin transaction has cost from $7-$20.
source: https://ycharts.com/indicators/bitcoin_average_transaction_f...
That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-)
It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient.
Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.
However, the upside of driving your Tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.
They would argue that a chunk of the energy is renewable -- so that makes it better.
There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
I think you mean "morally reprehensible"
The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear.
Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.
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off chain operations don't need to spend a lot of energy to validate transactions.
AFAIK globally the banking system estimated energy consumption amounts to ~100 terrawatt of power annually
that amount includes ATMs, servers and branch offices
EDIT: I forgot how touchy people on BC threads could be.
The data on energy consumption of banking system was cited from a post of a BC advocate
Statista has published data for transaction costs of 2020
https://www.statista.com/statistics/881541/bitcoin-energy-co...
What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.
Funny, indeed.
It's also worth to note that nobody really knows how many kW miners really burn. All the figures are more or less educated guesses from the efficiency of equipment sold publicly. If someone has a more efficient method they probably won't share it.
But nobody accused Bitcoin of being efficient, ever. That's what almost everyone notices when reading about it first time.
Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
Total energy required to mine one block / # transactions per block.
Bitcoin is six orders of magnitude less efficient than Visa. Six.
And it's getting worse every day.
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Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that.
All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.
Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on.
Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.
I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn.
People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin.
Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).
Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim.
In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable.
It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.
Edit: 39% of energy used is renewable, not really sure how that doesn't matter.
[1] https://www.finextra.com/newsarticle/36672/renewable-energy-....
>However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
With these issues in addition to the high power consumption, how will Bitcoin become a usable currency?
Sending simple wires in the US takes hours.
Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
Let's not even talk about how long it would take to move gold from one part of the world to another cf. https://www.bloomberg.com/news/articles/2020-04-30/iran-is-h...
You can buy or send bitcoin in seconds if you're not trying to do it on-chain, the same way you can do it with stocks and other assets. But definitive settlement of a bitcoin transaction is faster than pretty much any other asset.
What? No. It happens instantly at a protocol level. Practically, about thirty minutes. Most people don’t send and receive wires and so don’t choose bank accounts that prioritise them.
Practically speaking, Venmo and Apple Pay and Zelle are frictionless and instantaneous and more widely adopted than Bitcoin. For heavy users of international transfers, there are usually better solutions.
There are absolutely edge cases, and so a legitimate use case for a cryptocurrency there, but that’s not enough use to sustain Bitcoin’s value. To say nothing of the transactional motivation having been long since abandoned when inconvenient for the current store of value one.
You would need to do the same paperwork with bitcoin.
I have UK and French bank accounts, transfers between them take seconds. Transfers from the French account to any other Eurozone account take seconds.
Joke is on you, though. Even Brazil now has instant wires (zero fees).
How much time would it take to convert, transfer to a bank account AND withdraw that same amount of money from Bitcoin to plain FIAT?
While I agree with him that Bitcoin is a terrible currency, I think the "store of value" thing is nonsense as well. Stores of value need to have relatively stable value. Bitcoin is hugely volatile. That's great for speculation, but nobody with any sense would use it as the equivalent of a savings account.
“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.” - Hal Finney (2010)
It won't for small transactions. Buying a car or a house with BTC could still be viable in the future.
Especially for large transactions internationally, where my bank asks me+the other party to fees like $30 and it takes 3 days if everything goes well.
In comparison with that, BTC for those years, gave me on average 40 minutes and $1 fee.
This is thirty times better than what my bank provides.
It won't, it's just a speculative asset.
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Wake up, this question was reasonable in 2010, maybe 2015. :) Today no serious person is still thinking it would be usable :)
This is pretty much the way money worked in the 19th century, just with gold instead of BTC. Nobody physically carried or transferred gold to buy a beer. They just used bank notes that were backed by a trusted intermediary holding the physical asset. It might make sense for a bank, or even a very wealthy person, to pay the cost of physically transferring the hard asset. But most just used IOUs that were backed by the underlying hard asset.
[2] - https://1ml.com/statistics
Nakamoto instilled within the Block's raw data: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
IMO a niche use though.
Not really sure what’s point is for Tesla but my guess its speculative for them, with an attempt to get some additional value on cash they are starting to swim in now...
The transaction cost depends on the size of the transaction and the congestion in the mempool, the cost can be set by any sender depending on the urgency of the transaction.
I don't think these are widely used in practice yet, but I might be wrong.
Also, it's still faster and cheaper than an international SWIFT.
Small transactions can be done on sidechains and other chains.
Also while it is decentralized, the reality of how it is used is very much not. The typical use case is buying and selling it via an exchange, not much else. Depending on where you live you have to reveal more information about yourself to "just buy bitcoin" than you have to when opening a bank account.
This isn't so different from any network.
In fact the original design for Bitcoin assumed larger blocks in the future, so it is perhaps a more accurate description to say that Bitcoin Cash is the "original" Bitcoin, and Bitcoin Core is a fork with an altered (small blocks) design.
Bitcoin will not function as a currency due to it's high volatility. For a more usable currency look at DAI, USDT, and USDC which are stable coins pegged to the dollar. DAI is collateralized with on chain assets where USDT and USDC are collateralized with real life assets which are mainly regular USD.
On the surface it seems the value of Bitcoin is directly tied to its energy consumption and thus environmental harm.
I get that Bitcoin itself is decentralised and cannot be banned outright. But could it be neutered in such a way that renders it more and more worth / useless?
If the government is allowed to dictate how my car must be built in order to make it more environmentally friendly, I don't see why it shouldn't be able to dictate how my blockchain must be built in order to make it environmentally sustainable.
This wouldn't mean banning blockchain altogether. It would entail banning only those forms of distributed consensus that are not energy efficient.
Proof of work (POW) is by definition inefficient from an energy perspective. You have to prove to have spent a lot of resources to be trusted. There's no excuse for this from an environment point of view, even if, admittedly, from a technological perspective is quite a marvel.
I wouldn't be surprised to know that those defending bitcoin on this front are biased because they hold some quantity of crypto based on POW.
So save your regulations for the power plants and let the market figure out how to spend the electricity. If you wouldn't be in favor of the government regulating how much money can be spent on beef, or how much money can be spent on TVs, you shouldn't be in favor of the government regulating how much can be spent on Bitcoin's electricity bills.
There's no need for mental gymnastics of blaming energy. Just one powerful guy says "no" and poof, its illegal. Now laws or logic required.
There was an exception for collector coins and jewelry
Is there no way to slim down the resource requirements to cut electrical use? (without breaking everything Bitcoin of course)
-
[1] He played a major role in developing leaded gasoline (Tetraethyllead) and some of the first chlorofluorocarbons (CFCs)
[2] Environmental historian J. R. McNeill opined that Midgley "had more impact on the atmosphere than any other single organism in Earth's history"
https://en.wikipedia.org/wiki/Thomas_Midgley_Jr.#Legacy
To put it bluntly (not meant to sound blunt, I just can't think of a better example without reiterating a technical explanation of how bitcoin works), that's like asking if people living in the Sahara can't simply drink less water to solve the unavailability of fresh water. And even that's a bad comparison because the human body actually can actually make due with less water. Perhaps it's like an electric heater (not heat pump, just a plain old heater), if you know how these things work: if you make it use fewer Watts, you get less heat, because there is no "waste heat" because heat is what you want in the first place. So fewer Watts is always less heat no matter how you spin it.
Similarly, putting more power into Bitcoin makes you earn more money (as a miner). If we make the hashing algorithm more efficient, then the hash rate will just raise proportionally to meet the new supply (supply being the block reward + transaction fees, both in bitcoin (or whatever proof-of-work currency you're mining) that you receive when finding a block as a miner).
No, the alternative is moving away from proof of work. I've been hearing stuff about proof of stake for years now, and afaik there are some currencies already using it. Not sure why Bitcoin doesn't switch to it, I'm not keeping up. Lost interest back when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? I guess people just don't give a fuck about their non-direct impact and see it as a way to get rich quick.
If I wanted to neutralize it, I would do something like Bait&Switch. Support banks running own cryptos until point where general public will see no difference between BTC and private cryptocurrencies and leave BTC users with their wallets and even when it will remain legal and everything, the "crypto revolution" would be taken by usual suspects (the establishment).
However, I wouldn't like to see it. I prefer world currency to be run by nerds over bankers and politicians.
The fact that Bitcoin now uses half the power of Youtube (from a terribly unreliable estimate) should not be such a distraction from the real problem IMHO.
Terribly unreliable estimate:
https://www.google.com/search?q=what+is+the+total+power+cons...
The answer: they might try, but good luck with that.
It's not as simple as calling out the top energy users and saying we should start there.
Ah yes, the old trope that people use the US dollar because they are forced to.
Meanwhile, back in reality, people around the world are desperate to get their hands on USD for commerce, because it's easily transacted, accepted and valued anywhere. You know, kinda like Bitcoin purports to be, but way more common.
The whole point of Bitcoin is resistance to adversity. Bitcoin value is directly correlated to its resistance against governments/agencies/bankers/regulation or anything else that wants to shut it down. If you can wrap your head around that, you'll understand why making bitcoin more eco-friendly from a centralized government or organization will suddenly make it less valuable.
I sincerely wish more people had your ability for introspection!
FWIW here is my list of 'if a service were a country':
Google Guatemala
Bitcoin Argentina
Youtube South Africa (unreliable data)
[Edit] whoops - no references
https://www.google.com/search?q=what+is+the+total+power+cons...
https://www.google.com/search?q=what+is+the+total+power+cons...
https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
Both are basically unintelligible, but at least the country one is something that one can _imagine_ from their experience, if wrongly (my house consumption:country consumption = 1:population).
I bet few people on hackernews itself have any clue what the energy consumption of google might be, and have no way of relating to it.
First, the only thing that's energy-intensive about Bitcoin is block production. Making transactions, relaying them, validating them and storing them have negligible energy cost.
Second, nothing about the Bitcoin protocol requires block production to use fossil fuels. Just like with every other energy-intensive industry, the problem isn't the industry. The problem is the fossil fuel use.
Therefore, if you want to get mad about the high energy use of block production leading to environmental pollution, you should direct that anger at the appropriate target: miners who use fossil fuels to mine.
How do we fix this? The same way we fixed it in every other energy-intensive industry: through taxes and regulation. Let's get some laws passed to require miners in your area to use only renewable energy, and to require exchanges to impose a carbon tax on coins whose miners rely on fossil fuels to mine. Properly applied, these laws would make fossil-fuel mining unprofitable, which is exactly what we want.
Bitcoin and PoW aren't going anywhere at this point. So let's make sure it's continued existence doesn't make the world worse. Sound good?
Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Never say never. Humanity has successfully banned itself from using CFCs in refrigerants, for example. I also agree that regulating pollution from PoW specifically isn't as high of a priority as, say, regulating pollution from coal-fired power plants or concrete production. But it's something that could, in theory, be regulated if we find the will to do so. And if we don't believe that we can regulate CO2 production, then we must also believe that humanity is doomed anyway, and thus PoW pollution ought to be beneath our concern.
> We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Why stop there? Why not impose a global carbon tax on all goods and services known to produce pollution? Then it doesn't matter what the goods are or how the goods are procured; what matters is that CO2 concentration stays steady or goes down.
My original point was to channel focus on what matters -- energy-intensive industries are in need of pollution regulation. But as you point out here, this need isn't specific to PoW.
When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
No, there is no misdirected anger, there are good reasons.
Other countries can sanction them until they figure out how to apply such regulations. This isn't unique to PoW; it happens for other such dangerous pollutants as well (like CFC emissions).
> When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
Energy usage and product/market fit are both irrelevant to this discussion. What is important is the pollution PoW creates. If we can get a global handle on that (along with basically every other energy-intense industry), then it hardly matters that the energy is used for PoW. The point is to not pollute.
> No, there is no misdirected anger, there are good reasons.
You may not think Bitcoin has a right to exist, but it's not up to you, and it's not going anywhere anytime soon. Love it or hate it, we're going to be living with it for likely a long, long time, so we might as well figure out a way to get a handle on the pollution it could cause.
One of the problems with it is that it's difficult to bootstrap a network on a proof-of-stake system with a fair distribution. You end up with the pre-sale participants (i.e. VCs or founders) having the majority of the tokens.
I think what Ethereum is doing is a decent approach. They started as Proof of Work, so they were able to bootstrap the network for 6 years and now ETH is widely distributed and no single holder owns more than 1% of ETH, for example. So now they can migrate to Proof of Stake and they won't suffer from the centralized allocation problem.
There are plenty of people who understand it well, I'm not saying it's outside of reach of a normal human being. But understanding proof of stake is not a 30 minute journey. (nor is understanding proof of work for that matter)
Curious about this statement. Is this something that can be looked up online? I know wallets/transactions are entirely public so I guess its just a question of whether someone has made a tool to do this with ETH or other cryptos. How do other coins fair in the same regard? What's BTC distribution? LTC? Or any of their forks?
You mean no single wallet?
"A consensus mechanism unique to Nano which involves accounts delegating their balance as voting weight to Representatives. The Representatives vote themselves on the validity of transactions published to the network using the voting weight delegated to them. These votes are shared with their directly connected peers and they also rebroadcast votes seen from Principal Representatives. Votes are tallied and once quorum is reached on a published block, it is considered confirmed by the network."
Suggested read: https://docs.nano.org/protocol-design/orv-consensus/
But even in this crypto bull market, everybody seems to ignore it, except for the fanboys on Reddit.
https://ethereum.org/en/developers/docs/consensus-mechanisms...
"Yeah I agree that cryptocurrencies are interesting, perhaps some day one will replace the USD. It will probably not be Bitcoin, but rather some other cryptocurrency“.
Watch how they recoil!
For they have been found out, they do not actually care for financial freedom, etc., all these noble crypto goals which can also be achieved with a cryptocurrency that is not Bitcoin.
All they care about is their speculative investment in Bitcoin in particular, so it won't help them much if another crypto becomes the world standard.
It‘s probably <1% that are true believers and >99% that have missed out on a few bull runs and are now hoping to get rich quickly.
Really, try this line some time and you will come to the same conclusion.
Yay, I was the 1%!
Until I left in like 2015 when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? You seem to be right about the 99% idea, though the remaining 1% is not a true believer (you can't seriously be interested in the tech and miss this little fact) but rather people blinded by the additional promise of getting rich.
Are you happy? Sure you are, since being useful for X made the price soar!
...
Now let‘s pretend it wasn‘t Bitcoin, but some other cryptocoin that actually became the world's standard for X. Are you still excited? If not, you don't actually care about cryptocurrencies in general but want to make a quick buck with Bitcoin in particular.
This is the point I am trying to make.