Energy of a small city is still not big enough to protect from a government takeover. Also what matters more is the cost of the mining equipment (which is more than 1.5 years of electricity if the equipment is refreshed every 1.5 years).
Anyways if Intel can make North Korea trust its hardware, I might take a look at their project.
Weird thought... (I do not know if thi already exists, as I dont care about crytocurrency - only because I dont have the cycles, currently)
What if there was a crytocoin that was just a centrally mined 'thing' - and the value of the coin was what others were willing to bid on the next coin vs volume of those willing....
Isnt that literally how gold currently works?
So rather than consume billions of watts on bitcoin - just make digital gold?
Could you clarify how you are making the comparison?
I understand you are talking about the energy cost and other environmental impacts of gold mining, I just don't see how you are determining the present day value of the utility that each thing provides to humanity.
But at least gold isn't designed to make you waste as much energy as you can to secure its value. Instead, Bitcoin (and every other proof of work cryptocurrency) is based exactly on this principle.
Precisely. Bitcoin is, by design, a Red Queen's race -- miners are incentivised to spend more energy on mining, but the total reward available to miners is fixed.
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else—if you run very fast for a long time, as we've been doing."
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
Date nits: The US dollar stopped being based on gold in 1971 when conversions from the dollar to gold were stopped by Nixon. The formal repeal of Bretton Woods then occurred in 1976, and the rest of the industrialized world transitioned to fiat-based currencies around that time as well.
Energy used to run the mint is incidental, so lower energy usage can be an attainable target if it's prioritized. The energy wasted from Bitcoin, on the other hand, is a feature and cannot be reduced without reducing Bitcoin's core functionality.
But in Bitcoin's case it's the same, even the article mentions that "doing today’s calculations would “consume way more power than is generated on the entire planet” if it were done using the CPUs available when Bitcoin launched in 2009.". Energy used when mining Bitcoin could also be considered incidental, the goal is to calculate hashes.
No it wouldn't because increasing energy efficiency of the bitcoin miners just means that the difficulty will rise until you're back to the same power consumption. The power consumption depends on the block reward and transaction fees.
>Energy used when mining Bitcoin could also be considered incidental, the goal is to calculate hashes.
The goal isn't to calculate hashes. That is the incidental part. The goal is to have a randomly chosen node create one block every X seconds.
I agree. These out of context questions really bother me, as I have no frame of reference to relate the quantity to to know if it's excessive or not. It just seems like a pure ply for attention. Here are some questions that would make for a better answer:
How much energy do household TV's use?
How much energy does the sports industry use?
How much energy does it take to run our traffic system?
How much energy does the gold mining industry use?
How much energy does it take to run the US Stock Exchange?
At least the article should put up a fair power comparison...
And for all the question there is the same, simple answer - which 'deadmetheny provided in a sibling comment. In all those examples, energy use is incidental. It's an upkeep you want to reduce, and there's money to be made reducing it. In Bitcoin, however, wasting energy is a feature, an integral part of the system.
My best hope is that there will be some kind of OPEC cartel that agrees to limit production. The members could have unused reserves of mining hardware that ramps up when somebody violates the agreement.
> "My best hope is that there will be some kind of OPEC cartel that agrees to limit production."
Those limits were baked into the design from the start. In the current design there are only 21 million Bitcoins that can be mined, and we're approximately 80% of the way to that target.
Also, Bitcoin is designed to be harder to come by as time goes on. The number of new coins issued diminishes over time. See the Supply Growth section here:
"12.5 bitcoins per block (approximately every ten minutes) until mid 2020, and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued."
There will come a time when Bitcoin mining is no longer profitable. If the scaling problems with the transactions are solved in time, we may see more people trading in Satoshis (fractions of a Bitcoin). The scaling problems are pretty hard to solve though, it's probably going to take a hard fork to make Bitcoin a true alternative to traditional government-backed currencies.
Each miner has an incentive to outcompete other miners. A mining cartel can agree to keep difficulty and hashrate low. It is also comparable to a truce in a military conflict.
> "A mining cartel can agree to keep difficulty and hashrate low."
Won't work. If a mining cartel agrees to keep difficulty and hashrate low, they're just making it easier for those outside the cartel to mine more Bitcoin.
In one comment you're suggesting a cartel should keep the hashing rate low, in another comment you're suggesting the same cartel should increase the hashing rate to keep out the competition. What are you really proposing? Keeping it low until any form of competition shows up? That competition is always likely to be a factor for as long as Bitcoin mining is popular.
You're not listening. I'm suggesting it'll never work for Bitcoin as the available competition is ever present. A cartel gains nothing by mining at a slower rate.
Bitcoin Cash's "emergency difficulty adjustment" has seen a variation on this (miner's hold production, let the difficulty drop to a highly profitable level, and then turn the miners back on). It requires a high level of centralization however.
How much power is drawn by the "ever-expanding" racks of servers powering other stores of value? How many servers are running in the banking and financial industries just to enable non pseudonymous transactions of value?
This article is sensationalist nonsense. I would argue it is a positive point that a globally tradeable cryptocurrency with billions in market cap only requires the energy of a "small city."
> a globally tradeable cryptocurrency with billions in market cap only requires the energy of a "small city."
It only sounds good because we haven't really considered the scale here, so let's scale that up a bit.
What if even 1% of non cash financial transactions in the US were handled with BTC? For 2015, that would have worked out to about $1.8T.
How big would BTC need to be to handle that? Well, it looks like last year it's estimated to have done a little over $100B, so it'd have to scale somewhere around 15-20x to even cover 1% of one country's transactions...
You may have a point, except you haven't mentioned how many city's worth of power non-btc transactions currently require, not to mention the additional inneficiency of hundreds of thousands of staff which could possibly be reduced in number because of the distributed ledger.
I really don't think things are as clear cut as the article implies, but I dont have numbers for the amount of energy consumed by modern electronic value transaction and storage.
Edit: also, "city's worth" as a measure of electricity, as in the article, is a terrible choice because it immediately biases the reader and does not convey much useful information. My GPU maxes at 300W; the article provides no way of conversion. Never mind that a small city may be a suburb using one hundredth of the power used by a small city center full of servers and a handful of skyscrapers.
Isn't an Energy-Free-Bitcoin or Cryptocurrency having your lunch and eating it too? If you are going to have a cryptocurrency that consumes little energy (or energy consumption doesn't scale with transactional value), how do you secure the network?
Well, it's no closer to centralization than proof of work is. If one, or more than one party working together control >50% of the staked coins you are left with the same result as one party controlling 50% of the hashing power.
I think the assumption is that the more Ethereum you hold, the more incentive you have to keep Ethereum valuable and thus not attack the currency or its transactions.
It depends on whether you consider distributed consensus to be fundamental to cyber coins or not.
For instance, a cyber coin could publish a hash of their block chain in the New York Times everyday. A sound implementation would secure the chain up to that point.
But who is it that picks the hash to publish into the NYT? You're putting that picker in control of the whole network; it's not decentralized at all.
If you're going to have a trusted authority involved, then having a globally-synchronized blockchain is unnecessary. Users could just check with the trusted authority about whether a transaction is valid (not a double-spend), or even just have the trusted authority maintain balances for them.
The central authority would still choose what ended up in the ledger but they would not be able to rewrite history because of the publicized hashes locking it into place.
I meant to sketch out a centralized way of finalizing a public ledger, so yeah, it isn't decentralized.
The closest possibility would be proof of stake[0] instead of the current system of proof of work.
I'm massively simplifying the idea, but proof of stake delivers new coins (either at predetermined intervals or all at once during the ICO) out in a pseudo-random way with some weight factors. Its almost like buying lottery tickets.
https://en.wikipedia.org/wiki/Proof-of-stake
I'm not sure I understand the issue. I'm betting that the amount of energy used to power online games for Play Station Online is orders of magnitude worse than for bitcoin with arguably less benifit to society. What am I missing?
is not bitcoin consuming energy's is people's greed, china or whatever can ban mining same of US can ban industrial mining, bitcoin won't be affected a bit, I would be happy to be able to mine it on my laptop.
The most striking statistic was that bitcoin is 5000 times more energy intensive than a VISA transaction.
Maybe my naive interpretation of what VISA actually does is showing here, but I don't see how it's a valid comparison. Bitcoin doesn't simply replace credit card transactions, it replaces an entire banking system. Who confirms VISA transactions? How can you send and receive transactions through VISA? What about all the facilities that are supporting that transaction?
I think it's easier to trace the cost of a bitcoin transaction, which bears the entire cost succinctly, compared to an institution like VISA, which has its tentacles in a ton of energy costing faculties.
The real question is what the hell VISA is doing that one of their transactions requires even a tiny fraction of the work that goes into the mass hashing of Bitcoin.
VISA has to maintain its data centers. They're working on becoming more energy efficient, but it's a long and involved process. [0] On top of that, there's also the energy required to run the PoS terminals, I'm not sure if that was factored into the equation though because that burden is shifted to vendors.
Bitcoin isn't a payment processor. It can't handle the tiniest fraction of Visa's transaction volume natively.
Of course you can work around this by having third party payment processors that sit between customers and the raw blockchain. But because Visa already does much of that, you need to include the cost of those as well, in order to get an apples-to-apples comparison.
However the transaction throughput doesn't depend on the hashrate. The network could for example handle 10x or 100x the number of transaction with the same hashrate as today.
It's bitcoin. It uses bitcoin, it's powered by bitcoin, it's bitcoin. The sidechain distinction isn't a helpful one if people end up using it by default.
Yes, it's uncertain it will work, but the point is that it's not inherently obvious that bitcoin can't accommodate Visa's transaction volume. The above comment made it seem like that's a given.
It uses Bitcoin but it is not Bitcoin. It has different security considerations, usage and it's fundamentally different. That it settles to Bitcoin does not make it become Bitcoin. Beef isn't a cow even though it uses (parts of) a cow.
The second part I agree with. According to Satoshi:
> 1. It's not Bitcoin, it's a sidechain utilizing Bitcoin
I think you're mixing lightning up with something else; lightning is not a sidechain[0]. In lightning, at every step participants create standard Bitcoin transactions that can be finalized and settled at any time by just publicly broadcasting them on the Bitcoin network. The participants hold off on broadcasting the transactions until they're done with the payment channel so that they save on transaction fees (and avoid bloating the blockchain). They're immune to counterparty risk like normal transactions are, and it doesn't rely on any central or trusted authorities.
Maybe sidechain isn't the best term but I don't know a better one.
You're saying it yourself, it creates standard Bitcoin transactions (not lightning transactions). They hold off on broadcasting them, but that may mean if they both go offline they loose their state. It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
It still has not been shown that LN can even work in a decentralized fashion.
It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
>You're saying it yourself, it creates standard Bitcoin transactions (not lightning transactions). They hold off on broadcasting them, but that may mean if they both go offline they loose their state.
Yeah, the guarantees aren't exactly the same. Personally I expect that the risks will be for the most part smoothed over by things like lightning software that automatically syncs the state of payment channels between all of your devices for redundancy.
>It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
When a payment channel is settled by any of the participants, it's normal Bitcoin that comes out.
>It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
I really think that's splitting hairs. If it becomes the standard way to send Bitcoin around, such that nearly everyone talking about making or receiving payments in Bitcoin is using Lightning, and if it does end up working very well in practice with many transactions per second, then I think it's more than fair to argue against statements like "Bitcoin can't scale up to VISA volume". Are you insisting on always explicitly referring to them as a combination ("Bitcoin/Lightning")? Kind of reminds me of the losing battle fought by some to correct all references to Linux as "GNU/Linux"...
But to open a channel you do have to have a transaction on the blockchain with a smart contract right? So there's now two transactions for every channel opened which means unless channels are reused for multiple transactions between two parties there's no net benefit right?
Right, the benefit comes from reusing opened payment channels. A key thing to know is that payment channels can be used transitively: if Alice and Bob have an open channel, and Bob and Charlie also have an open channel, then Alice can send a payment through the connections to Charlie without any risk of Bob stealing the money. If many people keep open connections to a couple people each, then it becomes ridiculously likely that a path could be found through already-open payment channels between any two participants.
But also each channel has to have the total amount being sent precommited in the initial channel opening so in your example if Alice want's to send Charlie 1 BTC the balance in both the A-B and B-C channels has to be at least 1 BTC. Which kind of demands some pretty central clearing hubs in the lightning network that will need a large amount of BTC locked into these channels.
Right, don't think of Bitcoin as digital dollars. Bitcoin is more like digital gold. Use it to hedge the digital markets, but don't use it to buy coffee. Granted, some coffee shops will take your "digital gold" as they would take a sliver of actual gold, but logistically it doesn't make sense.
>Of course you can work around this by having third party payment processors that sit between customers and the raw blockchain.
There are decentralized solutions that don't involve trusted 3rd party payment processors. Payment channels and the lightning network will allow many transactions to happen between users that eventually and safely get settled onto the blockchain as only a few transactions containing the net transfer. These systems are decentralized without relying on trusted 3rd party payment processors, and the users are safe from counterparty risk like they are with normal transactions. (I know another reply mentioned Lightning. I just wanted to do more explanation and emphasis on parts.)
That doesn’t include the cost of visa actually processing the transaction though. It’s including governance, maintenance, arbitration, etc. Bitcoin does much more than just move cash from a to b.
VISA is a credit agency. As in, they confirm the money is paid, nobody else. There's no other transaction that happens as part of paying with VISA other than the monthly bill.
But it should be glaringly obvious that Bitcoin is by far the most expensive way to do financial transactions. That shouldn't even be contentious. It's literally built on the idea of doing computationally-expensive busywork.
Whether or not that busywork is a waste of power or a necessary cost then depends on your social beliefs, but it's definitely going to be vastly more power-expensive than any of the existing systems.
> There's no other transaction that happens as part of paying with VISA other than the monthly bill.
I respectfully disagree. There are many many transactions that happen behind the scenes when you're paying with a Visa card. All transactions go through a merchant bank before ever being sent to Visa, and they may even go through a second third party. Additionally there's a number of times in which clearing and settlement occurs, both on the merchant side and on the "monthly bill" part that you discounted as irrelevant.
This all takes energy, the POS takes energy, the banks all require energy to process transactions, it takes energy to send out statements, to pay your bill. I have no clue if this entire process takes more energy than Bitcoin or not, but I can guarantee the cost of doing a transaction through Visa isn't glaringly obvious.
The number calculated for VISA's power/transaction was arrived at by taking the entire power consumption of VISA's data-centers and dividing by the number of transactions.
Far from a perfect number and you're correct it won't cover payment processors, but it's also picking up non-trivial amounts of other stuff since those data centers don't do exclusively payment processing.
But either way you wouldn't count the POS. The POS is still there consuming the same amount of power if you pay with BTC, VISA, or cash.
Another problem with those numbers is that its a two sided transaction, and Visa data centers only account for one side of the transaction. It also doesn't account for any clearing houses external to Visa.
A lot of the energy that powers Bitcoin would otherwise go unused though, e.g. energy from very remote hydroelectric dams in Siberia, China, and Canada.
I'm guessing many of the miners are located in regions like Washington State or Quebec with low cost relatively-green hydroelectric power and the power use doesn't correspond to the environmental impact of an average small city (except obviously one located where the miners are).
Actually lots of mining is done in China using cheap electricity that comes from a glut of hydro-electric power created by government infrastructure spending.
But that electricity is cheaply available. We could stop bitcoin's use of electricity overnight, if electricity began to cost more than the expected return on investment. And this will inevitably happen anyway, since bitcoins only get harder to mine over time. This is a temporary problem.
Honestly it seems more like "bitcoin is a way to launder stolen electricity" rather than "oh noes, if people keep mining, eventually they'll have a huge impact on global energy consumption"
I hate wasteful software. A city’s worth of energy and a max throughout of 7 transactions per second[1]. When everybody’s done trying to get rich quick we can talk about improvements.
The mistake is thinking that the energy used from mining is a direct result from the number of transactions being processed.
The reality is that the two are not coupled together. Larger block sizes are obviously possible as demonstrated by bitcoin cash (and by anyone with common sense who hasn't been taken in the censorship on /r/bitcoin). More transaction throughput doesn't affect how much hash power is needed, therefore the main limiting factor is mostly just how many transactions are actually being made.
You don't make billion movies. You probably make billion transactions though; when these are energy-demanding, you are burning precious resources for very little value. If all of humanity switched to bitcoin, imagine we spent 50% of energy production to run mining and blockchain verification. It's a nice proof of concept, we need something different though to survive.
That's not how bitcoin works. The mining power being spent now is not tied to the number of transactions. The price is what is dictating all the mining that is currently being done. More transaction throughput requires almost nothing more from the miners than they are doing now.
This is known and well understood. Bitcoin's implementation consumes lots of energy.
There have been however lots of developments in the blockchain space, especially as it refers to different proof systems and algorithms. The alt-coins in general, though mostly badly viewed due to the often poor and sleazy behaviours, are a playing ground for exactly this kind of problem.
I won't give specific names because I'm not an advocate for any one in particular, but there are several other coins and implementations that try to do away with the energy consumption and improve scaling. Some have even gotten to the point of eliminating mining and transaction fees altogether (yup, zero fees: transfer value anywhere in the world, instantly, and pay absolutely nothing for doing so).
A quick google search should point you in the right direction if it sounds interesting.
The alternatives proposed in the article are also known as Proof of Luck and Proof of Time. Both require a trusted execution environment, which is what Intel's SGX enabled processors provide.
Perhaps Intel can find new blockchain applications for their technology, but it is unlikely to be adopted by a digital currency.
My novice armchair estimate is that something like ZCash is broadly much less efficient than Bitcoin. Of course, no measure can go beyond a loose estimate.
I don't think it makes any sense to try to compare the efficiency of different proof of work systems.
Now you could compare the work that goes into synchronizing the blockchain between all nodes, but I'd expect that has a near-negligible environmental impact compared to all of the miners. (Individual Zcash transactions are a bigger file size than individual Bitcoin transactions if I remember right.)
Could Bitcoin just halve the difficulty and half the reward for mining a block at the same time? Wouldn't that effectively double the throughput of the system? I'm guessing there's some negative consequences to this I don't understand.
Then we’d get blocks twice as quickly, but the transaction capacity of each block is not related to the difficulty or reward, it’s an artificial constraint. You could, say, have blocks 8x as large and increase capcity 8x without affecting the difficulty directly. (Some argue there are other ramifications to this, of course.)
Right, so speeding up blocks is roughly equivalent to increasing the block size, which is what the whole BCH vs. BTC split was over, correct? So I guess the arguments against it would be the same? And if I understand correctly the core argument is that it would make it harder for anyone to verify the entire block chain. Is there any real argument against it beyond that?
At the same time there was an article here some time ago showing that bitcoin uses as much energy in a year as a coal mine uses in a day. Everything is relative.
178 comments
[ 2.5 ms ] story [ 260 ms ] threadAnyways if Intel can make North Korea trust its hardware, I might take a look at their project.
Weird thought... (I do not know if thi already exists, as I dont care about crytocurrency - only because I dont have the cycles, currently)
What if there was a crytocoin that was just a centrally mined 'thing' - and the value of the coin was what others were willing to bid on the next coin vs volume of those willing....
Isnt that literally how gold currently works?
So rather than consume billions of watts on bitcoin - just make digital gold?
With bitcoin, pay for the computers and the electric bill. With gold, pay for the machinery and the miners. It "has" to go somewhere though.
Just give X amount of coins to every person and newborn for free.
I understand you are talking about the energy cost and other environmental impacts of gold mining, I just don't see how you are determining the present day value of the utility that each thing provides to humanity.
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else—if you run very fast for a long time, as we've been doing."
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
>Energy used when mining Bitcoin could also be considered incidental, the goal is to calculate hashes.
The goal isn't to calculate hashes. That is the incidental part. The goal is to have a randomly chosen node create one block every X seconds.
How much energy do household TV's use?
How much energy does the sports industry use?
How much energy does it take to run our traffic system?
How much energy does the gold mining industry use?
How much energy does it take to run the US Stock Exchange?
At least the article should put up a fair power comparison...
Those limits were baked into the design from the start. In the current design there are only 21 million Bitcoins that can be mined, and we're approximately 80% of the way to that target.
http://www.bitcoinblockhalf.com/
Also, Bitcoin is designed to be harder to come by as time goes on. The number of new coins issued diminishes over time. See the Supply Growth section here:
https://en.wikipedia.org/wiki/Bitcoin
"12.5 bitcoins per block (approximately every ten minutes) until mid 2020, and then afterwards 6.25 bitcoins per block for 4 years until next halving. This halving continues until 2110–40, when 21 million bitcoins will have been issued."
There will come a time when Bitcoin mining is no longer profitable. If the scaling problems with the transactions are solved in time, we may see more people trading in Satoshis (fractions of a Bitcoin). The scaling problems are pretty hard to solve though, it's probably going to take a hard fork to make Bitcoin a true alternative to traditional government-backed currencies.
https://en.bitcoin.it/wiki/Difficulty#What_network_hash_rate...
Won't work. If a mining cartel agrees to keep difficulty and hashrate low, they're just making it easier for those outside the cartel to mine more Bitcoin.
Cartels usually don't last forever, but they can last for a while. In the case of bitcoin, it could reduce total energy consumption.
Exactly. This is similar to how price dumping works: https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
This article is sensationalist nonsense. I would argue it is a positive point that a globally tradeable cryptocurrency with billions in market cap only requires the energy of a "small city."
It only sounds good because we haven't really considered the scale here, so let's scale that up a bit.
What if even 1% of non cash financial transactions in the US were handled with BTC? For 2015, that would have worked out to about $1.8T.
How big would BTC need to be to handle that? Well, it looks like last year it's estimated to have done a little over $100B, so it'd have to scale somewhere around 15-20x to even cover 1% of one country's transactions...
[1] https://www.federalreserve.gov/newsevents/press/other/2016-p...
[2]https://blockchain.info/charts/estimated-transaction-volume?...
I really don't think things are as clear cut as the article implies, but I dont have numbers for the amount of energy consumed by modern electronic value transaction and storage.
Edit: also, "city's worth" as a measure of electricity, as in the article, is a terrible choice because it immediately biases the reader and does not convey much useful information. My GPU maxes at 300W; the article provides no way of conversion. Never mind that a small city may be a suburb using one hundredth of the power used by a small city center full of servers and a handful of skyscrapers.
No, I didn't but the article did, and it's cited elsewhere on HN - Visa for example uses 1/7000th of the energy per transaction...
https://en.wikipedia.org/wiki/Proof-of-stake
For instance, a cyber coin could publish a hash of their block chain in the New York Times everyday. A sound implementation would secure the chain up to that point.
If you're going to have a trusted authority involved, then having a globally-synchronized blockchain is unnecessary. Users could just check with the trusted authority about whether a transaction is valid (not a double-spend), or even just have the trusted authority maintain balances for them.
The central authority would still choose what ended up in the ledger but they would not be able to rewrite history because of the publicized hashes locking it into place.
I meant to sketch out a centralized way of finalizing a public ledger, so yeah, it isn't decentralized.
I'm massively simplifying the idea, but proof of stake delivers new coins (either at predetermined intervals or all at once during the ICO) out in a pseudo-random way with some weight factors. Its almost like buying lottery tickets. https://en.wikipedia.org/wiki/Proof-of-stake
Maybe my naive interpretation of what VISA actually does is showing here, but I don't see how it's a valid comparison. Bitcoin doesn't simply replace credit card transactions, it replaces an entire banking system. Who confirms VISA transactions? How can you send and receive transactions through VISA? What about all the facilities that are supporting that transaction?
I think it's easier to trace the cost of a bitcoin transaction, which bears the entire cost succinctly, compared to an institution like VISA, which has its tentacles in a ton of energy costing faculties.
[0] http://www.businesswire.com/news/home/20170725006524/en/
High-availability data centers use power. We understand this. They also have meaningful outputs that Bitcoin struggles to demonstrate on its own.
Of course you can work around this by having third party payment processors that sit between customers and the raw blockchain. But because Visa already does much of that, you need to include the cost of those as well, in order to get an apples-to-apples comparison.
However the transaction throughput doesn't depend on the hashrate. The network could for example handle 10x or 100x the number of transaction with the same hashrate as today.
Not actually true. See the Lightning proposal.
2. It's not certain it can work in a decentralized way
Yes, it's uncertain it will work, but the point is that it's not inherently obvious that bitcoin can't accommodate Visa's transaction volume. The above comment made it seem like that's a given.
The second part I agree with. According to Satoshi:
> Bitcoin can scale larger than the Visa Network
It's not obvious that this is false.
I think you're mixing lightning up with something else; lightning is not a sidechain[0]. In lightning, at every step participants create standard Bitcoin transactions that can be finalized and settled at any time by just publicly broadcasting them on the Bitcoin network. The participants hold off on broadcasting the transactions until they're done with the payment channel so that they save on transaction fees (and avoid bloating the blockchain). They're immune to counterparty risk like normal transactions are, and it doesn't rely on any central or trusted authorities.
[0] https://bitcoinmagazine.com/articles/greg-maxwell-lightning-...
You're saying it yourself, it creates standard Bitcoin transactions (not lightning transactions). They hold off on broadcasting them, but that may mean if they both go offline they loose their state. It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
It still has not been shown that LN can even work in a decentralized fashion.
It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
How can this distinction not be clear?
Yeah, the guarantees aren't exactly the same. Personally I expect that the risks will be for the most part smoothed over by things like lightning software that automatically syncs the state of payment channels between all of your devices for redundancy.
>It's using Bitcoin as a settlement layer but it's still not interchangeable with Bitcoin.
When a payment channel is settled by any of the participants, it's normal Bitcoin that comes out.
>It uses Bitcoin and it may even become the default way to transact and be better in any way. But it doesn't matter, Lightning is not, and will never be, Bitcoin.
I really think that's splitting hairs. If it becomes the standard way to send Bitcoin around, such that nearly everyone talking about making or receiving payments in Bitcoin is using Lightning, and if it does end up working very well in practice with many transactions per second, then I think it's more than fair to argue against statements like "Bitcoin can't scale up to VISA volume". Are you insisting on always explicitly referring to them as a combination ("Bitcoin/Lightning")? Kind of reminds me of the losing battle fought by some to correct all references to Linux as "GNU/Linux"...
There are decentralized solutions that don't involve trusted 3rd party payment processors. Payment channels and the lightning network will allow many transactions to happen between users that eventually and safely get settled onto the blockchain as only a few transactions containing the net transfer. These systems are decentralized without relying on trusted 3rd party payment processors, and the users are safe from counterparty risk like they are with normal transactions. (I know another reply mentioned Lightning. I just wanted to do more explanation and emphasis on parts.)
But it should be glaringly obvious that Bitcoin is by far the most expensive way to do financial transactions. That shouldn't even be contentious. It's literally built on the idea of doing computationally-expensive busywork.
Whether or not that busywork is a waste of power or a necessary cost then depends on your social beliefs, but it's definitely going to be vastly more power-expensive than any of the existing systems.
It's driving electrical/computational consumption efficiency but its definitely a catch-22 as with most technology.
I respectfully disagree. There are many many transactions that happen behind the scenes when you're paying with a Visa card. All transactions go through a merchant bank before ever being sent to Visa, and they may even go through a second third party. Additionally there's a number of times in which clearing and settlement occurs, both on the merchant side and on the "monthly bill" part that you discounted as irrelevant.
This all takes energy, the POS takes energy, the banks all require energy to process transactions, it takes energy to send out statements, to pay your bill. I have no clue if this entire process takes more energy than Bitcoin or not, but I can guarantee the cost of doing a transaction through Visa isn't glaringly obvious.
Far from a perfect number and you're correct it won't cover payment processors, but it's also picking up non-trivial amounts of other stuff since those data centers don't do exclusively payment processing.
But either way you wouldn't count the POS. The POS is still there consuming the same amount of power if you pay with BTC, VISA, or cash.
Honestly it seems more like "bitcoin is a way to launder stolen electricity" rather than "oh noes, if people keep mining, eventually they'll have a huge impact on global energy consumption"
1. https://bitcoin.stackexchange.com/questions/53620/what-is-th...
The reality is that the two are not coupled together. Larger block sizes are obviously possible as demonstrated by bitcoin cash (and by anyone with common sense who hasn't been taken in the censorship on /r/bitcoin). More transaction throughput doesn't affect how much hash power is needed, therefore the main limiting factor is mostly just how many transactions are actually being made.
There have been however lots of developments in the blockchain space, especially as it refers to different proof systems and algorithms. The alt-coins in general, though mostly badly viewed due to the often poor and sleazy behaviours, are a playing ground for exactly this kind of problem.
I won't give specific names because I'm not an advocate for any one in particular, but there are several other coins and implementations that try to do away with the energy consumption and improve scaling. Some have even gotten to the point of eliminating mining and transaction fees altogether (yup, zero fees: transfer value anywhere in the world, instantly, and pay absolutely nothing for doing so).
A quick google search should point you in the right direction if it sounds interesting.
But it's not clear if they even work.
Isn't the energy consumption the whole point?
Perhaps Intel can find new blockchain applications for their technology, but it is unlikely to be adopted by a digital currency.
Now you could compare the work that goes into synchronizing the blockchain between all nodes, but I'd expect that has a near-negligible environmental impact compared to all of the miners. (Individual Zcash transactions are a bigger file size than individual Bitcoin transactions if I remember right.)