I'm probably more favorably inclined to cryptocurrency & bitcoin than 98% of commenters here but this is becoming a rather stale boast.
Quoting @jgreco on Twitter:
"Why are crypto people so impressed by this? 1) Do they think wires cost more as the dollar amount increases? 2) Do they not understand that wires are free for corporations and HNW individuals?"
Thats one way to look at it. I would answer that what the tax payer pays is much higher than what the consumer gets, and both groups are large enough to not easily prioritize one over the other.
Bitcoin was born on dissent on how governments bailed banks with tax-payer money.
I'm very happy with the liberty/access aspect of it, but it's much more relevant for small transfers. People moving this amount of money already have access, unless they're a drug lord or from a sanctioned country (and ofc they have their ways, too, shoutout to HSBC, Wachovia, DB, etc)
I think everyone wanted/expected bitcoin to serve for the distributed/small case, but reality has made it the other way around so far.
The capacity to avoid sanctions and the enforcement of law are greatly valuable assets: anything that limits the power of the state is a step towards liberty. (Not towards crimeless-ness)
I was going to say something similar, but I think that response is going too far.
If it's only "free" by virtue of the bank absorbing the costs to suck up to big clients, that's not much of a boast either. What's the comparable internal cost borne to process such transactions?
And I assume bigger transactions in the regular financial system do take more documentation and have to adhere to more safeguards, which, to correctly account for, you'd amortize over the cost of each transaction.
> If it's only "free" by virtue of the bank absorbing the costs to suck up to big clients, that's not much of a boast either.
Frankly, I first thought you were sarcastic given the massive subsidies by miners in the BTC and given that in my neck of woods ( Europe) bank transfers of all sizes are for all practical purposes free.
The tweet specifically said, "Wires are free for corporations and HNW (high net worth) individuals", meaning they're not free for others. That implies there is some cost they have to absorb, and I was asking about the apples-to-apples comparison to those costs.
Also, fees are probably the last concern you have when moving over a billion dollars. Safety and security is what you care about, and I am sure a person with a billion dollars would be happy to pay many thousands to keep it safe.
Is this due to some special technology or implementation details they used, or just the current going rate of getting your bitcoin transactions confirmed?
my response is admittedly whataboutism, but it's worth comparing to say, the dollar. The cheeky answer to "what backs the dollar?" is "guns, missiles, and aircraft carriers" but in reality it's "growth". The cost of the extant financial system isn't, say, the sum of bank branch construction & bank employees' gas commuting to work, etc -- it's the sum of all economic activity driving growth, which as of now is still inextricable from dirty resource extraction, conversion, and movement.
Which isn't to say it's OK to throw bitcoin mining on top of that, or that bitcoin can fix it. Just that we're on an unsustainable trajectory with or without it, barring an energy revolution or a very painful collapse -- at which point I suppose we can just plug the miners into the local fusion plant (or trade in ammunition and the chit of the local warlord).
Theres nothing to back it, if we go all Mad Max you'd have a hard drive with some 1s and 0s.
I suppose if we went Mad Max there wouldn't be anything backing the other currencies either. You might be able to pay the barter town entry fees with hard currency, it being a convenient token and all.
Trust that it's accurate and immutable. Which is backed in turn by economic incentives for miners (more accurately -- economic disincentives to trying to cheat). The former is denominated in bitcoin, and so represents the paradox of bootstrapping this system, but here we are (and this is why early adopters are rich now -- it was a seemingly insane risk to bet that those (positive) incentives would be effective)
The spot price on unregulated exchanges which are presumably operating fractional reserves, wash trading, front running, and spoofing the order book.
And don't forget 3 billion Tethers, likely being used to manipulate margin trades. (see "the bart" pattern, which is likely an indication of either Bitmex or Bitfinex wiping out margin traders with temporary price manipulation)
I see these stats all the time. What's the carbon footprint for a similar sized bank or stock exchange? How many people are employed? How much carbon do they emit traveling to work? How much money does it cost to employ all those people?
It might be worth comparing a transaction cost of 220.7 kg of CO2 to the average American's carbon footprint per year -- which is 16400 kg CO2. That's basically what the average American emits in 5 days. That DOES seem like a lot. I really doubt transferring similar amounts of money is anywhere near that. But I don't know.
If you want to get into travel and carbon emissions, it would be disingenuous to not include crypto's. I can't imagine a single bank's carbon emissions get close to the commute of even one crypto conference.
I'd further venture that the coordination cost of crypto (conferences and travel between individuals) far exceeds that of a single bank, and might rival that of the entire financial industry. This is probably a benefit of extreme centralization.
Bitcoin doesn't offer the protection and services provided by banks and stock exchanges, let alone the transaction volume.
Employment is a good point, as financial companies employ millions of people but then you would need to add in the additional metrics from companies and OPEX/electrical/hardware related to blockchain startups.
All of that is mostly irrelevant though, because the principle design of "Proof of Work" software is to maximize the inefficiency and operational waste of transactions as the network gains users and as time goes on, without any increase in network capacity. The other curious design choice is to decrease the economic output (production) as more work enters the network, which seems quite malicious, but few people have bothered to read and comprehend the design choices in "Satoshi's white paper".
Even without the exact figures it should be obvious that the inefficiency in Bitcoin is astounding. Consider e.g. that the Bitcoin network performs about 400K transactions per day while the Visa network performs about 150MM transactions per day. That works out to 375x. Coincidentally Switzerland consumes about 1/375 of the world's electricity. If the Visa network used the same amount of electricity per transaction as Bitcoin it would require all of the electricity used by the entire world.
Bitcoin can't easily increase the quantity of transactions, so it's hard to answer that directly. Bitcoin transaction rates are currently limited by the time to mine a block and the number of transactions per block. Technical and political barriers exist to changing either of those numbers. See
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem
for more details.
App stores and various middlemen like Uber getting a cut funded a lot of tech innovations and SV fortunes, I wouldn't say low fees are absolutely best.
In this case though, the fees are mostly spent on electricity and are rather large for a single transfer.
I'm, all for bitcoin, but articles like these are bullshit.
How many cryptography and bitcoin experts were consulted/hired to babysit this transaction, knowing that the smallest mistake could lead to total and irreversible loss of funds?
Probably none... That just isn't how it works. What do see the "bitcoin expert" doing in this case other than double checking the receiving address is correct?
I do lots of transfers between VMs (different personas) via mixing services. So I always verify receiving addresses using md5sum. I presume that prudent folk routinely do something like that. It's ~hard to see some single-character errors, but md5sum changes completely.
I think that this is misleading, they didn't really "move" anything, they just used a current key that was locking 1.26B to lock the funds with a different key. So the network only processed this small amount of cryptographic computation. For the Bitcoin network, the size of the transfer (i.e., fee) can be the same for sending 1 BTC as 1000000 BTC
44 comments
[ 5.4 ms ] story [ 96.5 ms ] threadQuoting @jgreco on Twitter:
"Why are crypto people so impressed by this? 1) Do they think wires cost more as the dollar amount increases? 2) Do they not understand that wires are free for corporations and HNW individuals?"
They are very different finance operations.
With cash you wouldn't even need to do this kind of transfer anyway, partly because of all the things you mention.
Bitcoin was born on dissent on how governments bailed banks with tax-payer money.
The capacity to avoid sanctions and the enforcement of law are greatly valuable assets: anything that limits the power of the state is a step towards liberty. (Not towards crimeless-ness)
If it's only "free" by virtue of the bank absorbing the costs to suck up to big clients, that's not much of a boast either. What's the comparable internal cost borne to process such transactions?
And I assume bigger transactions in the regular financial system do take more documentation and have to adhere to more safeguards, which, to correctly account for, you'd amortize over the cost of each transaction.
Frankly, I first thought you were sarcastic given the massive subsidies by miners in the BTC and given that in my neck of woods ( Europe) bank transfers of all sizes are for all practical purposes free.
And what miner subsidies are you talking about?
They are also free for people living in countries with healthy banking systems (i.e. most EU countries)
I'm kidding of course, but we do live in a world where transaction costs bolster some of our biggest businesses. Not sure if that's a good thing.
Bitcoin's current estimated annual electricity consumption* (TWh) 63.23
Bitcoin's current minimum annual electricity consumption (TWh) 38.25
Annualized global mining revenues $6,705,703,327
Annualized estimated global mining costs $3,161,647,973
Current cost percentage 47.15%
Country closest to Bitcoin in terms of electricity consumption Switzerland
Estimated electricity used over the previous day (KWh) 173,240,985
Implied Watts per GH/s 0.125
Total Network Hashrate in PH/s (1,000,000 GH/s) 57,577
Electricity consumed per transaction (KWh) 465
Number of U.S. households that could be powered by Bitcoin 5,854,904
Number of U.S. households powered for 1 day by the electricity consumed for a single transaction 15.7
Bitcoin's electricity consumption as a percentage of the world's electricity consumption 0.28%
Annual carbon footprint (kt of CO2) 30,036
Carbon footprint per transaction (kg of CO2) 220.7
Source: https://digiconomist.net/bitcoin-energy-consumption
Which isn't to say it's OK to throw bitcoin mining on top of that, or that bitcoin can fix it. Just that we're on an unsustainable trajectory with or without it, barring an energy revolution or a very painful collapse -- at which point I suppose we can just plug the miners into the local fusion plant (or trade in ammunition and the chit of the local warlord).
Theres nothing to back it, if we go all Mad Max you'd have a hard drive with some 1s and 0s.
I suppose if we went Mad Max there wouldn't be anything backing the other currencies either. You might be able to pay the barter town entry fees with hard currency, it being a convenient token and all.
And don't forget 3 billion Tethers, likely being used to manipulate margin trades. (see "the bart" pattern, which is likely an indication of either Bitmex or Bitfinex wiping out margin traders with temporary price manipulation)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
https://amycastor.com/2019/01/17/the-curious-case-of-tether-...
https://omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1...
Given the atrocities governments commit, I don't see anything morally wrong with using a currency run on Electricity.
It might be worth comparing a transaction cost of 220.7 kg of CO2 to the average American's carbon footprint per year -- which is 16400 kg CO2. That's basically what the average American emits in 5 days. That DOES seem like a lot. I really doubt transferring similar amounts of money is anywhere near that. But I don't know.
I'd further venture that the coordination cost of crypto (conferences and travel between individuals) far exceeds that of a single bank, and might rival that of the entire financial industry. This is probably a benefit of extreme centralization.
Employment is a good point, as financial companies employ millions of people but then you would need to add in the additional metrics from companies and OPEX/electrical/hardware related to blockchain startups.
All of that is mostly irrelevant though, because the principle design of "Proof of Work" software is to maximize the inefficiency and operational waste of transactions as the network gains users and as time goes on, without any increase in network capacity. The other curious design choice is to decrease the economic output (production) as more work enters the network, which seems quite malicious, but few people have bothered to read and comprehend the design choices in "Satoshi's white paper".
I have no idea how many people might be 'employed' in the bitcoin 'industry' though.
How many cryptography and bitcoin experts were consulted/hired to babysit this transaction, knowing that the smallest mistake could lead to total and irreversible loss of funds?
What was their compensation?