""If Bitcoin were to be adopted as a global reserve currency," he speculates, "the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity."
"We'd have to double our global energy production," he says with a laugh. "For Bitcoin."
He says it also limits the number of transactions the system can process to about five per second.
This doesn't make for a useful currency, he argues."
People just want an asset that can't be manipulated away. If it takes tons of energy, or if it totally changes power dynamics, or if we need to transact in different ways, then so be it. No one is going to give up the opportunity to own something like this for any reason. Regardless of whether people like it or not, they will have to adapt, since there is probably no viable way to stop something like this when people decide they want it.
Well, there's one very real way that complex financial instruments disappear in a huff. Bitcoin has only existed for less than 15 years. There's no indication that it's invincible to, say, a bubble burst and rapid permanent devaluation besides it having not happened yet. If in 86 years this is still the case, you could maybe convince me I won't see it in my lifetime, but just barely.
No, a swarm of autonomous actors in a decentralized system will continue to support it so long as it's profitable and legal (or at the very least, easy enough to get away with). Those are two huge assumptions for e.g. Bitcoin which has very little inherent value as a tool and is a relatively fragile as a value store. Should the internet be fragmented along national/political lines, I imagine BTC will lose most of its value over night.
Black swan events like that would effect everything. I imagine bitcoin succeeding is no less likely than any other culturally dependent phenomenon, seeing how much utility and incentive for adoption it provides.
Many people would choose to dump toxic waste into a river if they can make some money off it. They want it, but that doesn’t mean we have no way to stop them.
People want such an asset, but it absolutely can viably be stopped. Governments outlawing it will lower the price and utility. Governments doing a 50% attack or similar will end it.
What's interesting to me is that Proof of Work competes with government's Proof of Force.
I wonder, is this a choice between running the world on math (or profit) versus running the world on democracy (or force)?
Blockchains would be easy to stop if governments wanted. The power footprint of miners is easy to find, and wallets and transactions are easy to trace. The reality is, if a blockchain ever got large enough and widespread enough to impact a host government's currency, it could be shut down probably overnight.
The people who don't want it won't be able to effectively collude because so many people do want it. Many people will people will change their mind as well. Governments are just people after all.
> The power footprint of miners is easy to find. it could be shut down probably overnight.
This only works for single large-scale miners after you raided all factories/households with above average energy consumption. Many small miners would continue to mine from home (with average energy consumption levels) while collaborating in a global mining pool.
Most of the hash power is currently contributed by large scale miners.
Shutting just them down would cripple thing considerably. Then they could go after the methods of organizing pools, but I suspect that wouldn't be necessary.
For large economies, just saying it's illegal without enforcing anything at all would be massive blow, since blockchains' only current use case is speculation. If the the US government said tomorrow 'bitcoin is illegal' the price would crash to the point that mining no longer even made financial sense.
Bitcoin is extremely manipulable. Just look at the fact that the modern BTC no longer complies with its original ideals.
Remember the pizza? Buying games on Steam? All that ended, because the core group controlling bitcoin decided a tiny block size limit suited their interests. This makes perfect sense for people sitting on a hoard of coins and who want to keep on increasing the contention and driving up the value, but has nothing to do whatsoever with the original vision of "A Peer-to-Peer Electronic Cash System".
It's an interesting thing, really. Bitcoin had some successes, but failed at stopping it from being controlled by a central cabal.
How ironic that the forks of Bitcoin with bigger block sizes appear to be the coins more likely to be manipulated by "influential leaders" - resulting in numerous and continuous coin splits.
> the core group controlling bitcoin decided a tiny block size limit suited their interests
Even if there was some conspiracy going on, this happened in what 2017? The price of Bitcoin rose from ~2K to ~60K up to today. So whatever 'the group behind bitcoin' did, the market seems to agree with 'them'.
All the Bitcoin forks who misleadingly claim to be "the real Bitcoin" are either dead now or the market values them at <1/100 of BTC. Conspiracy theories tend to grow over time so maybe this is now just 'the group behind Bitcoin' manipulating the global markets as well?
I do have questions about the Digital Currency Group, Blockstream, MasterCard, and the former head of the Bilderburg group, but I'll need to read up on that in depth to come to any conclusions.
You think the likelihood of all these things are comparable? The president of the Bilderburg group literally provided the bulk of the funding for Blockstream. That should be considered with some seriousness shouldn't it?
> You think the likelihood of all these things are comparable?
Epstein contributed funding to MIT Media Labs which run the Digital Currency Group which provided funding to Bitcoin developers. Boom. Conspiracy confirmed.
Conspiracy theories are just like playing a game of six degrees of Kevin Bacon. The reason why you need to introduce large players like MasterCard or AXA or whatever is because the larger they are the more likely you are able to draw a connection to anything in the world.
Unless you can produce a falsifiable prediction based on your conspiracy theory they are no more than an entertaining drinking game.
I believe the claim is that Blockstream supporting smaller block sizes could be a conflict of interest because they sell transaction services. This suggests that Mastercard could be backing them as a hedge for their transaction fee business, meaning the market's call for larger block sizes could be someday be manipulated/disregarded.
Only reason I'm paying attention to this is that if the market one day wants larger block sizes (i.e. hardware gets to a point where more people can run nodes to the point that a reasonable amount of decentralization is possible with larger blocks), Blockstream may hold bitcoin back from transitioning, and something with a larger block size could see a considerable increase in market size. I would think they would accede if there were a reasonable risk of bitcoin losing share because they are keeping blocks too small, but maybe not.
Could you explain how Blockstream could influence the Bitcoin development process to act against the "market's call", e.g. which developers do you have in mind which currently work for Blockstream and have the power to overrule/manipulate other Bitcoin developers against their/the market's will?
Idk, that's why I need to read into this further. Many seriously think Adam is Satoshi though, so what he wants could get outsized support, regardless if there is explicit coercion or not.
Miner competes not only for block subsidy, but for tx fees as well. Those can be expected to dominate within 4 or 5 halvings, putting a lower bound on the energy consumption of bitcoin.
Let's imagine that overnight the price of bitcoin increase x50 to $1000000 like in the article.
In a imaginary word where miners get only the block subsidy, they get x50 more money are incentive to use like x50 more electricity.
In a imaginary word where miners get only the tx fees, they can reduce the fees x50 and get the same money. (Moreover, the size of the transactions will be x50 smaller in Bitcoins.)
In the real world where miners get both, it's something in between more complicated, but each halving makes it more similar to the second scenario.
If Bitcoin were to be adopted as a global reserve currency," he speculates, "the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity.
If you spent the entire US federal budget on a global reserve currency that worked without a military that's a net positive for humanity though, isn't it?
Cryptocurrencies will not remove the need for a military. Anything that can be bought by a Bitcoin can also be "bought" by force, often more effectively.
As an example, how could bitcoin being the reserve currency fix the South China Sea dispute? There are still multiple countries who want the islands.
The people that write these articles haven't the faintest idea of the protocol and repeat the same tired arguments over and over again. Why does Bitcoin have to justify its energy usage when the legacy financial system does not? Who becomes the arbiter of what tech or sector deserves to draw on the grid?
The "legacy financial system" is far, FAR more energy efficient in comparison.
Bitcoin's rising power usage doesn't achieve a greater capacity, it's simply the result of an arms race between miners. The faster others mine, the faster you must do so as well, if you want to keep making money. But Bitcoin's design results in that the increased power doesn't really do anything for the network. It doesn't make it faster, or give it a higher capacity.
Bitcoin is also not a financial system, it's a global game of chicken.
Even Bitcoin Cash, which keeps the same stupid design is a more attractive option if one wants to have anything resembling an economy simply due to that they increased the block size limit.
> The "legacy financial system" is far, FAR more energy efficient in comparison.
Citation needed. The legacy financial system has a huge infrastructure behind it to secure and maintain it (buildings, transport, security, ...). I would assume the US Petrodollar alone probably exceeds Bitcoin's consumption of resources (I don't have any sources though).
> Even Bitcoin Cash, which copies the same stupid design is a more attractive option due to that they increased the block size limit.
BCH is a scam. Not because they assume that the removal of the block size limit comes without any costs, but because it regularly splits after influential but narcissistic 'leaders' attempt to grab more power and because its community continues to justify deceitful tactics to promote BCH and trick people into buying BCH when they expected Bitcoin.
In fact, the lie that BCH is more energy efficient than Bitcoin is just that, another BCH advertising lie. Energy consumption is a function of block reward only (mined coins + tx fees). Currently miners are rewarded ~$400K for Bitcoin and ~6K for BCH. BCH would consume exactly as much energy as Bitcoin if BCH's prices or number of transactions would rise accordingly.
Ah, but until demonstrated otherwise, the legacy financial system also supports Bitcoin. It's what makes it possible to create the goods and services that people want to buy with Bitcoins, and the electricity to do the computations. We don't even know what society would look like without our present-day economic infrastructure.
For now, the cost of Bitcoin is on top of the cost of the existing system, not instead of it.
> For now, the cost of Bitcoin is on top of the cost of the existing system, not instead of it.
You can have a closed loop of exchanging Bitcoin for goods and services without any legacy financial system involved. Just because you prefer to exchange your Bitcoins for your local currency does not imply that the cost of maintaining your local currency should be added on top of Bitcoins own.
A BTC transaction is currently estimated to take 821 kWh. That's ridiculous.
> BCH is a scam. Not because they assume that the removal of the block size limit comes without any costs, but because it regularly splits after influential but narcissistic 'leaders' attempt to grab more power and because its community continues to justify deceitful tactics to promote BCH and trick people into buying BCH when they expected Bitcoin.
I don't care about any of that, actually. I'm mercilessly meritocratic in this regard, and in my case, merit == processing transactions at a low cost.
Whatever nonsense goes on in the community, the drama regarding branding or whatnot isn't of my concern. My interest in crypto is extremely minor and focused straight on the "cash" type of usage. Whoever can provide that earns my interest, and I hold no loyalty whatsoever. BTC had my interest back before it bumped into the block limit, and at that exact instant, lost it.
> A BTC transaction is currently estimated to take 821 kWh. That's ridiculous.
It is huge, I agree. But ridiculous in comparison to what? How much energy/CO2 does the traditional financial system consume/produce (incl. buildings, production, transport, security)?
>> BCH is a scam.
> I don't care about any of that, actually. I'm mercilessly meritocratic in this regard, and in my case, merit == processing transactions at a low cost. My interest in crypto is extremely minor.
If you don't care about the details and your interest in crypto is extremely minor it is super risky to put any money in an altcoin like BCH or to advertise it without a disclaimer.
You are more likely to lose value because
- a) it has low security (a collusion of only 0.5% of Bitcoin miners can perform a 51% attack on BCH)
- b) the community and their 'leaders' continuously lie and mislead the public about BCHs performance, adoption and scalability (e.g. unlimited transactions without degraded decentralization)
- c) the coin and the community splits regularly because of power grabs
- d) the market's expected value of BCH drops continuously (because of the points mentioned before)
The merit you are looking for, "processing many transactions at low cost" is currently not achievable without sacrifices. If something sounds too good to be true, it usually is.
> It is huge, I agree. But ridiculous in comparison to what?
The current system, which is far more efficient.
> a) it has low security (a collusion of only 0.5% of Bitcoin miners can perform a 51% attack on BCH)
Not a critical issue, since evidently it's not happening. I'm not putting in more than I can afford to lose.
> - b) the community and their 'leaders' continuously lie and mislead the public about BCHs performance, adoption and scalability (e.g. unlimited transactions without degraded decentralization)
> - c) the coin and the community splits regularly because of power grabs
Completely unimportant to me. I'm not loyal to BCH or anyone else. I use whatever works at any given point in time. BCH currently seems to be the most usable for my ends, given how it performs transactions cheaply and has decent enough adoption. But if it dies, no big deal, I'll use something else. Heck, even DOGE seems to be doing okay.
Plus, this is crypto. There is no such a thing as an altcoin. It's all software. Permissionless money, remember? Lies, deceit, cheating, are all fair game since there's nobody to give anybody official blessings or permission on anything. So I couldn't care less who said what or what internal drama is brewing. Does it work or does it not for my use is the only metric, and the second it stops working I'll find something else.
> - d) the market's expected value of BCH drops continuously (because of the points mentioned before)
No, currently it isn't. See the graphs. Plus I'm not interested in the virtual gold kind of usage. So long it more or less holds up, that works for me.
> It is huge, I agree. But ridiculous in comparison to what? How much energy/CO2 does the traditional financial system consume/produce (incl. buildings, production, transport, security)?
I've done the math before, but I've forgotten the precise results I came up with. The results are in the realm of "Bitcoin uses more energy than that which is used to produce all the US [maybe all the world's] currency." Like, it's not even close--I think shipping gold bars on an airplane may be more energy-efficient than Bitcoin now.
The hardest part is finding the raw data. I only considered the energy costs of actually producing the currency itself (mostly imputed by operations cost, since I couldn't find any reports on the actual energy consumption of the mints or engraving presses). I realize purists will object to not including the amortized cost of the facility, etc., but the number that's being compared against for Bitcoin focuses only on the cost of the proof-of-work and not the similar facility costs.
> Bitcoin's rising power usage doesn't achieve a greater capacity, it's simply the result of an arms race between miners.
When the difficulty rate rises the network is more difficult to be attacked. The upper limit to the difficulty rate is the point at which the miners can be profitable. We want the network to be as secure as possible. Though, I would say that we also want the network to be as efficient as possible (ie larger block size for more tx per block) like in Bitcoin Cash.
>>"Why does Bitcoin have to justify its energy usage when the legacy financial system does not?"
These questions always strike me as disingenuous / intentionally obtuse. But charitably assuming an honest question for purpose of frank discourse, my simplest answer / understanding is that in general, in the daily transactional system, participants work to reduce energy cost per transaction and over most periods of time this energy cost per transaction has been reducing, or if it increases, it is to support some additional identifiable functionality. This strikes me as a rational system.
With bitcoin, my understanding is that effective energy usage per transaction / for the system as a whole has been increasing. This strikes me as iterational.
I am eager to be corrected if my high level perception of bitcoin is incorrect and energy costs have been rationally decreasing / becoming more efficient over time.
If NOT.. Then how does anybody persuade themselves to believe this is a rational currency system, or at the very least, that it's energy usage in particular is in any way whatsoever defensible??
The increase in hashrate can be interpreted as an increase in security, i.e. it is much more difficult/expensive for an attacker (even nation-level) to harm Bitcoin. This is mandatory for a financial network that aims to operate on global scale.
Bitcoin does not consume energy per transaction but per block. How many transactions the block contains does not change the energy requirement to mine it. If the number of transactions on the Bitcoin network would go to zero tomorrow, energy consumption would not change (same if transactions were doubled).
Bitcoin's energy usage is a function of hashrate which is affected by mining profitability which is affected by block reward (mined coins + tx fees) and energy prices.
Long story short: Just make "dirty" energy more expensive by including the cost it incurs on the climate. This would make Bitcoin's already large share of renewables even bigger and would improve global energy production and consumption as a result.
I appreciate the response but we may disagree as to what is the summary / "long story short".
My "long story short" question is: over time, has Bitcoin effective energy per transaction gone up or down?
Not theory, not what nebulous public policy changes should happen to justify the energy mix, not what we think may might need to happen et cetera et cetera.
Is the energy cost per transaction in real world for bitcoin going up or down? (in principle calculated by "energy used for bitcoin system in total divided by number of transactions executed per some unit of time").
Everything else is trying to muddy it up from my personal perspective.
> Is the energy cost per transaction in real world for bitcoin going up or down? Everything else is trying to muddy it up from my personal perspective.
Energy is expended to secure the network as a whole and not for the transfer of coins.
But if you insist on computing such a metric with only limited applicability, the answer is: Yes, the metric goes up:
Estimated power consumption per day, 2020-2021 +5%:
01/01/2020: 0.2 TWh
01/01/2021: 0.211 TWh
Estimated number of onchain transactions per day, 2020-2021: +6%:
01/01/2020: 288K
01/01/2021: 305K
And this doesn't even include all the hidden private transactions that occur off-chain on Layer 2 solutions like the Lightning Network:
Number of nodes on the Lightning Network, 2020-2021 +60%:
01/01/2020: 5K
01/01/2021: 8K
Capacity of the Lightning Network, 2020-2021 +430%:
Bitcoin's energy use is only high because so many people want to participate in mining, the difficulty constant had to increase. If the "bubble burst", bitcoin would continue to operate unhindered with the exact same number of processed transactions with a much lower use of energy.
The assertion that bitcoin may be doomed specifically because more people want to participate, is laughably wrong. It is designed to adapt to a market that is itself adapting to it.
Apparently it is still more than 100 years before block rewards stop, unless the protocol is being changed. Wondering if quantum computing will break it beforehand
If you mean the hashing will stop - it won’t, because that’s how the system is secured. The creation of new bitcoins is irrelevant as far as energy use goes.
The creation of new bitcoin is what incentives miner to spend so much. When the reward go down, the miners would presumably spend less energy. (But it has so far been offset by the increase of value of bitcoin itself.)
Luckily there is a whole new generation of PoS networks that don't rely on proof of work. Some even automatically buy carbon offset credits to maintain a carbon neural footprint.
I've been reading about proof of stake cryptocurrencies for years, and how they will solve the problem of bitcoin's energy usage. Yet the problem persists.
Maybe something like Chia (chia.net) that "farms" from pre-computed "plots" as proof of work? There is still an energy intensive cost to the initial plot creation phase, but it is soon amortized by the low cost farming phase, where the precomputed proofs begin to do their work. As SSD storage is expected to become less $/TB than HDD storage in about 5 years, this could make for a very energy efficient PoW scheme.
I don't understand enough to know if it's a design decision or a technological limitation but the barrier to entry for something like chia also seems much lower, hopefully democratizing the ability to participate in the creation/validation side of the network. Chia requires a single ~100GB plot file (and 332 GiB scratch space when creating the plot) to start farming, which is a pretty low bar. I don't have to buy an expensive special purpose bitcoin ASIC and I don't have to stake the equivalent of 68,416.96 United States Dollar (32 eth) to get started and start contributing.
"Proof of stake" to establish distributed consensus will solve the energy problem related to cryptocurrency. Ethereum is one example of such cryptocurrency that uses this mechanism.
Beacon chain is on PoS now. They’re doing a very very controlled migration from the legacy chain over to the new PoS ones for obvious reasons (change management, testing, comms) but the tech is in prod and ready to go
Ethereum does not use Proof of Stake, it is a proposed change that is being worked on, with a timeline of several years before it will be put into action, and that's only if the network accepts it.
It's actually up and running for a while, with large sums already staked, and the flipping of the switch on mainnet will very likely happen before end of summer. https://ethereum.org/en/eth2/staking/
ETH 2.0 has launched in parallel with ETH 1.X. The timeline is ~1 year for final merge, not years. This is potentially going to be accelerated (https://notes.ethereum.org/@vbuterin/B1mUf6DXO).
The "network" doesn't accept anything. ETH updates via hard forks. You either get on the train with the most support, or you don't. The majority wants proof-of-stake and there is already almost 4 million Ether staked on the ETH 2 chain (https://launchpad.ethereum.org/en/).
> ETH updates via hard forks. You either get on the train with the most support, or you don't.
This is what I mean by the network accepting. Admittedly there's a spectrum of win/loss as per the ratio of the two resulting networks, but I'd suggest that the stake based network being substantially smaller would essentially be a failure, especially if the mining is still happening.
Eth is still spending plenty of energy on PoW, but most L2 systems are PoS and the PoS L1 system is running, but just deferring to the PoW chain right now
Assuming those numbers are correct. It's pretty amazing that it only took 10 years for the money subsidy to be a threat to the world.
I don't see how it'll pop the bubble, but imo the day where there's a moral imperative to switch to a PoS chain is coming. I wonder if the btc community could switch to PoS if they seriously were looking at losing Bitcoin dominance
I feel like this stretches the meaning of value into deep space. It's a speculative monetary value, based in confidence of return.
Its value evaporates with that confidence. It only takes one person or ban from one country to start a cascade sell off, and see its value go off a cliff.
> So whatever these people say about global energy use
... Is that it's destroying the planet for fun and profit. It's using a large country's power to do nothing of any tangible value. And it seems to be a bizarre thing to encourage as we cruise into a global climate disaster.
I am afraid the tipping point has long been crossed with BTC. The value accumulated in the ecosystem will sustain it and automatically validate investment in it. Also the community and investors don’t give up after such a high valuation even it’s completely useless. So it’s here to stay.
The energy cost of mining will always be bid up to approximately the net value of the reward. So as the price of Bitcoin goes up, so does the mining effort. If the price drops, the energy expended would drop as well.
It's important to note that the cost of energy its priced to is more or less the global lowest cost of energy. No one mines Bitcoin in Los Angeles during the summer. Bitcoin is a way to convert cheap or excess energy anywhere in the world into money, much of it renewable or energy that would go to waste. And most mining is centralized in a few locations for this reason. So doing a simple energy calculation is dishonest.
> The two essential features of a successful currency are that it is an effective form of exchange and a stable store of value, says Ken Rogoff, a professor of economics at Harvard University in Cambridge, Massachusetts, and a former chief economist at the International Monetary Fund (IMF).
> He says Bitcoin is neither
This made me chuckle. The reason the price of bitcoin (and hence the energy cost of mining) is going up is that people have lost faith in the monetary institutions. In a world where the US money supply can go up 23% in a given year with no end in sight is a world in which you can't trust your savings. We had a global pandemic and stock market is up 30% from pre-covid. This is insane. And people aren't dumb. They're just waiting for the other shoe to drop. In the meantime some find Bitcoin to be an effective hedge.
That's not exactly a deep insight. People buy things because they think its going to go up in price.
Basically every asset is up considerably since the US government decided to spend $12 trillion and increase the money supply by 23% in one year. I'm sure its completely unrelated
“Bitcoin is a way to convert cheap or excess energy anywhere in the world into money, much of it renewable or energy that would go to waste.” Do we have such a thing as “excess” energy? I’m not sure what you mean by go to waste.
“In a world where the US money supply can go up 23% in a given year with no end in sight...” And yet real inflation rates have remained low and pretty much on target for decades. Why don’t we see 23% inflation? You can’t take the money supply alone and assume inflation. That’s only 1/4 of the equation that determines prices. Expansionary monetary policy is implemented as a response to otherwise DEFLATIONARY adverse events, to prevent a downward spiral. The end in sight is the end of whatever crisis it was used for. The fed then announces a new interest rate. Etc. A % increase in the money supply alone, without context, doesn’t tell me whether it’s an excessive number and I should be worried.
> He says it also limits the number of transactions the system can process to about five per second.
This hasn’t been the case since segregated witness was integrated into the protocol.
This number is also “on-chain” transactions. The article fails to mention that most transactions are off chain, or are only settled on the main layer. No mention of second layer protocols that are made specifically for transactions (lightning), or off-chain uses, such as centralized databases like exchanges, or bearer bonds like opendime.
I think the thing that will burst the current bubble will be when the fake USD (“Tethers”) filling the market are finally recognised as not actually being backed by fiat reserves.
I keep wondering what would happen if bitcoin disappeared tomorrow? Would the world be swimming in excess electricity? Would prices all over drop because of over supply? I’m not sure, but I doubt it.
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[ 2.8 ms ] story [ 186 ms ] thread"We'd have to double our global energy production," he says with a laugh. "For Bitcoin."
He says it also limits the number of transactions the system can process to about five per second.
This doesn't make for a useful currency, he argues."
yeah, and fuck living in an inhabitable planet
What's interesting to me is that Proof of Work competes with government's Proof of Force.
I wonder, is this a choice between running the world on math (or profit) versus running the world on democracy (or force)?
This only works for single large-scale miners after you raided all factories/households with above average energy consumption. Many small miners would continue to mine from home (with average energy consumption levels) while collaborating in a global mining pool.
For large economies, just saying it's illegal without enforcing anything at all would be massive blow, since blockchains' only current use case is speculation. If the the US government said tomorrow 'bitcoin is illegal' the price would crash to the point that mining no longer even made financial sense.
Not really, Bitcoin accounts for a reduction in hashrate by adjusting the mining difficulty every 2015 blocks (~2 weeks).
> Then they could go after the methods of organizing pools, but I suspect that wouldn't be necessary.
Not possible if they are organized via secured networks like TOR.
Remember the pizza? Buying games on Steam? All that ended, because the core group controlling bitcoin decided a tiny block size limit suited their interests. This makes perfect sense for people sitting on a hoard of coins and who want to keep on increasing the contention and driving up the value, but has nothing to do whatsoever with the original vision of "A Peer-to-Peer Electronic Cash System".
It's an interesting thing, really. Bitcoin had some successes, but failed at stopping it from being controlled by a central cabal.
Even if there was some conspiracy going on, this happened in what 2017? The price of Bitcoin rose from ~2K to ~60K up to today. So whatever 'the group behind bitcoin' did, the market seems to agree with 'them'.
All the Bitcoin forks who misleadingly claim to be "the real Bitcoin" are either dead now or the market values them at <1/100 of BTC. Conspiracy theories tend to grow over time so maybe this is now just 'the group behind Bitcoin' manipulating the global markets as well?
Epstein contributed funding to MIT Media Labs which run the Digital Currency Group which provided funding to Bitcoin developers. Boom. Conspiracy confirmed.
Conspiracy theories are just like playing a game of six degrees of Kevin Bacon. The reason why you need to introduce large players like MasterCard or AXA or whatever is because the larger they are the more likely you are able to draw a connection to anything in the world.
Unless you can produce a falsifiable prediction based on your conspiracy theory they are no more than an entertaining drinking game.
Only reason I'm paying attention to this is that if the market one day wants larger block sizes (i.e. hardware gets to a point where more people can run nodes to the point that a reasonable amount of decentralization is possible with larger blocks), Blockstream may hold bitcoin back from transitioning, and something with a larger block size could see a considerable increase in market size. I would think they would accede if there were a reasonable risk of bitcoin losing share because they are keeping blocks too small, but maybe not.
So you are spreading conspiracy theories without substance and hide behind "I don't know, I am just asking questions"?
Here is the list of all contributors (even those just fixing typos in the docs) to the latest Bitcoin release: https://github.com/bitcoin/bitcoin/blob/master/doc/release-n...
Can you name just one who is also employed by Blockstream (let alone one with the weight to convince others to act against consensus)?
In a imaginary word where miners get only the block subsidy, they get x50 more money are incentive to use like x50 more electricity.
In a imaginary word where miners get only the tx fees, they can reduce the fees x50 and get the same money. (Moreover, the size of the transactions will be x50 smaller in Bitcoins.)
In the real world where miners get both, it's something in between more complicated, but each halving makes it more similar to the second scenario.
If you spent the entire US federal budget on a global reserve currency that worked without a military that's a net positive for humanity though, isn't it?
As an example, how could bitcoin being the reserve currency fix the South China Sea dispute? There are still multiple countries who want the islands.
Bitcoin's rising power usage doesn't achieve a greater capacity, it's simply the result of an arms race between miners. The faster others mine, the faster you must do so as well, if you want to keep making money. But Bitcoin's design results in that the increased power doesn't really do anything for the network. It doesn't make it faster, or give it a higher capacity.
Bitcoin is also not a financial system, it's a global game of chicken.
Even Bitcoin Cash, which keeps the same stupid design is a more attractive option if one wants to have anything resembling an economy simply due to that they increased the block size limit.
Citation needed. The legacy financial system has a huge infrastructure behind it to secure and maintain it (buildings, transport, security, ...). I would assume the US Petrodollar alone probably exceeds Bitcoin's consumption of resources (I don't have any sources though).
> Even Bitcoin Cash, which copies the same stupid design is a more attractive option due to that they increased the block size limit.
BCH is a scam. Not because they assume that the removal of the block size limit comes without any costs, but because it regularly splits after influential but narcissistic 'leaders' attempt to grab more power and because its community continues to justify deceitful tactics to promote BCH and trick people into buying BCH when they expected Bitcoin.
In fact, the lie that BCH is more energy efficient than Bitcoin is just that, another BCH advertising lie. Energy consumption is a function of block reward only (mined coins + tx fees). Currently miners are rewarded ~$400K for Bitcoin and ~6K for BCH. BCH would consume exactly as much energy as Bitcoin if BCH's prices or number of transactions would rise accordingly.
For now, the cost of Bitcoin is on top of the cost of the existing system, not instead of it.
You can have a closed loop of exchanging Bitcoin for goods and services without any legacy financial system involved. Just because you prefer to exchange your Bitcoins for your local currency does not imply that the cost of maintaining your local currency should be added on top of Bitcoins own.
A BTC transaction is currently estimated to take 821 kWh. That's ridiculous.
> BCH is a scam. Not because they assume that the removal of the block size limit comes without any costs, but because it regularly splits after influential but narcissistic 'leaders' attempt to grab more power and because its community continues to justify deceitful tactics to promote BCH and trick people into buying BCH when they expected Bitcoin.
I don't care about any of that, actually. I'm mercilessly meritocratic in this regard, and in my case, merit == processing transactions at a low cost.
Whatever nonsense goes on in the community, the drama regarding branding or whatnot isn't of my concern. My interest in crypto is extremely minor and focused straight on the "cash" type of usage. Whoever can provide that earns my interest, and I hold no loyalty whatsoever. BTC had my interest back before it bumped into the block limit, and at that exact instant, lost it.
It is huge, I agree. But ridiculous in comparison to what? How much energy/CO2 does the traditional financial system consume/produce (incl. buildings, production, transport, security)?
>> BCH is a scam.
> I don't care about any of that, actually. I'm mercilessly meritocratic in this regard, and in my case, merit == processing transactions at a low cost. My interest in crypto is extremely minor.
If you don't care about the details and your interest in crypto is extremely minor it is super risky to put any money in an altcoin like BCH or to advertise it without a disclaimer.
You are more likely to lose value because
The merit you are looking for, "processing many transactions at low cost" is currently not achievable without sacrifices. If something sounds too good to be true, it usually is.The current system, which is far more efficient.
> a) it has low security (a collusion of only 0.5% of Bitcoin miners can perform a 51% attack on BCH)
Not a critical issue, since evidently it's not happening. I'm not putting in more than I can afford to lose.
> - b) the community and their 'leaders' continuously lie and mislead the public about BCHs performance, adoption and scalability (e.g. unlimited transactions without degraded decentralization) > - c) the coin and the community splits regularly because of power grabs
Completely unimportant to me. I'm not loyal to BCH or anyone else. I use whatever works at any given point in time. BCH currently seems to be the most usable for my ends, given how it performs transactions cheaply and has decent enough adoption. But if it dies, no big deal, I'll use something else. Heck, even DOGE seems to be doing okay.
Plus, this is crypto. There is no such a thing as an altcoin. It's all software. Permissionless money, remember? Lies, deceit, cheating, are all fair game since there's nobody to give anybody official blessings or permission on anything. So I couldn't care less who said what or what internal drama is brewing. Does it work or does it not for my use is the only metric, and the second it stops working I'll find something else.
> - d) the market's expected value of BCH drops continuously (because of the points mentioned before)
No, currently it isn't. See the graphs. Plus I'm not interested in the virtual gold kind of usage. So long it more or less holds up, that works for me.
> The current system, which is far more efficient.
You keep repeating that. Do you have any sources to back that claim?
I've done the math before, but I've forgotten the precise results I came up with. The results are in the realm of "Bitcoin uses more energy than that which is used to produce all the US [maybe all the world's] currency." Like, it's not even close--I think shipping gold bars on an airplane may be more energy-efficient than Bitcoin now.
When the difficulty rate rises the network is more difficult to be attacked. The upper limit to the difficulty rate is the point at which the miners can be profitable. We want the network to be as secure as possible. Though, I would say that we also want the network to be as efficient as possible (ie larger block size for more tx per block) like in Bitcoin Cash.
These questions always strike me as disingenuous / intentionally obtuse. But charitably assuming an honest question for purpose of frank discourse, my simplest answer / understanding is that in general, in the daily transactional system, participants work to reduce energy cost per transaction and over most periods of time this energy cost per transaction has been reducing, or if it increases, it is to support some additional identifiable functionality. This strikes me as a rational system.
With bitcoin, my understanding is that effective energy usage per transaction / for the system as a whole has been increasing. This strikes me as iterational.
I am eager to be corrected if my high level perception of bitcoin is incorrect and energy costs have been rationally decreasing / becoming more efficient over time.
If NOT.. Then how does anybody persuade themselves to believe this is a rational currency system, or at the very least, that it's energy usage in particular is in any way whatsoever defensible??
Bitcoin does not consume energy per transaction but per block. How many transactions the block contains does not change the energy requirement to mine it. If the number of transactions on the Bitcoin network would go to zero tomorrow, energy consumption would not change (same if transactions were doubled).
Bitcoin's energy usage is a function of hashrate which is affected by mining profitability which is affected by block reward (mined coins + tx fees) and energy prices.
Long story short: Just make "dirty" energy more expensive by including the cost it incurs on the climate. This would make Bitcoin's already large share of renewables even bigger and would improve global energy production and consumption as a result.
My "long story short" question is: over time, has Bitcoin effective energy per transaction gone up or down?
Not theory, not what nebulous public policy changes should happen to justify the energy mix, not what we think may might need to happen et cetera et cetera.
Is the energy cost per transaction in real world for bitcoin going up or down? (in principle calculated by "energy used for bitcoin system in total divided by number of transactions executed per some unit of time").
Everything else is trying to muddy it up from my personal perspective.
Energy is expended to secure the network as a whole and not for the transfer of coins.
But if you insist on computing such a metric with only limited applicability, the answer is: Yes, the metric goes up:
Estimated power consumption per day, 2020-2021 +5%:
Estimated number of onchain transactions per day, 2020-2021: +6%: And this doesn't even include all the hidden private transactions that occur off-chain on Layer 2 solutions like the Lightning Network:Number of nodes on the Lightning Network, 2020-2021 +60%:
Capacity of the Lightning Network, 2020-2021 +430%:Oops, meant to say transactions go up vs energy, so the metric energy/transaction goes actually down.
The assertion that bitcoin may be doomed specifically because more people want to participate, is laughably wrong. It is designed to adapt to a market that is itself adapting to it.
How far are we from the total number of Bitcoins the system allows?
Total reward has been ~10-15% composed of tx fees recently.
Waiting for reward to drop off by halving will take a long time and if current trends persist will be nicely padded by tx fees.
https://btc.com/stats/fee
What will it take to end bitcoin's predominance?
Trust.
I don't understand enough to know if it's a design decision or a technological limitation but the barrier to entry for something like chia also seems much lower, hopefully democratizing the ability to participate in the creation/validation side of the network. Chia requires a single ~100GB plot file (and 332 GiB scratch space when creating the plot) to start farming, which is a pretty low bar. I don't have to buy an expensive special purpose bitcoin ASIC and I don't have to stake the equivalent of 68,416.96 United States Dollar (32 eth) to get started and start contributing.
ETH 2.0 has launched in parallel with ETH 1.X. The timeline is ~1 year for final merge, not years. This is potentially going to be accelerated (https://notes.ethereum.org/@vbuterin/B1mUf6DXO).
The "network" doesn't accept anything. ETH updates via hard forks. You either get on the train with the most support, or you don't. The majority wants proof-of-stake and there is already almost 4 million Ether staked on the ETH 2 chain (https://launchpad.ethereum.org/en/).
This is what I mean by the network accepting. Admittedly there's a spectrum of win/loss as per the ratio of the two resulting networks, but I'd suggest that the stake based network being substantially smaller would essentially be a failure, especially if the mining is still happening.
Doesn't bode well when the expert of the article makes a mistake like this.
I don't see how it'll pop the bubble, but imo the day where there's a moral imperative to switch to a PoS chain is coming. I wonder if the btc community could switch to PoS if they seriously were looking at losing Bitcoin dominance
This means that Bitcoin mining and energy prices form an arbitrate opportunity, which will force energy prices higher and higher as usage increases.
A friend of mine proposed that proof-of-work could be the Great Filter.
Miners are competing very profitably, on aggregate, for this amount of money daily.
Therefore the full-factor cost of the global Bitcoin network is under $50M per day.
So whatever these people say about global energy use, it's under $50M per day.
Its value evaporates with that confidence. It only takes one person or ban from one country to start a cascade sell off, and see its value go off a cliff.
> So whatever these people say about global energy use
... Is that it's destroying the planet for fun and profit. It's using a large country's power to do nothing of any tangible value. And it seems to be a bizarre thing to encourage as we cruise into a global climate disaster.
It's important to note that the cost of energy its priced to is more or less the global lowest cost of energy. No one mines Bitcoin in Los Angeles during the summer. Bitcoin is a way to convert cheap or excess energy anywhere in the world into money, much of it renewable or energy that would go to waste. And most mining is centralized in a few locations for this reason. So doing a simple energy calculation is dishonest.
> The two essential features of a successful currency are that it is an effective form of exchange and a stable store of value, says Ken Rogoff, a professor of economics at Harvard University in Cambridge, Massachusetts, and a former chief economist at the International Monetary Fund (IMF).
> He says Bitcoin is neither
This made me chuckle. The reason the price of bitcoin (and hence the energy cost of mining) is going up is that people have lost faith in the monetary institutions. In a world where the US money supply can go up 23% in a given year with no end in sight is a world in which you can't trust your savings. We had a global pandemic and stock market is up 30% from pre-covid. This is insane. And people aren't dumb. They're just waiting for the other shoe to drop. In the meantime some find Bitcoin to be an effective hedge.
Is there somewhere where I can get good data on where the electricity for Bitcoin mining comes from? The article itself says this:
> And the electricity the Bitcoin miners use overwhelmingly comes from polluting sources.
No, the reason bitcoin has increased in price is speculation of future increases.
Basically every asset is up considerably since the US government decided to spend $12 trillion and increase the money supply by 23% in one year. I'm sure its completely unrelated
“In a world where the US money supply can go up 23% in a given year with no end in sight...” And yet real inflation rates have remained low and pretty much on target for decades. Why don’t we see 23% inflation? You can’t take the money supply alone and assume inflation. That’s only 1/4 of the equation that determines prices. Expansionary monetary policy is implemented as a response to otherwise DEFLATIONARY adverse events, to prevent a downward spiral. The end in sight is the end of whatever crisis it was used for. The fed then announces a new interest rate. Etc. A % increase in the money supply alone, without context, doesn’t tell me whether it’s an excessive number and I should be worried.
This hasn’t been the case since segregated witness was integrated into the protocol.
This number is also “on-chain” transactions. The article fails to mention that most transactions are off chain, or are only settled on the main layer. No mention of second layer protocols that are made specifically for transactions (lightning), or off-chain uses, such as centralized databases like exchanges, or bearer bonds like opendime.
(There's a lot written about this. For example: https://davidgerard.co.uk/blockchain/2021/02/23/new-york-set...)