For all the hate Bitcoin gets because it’s obviously in a bubble market, can we at least agree that it is an astounding engineering achievement that an anonymous individual and a small group of researchers were able to build a network capable of transacting billions of dollars of value with only 2 service incidents in 14 years? All without any meaningful service costs and no hacking of the network, despite huge incentives.
There is a meaningful service cost, it's just paid for by mining. Environmentally there's also a massive cost, one that is not offset by the benefits bitcoin brings - which is primarily financial speculation and scams.
Cryptocurrency is probably one of the worst inventions in recent memory.
> Cryptocurrency is probably one of the worst inventions in recent memory
Keep in mind that not all Cryptocurrency use mining. Nano, for example, is zero fee, environmentally friendly coin that is incredibly fast. Bitcoin gets all the talk but there are some great and interesting tech out there. Get yourself a wallet (https://natrium.io/) and I'll send you some so you can try it out.
> Every block must also contain a small, user-generated Proof-of-Work value which is a Quality-of-Service prioritization mechanism allowing occasional, average user transactions to process quickly and consistently. The PoW computation for a transaction typically takes a few seconds on a modern desktop CPU.
I keep hearing bitcoin apologists saying "Bitcoin is environmentally unfriendly but... check this out" as if that would solve the record temperatures we're having at the moment.
How about we stop using cryptocurrency completely. Time for the UN to get together and get this banned.
You can't ban it. I mean you can say you've banned it, but you can't ban crypto. It's way harder than banning the drugs found everywhere in the world (I guess not a lot in Singapore, you willing to start chopping heads off for your goal?)
The best you can do is decide you don't like it, tell people not to use it, choose not to accept it, not to buy it, and rally your friend not to. That's all cool with me. But you can't stop crypto. If it dies it will be because something that replaces the advantages it presents comes along and people can't help but switch over to that.
That's the figure responsible for my "less than 1%" statement and I'm not even sure how accurate that estimate is. Honestly it makes no sense to me.
> The index is built on the premise that miner income and costs are related.
> Since electricity costs are a major component of the ongoing costs, it follows that the total electricity consumption of the Bitcoin network must be related to miner income as well.
> To put it simply, the higher mining revenues, the more energy-hungry machines can be supported.
So BTC price shoots up all the way up to nearly $70k. This means miner profits will also increase proportionally since they get paid in BTC.
The problem is they try to correlate energy consumption with miner income. Profits are up so energy consumption must have risen proportionally as well? I'm not sure I buy that. When BTC prices rise, profits must be higher and therefore the costs will represent a smaller percentage of miner income, not the constant 71.44% that's apparently assumed by this study.
The way they estimate the minimum energy consumption does make lot more sense.
What is your issue? If my dog bites a dog, do we need to ban all dogs?
Cryptocurrency is not even that much responsible for emissions in comparison to countries or corporations. Who told you that crypto is bad?
Since this is HN, you might enjoy this paper: https://arxiv.org/abs/0805.2815 originating from a project called Cardano, which has published dozens of peer reviewed papers (not only on arxiv), presented continuously at EuroCRYPT and works with great academics from “boring” fields (at least to most CS students) such as formal verification.
The main gist in pos (to which Cardano showed the first viable solution that does not have extensive unbonding periods or requires centralized coordination) is that stake pool operators (similar but different to miners in Bitcoin) are chosen randomly to validate the next block based on how much tokens are staked with them. The incentive system to keep these SPOs truthful is outlined in detail in the above mentioned paper.
You basically do not let everyone hunt one complex problem (where all but one miner waste their energy to secure the network) but build a system to chose one to then perform a validation. This decreases energy consumption of the overall network substantially.
I sent you one Nano to play with. Let me know what you think! For me, I think Nano is a great replacement to cash. You can give and receive without fees. It makes a great way to donate or pay for things.
> In very basic, the computers you and the receiver own do the processing work for you. Think of it like you're the one mining your own transaction. Instead of fees there's tiny few seconds worth of extra power being used by your CPU
The real amount of work needed to process transactions is extremely minimal. Bitcoin and other proof-of-work coins adds unneeded work that is taxing to systems and therefore, the environment.
If bitcoin's benefits do not offset the "massive costs" for you (because you're likely coming from a first-world country), it doesn't mean that these benefits do not exist for people who were not so lucky as you are.
Carbon pollution is not just a one-time cost, it is a debt that carries a massive interest rate with it that will be paid for generations. So whatever benefits someone else might reap from Bitcoin, it certainly isn't worth it to me.
People use way more energy for dumb heating. In my region humans can't survive in winter without it. There is no reason why mining rigs can't be used for 'smart' heating, heat being a byproduct of mining.
It is not done currently only because the energy use of bitcoin is so miniscule compared to other uses, that it's not even worthy to bother yet. Down the road, it'll likely change, but currently complaints about 'massive costs to the environment' are mostly virtue signalling.
If the energy use of bitcoin was minuscule while heating a building, and it could generate mining rewards while doing so, then people would be using it for that purpose. They aren't.
That's my point. It's not popular because it's not economically viable in many cases. So heating buildings is another thing that Bitcoin is supposed to improve, except it really doesn't.
Why do you think it would be less economically viable to use mining for rewards + heating rather than just rewards? It's both economically advantageous and arguably slightly less pollutive to offset energy consumption used for heating.
Because professional Bitcoin miners--the ones who are actually getting rewards--are not using rigs in their homes. They make more money by using industrial-level setups, buildings dedicated to mining that are located where the energy, taxes, laws, etc. are most favorable. These miners are the ones making the actual money from Bitcoin, not the hobbyists running a home rig who never mine a single block before their hardware is ruined. Home rigs do not compete with industrial setups on cost, not even when taking heating into account.
"Smart heating" is just one more example of where Bitcoin in theory does not match Bitcoin in reality.
That's a fair point, but isn't your beef with externalities associated with electricity not electricity itself? Blaming bitcoin sound like whack-a-mole where you can blame video games, AI, whatever for wasting electricity. The real problem IMO is that electricity consumers create negative externalities, be it from making their home a bit too warm and comfy or from using a crypto-currency instead of a gold bar.
I think when people complain about emissions from Bitcoin, their beef is really with both energy emissions and Bitcoin. If our energy production did not pollute, then I wouldn't care how much people mine it, but as things are now, it seems wasteful.
It is often considered more wasteful than those other things you listed because the mining algorithm is designed to be wasteful; i.e., if people design faster mining chips, it doesn't make anything more efficient or increase economic growth, it just causes the hashing difficulty to increase among all miners. That is sheer stupidity.
Given that bitcoin is just one tiny piece of massive electric inefficiency in our world today, do you not see eliminating externalities as the goal at hand? I just don't see how you can possibly solve your worries without getting to the root cause. IMO electrical production emissions damaging 3rd parties is the problem and bitcoin outrage is the symptom. Eliminate bitcoin and something else maybe picks up the electrical slack, with no real assurance what it will be.
correct. the cost of the Bitcoin network, at least in terms of energy is the sum of all the energy spent mining so far. this is also what values the network and makes it secure. it's a very efficient method to convert raw energy into a digital token
Let's take an article [0] produced by a big Bitcoin miner at face value. They claim the banking system consumes 263.72 TWh globally, twice the power consumption of the Bitcoin network at that time, 113.89 TWh.
Now, Bitcoin is processing 4.6 transactions/second [1]. VISA alone is processing 1700 transactions/second on average, with peak transaction rates claimed in the 24000/second [2]. Mastercard is similar, as are other payment processors.
Even worse, the claimed energy usage is for the entire banking system. This easily amounts to billions of daily transactions, but also many other services that Bitcoin doesn't even come close to offering: insurance, mortgages, credits, risk evaluations, escrow and many others. All this for a mere 2x the total energy expenditure.
We were discussing Bitcoin. The Lightning network is a completely different thing, with completely different guarantees of payment security/trust than Bitcoin (it's possible to steal money on the Lightning network, or to do denial of service attacks against nodes, by design).
Bitcoin hasn't replaced the banking system though, nor could it (or should it). A crypto backed finance industry would be a libertarian hellscape of consumer abuse.
The average transaction value made in bitcoin is $80k. A financial service cost of $26 on an $80k international transaction is amazingly good. And with something like litecoin goes down to $0.02
It's not the speculation and scams that are an environmental cost, it's the fact that the Bitcoin network uses more energy than a medium-sized country.
driving up the price of bitcoin increases the motivation to run even more bitcoin miners which use more and more electricity. Depending on where it's generated that can come at the cost of the environment.
There's no benefits to mining bitcoin specifically. You're right about that, it buys us nothing. Wouldn't mind even more energy being spent to secure the Monero blockchain though.
Also, scams are only common in the smart contract networks. People create useless shitcoins and spam telegram groups in order to generate some quick hype and exit with as much money as possible. I'd certainly like to believe nobody would be dumb enough to actually invest massive amounts of capital into these scams but that's exactly what they do.
The cost users are paying is the cost of decentralization. One single entity will always be cheaper than blockchain decentralization, but the cost can be spread across millions or billions of users.
Bitcoin is not decentralized. You need specialized hardware to mine bitcoin and the entry costs are enormous. One CPU one vote is history. As a result there are relatively few miners. Just look at how much bitcoin suffered when countries started banning mining activities. A truly decentralized coin would simply shrug off attempts at regulation because there are so many independent nodes no single country could possibly ban them all. What happened instead is one country banning BTC put a stop to a huge chunk of the network.
I mean decentralization in the "proving ownership" way. Right now, a bank can be the central authority on how much money you have in your account. With Bitcoin, people collectively determine how much each person has through the blockchain. A bank doing it will always be cheaper, but then the bank has too much control. How much are people willing to pay to make sure one entity does not have too much control or power?
Do you think more miners will join if Bitcoin gains more adoption? Their is a cost to even find out if decentralization (through blockchain) is even worth it.
How? They can't. My PC, laptop and phone can't mine bitcoin.
The way to achieve true decentralization is ASIC resistant mining algorithms and some form of diminishing returns to force miners to operate at small to medium scales. We need lots and lots of small miners running on commodity hardware that people already own, not a few large scale operations running on expensive custom silicon.
You make some great points. My points were for crypto in general, so do you think a crypto will come that is truly decentralized and can be mined more easily?
I think Monero is closest to the original cryptocurrency dream. Not perfect but closest. It has ASIC resistant algorithms to make mining with normal CPUs feasible.
>Cryptocurrency is probably one of the worst inventions in recent memory.
Do you have a source for this fact?
It might survive the 50 year old fiat dollar experiment. Until 50 years ago, there has not been a currency that wasn't backed up by something that was beyond the government
Don't believe the lies they say about fiat currencies in crypto circles. Currency is way more complicated than they lead you to believe.
After all fractional reserve banking has existed since before currency did. And if you have fractional reserve banking you aren't "back up by something" unless you count the credit of the bank as something. Given that is the literal definition of fiat currency (backed by the full faith and credit of the United States) that means that it is way more complicated than the gold standard.
To give a modern example (the gold standard no longer exists anywhere) many countries have a fixed currency backed by the USD. Since fractional reserve banking is a thing there too it isn't like the country is holding onto $1 USD for every $1 USD equivalent of currency. However it isn't like there isn't a relationship so the source of that relationship is government exchange. You can exchange $1 USD equivalent of currency for $1 USD.
Now we get to the real wrinkle. How can countries have higher inflation than the USD if they are locked with USD? (Which they objectively have) By simply restricting the amount of currency that can be exchanged for USD. This can be hand waved around pretty easy "we have a shortage" or "it is difficult to obtain that much". Now you have a fiat currency in reality but technically it is a backed currency.
To be clear it isn't like ditching the gold standard was without downsides, this is just long enough to point out that broad statements like "backed by anything" fail to account for the reality of backed currencies in a modern financial system.
>After all fractional reserve banking has existed since before currency did.
We don't even have fractional reserve banking. There is no reserve ratio, it's 0. Bernanke's own published book states it is only fractional reserve banking when it is required to keep a fractional reserve.
I am talking about the consequence of fractional reserve banking. Specifically that money is made by banks to some amount. Also I think saying "we don't have fractional reserve banking" is needlessly splitting hairs. The requirements are just more complicated than "hold onto X% of deposits".
My statement was that the currency (in this example, USD) until 1971 has always been at least partially backed up by something beyond control of any single government (gold). That was the whole reason of Nixon's speech and abolishing gold convertibility on August 15, 1971 [1]. This regime existed since at least Ancient Greece, but probably longer. I have no empirical reason to believe that the currency system of last 50 years is more stable than the one that existed for 2000+ years ( I think substantially longer).
You are ignoring my point because it wasn't what you wanted to say. "At least partially backed up by" is a meaningless statement. Certainly everyone agrees that US wasn't holding onto the amount of USD that existed as gold. So what percentage was it? Was that percentage stable?
The answer to both of those questions was no. The actual amount of currency in circulation (including balance sheets) was certainly well in excess of what the US was holding in reserve.
You could say that by offering gold at a rate you fix the value of the currency but I already covered how that is nuanced.
The reality of course is the reason we had trades for reserves and reserve requirements were to provide faith from consumers that the currency was worth something. I don't think anyone can claim that USD isn't worth anything today.
Because no private enterprise could provide power or internet. Sure, some of the internet technology was invented with government grants, but lets not pretend these inventions were only inevitable due to US government. If US government were gone today the internet, electricity, and bitcoin will still be here but the usefulness of the dollar will massively decrease.
If not for the relative regularization of commerce provided by corporate law, and relative stability achieved through economic policy, I think there would be no investment in great ventures of the scale needed to build the electric grid, semiconductor manufacturing, telecommunications, etc.
The limitation of liability granted to the shareholders of corporations is the granddaddy of all entitlements, because it enables relatively hands off investment. Without those things, a "big business" would be on the scale of a corner grocery store, or a family owned factory.
Those achievements are through cooperative contracts and agreements. That can happen without US government. They can even happen without any government at all. Government after all is just a body with a monopoly on violence.
I don't think contracts can replace law. Imagine having to read and understand a unique 3000 page contract in order to buy a share of stock, or a house, or to get married. Imagine trying to do something like loan money if you have no way of knowing what someone's existing financial obligations are. I think the volume of economic activity would plummet.
"Monopoly on violence" is something I've heard about before. Is this theory supported by evidence? Actually I think that a monopoly on violence might be a good thing. The number of bodies that can engage in violence is either 0 or 1, or many.
I read a translation of Njal's Saga which takes place in pre-literate Iceland. The erstwhile "government" had no monopoly on violence, except to assign cash damages in lawsuits. What the saga describes is basically a continuous blood feud.
Also, people doesn’t seem to know about the separation of power. The US is definitely not the best example from the point of view of a totally democratic state, but a financial system does need some kind of “admin account” to actually dispute/enforce the agreed upon law. This is not solved by cryptos at all.
Contract is just 'law' between consenting parties. When a third party gets involved in a way considered 'legitimate' without the consent of the first two (or N number of consenting parties), you have government.
I'd argue the opposite, if the US government ceased to exist, the electrical grids in North America would collapse shortly thereafter, followed by the Internet and Bitcoin. Without the rule of law and threat of prosecution, a massive surge in usage due to theft would overwhelm systems. Without the nuclear status quo and the threat of retaliation, NA would either be glassed or invaded.
They would probably be collapsed in the short term and eventually be replaced by something, if not decentralized power generation.
>Without the rule of law and threat of prosecution, a massive surge in usage due to theft would overwhelm systems.
I used both internet and electricity in Northern Syria circa 2015, provided by private providers, and it seemed to work just fine then. Why you think rule of law is so important to internet existing? If the dude running the cell phone towers and cell phone stand points an AK out the window when they see a crook, most people decide not to theft that. You don't need central power grid to have enough electricity to run phones and cryptocurrencies.
>Without the nuclear status quo and the threat of retaliation, NA would either be glassed or invaded.
Or cooperative militias and private individuals ally with someone with nukes or seize the ones already in existence. Not to mention invading American part of NA is hilariously foolish as there would be a "rifle behind every blade of grass."
Sounds like the next startup mecca. Now, before bitcoin, where did smart people put their savings? Probably, any money that wasn't needed for immediate liquidity went into dollars or euro or securities denominated in those currencies.
The present state of the art is that cryptocurrency is an arbitrage that converts subsidized electricity into value that can be transported out of the country.
Without bitcoin I would still advise putting savings in stocks, bonds, a little precious metals maybe. I don't see bitcoin as savings as much as a currency or insurance policy against all your material assets and bank accounts being seized and/or stolen.
>that can be transported out of the country.
There's a lot of value in this though, no? The 10k limit on undeclared financial instruments held in your personal custody through customs and KYC/AML laws in banking mean crypto fits a big void that was previously much harder to fill.
Would those stocks be denominated in Syrian currency, or something else?
Indeed, as I've said in the past, money is a technology, and different technologies can be applied to different purposes. The "major" world currencies are designed to be used as a temporary store of value, medium of exchange, and instrument of economic policy. Bitcoin could be applied towards different purposes.
>>> There's a lot of value in this though, no?
Sure, a subsidy is by definition a source of value.
Stocks would continue to be denominated in shares. I've never heard of a stock being denominated in currency, but maybe there is one out there like that. A share is usually something like I own 1/N of the interest in the company so the formula of ownership is m/N where m is number shares you own and N is the number of total shares (some simplification here, but roughly accurate). Market clearing determines how much people will pay for a stock, which happens in all sorts of currencies.
I'd argue the opposite, if the US government ceased to exist, the electrical grids in North America would collapse shortly thereafter, followed by the Internet and Bitcoin.
No, there will just be temporary outages and prices these things (electrical grids, internet) will rise to extortionist levels as local authorities / militias take over. Just like they do in any other conflict zone in the world.
If a major superpower falls, adversarial superpowers will be the ones to move in to fill the power vacuum, not local tribal warlords. See Russia after the fall of the USSR, but before Putin.
I don't think you can say there's a general "rule" like this, throughout history. If anything the cases where these powers become straight-up subjugated from the outside (absent outright military invasion) are in the minority. Counter-examples abound, e.g. the Ottoman Empire and Austria-Hungary, or Spain after the disaster of 1898.
See Russia after the fall of the USSR, but before Putin.
Post-Soviet Russia was weak for sure, but not a vassal state by any interpretation.
Are we pretending that the US government is gone without a worldwide depression? (To be clear the US isn't alone, any of the major countries disappearing overnight would shock the economic system too hard to make these style what ifs meaningful)
If so it wouldn't stop being valuable for quite a while still, in this hypothetical you would still have years of contracts in terms of USD, not all of which would be renegotiated for tons of reasons. Additionally most foreign trade that historically ran of the USD would want to change to a new world currency but would need to figure out what currency to use.
So lets flip it on its head. What if the mining reward disappeared? Would Bitcoin survive?
>Are we pretending that the US government is gone without a worldwide depression? (To be clear the US isn't alone, any of the major countries disappearing overnight would shock the economic system too hard to make these style what ifs meaningful)
Crytpo will march on with or without US government, I don't see them as existential concern for BTC or other crypto.
I'm not sure if BTC will survive once there is nothing to mine, but other crypto like XMR has infinite tail emission thus mining never dies. I apologize but here I often use BTC interchangeably to mean PoW cryptos in general. I shouldn't do that.
Private enterprise providing power and internet would be a massive disaster, this is the reason we have utilities; a cadre of competitors dredging up the shared public space to each erect their own private lines would create a hideous patchwork of incompatible and inefficient infrastructure that would have completely destroyed any possibility for the internet as we know it today.
Quantify the environment cost that has been borne by bitcoin and now compare it to the cost by overheating or cooling houses (except perhaps a few elderly or infants, no one needs a house to stay within 60-80 degree band, you can survive with much less heating/cooling energy usage). Then explain to us how anyone living in a comfortable room temperature heated home that complains about bitcoin isn't a hypocrite, using environmental concerns as propaganda to shame people using computation cycles in some way they deem unfit while simultaneously restraining their outrage for AI training or video games.
This comment is unpopular, because it hits too close to the heart of home for many of you sitting in your comfortable home wasting energy on heat and A/C while complaining about environmental consumption of bitcoin.
"You criticise bitcoin for using more electricity than Ireland while using disproportionately high levels of coal power usage, and yet you live in a house. Hypocrite!"
This isn't a cogent argument. Yes, overheating or overcooling houses is also bad. If AI training used as much electricity as Ireland I'd be critical of that too.
Heating and cooling uses way more electricity than Ireland. This message is for the hypocrites who complain about bitcoin while keeping their house above 60 when it's cold, or those running A/C below 80 when its hot. Y'all are wasting way more energy than bitcoin, while many of you simultaneously complain about bitcoin.
>This isn't a cogent argument. Yes, overheating or overcooling houses is also bad. If AI training used as much electricity as Ireland I'd be critical of that too.
It's a cogent argument to point out the hypocrisy. If you want to argue we should create a watt-police or ensure externalities of power consumption are better accounted for, that's a different argument.
I mainly just want to ensure the earth doesn't burn. Yes people should ideally not be overheating their home (could easily be done using smart meters if electric companies weren't incentivised to ignore it) and many other things like reducing fossil fuel usage. Bitcoin consumes massive amounts of energy for basically no benefit except pure money wonkery, which is no benefit at all. It's a net negative in every possible way.
>Bitcoin consumes massive amounts of energy for basically no benefit except pure money wonkery, which is no benefit at all. It's a net negative in every possible way.
Well I disagree here. It provides benefit for many people. The example I continually use for me personally is buying precious metals with <30 min clearing without paying credit card fees (and I really hate funding credit card companies anyway). But people in Argentina also using it for reasons just to have efficient way of receiving dollar for free-lance work.
I think we're in agreement we would do well to be as efficient as we can with our resources. It would be great to find a way to eliminate externalities of energy production/consumption.
But those rules/fees are there for a reason. You (and me also) may not agree with those reasons, but still you are just circumventing a law made through a democratic process.
Are you buying precious metals in the abstract, commodities market sense or are you manufacturing? Because if its the former, I still don't think that's a net positive.
I do think it has some small benefits like transferring money where there are no other options. But the vast majority of the network's use is in purely financial use and justified by HODLers and libertarian types. Its existence is largely a downside on its own even without the huge energy costs.
>Are you buying precious metals in the abstract, commodities market sense or are you manufacturing? Because if its the former, I still don't think that's a net positive.
Y'all told me crypto was bad and now I'm bad for dumping crypto to buy precious metals? The litecoin transaction I do uses $0.02 of electricity. $0.02. Ever left a lightbulb on longer than you should have? Spent $0.02 in gas to go to the bank to get fiat? Just can't win. I don't really like holding dollars as the government constantly inflates them, and I see them as part of a system that bombs innocent children abroad and locks up foreign nationals without even a trial. I see it as irresponsible not to store emergency wealth _somewhere_. I'm committed to not become a public charge and I wouldn't resort to begging from family unless there were no other choice and even then I'd probably rather just starve
> The litecoin transaction I do uses $0.02 of electricity. $0.02.
Litecoin processes about 100k txs a day and miners make about 1M$ per day.
So that comes to about 10$ in electricity per tx if we assume miners break even and ignore hardware depreciation. While this overestimates electricity costs, it's not off by orders of magnitude. This is the way that people attribute bitcoin's electricity costs to transactions.
The marginal cost of the transaction is very close to the transaction fee. The block was going to be mined with or without my transaction. So no it definitely did not add $10 in electricity cost to add my transaction to the chain.
Well, it's pretty simple really - I'm not a big fan of financialisation. I think it's done some pretty serious harm to the world - even many libertarians, simple minded though they may be, have the good sense to point out that wall street is bad. Now I don't really blame you personally for day trading or buying gold as a store of value or whatever, but it isn't helping your argument that bitcoin is doing anything good if it is literally just "wall street but with massive energy costs, less regulation, and full of even more scammers and financially illiterate".
Well what is your solution for the common man TODAY then, to do in the meantime before all your dreams of a more equitable or reasonable society come true? You don't seem to like wall street so stocks are out. You've bashed precious metals as not being a net positive. Crypto is out because it makes it makes smoky the bear cry. Dollars have reached a ~7% inflation on CPI and even worst inflation against assets. Most bond yields aren't even reaching inflation rate. Just what the hell am I supposed to do? When will you stop thinking of me as a sinner for doing something, anything, to keep some safety for the wellbeing of my family? Would you think better of me if I shorted USD by taking out a loan and over-extending the hell out of myself to buy property instead? (Nope, can't do that last one because that's financialization.)
Are you gonna be there to personally bail out my whole family if we lose our jobs? Can you withstand that burden? Maybe that makes me evil. At least I don't stay awake at night wondering if I can buy more diapers and milk if I get axed at work tomorrow.
>Well, it's pretty simple really - I'm not a big fan of financialisation.
How do you see as buying precious metals with proceeds of labor being financialization? Do you think the $0.02 financial service cost from the transaction as really being larger than the financial cost of if I had went to the bank and got a big pile of cash, or if I had used a credit card? No, the "financialization" has lessened. The wikipedia article I read states it's a period where debt-to-equity ratios increase and financial services account for increasing share of national income. Explain how buying precious metals without debt is financialization. I can't even get a loan against personal custody of precious metals, if anything it _decreases_ my access to "financialization."
>bitcoin is doing anything good if it is literally just "wall street but with massive energy costs, less regulation, and full of even more scammers and financially illiterate".
I don't think that's the advantage of bitcoin, even if you describe it that way. The advantage of bitcoin is decentralization and lack of centralized trust -- packaged into electronic form.
Once again, I don't blame you at all for engaging in investment or speculation or whatever. I'm not concerned with individual action, I'm concerned with the systems that drive those actions. If bitcoin didn't exist you'd presumably be doing something else to feed your family, so the question in my mind is this:
- what real world utility is realised by the introduction of a new system?
- what real world cost is realised?
- how does it shape people's behaviour?
Note that none of these is a criticism of the individuals engaging with the system. It's about the impact of the system itself. Now from where I stand this is how bitcoin plays out:
- negative utility: high electricity and CO2 cost
- negative utility: labour does not provide material benefit (financialised)
- negative behaviour: increased cultural propagation of scamming, speculation and other results of financialisation
- mixed behaviour: cultural hub of libertarianism
- mixed utility: provides a space for unregulated financial transactions. Negative: scams, blackmail, other financial crimes. Positive: paying financially isolated and unbanked people. Mixed: purchase of contraband.
Which is to say, the ratio of positive to negative, especially weighting the impact of increased CO2 emissions (which is a potentially existential threat in the medium term and a mere catastrophic threat in the short term), is pretty shockingly bad.
While your qualitative descriptions of utility and assessments I mostly find roughly accurate (pure opinion on both our part, and I will nitpick and say it's great when benefit-to-labor ratio is high), the quantitative balance is subjecive opinion. You've simply analyzed and decided the ratio is poor. I've looked at it and find the opinion the ratio is excellent. But it's true crypto doesn't care either way and is exceedingly difficult to squash. Ultimately I think it is on the power producers and consumers to achieve how to eliminate externality associated with electricity use; playing whack-a-mole with whatever people use their electricity on (AI, crypto, video games, whatever) is just patching the issue.
And thus brings us to the reason why crypto is an ever popular debate on HN. At the end of the day even if you find crypto morally bad, there's no universal shock to the conscious for using crypto like there would be for murder/rape/theft. Some see crypto as sinner and other see it as saint. You seem to acknowledge a little of everything but weigh different factors differently than others. At the end of the day given the impossibility of banning crypto and the number of people on both sides, I just don't see it going away without a superior replacement filling the spot. For me this is a great thing, but for many it's going to be a point of contention and outrage for a long time. I will go one respecting the choice for some not to use it and hopefully others will peacefully implore us to stop if they find it wrong, but I think it's going to take violence and an oppressive enforcement mechanism to force me and many others to stop. Good luck.
I'm more lamenting crypto's existence than waving the guards over to come shoot people. I don't see how bitcoin can at all be a positive thing on a systemic level when it's primary purpose is financial speculation and scamming (neither of which are materially productive) and its primary cost is massive amounts of CO2. Of course it can be individually beneficial - mass murders are financially beneficial to funeral directors, but I don't think they're good in the general sense. And that's basically how I see crypto advocates - advocating for something immoral because it benefits them financially. Which is about all I expect from libertarians, to be fair.
>I don't see how bitcoin can at all be a positive thing on a systemic level when it's primary purpose is financial speculation and scamming
I understand this is all opinion on both sides. I would add this opnion risks overlooking, say, Argentinian free-lancers who are paid in crypto because the system surrounding them makes it untenable to use conventional banking. Or the jewler buying precious metals with litecoin to avoid credit card fees. Escaping a failed economic system like refugees in Venezuela receiving crypto remittance definitely seems like a systemic improvement for them.
I guess you could call using it for transaction to buy precious metal speculative, but even in that system the actual crypto transaction isn't speculative as it merely acts as a unit of trade to buy an underlying "speculative" investment (personally I don't consider PMs speculative investment but rather store of value that I don't desire the volatility to appreciate or depreciate.)
>its primary cost is massive amounts of CO2
So you hate electricity? Join the Amish.
>mass murders are financially beneficial to funeral directors
But this isn't true. The people killed have to die sometime, their death is assured to the funeral directors. Them living longer just means they're more likely to reproduce and generate a new human who in turn dies someday. Funeral directors are worse off by mass murder. I think this excellent allegory points out your economic short-sightedness. Funeral directors want people to live highly reproductive lives, not short lives.
> Of course it can be individually beneficial - mass murders
Now we have entered clown world where mass murder is the example given. How many mass murders actually happened specifically and only because of the existance of crypto? The only example even close I'm aware of is Ross Ulbricht's alleged murder plot that was never even prosecuted thus we have no idea if it was true.
>advocating for something immoral because it benefits them financially
So basically anyone advocating for using dollars? I see crypto like a hammer, it's a tool that can be used morally, immorraly, or merely in a morally neutral fashion.
>Which is about all I expect from libertarians, to be fair.
Is this supposed to be some sort of ad-hominem attack?
>Which is about all I expect from libertarians
I have a hard time making sweeping generalizations about morality based on one's political choice.
> I would add this opnion risks overlooking, say, Argentinian free-lancers who are paid in crypto because the system surrounding them makes it untenable to use conventional banking. Or the jewler buying precious metals with litecoin to avoid credit card fees.
I did include the unbanked and productive manufacturing (which you neglected to mention until now - are you a jeweler?) in examples of positive use, in my utility list. But you have to assess a technology based on its overall effect.
> So you hate electricity? Join the Amish.
Totally specious.
> Funeral directors want people to live highly reproductive lives, not short lives.
This is overly reductive. Clearly a short term boost in business is a financial boon for funeral directors, as it would be for any business.
> How many mass murders actually happened specifically and only because of the existance of crypto?
Uh, what? Maybe I should just give up trying to explain my point to you if a simple analogy is beyond your comprehension.
> I see crypto like a hammer, it's a tool that can be used morally, immorraly, or merely in a morally neutral fashion.
You can look at actual use to determine the effect of something. Not many people are using F15s for anything else but killing people, so it's fair to call weapons of war broadly immoral.
> Is this supposed to be some sort of ad-hominem attack?
"greed is good" and "unregulated capitalism is the ideal" are libertarian tenets, so yes, I think it's fair to say that they're selfishly self interested. So you consider yourself a libertarian?
> I have a hard time making sweeping generalizations about morality based on one's political choice.
Given that politics is an expression of values, I really don't. If somebody were to say "I don't like Jews and that's why I'm a nazi" (this is an argument from absurdity, BTW) I could reasonably call them a bad person. They also wouldn't need to say the first part because its implicit in the identification. Libertarianism is fundamentally about "fuck you got mine", which I find to be immoral.
>This is overly reductive. Clearly a short term boost in business is a financial boon for funeral directors, as it would be for any business.
I don't see that as true. A short term boost followed by long term bust in many scenarios is not good for business. See payday loans. Mass murder is a payday loan to funeral directors, you get a little bit early now but a big loss in the long run from drop in reproductivity rate (and ultimately, long-run death rate) of the populace.
>Totally specious.
Here's an idea, if you don't like using electricity don't use. There's no single "right" way to use electricity. Your beef again seems to be with externalities of electricity use. So you probably hate video games and AI too, albeit proportionately less on CO2 output. And you probably hate those in cold climates keeping their houses near 70 in the winter even more than bitcoin.
> So you consider yourself a libertarian?
The attribution you made suggesting my libertarianism was your statement "Which is about all I expect from libertarians, to be fair." This is your words, not mine, directly replying to me. Ad hominem doesn't require the label to actually be accurate. I've never called myself a libertarian, although I'm sure some might label me that way. I call myself an anarchist but that's really the only political label I give to myself.
But really this is all your self aggrandization about your moral superiority to libertarians, because in reality tons of people, even liberals or socialists and even authoritarians (North Korea government) use crypto. Crypto isn't exclusive to a subset of libertarians.
>You can look at actual use to determine the effect of something. Not many people are using F15s for anything else but killing people, so it's fair to call weapons of war broadly immoral.
Nah, 'weapons of war' aren't immoral. They're tools. Used to defend, or to aggress. Or maybe in my case, to put some holes in paper for enjoyment. Ever shot an SKS or an AK? Good fun. Even shot one at ISIS once, never felt bad about it but every once in awhile have a laugh at the fact I survived. They can be used for good or bad.
Yes I look at the F15 and see it like a hammer too. If aggressive fighter enters and bombs innocent people, I see it as fair game for that fighter getting blown out of the sky. The F15 isn't immoral, its use on the innocent is. Killing in self defense isn't immoral. Although sure the government and individuals in it have used the F15 immorally. Actually it's probably easier to use an F15 in a moral fashion than a larger bomber not as well suited for defensive fighting, although neither are immoral at face value.
>"greed is good" and "unregulated capitalism is the ideal" are libertarian tenets
Was selfishness the subject at hand? I don't see selfishness as bad, I see coercive selfishness as bad. Selfishly building a farm so you can make money with the effect others around you are fed is at least neutral and probably good. Using coercion to rob your neighbor is bad.
>I did include the unbanked and productive manufacturing (which you neglected to mention until now - are you a jeweler?)
I mentioned it because that's a large percentage of use of gold (going off memory here, but I think it's like 40%), for instance. Were you not aware of this? You know people use precious metals for different purposes right? For instance most platinum / palladium buyers are actually industrial rather than those perhaps seeking to hold on to it until manufacturers need it more and thus yielding a profit and providing market liquidity.
> But you have to assess a technology based on its overall effect
And your assessment is 'totally specious.'
> If somebody were to say "I don't like Jews and that's why I'm a nazi"
Not a fan of Nazis, but if someone simply calls themselves a Nazi and doesn't hurt any Jews or aggress on anyone then I call them a whacko not a bad person.
>Libertarianism is fundamentally about "fuck you got mine", which I find to be immoral.
This encompasses so much stupidity and naivety I don't know where to start. But I think you know more about libertarians than you give off, and you understand if we're (we're as in you an me, not we as in aforementioned libertarians) dumbing things down to your level socialism or democracy can be about "fuck you got mine" by those who vote to redistribute funds from the others to themselves, telling those who pay the tax "fuck you, got mine from the tax you paid."
Of course we could live at 60 degrees in the winter, but most people would agree that their lives are meaningfully improved by increasing the temperature to closer to 70-72.
On the other hand, Bitcoin provides no meaningful benefit to society compared to other currency. The only real benefits of Bitcoin are that it makes ransomware easier to accomplish (which is bad for most people) and that it has made some people a lot of money due to its pyramid scheme qualities (again, bad for most people).
Crypto provides extraordinary meaning to many people in society compared to other currency. Argentinian freelancers use it to get paid, for instance due to systemic issues with financial transaction in their country.
One big one to me is buying precious metals online with <30 minute clearing time without paying credit card fees. Literally nothing else I can find accomplishes that; I didn't even set out to use crypto for that purpose it just happened to be the best way to do it in my circumstance.
>lives are meaningfully improved by increasing the temperature to closer to 70-72.
Well I could say "nuh uh" and then you could say about bitcoin "nuh uh" but then we'd both merely be saying the other's use of energy consumption is bad. If you have an issue with making sure every bit of electricity is only used for necessities, why don't you go out and say that or explain how you want to make sure externalities are paid for by power consumers. Singling out bitcoin by people living near room temperature with aid of heating/cooling is just hypocrisy.
That’s a fair point. We should be including the cost of pollution and climate change with the price of energy, and if we were, then I’d care a lot less about the energy use for what I consider nonessential.
That is unfortunately not the world we live in though, and probably never will be due to political reasons.
Citizens of Kazakhstan or Iran suffering from brown outs or people near recently restarted coal plants may prefer argentinians seek other ways to work around currency and corruption problems.
> can we at least agree that it is an astounding engineering achievement
As the first cryptocurrency, it's certainly an incredible innovation and idea. However, it's already outdated technology.
Bitcoin failed to become everything it was idealized to be. It's not anonymous. It's not private. It's not fungible. It's not decentralized. It's not unregulated. It's not even a currency since transactions are not cheap and fast which makes them unusable.
The best thing this coin can do for the wider cryptocurrency space is disappear and let better projects take the lead. Yet it's the most popular coin and the only one the average person knows about. This is sad and to me it's proof of the complete irrationality of this market.
On the contrary, I don’t think you know what those words mean. Bitcoin is neither fungible or decentralized.
Mining is completely dominated/centralized by ASIC farms run by huge mining cartels.
Also, buying Bitcoin from someone else inherits that coin’s entire history. If those coins were stolen at some point you could become liable. Bitcoins are non-fungible.
There is not one entity that controls Bitcoin, thus it is centralized. You can argue about degrees of decentralisation, but it is simply far more decentralised than FIAT.
You’re creating an impossible standard, a logical fallacy. Dollars can also be tainted with serial numbers, get damaged, be marked with colors.
Again, your argument only consists of logical fallacies.
No. It is absolutely centralized. To discover who's really in control of bitcoin, all you have to do is propose an upgrade that improves network but reduces miner profits.
This is not an impossible standard nor is it a fallacy. Either it's decentralized or it's not. Either it's fungible or it's not. Bitcoin is neither.
When it was created, it was idealized as the digital equivalent to cash. Totally private and anonymous so you can do whatever you want without some bank or government monitoring you or taking issue. It was supposed to be your money, not your social credit at the bank that the authorities allow you to use for approved purposes.
Bitcoin totally failed to become all that. The ledger is public and perfectly traceable so it's even worse than money at the bank. People have even identified the wallets of whales so that they can track their movements and see if they're about to dump on the market.
Coins are not fungible which means exchanges will refuse your tainted money if you use a mixing service for privacy. Governments will sanction addresses, making the coins held by them illegal and unacceptable by any business.
> Becauee my transactions were cheap and quick
Mine were not. Were you using the higher layer networks that delay blockchain settlement? Because that defeats the purpose of having cryptocurrencies in the first place.
> Bitcoin totally failed to become all that. The ledger is public and perfectly traceable so it's even worse than money at the bank.
Well, but that's not about "not regulated", just not totally anonymous.
But it if you think about it is better than money in the bank. Because that can be traced only by governments, and here average Joe can do the tracing. So it is at least more egalitarian.
Anonymity is a prerequisite to being unregulated. Monero for example is apparently resistant to US sanctions. They tried to sanction a wallet and ended up sanctioning a transaction hash.
Those are externalities, not service costs. Hal Finney didn’t have to pay a dollar to keep the network running, the users pay all the costs, and the users are miners or accounts.
Nuclear bombs can be cheap and bad at the same time, the 2 things aren’t mutually exclusive. If you can’t admit the nuclear bomb was an engineering achievement because it had externalities, then that’s short sighted.
But in practical terms -- the cost offloading that is inherent to BTC is so blatant and direct that it barely qualifies as an "externality" (and only in an abstract, technical sense).
The gist of the GP comment was, in essence: "Isn't BTC nifty because it can do all these things, and it costs basically nothing to run." When in fact the exact opposite it true. And in fact there are still countless people running around trying to downplay its true cost.
If you can’t admit the nuclear bomb was an engineering achievement
I will accept that the bomb was "an engineering achievement". But I'm not going to get out my pom-poms try to lead the room in a cheer to the effect of: "The Bomb was an astounding engineering achievement that keeps the world safe for democracy, and at minimal service cost".
Only by outsourcing those. If BitCoin consumed the electricity equivalent of Argentina[1] recently with basically nothing to show for it, how much longer before your small group of researchers surpasses https://en.wikipedia.org/wiki/Thomas_Midgley_Jr. as the most harmful inventors of all time?
What other uses could 120TWh of electricity have been put to? Training GPT-3 took approx 200MWh of electricity[2], so enough power to train GPT-3 ~600x over.
> were able to build a network capable of transacting billions of dollars of value
But that is only possible because the value of bitcoin has skyrocketed. The last data I saw had it at only a few transactions per second which isn't that impressive.
>All without any meaningful service costs
There are service costs, they are just paid in Bitcoin. There is also obviously the electricity spent to keep the whole thing running that exceeds the amount needed to actually process the transactions.
> But that is only possible because the value of bitcoin has skyrocketed.
Even if the price of Bitcoin hadn't skyrocketed, it would still be capable of transacting billions of dollars of value. You'd just have to buy more Bitcoin in order to send the value.
When you do, however, the price of Bitcoin also increase, because it's a scarce asset. That is why it has skyrocketed. And because it's safe. And because it's decentralized. And because it's censorship and regulation resistant. And because it's even scam resistant, due to all transactions being public.
On top of that the transactions per second are irrelevant, as everyday purchases can be handled by side chains that are finally settled on the main chain. This means Bitcoin is still being developed as we speak, and so it's not outdated in any way shape or form. In fact it's getting better day by day.
Bitcoin is not a central service. That's like saying "email never had service failure"...
Still, from a technical perspective it sure is (was) an astounding achievement to create the first widely deployed blockchain.
What are you talking about - the bitcoin and ethereum network "service costs" are through the roof and are one of the biggest failures of the network as it was designed.
The service costs are so extremely high for each transaction, and if you don't pay the gas/service fees there's a very high potential that no one will process your transaction.
It's basically highway robbery.
I'm thinking you've never really transacted anything on the bitcoin blockchain?
No need to whataboutism this issue. Bitcoin uses over .5% of the world's electricity just to prop up a pyramid scheme and illicit markets. It's an abject disaster.
The site is disingenuous. There have been far more than two service incidents. Around 2015 there were many periods where transactions simply weren't clearing at all due to overload, and there was no way to set a correct tx fee because the fee needed to get to the front of the queue was constantly changing and wallets couldn't inform users of what the current fee was anyway. From the user's perspective these were outages.
Clearly the people who created this were absolutely brilliant. And after sinking years of sweat and energy into groundbreaking work, the end result is an energy-sucking ponzi scheme that's done considerably more harm than good.
Wow, that's bold. Do you mean service cost to the anonymous individual? Or overall service cost? Because if it's the latter, I think you might be very sorely mistaken.
The amazing part is they hash "no" work as proof of work to get rewarded with digital coin that contribute to global warming hastening "2012 movie" and we celebrate it as a monumental achievement! Maybe Thanos is right.
I totally agree with you. Distributed ledger technology is amazing .
But, I think bitcoin could do better if it’s services could be split apart.
People use bitcoin to perform transactions , to speculate on its price and to generate value by mining to secure the blockchain.
If these services were more broken apart we would have a better solution but this could be intractable problem. The main problems that people cite such as the ESG impact are big. Many people in bitcoin speculate on the price which introduces problems with people that want to use it for payments. Since we need miners to secure the chain it has a large environmental impact by those miners. And socially it is used to allow people to violate various laws .
If you count those, that is no different than blaming traditional banks because your gran was conned out of some money by Bodgit & Scarper Roofing and Driveway Contractors Ltd.
> Actually Bitcoin is down 13.52% in the last 7 days
If a stock market index (e.g., S&P 500, FTSE 100, etc) was doing the same there would be many more headlines and people freaking out.
Some people claim that Bitcoin is "money", or at least a store of value, but I'm not sure I'd want to have any net worth stored in something that is as volatile at Bitcoin has been over the past year:
The S&P 500 market cap is over $40 trillion. The bitcoin market cap is under $2 trillion. I just looked up this data super quick with Google so corrections are welcome. And yep, I'm editing my comment because apparently that data is for all of crypto - bitcoin is $815 billion according to ycharts.
That's still an absurd amount of money, but there is more than an order of magnitude difference just in money, not to mention how almost no parts of the modern economy interact with cryptocurrencies in any way whatsoever.
I don't necessarily agree with it, but market cap is essentially the standard metric for how we measure value in our economy. If Apple goes down 10% people care because they're worth trillions and lots of people lose money. If a mid-size company goes down 10% a lot fewer people care.
I understand what market cap is but I don’t understand why it is relevant to your point. Apple is the same order of magnitude as bitcoin but you claim the media would care about a 10% move in the former but not the latter.
Firstly it doesn’t make sense to me because bitcoin isn’t a company, nor is it made of them so this doesn’t feel like a like-for-like comparison. Secondly it doesn’t make sense to me because I don’t understand why market cap should be related to media reactions to volatility.
I don’t see what cohesive theory underlies your claim that a big ‘market cap’ is required for the media to care about volatility.
I was saying Apple is the S&P 500 and Bitcoin is a random midsize company - it was an analogy. No analogy is perfect though, and you can certainly poke holes in mine (as you have).
> Secondly it doesn’t make sense to me because I don’t understand why market cap should be related to media reactions to volatility.
Because larger amounts of money matter more than smaller amounts of money. That's all. Penny stocks can fluctuate 1000x in a day but nobody cares.
I put it to you that market cap is not a particularly relevant quantity but the thing that matters is mostly a mix of retail exposure and expected volatility (as well as eg media interest). Bitcoin is basically expected to be volatile (which is why 10% down is not news). I think you were trying to make a point about retail exposure rather than market cap, but that does not sufficiently describe why the media care because a big move in something that is meant to be stable (e.g. some fixed income index) is smaller in percentage terms than a big move in something that is expected to be less stable (like an equity index).
Well the last part of my original comment was that most people just don't interact with crypto in the first place, which is what you seem to mean by retail exposure.
As for the rest, I disagree. If a million people lose 10% of their savings it matters more than if a thousand people lose 10% of their savings, and that's why market caps matter for anything publicly traded. The amount of money is what matters, and that's measured by market cap. Sure, we can get down into more granular details like how much of that market cap is the float, are people investing into certain stocks using their Roth IRA, or whatever other details - but the amount of money drowns out these factors in the aggregate.
Bigger market caps means bigger market makers with far more liquidity, so an average trade is much smaller in the grand scheme of things. When there isn't as much liquidity and smaller volumes, the market will move more quickly.
You can't take one snapshot in time and compare it when the two assets exhibit wildly different volatility characteristics. You are capturing Bitcoin's price when it is down.
If we were to do the same thing at the end of the year last year we could say it went up 70% in 2021 (and that was after a big drop from it's ATH) whereas the S&P only went up 26%. See how that isn't the whole story?
> You can't take one snapshot in time and compare it when the two assets exhibit wildly different volatility characteristics.
I mean, you certainly can if you're taking the "buy and hold" approach, or hodl amongst the cool kids. It simply points out that buy and hold crypto is not guaranteed to be better than something like SPY, and the excess volatility is maybe not a good thing?
The highest possible returns != what investors actually achieve.
Pointing out that at the peak it was up higher than SPY, even though it is no longer up higher, and considering that a good thing seems very odd. It would also only relevant if you're able to know when things are at a top and bottom. Did you sell any bitcoin you owned when up 70% and, if so, have we reached a bottom when it is optimal to buy back in?
> Did you sell any bitcoin you owned when up 70% and, if so, have we reached a bottom when it is optimal to buy back in?
This is the ultimate investing question. What signals a top or a bottom? How do I sell just before the price falls and buy just before it climbs back up? Is there even an answer? There must be since there are literal trading bots out there making millions.
That's low risk but inefficient because it fails to exploit market movements. People say the markets are unpredictable but somehow people managed to automate trading. There must be some method to it.
>It simply points out that buy and hold crypto is not guaranteed to be better than something like SPY
There are no guarantees in life, much less in financial markets of any kind. The whole concept of markets is that different investors make different assessments of different assets.
Bitcoin is 41 times higher in the same time period
Nasdaq is down 6% in a week
Bitcoin is up 4% in the last year, it was 40,254 on the 9th Jan 2020, and currently 41,766. Its lowest point in Dec 2019 was 6,540.05. Dec 2020 was 17,619.53. Dec 2021 was 42,874.62.
None of that really tells you anything about the relative worth or the direction.
I suppose short memory is good when remembering is painful.
I remember when ETH was about $100. BNB was $40 months before I had enough spare money to enter this market. I have one family member who once held several bitcoins but sold them at $70.
I went up x,xxx% from basically nothing though. Going up the same percentage in the next five years from the current price is another story. I wonder if this might be contributing to the popularity of NFTs as a new, alternative thing for people to risk their money on.
You may be confusing the bitcoin network conditions with price action.
iirc, there were some mainstream and social media stories of the recent "events" concerning the country of Kazakhstan regarding banning of bitcoin mining and the political unrest (and or violence that ensued). The blip you experienced may have been a direct result from this.
1) is dated 1996, the S&P started on 614 and ended on 766. It would never be as low as it was then.
Had you put $1k in at the peak in 2000 then you'd be below water for 12 years, but by now 22 years later you'd have $3300.
Had you instead dripped $50 in each year since 2000 you'd have $3500.
If you'd have put that $1k in a bank returning around the fed funds rate, you'd have about $1400. Dripping it in would be about $1300.
To be down over the course of 15 years, you'd have to go back to the 1926-1930. Even putting your entire life savings into the stock market on Jan 1st 1929 you'd be above water after 23 years, would have doubled your money in 30 years, and quadroupled it in 40 years.
The market still seems to be in price discovery for crypto. Also, I wouldn't use crypto as an investment for some of the same reasons I wouldn't use dollars.
"downtime" is kind of a weird way to call it. Its not down in the same way we think of AWS being down. I guess the right way to say it is 'time when the current longest chain was not an active chain', but that doesn't exactly roll of the tongue I guess.
At any given moment there are a handful of active chains on the bitcoin network. really a better word I should use is fork, because these chains are 99.999+% identical, its just the last few blocks that may differ. The consensus work that Blockchain does is all about figuring out which one of these forks is the one we all agree on. This is why if you deal with actually posting transactions to the bitcoin network they say you should wait for ~6 confirmation blocks to ensure that you don't end up on on a fork that doesn't end up in the consensus (its unusual, but it happens).
During those downtimes the current active chain that is run today was not one of the active chains in consideration for consensus. This is why the fixes was to go back and do a softfork from an earlier state.
> Yes, the Bitcoin Network has been down two times in the past. Once in 2010 for around 9 hours, known as the Value overflow incident where a block contained a transaction that created 184 billion Bitcoins for three different addresses. The network was soft forked to not allow any more than 21 million Bitcoins ever.
> And once again in 2013 for 7 hours, known as the March 2013 Chain Fork, where a block that had a larger number of total transaction inputs than previously seen was mined and broadcasted. While Bitcoin 0.8 nodes were able to handle this, some pre-0.8 Bitcoin nodes rejected it, causing an unexpected fork of the blockchain. A new released a version 0.8.1, forked directly from 0.8.0 solved this issue without any harm to the network.
For 16 hours to be 0.01% of the total time, bitcoin will have to be 160000 hours old, which is about 6666 days, or 1913 days from today. So on April 5th, 2027 (assuming it has no more downtime before then), bitcoin will be able to claim four-9s of reliability.
Would be interesting to include stats on of chain reorgs (frequency, length, etc.) as they're technically part of their downtime definition ("current longest chain was not an active chain"). It would also give an idea of the level of risk when waiting for X confirmations.
You could probably parse the Bitcoin Core logs (assuming reorgs are logged) or run a modified Bitcoin node software which explicitly tracks such reorgs.
You wouldn't catch all of them but I believe you could get a pretty good sample by running a single node. And you won't be able to get historical data unless someone else has been tracking this and shares their data with you.
There's some discussion about reorg frequency/depth on BitcoinTalk[0][1]. Also there is this academic paper[2].
Bitcoin could go over a million dollars, or below one dollar, multiple times, in any order. It would be a risky short, even if it did ultimately end up valued at 0.
You'll buy it dirt cheap to cover your short position and keep the initial capital you got from the short sale. Pretty dangerous though, even if you're right in the long term, short term anything can happen and you'll get liquidated.
Bitcoin, or any Crypto, Block Chain, are too complex, unfortunately, to understand, and therefore is a huge barrier to their adoption.
Whoever comes to an easy way of doing the digital currency first will win big.
One other turn off remains: is to solve the material part, how to turn crypto back into Fiat Money so it really seamlessly works and not entangled into revenue control traps, losses on exchange between networks, daily limits, and so many more.
Very true, I even think satoshi wrote that somewhere on bitcointalk back in the day, something along the lines of "I have designed bitcoin, it solves byzantine general problem. This solution is extremely complex so it should hide the fact what ive really made is a ponzi scheme"
I am curious how the 99.98% SLA compares to other payment networks (eg: Visa, etc). A bit apples to oranges, since the transaction volume is different.
1. VASTLY different definitions of "uptime". A credit card POS terminal that required minutes or hours per transaction would be considered defective. If we measure Bitcoin's uptime by typical performance requirements for a CC processing system, Bitcoin has had 0.0 seconds of uptime since inception.
2. Bitcoin has no SLA. If it goes down you have no recourse. If your transaction does not post within N seconds, you have no recourse. If you transaction posts but is later not recognized by the network, you have no recourse.
go walk into a starbucks with a gold bar. it certainly has value. they certainly want to give you coffee for value. it's just not the write medium. bitcoin is gold bars. not ready for retail but certainly ready for a hold of value. nothing wrong with that.
Not Bitcoin itself but the price did - and this aged perfectly well: [0][1]. Did people really think that last year, Bitcoin was going to $100K?
Actually, we are going back down to earth again. After all, this is even before regulations are coming for cryptocurrencies. So who knows which ones will survive this.
As for those who jumped into Bitcoin at >$60K, you are going to be waiting for a long time. I hope they didn't FOMO all in with their life savings, loans and everything they had at $68k last year then.
It's functional but not ready for prime time yet, IMHO. Buying things on Bitrefill using Lightning works well. It is better than a credit card, I think. Really fast and low fees. Imagine a gift card that works for any merchant that opts into the open protocol. Also, if you want to refund the money on the card, you can do that without the cooperation of any merchant.
There are a number of improvements in the pipeline. Taproot just got enabled. It seems we need something like SIGHASH_ANYPREVOUT (BIP-118) in order to implement eltoo. eltoo would be like the next generation of Lightning, making it easier for users.
No, I mean unlike a gift card, you can get your balance back from the card without the merchant's cooperation. Once you pay a merchant, it's not reversible.
Ah I see thanks, I see what you mean now. It's probably more like a prepaid bank card?
The big thing it's missing from a consumer standpoint is the purchase protection that comes with credit cards (which does let consumers claim refunds for faulty products etc).
I'd say so. There are some smaller issues here and there of course - but it's getting better all the time. Bought a game on Joltfun the other day, took me all of 2 seconds to scan a QR code and pay.
Whats your suggestion, how should crypto people react? They currently dont hide the fact the network split twice (8 years ago), so what else should they do?
Like, maybe have a thing that doesn't break its own core rules when a bunch of jerks decide that it should? That would be a start.
“It's so decentralized, very nice! Oh, wait, let us centralize it real quick. Here, now it's decentralized just like the other day! No, wait, we need to centralize it again for a minute. Done, now it's surely decentralized and immutable, tell all your friends!”
