This is a rambling article, but the core premise that Bitcoin is leaky because it has an energy INPUT is a weird one. The argument that other tokens being fully closed loops that don’t leak value is certainly a take…
Proof of work plays many roles in the Bitcoin. One role it plays is that it ties a digital token to a real world, scarce, valuable resource. The only thing a digital token can be tied to: computation, or energy. Closed loop staking tokens have no tie. It is a formless, virtual, free floating concept. Not to mention that they are all highly centralized, so they don’t even have confidence in their monetary policy to fall back on.
With Ethereum, Cardano, Solana, etc, your value is in the hands of where the developers choose to take the protocols. They can and have changed their monetary policies, and they will again.
This person’s real concern appears to be “number go up”. It seems to have infected their thinking. They see a system that decided to engineer for NGU instead of stability and confidence, and thinks that’s “not leaky”. It is extremely short sighted.
In the stormy world of crypto, Bitcoin is the port.
No it doesn't. It has one purpose, and one purpose only: to secure the network against double-spending attacks by making it infeasible to reverse transactions.
I won't comment on PoS. I am not familiar with it, but it seems like it bypasses this need simply because it is more of a compromise based on classical consensus.
> With Ethereum, Cardano, Solana, etc, your value is in the hands of where the developers choose to take the protocols. They can and have changed their monetary policies, and they will again.
This is a bad premise because it frames the discussion as a false dichotomy: between Bitcoin and Ethereum/Cardano/Solana/etc. There are PoW cryptocurrencies like Monero, Litecoin, and many others that have community-driven development and institute a less dangerous emission schedule than Bitcoin.
> This person’s real concern appears to be “number go up”. It seems to have infected their thinking. They see a system that decided to engineer for NGU instead of stability and confidence, and thinks that’s “not leaky”. It is extremely short sighted.
This is a misreading of the post. The problem is that (this is an over-generalization) bitcoin's resilience to attacks requires that the price of bitcoin increase twofold every halfening, or the relative hashrate to some outside attacker will be cut in half.
>In the stormy world of crypto, Bitcoin is the port.
This is an idiotic statement. Bitcoin development has completely succumbed to corporate capture at this point by Blockstream and the likes.
> No it doesn't. It has one purpose, and one purpose only: to secure the network against double-spending attacks by making it infeasible to reverse transactions.
I won’t argue with you on this point. A better way to phrase it might be to say “POW has many features or implications for Bitcoin…”
> There are PoW cryptocurrencies like Monero, Litecoin, and many others that have community-driven development and institute a less dangerous emission schedule than Bitcoin.
Disagree that it is dangerous. We don’t have enough information about the future to determine that. It is just as likely that fee markets will be enough, thus implementing some kind of “perpetual emission” would only damage the value of the network.
It's true that nobody knows for certain what will happen. I am skeptical of the idea that bitcoin in particular will be able to scrounge up enough fees on "L1" to keep the network secure, especially given its small throughput.
As the author mentions, the "L2" scaling solutions like LN still require security on "L1". However, to the extent that "L2" is scalable, it will not increase "L1" fees.
> >In the stormy world of crypto, Bitcoin is the port.
This is an idiotic statement. Bitcoin development has completely succumbed to corporate capture at this point by Blockstream and the likes.
I disagree. Bitcoin has never had a hard fork. There isn’t a “Bitcoin classic” chain floating around with an old set of consensus rules. Block stream and/or minors can’t force a hard fork like ETH devs can.
> There isn’t a “Bitcoin classic” chain floating around with an old set of consensus rules.
Yes, there literally is a Bitcoin Classic, and prior to that was a Bitcoin XT. There's also Bitcoin Cash, and many others.
Even excluding hard forks which were chain splits (so upgrade only), there have been several. There were two hard forks in 2010, one to add OP_NOP and one fixing a critical bug where anyone could spend any Bitcoin. There was a hard fork in 2013 (BIP-50) because a block broke a limit and at least one double spend occurred.
Why comment if you aren't educated on the topic? Or rather, why actively spread misinformation?
No, this was very different than ETH/ETC. Bitcoin cash was a minority of people forking away from the BTC chain to increase the blocksize. ETC was the original chain that was forked away from to reclaim stolen funds because of a smart contract hack.
Generally when people are talking about “hard forking” they are referring to the majority making a backwards incompatible change that leaves little activity or economic value on the original chain. Bitcoin never forks like this, because who would coordinate it?
Bitcoin core maintainers tried to fork it and were not successful (See bitcoinXT).
Miners and community leaders tried to fork it and were not successful (see bitcoin cash).
Bitcoin exchanges and businesses tried to fork it and were not successful (see segwit2x).
And many more will come, I imagine a PoS fork will inevitably come and not be successful.
Sure, but I would argue that blockstream and others control bitcoin not by forcing upgrades, but instead by preventing upgrades to the network and creating commercial solutions to easily fixable problems.
I'm not saying that blocksize, LN, etc are solved problems. But I am saying that the indecision and lack of community involvement is slowly killing bitcoin. It is succumbing to corporate capture. They continue to invent increasingly custodial methods of using bitcoin.
There is a fundamental difference of opinion here. There will always be people pro changes and against. Its conservatism against progressivism. So, while it's useless to even argue (you're either one or the other, and that probably won't change, ever), let me just say that if you want any kind of digital property to exist, it's pretty important for such property to remain constant in regards to it's features, or better say, both it's virtues or flaws. That's why Bitcoin maximalists, as they are called, are very conservative towards bitcoin development.
Because of all that, making a case that someone controls Bitcoin just because they are preventing changes is rather far-fetched. So, while your other points may be valid, this is certanly an invalid one.
> I won't comment on PoS. I am not familiar with it, but it seems like it bypasses this need simply because it is more of a compromise based on classical consensus.
Proof of Work and Proof of Stake round to the same thing.
In PoW you input cash to buy miners and power to obtain coins. Cash > ??? > Coins.
In PoS you input cash to buy coins to obtain coins. Cash > ??? > Coins.
In both PoS and PoS those with the most money get to control the system. PoW adds a layer of indirection by wasting mountains of components and a country worth of power but at the end of the day there's no real difference.
In Proof-of-Work, a large fraction of the money you put into the system is destroyed. There are physicially meaningful economies (and dis-economies) of scale involved. You are generally incentivized to sell your cryptocurrency as fast as possible to cover your real-world costs (lowering the price of the cryptocurrency).
In Proof-of-Stake, you are incentivized to keep your money into the system so you can control more and more of it. It's like a ponzi scheme where you are incentivized to re-invest your winnings. This falls apart when everyone starts to cash out.
The use of bitcoin mining as indoor heating is one such example of a dis-economy of scale (but this is an oversimplification because it does not factor depreciation costs). Also, there are systems like RandomX which encourage CPU-based mining, which has economies of scale for home miners or botnets over larger mining operations.
Ethereum's PoS also pays only a tenth as much reward as Bitcoin, as a percentage of total supply.
According to whattomine.com, with an electricity cost of $0.03/kWh your cost is about 2/3 of the Bitcoin reward. Combined with a 10X higher reward, that means a Bitcoin miner with that electricity cost gets about three times as much return on investment, as a percentage basis, as an Ethereum staker. That's money they can reinvest in new mining equipment.
> you are incentivized to keep your money into the system so you can control more and more of it. It's like a ponzi scheme where you are incentivized to re-invest your winnings.
So you think the stock market is a ponzi scheme? Shares pay dividends, you are insentivised to keep putting money into the system
In the stock market, the money you invest into a company is used to pay for workers, equipment, etc that generates more dividends. Anything you invest in staking is competing in a zero-sum with other stakers.
> In the stock market, the money you invest into a company is used to pay for workers, equipment, etc that generates more dividends.
Only if you invest in the IPO or later stock offerings directly from a company. Otherwise you're just buying in the secondary market and no part of the price you pay goes to the company.
Shares represent voting control in the companies decisions. Even the existence of non-voting shares is still a message about expectations of future profitability - i.e. a companies ability to issue additional stock profitably depends on expectations about the value and future value of presently held stock...which in turn is a signal about confidence in the company's direction, profitability etc.
When you get into non-voting shares, you move closer and closer to "corporate branded" crypto. We'll see when a major company with a lot of non-voting shares really struggles and gets acquired at a discount or moved private, how much value is given to the non-voting shareholders.
You're confusing funding and cash flow. Funding is invested in value generating assets. Just because the money is spent doesn't mean the asset (like a conveyor belt) evaporates. It's essentially the equity holders allowing the firm to use their stuff. Which is an ongoing thing.
Stocks are different because stocks derive intrinsic value from non-investor participants. When a customer buys something at a store, the profit from that is saved in a cash account, re-invested in the business or returned to investors via dividends. Yield through dividends is no different at the limit than that money accruing to intrinsic value in the business.
Crypto only has investor participants. You cannot ever get more money out of a Bitcoin than someone else puts in buying Bitcoin. Less, actually, because you have to pay miners to operate the network.
Stocks as a whole are positive-sum due to the contributions of non-investor participants.
Futures, options and PoS crypto are zero-sum.
PoW cryptos are negative-sum due to the contributions of miners.
> In PoW you input cash to buy miners and power to obtain coins. Cash > ??? > Coins.
In the long run yes but mining equipment is an asset which can be sold or used as collateral for a loan.
I’m not an accountant but I’m sure there are some tax benefits to depreciation. In a bull run the miners even appreciate in value too so I don’t know how that would work out.
A better way of thinking about mining is it’s a way to dollar cost average into Bitcoin if you have access to cheap power.
It's a fact that PoW involves quite a bit of waste, just like it's a fact that e.g. a coffee shop will waste quite a bit of coffee (by discarding it at close or when it gets too old). That the market dynamics all but require the coffee shop to do this doesn't somehow stop it from being waste.
The market can't disagree with definitions of words. What it can do, is encourage the waste.
The mystical powers people assign to proof-of-work are quite something to behold. The only thing keeping Bitcoin devs from changing the issuance schedule is social consensus, just like with any proof-of-stake chain.
PoW may tie the token value to a real resource, but that's a correlation where many advocates get the causation reversed. Because of difficulty adjustment, the energy devoted to hashing is the result of the current price, not the other way around.
To add, the energy devoted to Bitcoin hashing is a product of the bitcoin price, block reward, and the wide acceptance in the Bitcoin community of the idea that provable energy burn is a good way to ensure rarity of the coins.
Even if we maintain proof of work chains as the fundamental consensus tech, there is absolutely nothing (aside from momentum) stopping the community from decreasing the block reward to the a lower value required to prevent double spends of reasonable size. The current hashing power and energy burn in Bitcoin is absurdly oversized for that specific purpose.
You could even maintain the current coin issuance schedule - there is absolutely no need to burn coins into existence, you could simply distribute them randomly to existing holders.
The article simply points out PoW imposes a huge cost on the system, and that such a cost is assumed by the token holders whether they like it or not. This has been known for a long time.
The key difference is that there's an entire network that needs securing with a minimum cost to secure. By contrast you can secure your own gold for free by burying it in the ground if you so wish, and other people not securing it properly didn't prevent people from transacting with gold throughout history.
The gold storage cost is the equivalent of buying a cold wallet and keeping it in a safe place (crypto has that as well, but it's not a problem). The 'mining' is the equivalent of subsidising a banking system
But surely the gold-owner would have to cash out some of their gold to pay the guard in cash? Does it make a difference if he pays the guard in gold and then lets the guard cash it out?
The owner would buy less gold, i.e. the gold they intended to buy minus the cost of securing it, but they don't have to sell gold. Buying less of something and selling an equivalent quantity of it is not equivalent.
Does it? The Protection Department of the United States Mint spends about $50M / year, and they look after the United States Bullion Depository which has over $10B worth of gold in deep storage - so no more than 0.5%/year.
BTC miners make around 20mil / day and with a 400B market cap, that's around 1.78% / year so definitely higher. But I'd argue the United States Mint also relies at least partly on the US military.
The Protection Department would not last long against a nation-state attack. In contrast, BTC has no nation-state or military protection.
It doesn't matter about the US military, because the gold market doesn't have to prop up the US military - it gets that ride for free. The point isn't "who is cheaper" in some theoretical sense, it's that as a practical matter the nation of Bitcoinia is importing a large amount of electricity from the USD, RMB, EUR etc economies. This is equivalent in effect to what the gold market as a whole has to pay in storage/holding costs for physical gold. If physical gold holding costs were to rise substantially for some reason, that would significantly reduce the returns available from holding gold.
Gold is useful in chemical and industrial processes. Bitcoin obviously has no use other than money, so I don't know if they are completely comparable in this sense.
If people decided that gold was not valuable as money, it would retain at least some value based on its usefulness alone.
Thought-provoking post, but this is an argument I just don't get. Oxygen and CO2 are useful in chemical and industrial processes too. If you want something more limited, then Aluminium. That's the value Gold will retain if people decided it was of no use as long-term money. Gold's use in industry has very little to do with its value. What am I missing?
I consider Bitcoin’s use only as money to be a good thing for Bitcoin. It has no competing uses, thus has ultimate comparative advantage as money. The best monies throughout history had no competing consumption uses.
An interesting idea. I think digital and paper currency[0] are the obvious competitors however, so it isn't uniquely the ultimate comparative advantage.
[0] Ok, I guess you can burn paper money or use it as a chair, I think Weimar hyperinflation had examples of that…
This is an oft-cited example, but if you look at the numbers, the industrial demand is mostly insignificant. If for some reason people lost interest in gold as a store of value, the industrial market would be so oversaturated that the gold price would likely be very nearly zero.
> With Ethereum, Cardano, Solana, etc, your value is in the hands of where the developers choose to take the protocols. They can and have changed their monetary policies, and they will again.
The consensus mechanism has nothing to do with governance in most chains. Bitcoin and Ethereum governance is both determined off-chain through social consensus, based on what node and client software the honest users of the chain choose to run.
Yup - typically referred to as layer 0. The ETH devs cant willy-nilly change the protocol and expect social consensus to agree. As a solo staker i also have the choice of which node and client to run (like you said).
How is it a rambling article? The author has an opinion and articulates it. It could be wrong, but that doesn't make it a ramble.
To me, it seems like an interesting take and makes a lot of sense. If the network is kept running by miners, and they need a certain price to make it profitable, then the price needs to keep going up as the rewards halve. Seems straightforward. It's also made clear that the price will eventually need to be astronomical. The second argument is that the price will need to go up even more, since the hashrate will need to go up as well, plus electricity prices will also go up. I wouldn't mind hearing where the author is wrong here.
The argument about Ethereum I am less interested in.
Constant supply and fluctuating demand will lead to times where you must choose between paying low fees and waiting a long time for confirmation, or paying high fees for faster confirmation. If you zoom out all the way, you can see this has played out with every halving so far.
This argument made sense when Bitcoin was still a “peer-to-peer electronic cash system” as Satoshi envisioned, but it doesn’t make sense under the current “store of value” narrative. If people are just buying and holding, they aren’t creating much demand for block space.
People do hold this viewpoint, and that's why I linked hard data. You can see the fees fluctuating from day to day. On Sep 3, many transactions had 10x the normal fees. On low volume days such as Sep 11, very few transactions had high fees.
You can argue philosophically about whether a chosen narrative makes sense or "should" create demand for block space, but I'm ignoring philosophy and looking at empirical data. Since this is already happening, and has been for the history of the project, it's not a stretch to predict it will continue happening.
There's day-to-day fluctuation, sure, but the overall share of mining rewards that transaction fees make up has been trending down over the last year[1] to around 1-2% today. That means that to maintain the current level of security in the system, aggregate transaction fees will need to go up 50-100x over time to offset the lower block rewards. Even just considering the next halving in 2024, transaction fees would need to go up ~50x from where they are today to make up for the incentive lost to miners.
If I zoom your chart out, I could make all the same arguments about 2018. It looks like just another cyclical metric that follows the halvings.
In the year after the 2018 peak, fees approached zero, but in the year after the 2021 peak, they stayed higher. As long as that keeps up and they don't actually go to zero, and people are competing for block space, miners will keep lining up, and the network will be fine.
Halvings matter less as time goes on. I didn't shed any tears for miner incentives when the reward went down by 25, and I won't shed any tears when it goes down by a mere 3.125. Mining was never meant to be profitable beyond BTC's bootstrapping phase. In fact the protocol actively makes difficulty adjustments to keep profitability near zero. Let their profits go down. As long as people are competing for block space, and transaction fees keep coming in, miners will continue competing for their fractions of a percent, and the network will be fine.
I don't understand the relation you're alluding to between halvings and transaction fees. As far as I'm concerned, they're entirely unrelated. It's true that both big spikes in transaction fees happened to occur four years apart and in the vicinity of halvings, but that could just be coincidental -- if it's not, I don't understand the mechanism that would cause it.
In any case, neither spike was particularly long-lasting, and even if they were sustained at their peak, neither would make up for the mining incentive lost in the next halving.
I only brought up halvings because it explained the chart. But let's ignore halvings and talk about mining incentive then. Fees are the less important half of the story. The main driver is difficulty adjustments. If scarce fees come in, difficulty goes down so profitability increases. If plentiful fees come in, difficulty will go up so profitability decreases. Fees are actually damped by the adjustments so the absolute amount of fees doesn't really matter. So long as fees are above 0.00000000, the network will be fine. I predict that there will always be some baseline level of competition keeping fees above 0.00000000, but if that is wrong, then things would likely fall apart one day.
The problem is, that when it become inprofitable -- miners would shut down their ASICs and wait for better time -- causing difficulty to drop.
And at this point somebody with huge computing power disabled could enable theirs Rig and quickly generating block to perform double-spend, and create soft fork.
The security of the network depends on the difficulty. It’s true that in the absence of bad actors the network will run as long as fees are nonzero, but the whole point of bitcoin is that it’s supposed to be resilient to attacks.
The original comment asking for a source was quoting an assertion that Proof of Stake blockchains, as opposed to Proof of Work ones, "are all highly centralized".
So given the context, I was implicitly asking for what distinguishes Proof of Stake from Proof of Work to make the former centralized where the latter is not.
People are so quick to dismiss cryptocurrency now because it isn't "green", but disregard the enormous infrastructure, capital, and resources that the global fiat industry uses that is completely automated away by crypto.
Even if you only factor the value of human life alone, just the time saved by the hundreds of thousands or millions of worldwide fiat employees who's positions largely would not need to exist anymore should surely be factored into these discussions about resource consumption. And that's before factoring things like wages. Or the ultra-weathy executives. Let alone physical infrastructures, skyscrapers, data centers, private jets, marketing, R&D, legal teams, IT/security, fraud depts, and loads of other internal costs.
I just don't buy that it's much worse than many existing costs we already turn a blind eye to. I believe that the growing use of safe nuclear power and other future alternative energy sources make this a moot position in these arguments anyway.
Crypto has not automated away anything useful beyond toy projects nor shown potential to do more with less. If crypto disappeared today its disappearance would have zero impact on goods and services.
I had to cash a check yesterday. This would have been a single CLI command with crypto. Ignoring the fact that this is a 100+ mile journey for me, I had to speak with real humans to get payment in hand. Just how much manpower and resources are spent simply in getting the cash from these federal printers to my hand, resources that I am inadvertently paying for? From Multiple CEO salaries to armored truck transportation to the cleaning person at the branch. and much more. I just think if people are going to slam crypto for resource consumption, you can't overlook fiat's true overall resource consumption.
Let me guess, your passport cover is painted with the correct color. You probably never had to submit a mountain of paperwork officially translated to English because you committed the crime that is to help your mother back in your home country to pay for medicine. Your bank never blocked your funds and demanded explanations on why you withdraw that cash on an ATM. You've never been through the AML racist and fascist bullshit that subverts the concept of people being innocent into proven guilty. You probably also never lived through the hell of hyperinflation or government mandated confiscation of savings accounts[0].
Saying the only reason Bitcoin is needed is to help facilitate illegal transactions is not exact a resounding endorsement that will enable its widespread adoption. Most people don't want to actively encourage / support the breaking of laws.
Bitcoin doesn't have a defined mechanism for honoring the rule of law when society determines that something bad has happened. That's a pretty fundamental and potentially fatal flaw for some (unless, perhaps, you're a libertarian). For those of us that live in a society where the rule of law provides tangible benefits to our daily lives, that's a problem.
Personally, I'm perfectly happy with the banking system the way it is. I can send modest sums of money to others via an Interac e-Transfer via an email or SMS in a matter of seconds. I can transfer funds using EFT/ACH within 24 hours with no fees thanks to the credit union I use. Bitcoin isn't really an improvement on this situation for me.
You need to understand and accept that there are a non-trivial number of people in society which feel similarly and hold the same belief. Adopting something new just because it's tech is never going to win everyone over, especially when worries about personal wealth are involved. This isn't a simple technical problem that can be easily fixed with a bit more code.
I don't believe it's shitting over the value proposition: to me, adherence to rule of law is a requirement for the financial systems that I use. If someone compromises my credit card or bank account, the bank can reverse the fraudulent transactions. If someone compromises my Bitcoin wallet and transfers the contents out, the funds are gone and I have nobody to turn to for help, and the odds of recovery are negligible. This is a feature of the banking system. To me this is a bug in Bitcoin (not a feature). I'm not "shitting" over the value proposition -- I'm telling you that it doesn't meet my requirements.
You didn't bother to look up Henry Duncan did you.
Go do the proper homework and come back.
This financial network and it's rule of laws did not start that way, learn from history or don't I frankly don't care what you feel/think, you are literally 1 person that does not represent anyone but yourself.
You're entire argument is a strawman, I gave you the hint to understand why but you are too lazy to learn.
I read up on Henry Duncan prior to making my previous post, and it's mostly irrelevant. He created savings and loan entities that were still regulated by the government and had to abide by the rule of law. More importantly, they were run by and employed humans. Humans have incentive to abide by the rule of law which computers (nodes in the Bitcoin network) do not. That's a pretty massive difference between the two approaches to financial transactions which you have not addressed in the slightest.
I've explained what my major concerns are. You have not provided any explanation for how these concerns can / will be addressed. Your claim that Henry Duncan explains things seems to be a very indirect way of stating that laws need to be changed. Great -- let's say the law is changed. How do you retroactively implement governance mechanisms in Bitcoin whereby a transaction can be reversed upon an order by the court? Right now you can't! This is a real concern for myself and others. Hand waving it away is not addressing the problem. Why would I even remotely consider giving money to people that insist upon hand waving concerns about governance issues away?
Please respond with facts and ideas, not vitriol. I really do want to understand how people involved crypto currencies are going to implement the governance that is needed in the real world, as the current approaches appear to be completly ad-hoc and unpredictable to an outsider.
It was completely unregulated when he launched it and he was the proponent of regulation but that didn't come for another 10 years+ after he rolled it out and open sourced the idea.
If you can't see the parallels then meh, it's pretty much the same process any new financial network goes through.
You're entire argument is one big strawman, people will figure out over time how to regulate it, ie custodian solutions are just the beginning, you know all of these funds can be held in escrow.
Your lack of vision is a you problem, not the network's.
Innovate or get left behind, I gave you a clear example from history which refutes your core concept and you just...hand wave it away.
Btw - I genuinely believe that there are applications of blockchains that would improve governance in the real world. Most notably, blockchains as a public ledger tracking the actual ownership of publicly traded stocks and other financial instruments would be a really good idea, as it would enable the verify part of "trust, but verify". Sadly, this is not the application that has captured mainstream attention as of yet.
No but I have been through exchange mandated confiscation of crypto wallets. Be your own bank you say? Keep my own keys you say?
You think the average person from the article would hold their own keys? No the reality is if crypto was adopted en-mass, people would use services to manage their keys and you literally solve zero problems.
"This would have been a single CLI command with crypto."
Would it? Would you have actual cash at that point? Physical banknotes in your hand you can then spend in an ordinary shop? Are you genuinely comparing similar things here?
At the very minimum crypto showed that you can run an efficient, highly liquid, double digit billion dollar, fungible or non fungible exchange market in a fully automated and distributed manner.
A huge fiat equity market such as NYSE averages $3B/d, crypto DEXes alone is around $2B/d.
Crypto also completely removes the need for middle and back offices, clearing houses, etc. on these platforms.
Just technology wise (if we were to drop the self-sovereignty of crypto tokens and just use central bank backed crypto euro/dollar/etc to replace the current financial system) a monstrous amount of manpower and energy could be saved by removing the banks, exchanges, brokers, clearing houses, compensation chambers, back office, etc. industries.
In practice, crypto markets are not any more decentralized than others. In real life people use hosted wallets on exchange platform. Transactions happen on a distributed (not decentralized!) ledger. The underlying network is only somewhat decentralized (the mining economy tends to the concentration of big players).
Also the way you seem to imagine we could be "removing the banks, exchanges, brokers, clearing houses, compensation chambers, back office, etc." just shows how much you don't know about how an economy works. Real-world transactions need to be reversible, need escrow, guarantees and a lot of other mechanisms that are by design not available using blockchains based assets (if they are there, it means the assumptions which would have made a blockchain useful have been broken, and that we can achieve the same features and services without a blockchain in a more efficient manner).
Why bother replying if you have no clue what you are talking about...
> In practice, crypto markets are not any more decentralized than others.
I specifically mentioned DEX, you are talking about CEX.
> Also the way you seem to imagine we could be "removing the banks, exchanges, brokers, clearing houses, compensation chambers, back office, etc." just shows how much you don't know about how an economy works.
So you are at lost of arguments and start questioning the argumenter pedigree instead? if you want to go that route: I have 15 years of experience in financial markets, am partner and founder in 2 (running) investments funds, trading equities, FX forwards, equity futures and interest rate swaps for ~1.5B AUM. I am currently a registered MIC on 5 accounts with the SFC (some of these including operational risk). I have setup multiple front office systems, work daily with middle office systems, and have a fairly good understanding of back office. I have worked extensively with clearing houses, most recently for the implementation of central clearing on interest rate products.
So please, explain me how you somehow have such a deep knowledge of these subjects that you can obviously see from my comment that I "don't know much about how finance works"?!
> Real-world transactions need to be reversible, need escrow, guarantees and a lot of other mechanisms that are by design not available using blockchains based assets
I will play your game: you have definitely 0 idea what exists in the crypto space. Everyting your mentions and much, much more already exists. The sophistication available on crypto contracts and protocols nowadays is at the very least on par with traditional finance entities and contrats, if beyond.
> In real life people use hosted wallets on exchange platform.
The parent mentions DEX volume, which tracks on-chain wallet usage, not what is being traded in a CEX.
> Real-world transactions need to be reversible, need escrow, guarantees and a lot of other mechanisms that are by design not available using blockchains based assets
Many blockchain transactions have reversibility, employ escrow, and have very strong cryptographic guarantees.
The only point of your post that is not easily refuted is: blockchain is not decentralized enough. But compared to what? Is Ethereum, open source software with many thousands of nodes and developers spread across the world, more or less centralized than the US dollar?
Well, it has at least facilitated the Silk Road and many others to do business.
Regardless, I suppose that I agree with your point here. But I think that cryptocurrency could possible be useful for everyday transactions: it must first overcome network effects.
> If the network is valued at $568B, but costs $7.125B/year or more to secure, that’s a pretty big leak for something that is supposed to preserve value.
> Now some of you are already thinking, hey 7.125/568 is only 1.25% per year. But that’s not exactly how market cap works. This 1.25% system leak doesn’t necessarily translate to a 1.25% price decrease per year.
Far from “not exactly how market cap works”, this is more or less “not even close to how market cap works”.
Econ 101 time: value is subjective. Human beings merely use value as a description - it does not exist inside of any object or inside of any equation. A “store of value” has always been an ill considered term - but this is not the argument against it.
What Bitcoin is good for is being internet dollars that can’t be spent twice. That’s a nontrivial feature.
> What Bitcoin is good for is being internet dollars that can’t be spent twice. That’s a nontrivial feature.
Funny. My bank account does that too and transactions don't cost me anything. I can even use trusted services to do direct banking when I want to buy something online so the seller can instantly verify the transaction and I don't have to deal with entering numbers.
But then again I live in Europe and our banking system doesn't run on physical paper checks delivered by carrier pigeons. I wonder how much it would cost to upgrade and maintain the US banking system compared to moving the entire US to crypto or Bitcoin.
That's something I've never understood as a benefit of Bitcoin. In my 20+ years of digital spending, I've never run into an issue (or know of anyone) that's spent the same money twice.
Crypto/Bitcoin is frequently touted as a solution for banking the unbanked. But the transaction fees alone make the technology useless for that. Existing solutions like M-Pesa are widely adopted and work. They don't even have to make up new currencies to use it.
People sometimes treat established fiat currencies as a speculative or at least arbitrage-based asset, but they are a tiny minority compared to those who use it as well, currencies.
With crypto the proportions are reversed. Those who use it as a currency are a tiny minority compared to those who speculate on it.
If crypto were a real currency, in real use, there would be valid criticisms of its future viability as a currency if it changed more than 1% in a day, or dropped in value > 10% a year.
Its as if someone traded a tulip bulb for a sack of flour and claimed it was the "new Danish currency".
lottin commented that people don't use crypto as a currency, which is flat out wrong. Nothing you said changes that fact. Just because the majority uses it as a speculative asset doesn't mean it's not being actively used as a currency.
I don't want to misrepresent their argument, and I don't want to go into a gotcha contest, but that's not what I got from the GP's comment. They said that bitcoin wasn't used the way dollars are used, which is different from saying that they are never used as currency. Currently, dollars are used as a currency first and an asset a distant second. Bitcoins and other crypto are used as an asset first and as currency a distant second. That might change, especially with Ethereum, but for now I agree with the GP that things are not looking rosy when it comes to functioning as an online dollar.
> Econ 101 time: value is subjective. Human beings merely use value as a description - it does not exist inside of any object or inside of any equation
Econ 201 time: value is concrete, the definition of value is subjective. I can say that the value of two exchanged objects are concrete - that they have the same embedded value.
No,that's econ negative 1. People don't exchange things because they are of equal value, they exchange things because each feels himself better off after the trade.
and that's certainly happening. money now is better than money later (time value of money, net present value discounting), during economic downturns people don't start buying the dip like there's no tomorrow, even though it's very likely that they would make bank in 5-10 years. (because people are risk averse)
similarly we are bad at managing spread out risks (climate change, road traffic incidents)
That's a simplifying assumption used to make the accounting practical.
But knowing that someone bought something on Amazon doesn't tell you how much the buyer would have paid or how low the seller would have been willing to go. (There are gains from trade and who gets them depends on negotiations and the competitive situation.) Also, one or even both of them may have made a mistake. People return things they purchased all the time, and they may regret purchases they don't return.
We are fortunate that for many kinds of goods, we usually don't have to pay the full value of what we buy, due to competition.
>Far from “not exactly how market cap works”, this is more or less “not even close to how market cap works”.
>Econ 101 time: value is subjective. Human beings merely use value as a description - it does not exist inside of any object or inside of any equation. A “store of value” has always been an ill considered term - but this is not the argument against it.
Who cares? The general point here still stands: bitcoin's valuation will have to double every halfening (in terms of some indicator like USD) in order for the cost of security (total block reward) to stay constant in (terms of some indicator like USD).
>What Bitcoin is good for is being internet dollars that can’t be spent twice. That’s a nontrivial feature.
Any cryptocurrency can do this, and many do not have bitcoin's crippled market cap or development structure. The question is this: "Why bitcoin?". Bitcoin's sole advantage over other cryptocurrencies is its name brand.
No, it doesn't. Bitcoin's difficulty automatically scales based on how fast the previous blocks were "solved". With that, if miners start dropping off, then the protocol will adjust for the falloff in "hashrate".
the problem is that Bitcoin mining has to be sufficiently popular for the network to be secure. if the amount of miming ever drops too low, it becomes attackable.
>- Miners fall off the face of the Earth. Bitcoin is still valuable so others rush to their place because there is money to be made.
Your logic does not follow. What I am saying is this: You cannot continue to halve the mining rewards while maintaining network security.
At some point you reach a point where the cost/benefit of attacking bitcoin (whether that be a deliberate 51% attack or a selfish mining scheme) outweighs the cost/benefit of mining faithfully.
There may be some irrational agents who continue to mine at a loss, but they will be outnumbered by rational agents with more capital.
Your argument assumes that the Bitcoin price stops rising after halving, which does not make any economical sense. And even when all Bitcoin has been mined, transaction fees will prop miners up (though it hasn't happened yet so it's valid to be doubtful this'll happen in practice)
And also depends what you mean by securing. All clients, miners and not, are capable of checking transaction and discarding "insecure" and invalid chains. I don't need a miner to tell me if your transaction is valid or not.
>transaction fees will prop miners up (though it hasn't happened yet so it's valid to be doubtful this'll happen in practice)
No, they won't. This is a common talking point, but it is rarely accompanied by facts. Consider that fees currently amount to about about a percent of the total miner payout. There is some research that indicates that bitcoin is vulnerable to a class of double-spending attacks known as selfish mining:
>And also depends what you mean by securing. All clients, miners and not, are capable of checking transaction and discarding "insecure" and invalid chains. I don't need a miner to tell me if your transaction is valid or not.
No they aren't. You misunderstand the fundamental design of bitcoin. The problem is not that the non-mining nodes cannot verify signatures or something, the problem is that these non-mining nodes will not be able prove to each other that the signatures to not refer to already spent funds. The non-mining nodes cannot conclusively prevent reorgs that can be used for double-spend attacks.
>All clients, miners and not, are capable of checking transaction and discarding "insecure" and invalid chains.
They do this by selecting the chain with the highest amount of PoW associated with it. If the network hashrate is low relative to an attacker, then any attacker will be able to easily overpower the network and decide which chains are invalid.
I am not new to Bitcoin but I appreciate the link to the two papers, which I should probably dive into.
All I've heard about the transaction fees problem is that "no one knows for sure, it's still too early to tell." From a cursory look, the papers suggest it's possible to update the protocol/consensus to detect and thwart that type of attacks, and while Bitcoin is slow moving, it's not static and there's still plenty of time to find a decent fix to that issue.
> no one knows for sure, it's still too early to tell.
This is true, no one knows for sure. But I am betting against bitcoin here. At some point the fees are just too high and it become prohibitive towards most people using it at all. So despite the fact that the fee/tx is higher, the total fees collected are lower than an equivalent cryptocurrency with more L1 bandwidth.
As the article I posted says, the real problem with bitcoin here is that the "L2" systems like the lightning network reduce load on the "L1", but also you need the "L1" to collect enough in fees to keep "L2" secure (and that's with L2 middlemen taking their own fees). It is a very delicate balancing act.
>the papers suggest it's possible to update the protocol/consensus to detect and thwart that type of attacks, and while Bitcoin is slow moving, it's not static and there's still plenty of time to find a decent fix to that issue.
Yes, it is quite possible to make these technical improvements to bitcoin. But it may be socially infeasible to convince bitcoiners to do this. The BTC/BCH fork was quite disastrous: not because it forked the cryptocurrency, but because it forked the community. The remaining BTC community is strongly anti-hardfork (they are opposed to any non-reverse-compatible changes). The part of the community that was proactive about change died with BCH. But attitudes may change, who knows really.
The literal hashrate is irrelevant. What matters is the comparative cost/reward of an attacker performing an attack on the network, which will continue to decrease for the reasons i've stated.
Sure, the protocol will adjust for the falloff in hash-rate as miners ditch their hardware- a perfect opportunity for a malicious entity to buy up their hardware and use it to attack the network.
But what is the comparative reward you're talking about here?
The world is filled with situations where something with lesser economic value secures something with higher value. That's a sign of efficiency.
My house is worth $250K. But you couldn't capture that much value by breaking in, so I haven't spent $250K on a security system. If I did need another $250K to secure my first $250K investment, it wouldn't be a great investment.
Suppose it only takes $3.5B to attack a $7.3T network. So what? Unless your plan is to burn billions of dollars for funsies, you'll need to capture at least $4B worth of value for that attack to be worth it. You think you can find someone to anonymously make a $4B crypto sale to you, who won't know where to hunt you down when you try to 51% away the transaction after the next block in 10 minutes?
What I don't really understand about the ideological basis for crypto and NFTs is that the number of people who are interested in it for reasons other than enrichment through speculation is vanishingly small. This of course circularily means that the value is almost entirely based on speculation.
The other aspect is that adopting these systems just increases inequality since the early adopters are massively wealthy. It doesn't work as a liberating medium. At best it works as a useful temporary measure for poorly run inflationary countries. Instead of being at the mercy of a commercial or central bank, you are at the mercy of a small range of individuals who either hold almost all of the cards or develop and thus determine the monetary policy of the coin in question.
Right, nobody buys Bitcoin because of its sales pitch, which was that it's supposedly stable currency. It's supposed to behave like gold by mimicking gold (mining, limited supply, divisibility, etc.), but in reality its price behaves like a Beanie Baby. And before you say Bitcoin can be used as a currency - I would say the number of people doing that is vanishingly small compared to the amount of people buying it to speculate on the exchanges.
That’s literally just another way of saying you are using Bitcoin to break the law.
Also in the US, transferring Bitcoin to say Russia is sanctioned and illegal. Is it technically possible to push the button and the transaction go through? 100%.
Does it mean it that you wont get in trouble for it? Absolutely not. Congress has an entire page about it. 1 year, 5 years down the line as soon as the govt gets a whiff, all your past dubious transactions that you used to evade sanctions are now Public and used as evidence against you at your trial.
In my view that is the strongest use case of bitcoin that exists at this time, but the usefulness of this practice is dependent on the value of the crypto resting on the speculative desire of most of its adherents.
> This of course circularily means that the value is almost entirely based on speculation.
Most markets are primarily based on speculation: equities, real estate, art, VC.
> you are at the mercy of a small range of individuals who either hold almost all of the cards or develop and thus determine the monetary policy of the coin in question.
In crypto this policy is determined by users. The protocols are open source, development happens in public, and the tech is permissionless - anybody can develop new proposals and contribute changes. This is a far cry from most monetary policies in the world.
I'd wager that the number of people who look at art in a museum or other environment and don't think about the price of that piece in detail dwarfs the number of people who think about art for speculation purposes by about four orders of magnitude.
The same happens with digital art and NFT. Hundreds, maybe thousands of people will 'like' or re-share a tweet or Instagram post without realizing the artist is selling it as a NFT. The audience just appreciates it, without thinking or caring about its dollar value. For a concrete example see[1] which is also a NFT[2]. Same with digital art in physical setting, such as Anadol's work which many audiences will not realize is NFT based[3].
There is "art" and there is "art market." If you look at NFT and only see a market, you will only find speculation. If you look at the "art" part, it turns out a lot of people just appreciate the work itself.
But for each of these markets there is something beneath it. With equities there are companies or at least some form of non-virtual economic activity. With real estate there are houses. With art, there are paintings and artists. With VCs there are startups. With crypto, there is only the speculation since very few people want to spend and use crypto as a currency. The bulk of the interest is predicated on the greater fool mindset.
>In crypto this policy is determined by users. The protocols are open source, development happens in public, and the tech is permissionless - anybody can develop new proposals and contribute changes. This is a far cry from most monetary policies in the world.
Maybe we would need to explore the differences in more detail, but the value of coins like Ethereum will still depend on the will of the devs who end up having the most influence or the users who have influence over those devs. And despite the openness of it only a minority of users have an active role in determining policy, just like in any large nominally-democratic structure.
What lies beneath the NFT market is not much different than what lies beneath the traditional high-end art market: scarce objects made by artists and creatives, and there are some who want to collect these objects. It’s short-sighted to think that only physical work can have artistic merit and be valued by an art market.
> And despite the openness of it only a minority of users have an active role in determining policy, just like in any large nominally-democratic structure.
To be expected - same with open source software like Blender and VLC, not all users of it are also developers, but we all benefit from its openness and can create new forks of the software over time, if necessary. It also spans borders - making governance far more accessible worldwide than the monetary policies of state-backed dollars.
> According to the University of Cambridge, about 118.75 tWh (terrawatt hours).
I stopped reading as soon as they quoted that silly inaccurate UoC website that gets quoted over and over again.
Why? Because they even admit, in their own methodology (https://ccaf.io/cbeci/mining_map/methodology), that it is an extrapolation from less than 50% of the total hash. Even worse, is the pools they extrapolate from have been Chinese based. Although, that's changed over time, which invalidates their numbers even more.
Even still, there is no way to know how that power is generated, how much it offsets other power generation, etc... there are just too many variables to simply quote UoC.
> I stopped reading as soon as they quoted that silly inaccurate UoC website that gets quoted over and over again.
You stopped reading because you don't like what they had to say. Even mining groups who are incentivized to provide the rosiest picture are within the ballpark.
Current hash rate is 245.32M TH/s. An AntMiner S19 Pro consumes 29.7 J/TH, so assuming they're all S19s (a big if) we'd be consuming 7226MJ/s or 2007.5kWh/s. That's 64TWh/yr.
So your absolute best case is 1/2 of the Cambridge number. Which is exactly what they list as the "minimum" number.
As soon as we start factoring in things inefficiency and losses along the way - and the fact not everyone has an S19 Pro - we start to get closer and closer to that flagship number.
But let's make no mistake - even the minimum number is a staggering, mind-boggling disaster of unprecedented scale.
Lyn is a zealot and a shill, and her arguments on basically any topic are trivially wrong. I would strongly recommend against trusting anything on that blog and instead look for different sources.
Can you elaborate on Lyn Alden? I don’t know enough to comment on her expertise, but I do know that dismissing someone as being trivially wrong on basically any topic is often a sign of not understanding the person’s arguments.
What's to say? Lyn is a zealot and will go to any lengths to justify her positions. She's clearly intelligent and completely uninterested in objectivity. She's like if Saylor wasn't completely vacant and instead of posting "MORTGAGE YOUR HOUSE TO BUY BITCOIN" at the top of the market you get 15 page diatribes about why Bitcoin energy usage doesn't matter because "the Fed" and "censorship" and "hard to confiscate" etc etc. None of which has a single thing to do with energy usage. It’s just pages of gish gallop.
If you want to listen to someone interesting who isn't just performing mental cartwheels to defend the indefensible, listen to Boaz Sobrado, Mario Gibney from Ledn, Lily Francus, Josh Cincinnati, etc.
Lyn is just rewarmed long-form talking points from r/Bitcoin presented uncritically. There’s interesting people in the space but Lyn is more of a millennial William DeVane shilling gold on Fox at 2am with a substack.
Before he edited and went on a rant, he just said this:
"What's to say? Lyn is a zealot and will go to any lengths to justify her positions. She's clearly intelligent and completely uninterested in objectivity. She's like if Saylor were intelligent."
I don't think "he hit enter by accident" is quite the gotcha you seem to think it is.
You found my criticisms insufficient, so I gave you a long-form version along with a list of folks who actually do have something interesting to say in the space. Then it was too verbose.
> You stopped reading because you don't like what they had to say.
Yes, I literally said that. Glad we are in agreement.
> Lyn is a zealot and a shill, and her arguments on basically any topic are trivially wrong.
Yes, trust the guy on HN who is consistently negative about crypto about who to listen to. Sorry, but when people are so adamantly negative about something, I tend to run towards it because it often has a lot of interesting value. You have chosen the 'Chief Censor 451' role in life.
> Yes, trust the guy on HN who is consistently negative about crypto about who to listen to. Sorry, but when people are so adamantly negative about something, I tend to run towards it because it often has a lot of interesting value. You have chosen the 'Chief Censor 451' role in life.
I didn't tell you who to read, I suggested you dug around and found someone else who isn't a zealot and a shill. There's good authors out there, this isn't one. I follow a number of pro-crypto authors too, ones who I disagree with but respect. They're out there.
Lyn is in my opinion only slightly above Pomp (who I know has retired to spend more time with his fiat) and Saylor (who was promoted to customer).
I don't see it as a waste. I don't feel that technology, in any form, is a waste. The world is a better place with technology and I don't feel that we have to be stuck buying things with gold nuggets. I am more than happy trying to "reinvent finance"... because I see and have personally experienced a lot of issues with existing financial systems.
Early generations of tech might not be the best, but you have to start somewhere and iterate to a better future.
Given that energy use of Bitcoin is literally written into the protocol to decrease over a long period of time, I don't see the big deal of expending energy to get there. Ideally it produces methods of better power distribution, encourages the use of green energy, etc...
What about technology that just sets oil fields on fire for no particular purpose? Seems pretty wasteful to me. Technology is never platonic. Concepts aren't a waste but their implementation certainly can be.
> Early generations of tech might not be the best, but you have to start somewhere and iterate to a better future.
Bitcoin is the most obstinate to change on purely ideological grounds. It hasn't materially changed in almost a decade except to move the deck chairs around. This is the time at which one would expect the most change and yet Bitcoin changes the least out of all its peers. This is an intentional decision by both the community and the core team.
Adding green energy simply to waste guessing random numbers instead of decarbonizing the grid just adds to the e-waste Bitcoin is responsible for. Power distribution is a solved problem (only 5% of power is wasted in distribution in the US) - the issue is just NIMBYs refusing to put transmission infrastructure down. Bitcoin does not fix this.
> What about technology that just sets oil fields on fire for no particular purpose?
Oh come on, don't be absurd. Bitcoin is not setting oil fields on fire any more than the power usage of the whole internet has. How about games? That's pretty pointless expenditure of electricity... but you aren't screaming at the rooftops over that. This is seriously a case of old man yells at cloud meme.
> Bitcoin is the most obstinate to change on purely ideological grounds.
That's fine. ETH exists. It could mean that ETH wins in the end. Who knows.
> Adding green energy simply to waste guessing random numbers instead of decarbonizing the grid just adds to the e-waste Bitcoin is responsible for.
Blah blah blah... just as absurd as the above statement. Try a different trope, please.
It’s not a trope it’s facts you dislike and refuse to engage with. You are a miner, you are part of the problem and of course you are looking for anything you can to justify what you do without having to ask if you're the baddies. Such a disclosure would have been helpful in advance and would have saved me some time.
I'm sorry you're trying to defend the indefensible: kilotons of e-waste per year and the energy consumption of a small country to achieve the work of a Raspberry Pi.
97% of all bitcoin mining ASICs will never mine a single block. Ever. Just straight from factory to landfill with a long sojourn warming up the planet.
Everything beyond those facts are mental gymanastics.
I think it might actually be somewhat accurate. There are 6.25*6*24*365 new bitcoins created every year and given to miners. That's over $6B at current prices. So it sort of makes sense miners would spend $6B/year to acquire those $6B of new bitcoins. And that isn't factoring in transaction fees that miners also get, nor that this article was written in June when prices were a lot higher, meaning it would have been much more than $6B/year if I did those calculations then.
And that's the thing -- all the fancy gymnastics the article uses to derive the cost of running the network based on power utilization and power costs is irrelevant.
The Bitcoin network pays 238,500 BTC annually for its maintenance, plus fees. This is the amount that will be paid regardless of network difficulty, price of bitcoin, mining capacity, cost of electricity, capital cost of mining equipment, etc.
That seems unconvincing. In fact how much energy is required per hash is something that's really quite easy to measure accurately. At any given time there are no more than a few dozen hardware platforms in use (they get priced out rapidly, everyone is running the newest stuff in the BTC world). Just plug them in and measure them.
All that's left from there is to come up with second order corrections about stuff like grid efficiency. But we absolutely know to quite high precision how many joules were spent to produce the coins we observe to have been created.
> everyone is running the newest stuff in the BTC world
That's not true. The profitability of a miner is not measured with their hardware generation but with the energy cost needed to operate them. If you have access to very cheap energy, they can still be very profitable. There is a reason the market price of old mining rigs is not 0.
> There is a reason the market price of old mining rigs is not 0.
Electrical costs vary by a factor of two or three around the world. Maybe five at the extreme outliers. Modern mining hardware is tens of thousands of times more efficient than the stuff used less than a decade ago. Also due to growth in the market, the rate of production has been increasing rapidly so the total number of old rigs is negligible anyway.[1]
To rather accurate first approximation, all BTC mining is done with hardware less than two years old or so.
[1] Also also, the recent crash has had the effect of depressing mining revenue and accelerating the retirement of the old junk.
what you know is an estimate of total network hashrate. that's it.
but! total network hashrate moves around all the time, so it is really just an estimate. it has gotten better over time, but these machines don't operate perfectly 24/7 and older hardware is still in use. power outages happen too. stuff is just coming on and offline all the time.
you don't know efficiency (watts to hash) of the equipment on a global scale. you can extrapolate, but it is impossible to know for sure.
there are other losses, like stale and invalid shares. also impossible to know. you don't know how much is 'wasted' either... every single power supply on the planet is a snowflake. this would actually increase power usage estimates since it is effectively truly wasted energy.
disclaimer: I've PoW mined since 2014. Even I, with many many megawatts of power, have a hard time calculating exactly how much power we use and that's having access to the raw data!
If you have access to the raw data, then you should be able to quite easily provide a good estimate for what the article is trying to assess--what's the actual operational cost of bitcoin mining. Estimating the energy consumption is only a vehicle to doing this because those of us who don't have any raw data to do this.
What you should be able to do is:
a) Open up your electricity bill and look at the total energy consumption for a given period. Admittedly, I'm not familiar with how electricity is invoiced, but I'd be surprised if there wasn't something that was at least coarsely indicating total energy consumption for a billing period. (Or you can skip several middlemen steps and just take the total cost of the electric bill.)
b) Tot up all the bitcoin mining rewards you received in the same time period.
c) Count how many bitcoin blocks were mined in the same time period.
d) Divide b by c, now you know what fraction you are of the total bitcoin mining network.
e) Divide a by d, now you have an estimate of total worldwide energy consumption of bitcoin.
The only reason I can see that might make this hard is if you mine more than just bitcoin, in which case, replace "bitcoin" in the above steps with "sum over all of the cryptocurrencies you mine"--which is closer to what people want to know anyways. Even then, you can use crude weighting metrics to estimate what the consumption of just bitcoin is, which would at least let you know if the estimate is in the right ballpark or not. The exact number doesn't matter; it instead matters if the real number is closer to 14 TWh/yr, 140 TWh/yr or 1400 TWh/yr.
But we really don't care about that factor of 2. It literally doesn't matter, whether Bitcoin wastes half a Luxemburg or a full Luxembourg.
And, iirc, then they estimated total consumption from well-funded and very active mining pools. I.e. exactly the operators that you would expect to run the most efficient mining equipment. Meaning all you do is being overly optimistic, as in "we claim mining uses less energy than it actually does"
The statistic you're poo-pooing puts error bars that are a factor of 2× in either direction. Tolerating that degree of error bar isn't all that difficult, and if you bothered to continue to read the article, you'd discover that the author themself discusses possible error bars, and deflates the estimated operational cost of bitcoin miners by half anyways.
And, FWIW, the kind of methodology that was used to produce the Bitcoin energy consumption is the same kind of methodology that is used to produce statistics like GDP, inflation, employment--basically every macroeconomic indicator. If you're going to complain that you can't quantify Bitcoin's energy consumption, then to be intellectually honest, you need to complain that the true inflation rate or the true size of any country's economy is impossible to quantify as well.
Again, though, that's just not true. The hardware is well-understood and easily measured. Sure, there is slop in the measurement (how much of the fleet is using platform A vs. platform B). But those are comparatively small numbers. Sure, like you say, we might have a factor of two lurking in there (seems high, but I'll grant it).
But a factor of two wouldn't change any of the analysis! If the article said "60 TWh" instead, would that be any less horrifying? No, it wouldn't.
We don't know what hardware is on the network and we don't know how all of the power is generated. If it is 60TWh of clean energy that isn't being used for anything else, who cares?
And the only way to hypothesize something different is if there's a ASIC or something that can mine much better than existing equipment (in which case the group that had it would suddenly shoot up in the blocks mined lists) or there's a weakness in the cryptographic protocol somewhere that we don't know about.
I must note that this in fact happened in the past (AsicBoost). Currently, I don't think there is AsicBoost-like secret information, but you can't be sure.
Let’s assume you have AsicBoost 2.0 - what would be the most strategic way to deploy it? I assume it’d look like a hashpower increase to the rest of the world, which may or may not go noticed; but perhaps have them run “normal” and then fling it wide open just before? after? a havening?
I’d guess the optimal strategy is “get that thing turned on as fast as possible and keep as much of the cluster running 24/7 as you possibly can before you get leapfrogged.”
1. A poor estimate is better than none at all. No matter how uncertain it is, there has to be some range where we can say with 95% confidence, BTC energy consumption falls within this range. We all understand that any estimate will be very uncertain because of the scale and complexity of mining.
2. The arguments youre responding to about BTC being a waste of energy etc. aren't being made in this post. He's just using energy to estimate leak rate, not to assign any moral value to it.
Estimation is fine. Basing a HN level of hatred on crypto because of inaccurate data... is... well...
What would you prefer me to call it? The pure definition of silly is "having or showing a lack of common sense or judgment; absurd and foolish." Seems pretty accurate to me.
Well you should've continued reading. It's not about how much energy is used, it's about the fact that energy is used at all. The numbers can be extrapolated from a third of that value and still look bad.
We all know bitcoin uses a lot of energy, there is no debate about that. But, on a global scale of all energy used, it is just a tiny tiny sliver of the pie (see my previous link). Just because something uses energy doesn't mean it is inherently bad. If you want to extrapolate and say that wasting energy on PoW is bad, then you also have to compare that against all of the other wasted energy. If you do, bitcoin doesn't look that bad either.
Of course plenty of people here like to fixate on telling people what a good or not good use of energy is. Which is so ironic to me given that here we are using energy to have this debate and I'm sure someone out there thinks it is equally wasteful.
The article is not about energy usage, it's about capital outflow in the form of energy expenditure. As long as mimers must pay someone to keep running, either capital outflow must match capital inflow, or the price will go down, and consequently mining will decrease and with it security. Either way, not a good store of value.
Mining never ends, but the inflationary aspect does [0]. At which point, bitcoin will become unprofitable for most miners and they will shut down. A few who can remain profitable, from the transaction fees alone, will stick around and the end result is that energy usage will drop significantly. Unless, of course, miners vote in another consensus model before then (unlikely).
This is a big reason why there is such a huge land grab of new miners coming online right now and a huge increase in power usage. It also solidifies the monetary policy imho. Once emissions stop, it'll become even harder to obtain what BTC is left and as long as it stays desirable for its intrinsic value (imho, that is digital gold... its store of value), people will want it.
Don't forget that while 19m have been emitted, millions of that are locked up forever and will continue to get locked up over time (things like people who die suddenly without leaving access to their private keys). Thus, there is actually a lot less than 21m BTC that'll ever be available.
͡° ͜ʖ ͡° at the halving chart on that website. I usually don't think that past performance indicated future results... but come on... this is just obvious financial cycles. If you haven't already, you'd do well to buy $100 of bitcoin and just sit on it.
OK, you mean when the creation of new bitcoin ends.
No, that's not what the article is about. The article basically says any cryptocurrency that relies on mining cannot be a store of value because mining requires capital outflow which means your bitcoin loses value without continued capital inflow in the form of new demand.
It is very likely miners vote in another consensus. There are ~118 years left before the supply capnis reached. If bitcoin lasts that long, it is highly likely that some major changes occur, consensus seems like the number 1 candidate for change.
The end result of energy usage dropping... if the energy usage drops, the security does also. So price decrease results in less mining, and therefore less capital outflow, which is great, except it results in less security. the only way to get 0 capital outflow (and therefore require 0 capital inflow to keep a steady price) is to have 0 mining, which means no blocks being produced and no security, which again, does not make a good store of value.
> The article basically says any cryptocurrency that relies on mining cannot be a store of value because mining requires capital outflow which means your bitcoin loses value without continued capital inflow in the form of new demand.
Sorry, but you have to make the distinction between mining and inflation. Two different things. Mining is just validating transactions. Today, miners get paid newly minted coin + fees for that service. In the future, they will only get fees. You have to factor that into the long term viability of the coin.
After just watching ETH literally destroy GPU mining, I don't think it'll be that easy for Bitcoin to achieve any sort of changes that affect mining in any way.
Yes, there are 118 years to 21m, but the supply is dwindling... 6.25 now... next 3.125... and the difficulty keeps going up. Did you ͡° ͜ʖ ͡° at the link I sent? It has a nice graph of the decline of inflation... we are super close to zero by just 2029 and 2033... even closer.
> The end result of energy usage dropping... if the energy usage drops, the security does also.
Untrue. Difficulty adjusts automatically. The ONLY issue is if a huge amount of hash drops off... and then rejoins... together... all at once... in a way to attack the network. But the economics of doing would negate that pretty quickly.
> the only way to get 0 capital outflow (and therefore require 0 capital inflow to keep a steady price) is to have 0 mining
No... we are going to get to near 0 capital outflow by 2033. We will always need mining to form blocks. The question is what will happen to the fees, and the price. Fees are a function of usage and a minimum set by the miners as a whole. There will always be miners willing to form blocks for almost no fee. If there is little usage, the fees will stay low, but demand of the coin as a store of value, should drive the price up due to the fixed supply and lack of availability.
I don't think you understand this stuff as well as you think you do. That's not intended as a rib, it's important for us to continue learning.
The hash difficulty adjusting automatically keeps the block time relatively constant. Security goes down the less hash power is on the network, that's an undisputed fact. Hash power is proportional to energy consumption. Lower energy consumption means less hash power means less security. Think of it like this: if 2 CPUs secured bitcoin, it is trivial to attack. How much hash power and energy an attacker has to buy for a successful attack is the security of the network.
You don't have to factor in the distinction between emission (commonly called inflation) and fees when discussing this particular topic, any bitcoin liquidated to pay for energy usage is mathematically identical to price inflation when looking at BTC as a currency. It is sell pressure, it is capital outflow.
Emission of new bitcoin, or inflation as it is commonly called, is not the same as capital outflow. Capital outflow is sell pressure. You cannot get to 0 capital outflow as long as miners must pay for power. Do you understand what I'm saying? This has nothing to do with how many new bitcoins are created.
Please try to understand what I'm telling you. We aren't talking about the usual everybody-has-heard-it-a-million-times bitcoin critiques. I am very, very familiar with how bitcoin works and understand very much all the points you're making. But these things have no bearing on what I or the article are saying.
I hear what you're saying and maybe I'm just not explaining myself well enough. You're totally right. Thanks for the clarification. I do understand things the way you're explaining them. I appreciate that you're trying. =)
You're right. Sell pressure (capital outflow) cannot end. That said, with inflation (or emission) becoming less and less over time, there won't be as much to sell.
I'm sorry, but difficulty is also security. Attacks aren't just about hashpower, it is also expense (capital to buy and run enough hash) for the attack. If the hashpower goes down, you're right... there is a window where attacks become possible before the difficulty adjusts (I'd argue ETH PoW per block adjustments were more secure), but that would require the same amount of lost hashpower to also be 'found' and dedicated towards attacking the network at the same time. It isn't like the network was less secure 1 month ago than it is today.
There won't be as much bitcoin to sell, but the capital outflow remains the same if the security remains the same, and that means the price of each bitcoin would have to be much, much higher, but that requires equal capital inflow. If inflow is less, price goes down, miners can't afford it so they drop off the network, security goes down and capital outflow goes down too.
Block difficulty does not determine security in any way. All it determines is average block time, that's it. The security of a network is determined solely by the hash power on the network (and the expense to double it). There's no window while difficulty adjusts, if hash power goes down the security goes down until hash power goes up again. The network was less secure if the hash rate was lower. On September 14 at 12:00 UTC, bitcoin's hash rate was 136 EH/s. Right now it is just under 250 EH/s. Bitcoin is more secure right now than it was on September 14 at 12:00 UTC, and the block difficulty has nothing to do with that whatsoever.
> Any token system can be thought of as a pot of money. Every cryptocurrency is its own pot of money. When people sell, they are taking money out of the pot. When people buy, they are putting money into the pot.
I'm not sure where the author gets this from, but it doesn't make sense.
Buying and selling bitcoin does not change the size of the pot of bitcoin. Look on the block chain and you'll find no mention of USD, alpaca socks, or Lambos purchased. What you'll find are state transitions with value being unlocked and simultaneously re-locked.
The one exception is a block reward, which requires no unlock (input).
The block reward can be viewed from one of two perspectives:
1. value being created
2. value being unlocked
Either way, the block reward comes into existence on a fixed schedule known to all participants.
The author tries to once again bring in the US dollar as follows:
> In this more accurate representation, we have miners pulling money out of the pot in two ways: transaction fees, and the selling of their Bitcoin mining rewards. The latter is harmful to BTC’s value in two ways. It dilutes the circulating supply of BTC which decreases its value, and it pulls money from the pot to cover energy costs. A majority portion of the money miners are pulling from the system is being burned forever in the form of energy costs, meaning it has no way of ever re-entering the system.
Again, bitcoin transactions merely unlock and re-lock value as an atomic operation. What the author characterizes as "value" is an off-chain phenomenon.
That last part about "being burned forever" is debatable. The residual value of the energy expenditure is proof-of-work that the author conveniently ignores. That proof-of-work is what stands between the Bitcoin network and an attack that rewrites history. So to characterize mining as "burning forever" value misleads the reader into thinking nothing of value remains. This is demonstrably false.
> I'm not sure where the author gets this from, but it doesn't make sense.
It makes sense if you look at bitcoin like a speculative asset with a cash value, which is how most people who own bitcoin treat it. Bitcoin has a market cap based on its current exchange value, which is the "pot of money". As more people buy bitcoin, it's cash value goes up, and vice versa.
One can argue whether this adheres to the purist view of Nakamoto et al but this is simply how crypto is marketed to consumers, for better or worse. And in this system, the ways in which these various exchanges and defi platforms facilitate access to blockchain technology through cash transactions ultimately define its value, as we've seen these tokens plummet this year.
> Again, bitcoin transactions merely unlock and re-lock value as an atomic operation. What the author characterizes as "value" is an off-chain phenomenon.
People only care about bitcoin nowadays precisely because of what happens "off-chain". If 1 bitcoin was still a penny, nobody outside the crypto enthusiasts would care more than a decade into this experiment.
> its current exchange value, which is the "pot of money"
It's not a "pot of money" because the market cap is not determined by the amount of government currency traded for bitcoin. Trading $100,000,000 for 5,000 bitcoin does not increase the market cap by $100,000,000.
Similarly, trading 5,000 bitcoin for $100,000,000 does not decrease the market cap by $100,000,000.
Since there's a seller for every buyer, there's zero money going into any "pot".
The market cap is determined by what price buyers and sellers agree on at any point in time. That means the market cap can double, or halve, instantly, even though trading volume is a tiny fraction of the change in market cap.
There is no pot.
And it works the same way for every other market, from stocks to bonds to gold and real estate.
Nevertheless we humans still think of things in terms of pots. The term "pension pot" comes to mind.
The reality is the market value of anything is influenced a great deal by human sentiment, as well as raw intrinsic properties of an underlying asset or the performance of a business.
Investors like to think they are actually "investing" in Google when they buy Alphabet shares even though not a single penny of their money is going to Google for the board to direct toward productive endeavours.
Even earned income in a savings account is an act of faith... in a system that we hope will continue to value an hour of our labour today to something close to what it will be a year from now. The savings account itself isn't a store of value, it's the nature of the labour market here that is actually the store of value.
Every cryptocurrency is its own pot of money. When people sell, they are taking money out of the pot. When people buy, they are putting money into the pot.
It's a popular myth but it's obviously bogus when you realize that for every buyer there is a seller.
So when people buy a gold bar, or 100 shares of AAPL or a cabin at the lake, the money the buyer puts in is exactly offset by the money the seller takes out.
> As more people buy bitcoin, it's cash value goes up, and vice versa.
Ignoring mining, every purchase is a sale, and vice versa. Lots of new people could buy bitcoin and its price could drop in the process. What you maybe mean is something else about supply and demand?
> Bitcoin has a market cap based on its current exchange value, which is the "pot of money". As more people buy bitcoin, it's cash value goes up, and vice versa.
This is not how trading and market cap works, at all. There is no "pot of money" either.
A major factor here is that, especially historically, the vast majority of trading volume for coins apart from BTC/ETH is priced in either of those two. Unless you have aggressive arbitrators and liquid markets with thick and deep order books, this means that smaller-cap coins end up tracking the major ones.
It is only relatively recently that ETH significantly decoupled from BTC in this sense.
There are also infinite ways to construct and weight a price index. Go to different websites and you will notice significant discrepancies. One doesn't necessarily have to be more "accurate" or "better" than the other.
Right now everything seems to be tracking the NASDAQ, though...
It's the same reason the bubble in tech stocks crashed in the same general time frame that all of the crypto crashed, and the housing market began to freeze up.
It's risk off, as the Fed pushes up rates and investors and speculators grow increasingly fearful of more to come. The cost of debt and leverage also went up considerably.
Or as Warren Buffett likes to put it, you can think of interest rates as gravity as it pertains to asset prices and speculation.
When people buy or sell it simply changes the makeup of an order book. there is no pot of money. there is just an entry on the ledger. the article doesn’t make any sense full of bad faith arguments
Saying "Bitcoin is not a Store of Value" is not the same as saying "Bitcoin has no value," because of course it does as long as people think it does.
I translate the original title to "Bitcoin is a terrible store of value", which I already knew, especially since the 75% drop in value. Yes I know, it's gone up a bazillion percent since 2012, but trees don't grow to the sky and saying otherwise is the kind of thing they tell suckers at casinos along with "There's only 21 million that can ever be mined so they are guaranteed to go up due to scarcity that can't fulfill demand." The demand part of the equation is unknowable and could go to zero.
I did read the article. Your dismissive comment is typically what I get in these threads
> Some people actually believe that Bitcoin is “thermodynamically backed”. This is utter nonsense. There's no such thing. BTC is backed by demand just like everything else in the world. Remove the demand and price falls.
How am I so far off? Author is talking about value measured by price and the effect on that value by demand.
Yes, I got that, but I don't think it has much to do with Bitcoin being a good store of value. The price of Bitcoin isn't set by the price of electricity.
No, but the price of bitcoin is set by supply and demand. And because miners have to liquidate bitcoin to stay afloat, the price will go down without new demand. An asset who's price goes down doesn't store value, an asset which continuously requires new entrants isn't a store of value.
There isn't a fixed pool of demand that miners are slowing bleeding away. I starting rejecting the article while reading it as an unrealistic thought experiment. I guess my point is there are so many ways demand could drop. Demand goes in cycles and no one can predict.
I just thought of this so blue sky: What if Satoshi Nakamoto reappeared with a new coin and a new proof that didn't use large amounts of electricity? What would BTC be worth when everyone was selling it to buy this new coin? Or would Satoshi let people swap BTC for his new coin? A true Black Swan event.
There isn't a fixed pool, but there's a minimum threshold of required new demand that is equal to the energy expenditure of mining. That threshold is proportional to the security of the network.
You the laborer have the capacity to decide where the value of your labor should be kept.
Whether some think it's leaky, or that it is a melting ice cube or ultrasound money is irrelevant. Despite or with support from opinions of others, it is ultimately you who makes the decision where to store your value.
Only time can say if you've made a good decision, as not one person can predict the future, and likewise you must suffer or enjoy the consequences of your decision.
While we can't predict the future precisely the future isn't completely unknown either. This allows us to say beforehand that some investments are better than others, regardless of what the actual outcome of such investments will be.
It's funny to me that this is such an offensive idea that it needs to be downvoted. It seems pretty straighforward and self evidently true.
The irony is that the whole message is that it doesn't matter if you disagree or disagree, only the quality of the decisions you apply your framework towards. Time will reward those who take time to understand this stuff and punish those who don't. Liking the message is entirely besides the point.
> You the laborer have the capacity to decide where the value of your labor should be kept.
Depends on the laborer. There's no law of nature that grants me the ability to make good financial decisions as an award for my labor. The ability to manage risk is not an ability that gets unlocked once you accumulate enough money to invest. Now, I have to both work hard to make money, and gamble to protect my future.
My PoW theory after talking to a bunch of people at Berlin Blockchain Week:
PoW is easy mode and PoS is the logical consequence of it.
First, letting people calculate random hashes is easy to implement, because you don't have to check useful stuff, just a hash.
PoS then is just giving people that did these calculatios, who now value their tokens because of the work they put in their creation, an incentive to validate txs, or they will lose that work.
Chains like Filecoin, Sia and Arweave go a harder route. Their PoW is storing real data of real users, so the "miners" get rewarded to do actual work. It's a decentralized version of S3, and S3 also was one of the first services AWS started with.
I think, in the next years, we will see more and more of these useful proofs cropping up. And people will understand the value they're "storing", no pun intended.
>I think, in the next years, we will see more and more of these useful proofs cropping up. And people will understand the value they're "storing", no pun intended.
You could be right, but the first time something like this was discussed was around 2011 [1], and here we are 12 years later, still waiting for a widespread implementation of a "useful" proof of work.
This focuses on the money that "leaks" out of the Bitcoin ecosystem due to mining, which is entirely correct but it's not the reason Bitcoin isn't a good store of value IMO. Bitcoin has little or no guaranteed demand (i.e. things that you can only buy with Bitcoin); what's left is speculative demand which has no floor.
Money that can’t be stopped by meddling do-gooders has high utility value.
Just ask the poor slobs in Russia or Venezuela who can’t sell their software and feed their families, or in Canada who threw $50 to support their trucker buddy and got their bank account frozen.
Also - there is easily $7B of “stranded” energy in flare gas and hydro “rotating reserve” available to secure Bitcoin and similar systems. Besides, the limiting factor for a successful 51% attack isn’t the energy — it’s the capacity to actually create the hash capacity to execute the attack. Not even the NSA could do that, let alone some non-state attacker.
Curse those meddling governments who want to tax you to pay for roads, hospitals, and schools, and social welfare.
At least, speaking as a European, this is where the large majority of my tax euros go. If your government spends your tax on less useful things then maybe the solution is to work towards a better government, rather than trying to hide your savings in untaxable havens.
(Actually I have no idea how easy it is to hide money from the tax collectors using crypto, but I assume that's one of the appeals).
EDIT: user above me edited their comment to reference Russia and Venezuela. My comment about working towards a better government still stands although I recognize it's not an easy task.
> this is where the large majority of my tax euros go.
Actually this isn't true. your tax euros go to paying down the debt on loans taken out to pay for these things. Under this system ultimately one of two things happens -- it's either unsustainable and you lose those niceties, or, the euro gets devalued and the only way you get those niceties is by absolutely routing the lower class (even under European gas and water socialism the divide between rich and poor is increasing.
Get ready for a big hike in this divide over the next five years as the euro loses its PPP and needs to start defense spending to safeguard trading relationships). Especially hurt will be underprivileged Europeans, like stateless Turks in Germany or immigrants living in banlieues in France.
Other governments out there spend money on roads, hospitals, schools, and social welfare regardless of the amount of tax dollars they collect. It would be understandable for people under such a system to view their taxes as purely punitive.
> (Actually I have no idea how easy it is to hide money from the tax collectors using crypto, but I assume that's one of the appeals).
Depends on which one but let's take pure bitcoin because that's what the post is about.
Governments have 3 main tools, tracing, freezing and recovering. The breakdown is different in crypto vs fiat.
In BTC, the blockchain contains all previous transactions, everything is public. If you send your BTC through middlemen it'll be mixed in with their assets but you can still follow the trail perfectly. So tracing is easier with BTC than fiat, because you won't have to convince some Cayman island bank to hand over the cash.
Next, there's freezing, which is harder. You can't block transactions to Iran on the chain, but you can block entry and exit points when trading with fiat, on most exchanges. Since freezing is technically equal to censoring, it's a feature.
Recovery is almost impossible, to the point of you can even lose your own private key, let alone someone who stole from you. The government can't produce a valid private key any more than your quad-core IOT fridge.
TL;DR avoiding tax is hard to do for retail people, simply because the regulators are watching the entry and exit points. So even if you tornado cashed and zcash yadda yadda and your funds are untraceable you eventually need to buy fiat for them, because you'll need the fiat for the Lamborghini.
> rather than trying to hide your savings in untaxable havens.
Kinda OT, but why suddenly is tax evasion a problem with retail crypto of all things? We have institutionalized tax avoidance for the biggest players (megacorps & ultra rich) to the point where nobody raises an eyebrow anymore. Seems inconsistent to me.
This comes up over and over, where people clearly don't understand how foreign currency exchange works.
The name, of course, tells you, but people seem to think that "currency conversion" is some transformative process where rubles just become bitcoin.
Which is of course: false. To turn rubles into bitcoin, someone who wants to buy rubles has to be willing to buy them for bitcoin. This means someone local, who can transact in rubles, needs to have a supply of bitcoin.
Where are they getting it from? They can't buy it overseas because if you could exchange rubles with foreigners then you could also just buy USD. They could mine it, but that still means they need to be willing to accept rubles for their bitcoin, and yet the scenario presented suggests there's a path to exchange rubles for USD which is more favorable.
In fact at every step of the process, you have the problem that the only way to get Bitcoin from your stranded currency, is to buy it from another party locally.
No actually you can sell services (software, as the original comment alluded) and get Bitcoin in return. These Bitcoin can be sold for Rubles, or bread, or whatever. There's no forex involved unless people want the convenience of exchanges. Which is one of the limitations of Bitcoin: it's hard to deal on-net.
You would have to sell Bitcoin constantly to pay your taxes in your local jurisdiction. And while there's no unrest locally, you're at a negative: no one has any reason to give you a favorable rate, since you need rubles much more then they need Bitcoin.
It's just Forex concerns, and you're going to be paying out the nose constantly on a "what if". Of course, while there's no sanctions, you could also just buy USD directly.
Before, you said that nobody in the local market has Bitcoin. Now you're arguing the opposite, that nobody in the local market wants Bitcoin. Sure, both can be true, when there's just no market. But that's a different argument.
This isn't a contradiction: until you need Bitcoin (to leave) your demand for local currency is, effectively, infinite - because you're taxed in local currency. That's non-negotiable.
After you want to leave, the situation flips on you - as the only sort of person who would have local Bitcoin, you (the royal you) are the only potential source of it to people who want to leave, but now you want to retain it.
And there's the other side of the equation as well: once you leave, your situation flips again: you, and if there were actually a lot of people doing this you'd be in trouble - now have a desperate need to exchange Bitcoin into whichever local currency you actually land in, and you have to do so urgently in order to purchase food/shelter etc.
This is the fundamental problem with an unpegged exchange currency: the optimum rate of exchange is either 0, or infinite. Market factors, imperfect information etc. are why this isn't the case, but it is why Bitcoin swings wildly compared to any properly managed currency.
P.S. This is excluding other practical issues, like Bitcoin needing computers and internet access to work but in a time of instability access to banking is going to be extremely limited. Even if satellite internet is a thing, you're no longer going to have escrow services to conduct currency exchange - transacting in Bitcoin in a warzone involves taking a bunch of your actual resources in hand and somehow ensuring you don't get screwed in the exchange - and vice versa.
You've added a pile of arguments that there might not be a local market for Bitcoin at all. Sure, that may be the case. Who are you arguing with?
This is what I saw as incomplete:
> This means someone local, who can transact in rubles, needs to have a supply of bitcoin. [...] In fact at every step of the process, you have the problem that the only way to get Bitcoin from your stranded currency, is to buy it from another party locally.
There are global markets (original example being software services) where you can get paid in Bitcoin. This possibility was omitted. Address that.
Point to literally any one of these which can pay at a rate providing an actual salary level compensation, and which will do so without knowing who you are or your current country of residence.
Why would they not know who their partner is? Just because they trade in Bitcoin does not mean they must be anon. Bitcoin would be the wrong vehicle for that anyway, no?
I would assume it to be possible to find contract work that's paid in Bitcoin. But in the end I don't know these markets well.
>Also - there is easily $7B of “stranded” energy in flare gas and hydro “rotating reserve” available to secure Bitcoin and similar systems. Besides, the limiting factor for a successful 51% attack isn’t the energy — it’s the capacity to actually create the hash capacity to execute the attack. Not even the NSA could do that, let alone some non-state attacker.
The cost of securing bitcoin is not just in electricity, it is also in the depreciation cost of ASIC hardware.
I guess it would be easy for the NSA to pull off the 51% attack if they are able to backdoor the handful of ASIC manufacturers.
> it’s the capacity to actually create the hash capacity to execute the attack. Not even the NSA could do that,
I don't see why. The current value of BTC mined in a year is around $6.5 billion. Hardware lasts, let's be generous, 2 years. No one will mine BTC at a loss, so the total cost of mining BTC for 2 years must be less than $13 billion. So for less than $13 billion, the NSA can create a new BTC mining network at 50%. That seems well within their budget. And if they sell their BTC, they can probably be cashflow positive before destroying the network.
> So for less than $13 billion, the NSA can create a new BTC mining network
The NSA doesn't go to the NVIDIA store to buy $13 billion of GPUs. Measuring only the monetary value conveniently ignores the bottleneck of underlying resources to build the hardware to do the mining. Where does the NSA find $13 billion worth of top-shelf GPUs or ASICs? Having money is not enough if there is no one to sell you.
That hardware takes natural resources, knowledge know-how found only in a few companies and a non-negligible amount of rare earth minerals to build. That's a serious bottleneck and not something you can stealthily enter in in that capacity, NSA or not.
> Where does the NSA find $13 billion worth of top-shelf GPUs or ASICs?
Leaving aside the fact that they could have private secret production capability and I would believe it, the market is probably being flooded now as BTC is tanking. GPUs are apparently getting cheap again.
It would not be surprising if the NSA is able to design and source whatever ASICs they need. That's a capability that would be directly applicable to attacking encryption in general.
Considering that a USD payment company can literally destroy a business without a reason, how confident are you about that "little or no guaranteed demand" part?
And a company like OpenSea can arbitrarily destroy the value of blockhain assets on a whim as well. It turns out that the problem isn't that companies like Stripe are evil and looking to screw people over, the real truth is that money is complicated and dealing with things like fraud cause myriad edge and corner cases which have real financial effects.
Blockchain, for all it's promises of decentralization, has rapidly centralized on a few players who's interpretation of the chain are practically law, and thus, is subject to the same problems as any other centrally governed system. The many differences include that stripe (and it's competitors) can handle millions of transactions whereas bitcoin struggles on a few thousand.
> the real truth is that money is complicated and dealing with things like fraud cause myriad edge and corner cases which have real financial effects.
More specifically, policies like "know your customer" are great in theory but very hard to implement in practice, which is why companies like Stripe tend to be ruthless with their merchants.
Crypto tries to sidestep this entirely by arguing that it's trustless from the ground up. The problem with this is that it facilitates the creation of an unstable marketplace full of interconnected players and nobody knows who is legit and who is a complete crook. Projects like Terra show that when the crypto market recedes, entire segments of the blockchain ecosystem are at risk of being wiped out because there is no transparency to their underlying operation. It's all gravy in a boom cycle, but the bust always happens.
Crypto and its derivative products can only truly thrive in an environment that is free of market downturns because there's absolutely nobody at the wheel making sure that these companies are actually doing what they claim to be doing.
Can we stop conflating one cryptocurrency with the other?
Using the argument of what happened to one coin as a proof that blockchain is necessarily bad is like saying the Internet is useless because there are scams that happen online.
OpenSea and NFTs have nothing to do with Bitcoin nor blockchain, the technology.
Very. The premise you're floating is the size of a mountain and you're attempting to rest it on top of an egg.
A $25 trillion economy, a massive payments ecosystem, a large payments company in Stripe, and you're talking about isolated examples. Even if there are ten examples, it's ten in tens of thousands of counter examples where businesses aren't having that problem.
The obvious point being: all those other businesses aren't worried because your premise is so rare. And for the small number of businesses that end up in the negative scenario, they're not prominent enough to matter as a warning sign to everybody else.
You'd need a very big, very common problem to spur the kind of adoption premise you're suggesting. It doesn't exist at present. A big share of Stripe's customers (along with other processors) would need to be suffering like that example.
> Stories like this have been appearing pretty regularly on HN
This is literally extrapolating from outliers (notable news stories about fraud or mishaps) to make predictions about whole data sets (reliability of transactions using the US Dollar).
No one can prove to you that dollars are safe if you don't believe it. But no one has come up with a more reliable alternative yet, and BTC is laughably far down the list of challengers.
Bitcoin is neither a currency nor a store of value. It's just a speculative magic token for punters to bet on and for scammers to scam starry eyed suckers by promising eternal wealth.
The article takes the hashrate and cost of electricity as a proxy of the cost of maintaining the bitcoin network, but there is no need for a proxy because the cost of maintaining the network is, by definition the block reward and the transaction fees. No wonder that the two estimates are about the same, because the hashrate directly depends on the rewards and the price of bitcoin and electricity.
A summary for those of you not quite grasping it is, mining means bitcoin has capital outflows, and to maintain a stable price needs equal capital inflows in the form of new demand. It's security is proportional to this inflow/outflow value, so if you lower the capital outflow you require less capital inflow but reduce it's security. A network with no capital outflow is a network with no mining happening at all, a network with high security means a network with either high capital inflows or a steady drop in price for each coin. The more spent on mining, the quicker the price will drop if new money doesn't enter the market. Compound this with the relationship between market cap and liquidity and it paints a very bad picture. Add the business about halvenings and it's worse. An asset that requires capital inflows cannot store value, an asset that has no security cannot store value, and those are your only options with bitcoin, so it isn't a store of value.
I'd love if someone could refute it, I couldn't find a comment in this thread that did, the only refutation I can come up with is if bitcoin were actually used as money by everyone that would be the same as capital inflows equaling capital outflows and you'd have no change in value, although you'd have a change in value for an entire economy as you burn resources to secure it which would be price inflationary which amounts to the same thing.
The network earns transaction fees. It also mints new money through inflation.
In its bootstrap phase, while the network isn't earning enough in transaction fees, the network relies on inflation to supplement its earnings in transaction fees. It pays its miners with a combination of the two. This is not too different from a startup relying on stock options to incentivize employees, contractors, painters of art pieces etc, while still in its growth phase.
The rest of the article conflates the market for BTC, buyers, sellers, holders etc, with the above.
To be clear, I'm not making a declaration on what is or is not a store of value.
As I understand the article, it argues that relying on transaction fees to reward miners is not viable, as there are too few transactions happening thus making the transaction fees extremely high.
> "$7.125B / 91,250,000 tx = $78 per transaction."
> "But we just proved the store-of-value narrative breaks down because of the $7.125B/year leak and the fact that mining is unsustainable long-term unless it is subsidized by transaction fees, which will not exist because transacting on Bitcoin is slow and expensive."
That is not the point of the article. The point is that, as long as miners have to liquidate bitcoin to pay for power, capital will continue to flow out of bitcoin. As a result, either the price will go down or it requires capital inflow, both scenarios mean it is not a store of value. Additionally it talks about the implications on the security of the network as a result of this dynamic.
I understand how bitcoin works. I'm a big fan of bitcoin actually. But what you've said doesn't refute the article or what I've said.
Every time a miner sells their reward, whether it be a coinbase transaction or fees, it puts sell pressure and drives the price down. For bitcoin to even stay at a stable price requires corresponding buy pressure, new capital. An asset that continuously requires new money to enter it's market to maintain its value is not a store of value.
I don’t think this is at all the reason that it’s not a store of value.
It’s not a store of value as the supply is infinite. You’ll read in many places that only 21 million tokens will be produced. This is false. You can freely create as many new ones as you want by copying and pasting the source code any time you like.
That one is on the “real” chain and another is not, hasn’t actually mattered at all - as long as another chain can be perceived to have any value, the original is undermined.
Satoshi wrote about this at the very start - the notion that if it ever came to have any perceived value, even a minuscule value, then it’s achieved its goal of being transferable. That’s true of any and all others too, though.
This has been seen many times over the decade since: any time the perceived value climbs steeply it’s seen as being “overpriced” and money starts flowing into smaller “underpriced” tokens, nullifying it’s use case as a store of value.
Slowly and eventually I think the passive speculators will come to learn this, it’ll stagflate, then it’ll decline back close to nothing when it’s not producing the 300% CAGR it’s holders demand.
It's not because a system leaks energy that it necessarily loses its value completely. When I use a light bulb, I need electricity and heat is generated. But the light is providing what it's used for. The loss of energy is not important enough to jeopardize the system - it still successfully accomplishes its goal within the set parameters.
yet another case of not reading and understanding the original paper or econ more generally. Energy, labor, ingenuity, and resources are used to pull gold from the ground. After which it serves as a reusable proof of work. Is gold leaky?
I think you are misunderstanding the article. Perhaps re-read it. The point is that bitcoin does not spend enough energy to protect the network.
Bitcoin mining is not comparable to gold mining because the purpose of bitcoin mining is to secure the network's transactions, the fact that bitcoin mining produces bitcoin is merely a side-effect of this. If gold mining ceases to exist, or if a single company dominates the world's gold mines, that doesn't prevent people from moving gold ingots around. It doesn't allow the gold mining monopoly to double spend. But this is true of bitcoin. So it's unwise to make such a comparison.
If the value of gold is defined ONLY by the cost/effort/energy of mining it and the cost of mining silver is similar, then the prices should be similar and not orders of magnitude different per troy ounce.
do you imagine the energy cost of mining gold and silver to be the same?
in this world, do you imagine that silver is unprofitable to mine or that gold is wildly profitable to mine? Maybe you should be buying gold mining stocks.
No interest in reading the article, but I'm curious who still thinks an asset that can experience a 27% drawdown in 3 days is usable as either a store of value or as a currency?
Historically many fiat currencies have been dramatically debased, for example the german papiermark or the zimbabwean dollar. Currencies fluctuate. Currencies that are not backed by sound business relationships fluctuate more. But if it facilitates trade, it's a currency. As for a store-of-value? I don't know.
I think it's clear that the cryptocurrency market is chiefly driven by speculation in its current state, and this strongly perturbs the nature of cryptocurrency in a strange way. But I think it is more interesting to discuss what happens at some equilibrium state as t -> inf.
I plan to buy some if it drops below $15k or so as I think it will be basically up from there, maybe hitting 200k in 2025. It can hold value if you do it right.
Rambling article which I couldn't follow but because the very first idea was that bitcoin could be considered a "pot" that you "put money into", I know the rest will be quite wooly. Buy bitcoin, money goes in, sell bitcoin, money goes out? But every buy is a sell and the same money goes "in" and "out" simultaneously. There is no pot at all, it's just traded.
> But who is actually transacting on the Bitcoin network? No one. And I doubt anyone ever really will. When it comes to all transaction metrics, Bitcoin is horribly unscalable and expensive to transact on.
> The Bitcoin network is doing around 250k transactions per day (source).
With lightning network Bitcoin scales to far greater magnitude than that, amongst other things it collapses the entire premise of the article.
Thanks for sharing the article. But it doesn’t refute the premise that Bitcoin scales to far more transactions than what is stated in this article. Lightning already facilitates several magnitudes higher transaction numbers. https://bottlepay.com/blog/bitcoin-lightning-benchmarking-pe...
Re: the authors notion that hubs are going to be huge and are going to be bank like. I think it is going to reflect societal trust model where it is employed. In a low trust environment there is going to be more hubs . In a high trust environment people would prefer to defer routing to few hubs. If hubs engage in censorship there is minimal barrier for anyone to start their own hubs and route as they prefer. This is my hypothesis anyway. Also I take serious issue with the notion that any solution that is not VISA scale is automatically ruled out. There is a lot of middle ground in organic bottom up solutions.
Lack of awareness? Since most people’s initial interaction with Bitcoin is through exchanges, exchange adoption of lightning will increase awareness. Like how Kraken is doing it
What can I do with it ? I have many currencies in my Hong Kong bank and have very low fee, no capital gain tax, no criminal desires and no problem using cash.
I always think it's useful to compare Bitcoin to gold, and to try to apply every criticism of bitcoin to gold. Gold mining provides constant downward pressure on the price, bitcoin mining (in the sense of creating new bitcoins) will eventually stop. Securing and transacting gold is a lot more expensive then securing and transacting bitcoins.
When the value is set almost entirely by speculation then the fact that there’s a “drain” in the form of energy maintenance is basically irrelevant. How can you measure or analyze a speculation system with a 1 percent drain versus a speculation system without a drain? It’s all speculation in the end
> For anyone wondering, based on these estimations our BTC equilibrium price (break even point for miners) would be roughly $22k.
Note: with the current network hashrate. If some miners become unprofitable - they turn off their equipment, total network difficulty decreases, and the hashrate needed decreases too.
Crypto currencies are IMO all speculative assets. They may go up or down. People try to anticipate which way they will go based on various different criteria, but it's mostly a crap shoot. The same crypto currency is likely to fluctuate significantly up and down in value over time.
Yes, and just because early adopters are disproportionately rewarded to laggards doesn't make it a "pyramid scheme" either.
If it was that would mean all stock investments are "pyramid schemes" too. Did early investors in companies like Apple, Amazon, Google, or Tesla benefit from a "pyramid scheme"? They saw value before others did, got in early, and reaped the rewards once the majority cottoned on to their value proposition.
It's no different with Bitcoin. People see value in it before others have and may reap the benefits if demand continues to rise from society seeing value in its properties. You can argue about whether that perceived value is justified or not, but ultimately only time (and the market) will tell.
I'm not sure where you are getting "Pyramid scheme", most criticisms of crypto are that they are Ponzi schemes. The difference is that rather than money funneling up to the top of the pyramid, in a Ponzi scheme an illusion of returns is created by redistributing newer investors money to existing investors, rather than from the underlying investments gaining value. See Madoff's great scheme.
There was a great article, probably lost in time, which explained how the dot-com crash of the 00s was basically the collapse of an internet advertising Pyramid, and a smaller collapse of a dark-fiber pyramid.
The pyramid vs Ponzi scheme debate is just arguing semantics. They are variants of the same idea: that you constantly need fresh suckers to prop the scheme up.
(Not saying that crypto is any scheme; because there is not one cryptocurrency and because it's a dumb oversimplification of the problem)
A cryptocurrency emitting one coin per second forever makes a poor speculative asset, as there is plenty supply for late adopters. It will take a whole century to get yearly inflation rate down to 1%.
I've seen similar arguments like this before, which of course have their own set of counter-points from the other side of the debate. Both sides are unverifiable because they're trying to predict the behaviour of complex interacting systems. We're in the middle of a big experiment and the only way to know for sure who is right is to wait and observe.
I won't bother to respond to his core argument because it has been countered plenty of times before and as I said above it's ultimately a pointless endeavour to debate, but I did want to pick out what I found to be the most egregious part.
> Bitcoin was a phenomenal first attempt, just like Blockbuster was amazing while it lasted. But to think that we nailed it on the first try is crazy. I cannot think of a single piece of technology that hasn’t been improved for the better over time. Would you prefer to use a computer from 1988? A tablet from 2014? A car from 1932? Would you attempt to fly across the Atlantic ocean in the first airplane ever made? Of course not. Technology gets better with time. Period.
This is an outstandingly poor take from someone who clearly doesn't know the history of "e-money" or understand the core promise of Bitcoin, and is a common argument by "crypto defi bros".
The first, but lesser problem is that... no, Bitcoin isn't the first attempt at "digital money". The whitepaper specifically references previous attempts, why they failed, and how Bitcoin addresses those shortcomings. Bitcoin was just the first, arguably, successful attempt.
The second, but more significant problem is that the author thinks "crypto" is the new technology that's just starting out and being evolved here. Perhaps it is in a way, but that's missing the point. The technology been evolved here is almost as old as civilization itself.
Money.
Money has an incredibly long history of evolution through various technologies from stones on the island of Yap, shells, cloth, glass beads, ledgers, and yes, gold and other metals. In the modern age we saw paper certificates appear as IOUs for gold, then this link was severed in 1971 by Nixon, we saw the emergence of credit cards and e-commerce which all come with their various advantages and disadvantages.
So framing Bitcoin as the "first" of a new technology is recently and historically... wrong.
There's also the argument that the design space of money is limited. Bitcoin arguably fills in the final properties of money that needed to be improved on from gold (salability across space and divisibility) and fiat (scarcity i.e. salability across time). Vijay covers the properties of good money in his well-known article [1] (now book) better than I could. If you buy this argument the logic goes that there's not much more room for improvement when it comes to money.
This article is like the opposite of Saylors argument about energy being preserved in the form of bitcoin. Both oppinions are basically "that's what this concept feels like to me" and nothing more.
It's an investment. You buy bitcoin because you believe you'll get a certain amount of value back when you sell or exchange it.
There is no "pure" store of value. All investments, including gold, all currencies, art, baseball collectibles, even food change their value over time. When people mean "store of value" they mean something that appreciates more than the commodity they exchange it for.
I mean... Electricity theoretically could be payed with Bitcoin... What am I not seeing here? This argument that Bitcoin will leak only works if people are taking their value to other monetary systems. Which is the case today, but decreasingly so, as judged by Bitcoin increasing price over the long run.
Supply growth is not a bad thing for a crypto currency. Ideally the protocol rewards participants enough to incentivize them to secure the network, but no more.
You realize supply growth was significantly larger with PoW, right? It's like saying "Ethereum uses energy too!" completely ignoring the fact that it uses 99.9% less energy.
What has supply growth anything to do with how the network is secured (PoW specifically)? There is no correlation nor relation whatsoever between the two.
Ethereum lowered the issuance rate dramatically when it changed to PoS.
The reason it was able to do this without lowering the cost of a 51% attack is that it no longer has to rely on rewards alone. It can also apply penalties. Certain provable attacks result in automatic destruction of stake. In PoW terms, it's as if a 51% attack caused the attacker's mining rig to burn down.
Security is strongly correlated with issuance i.e. supply growth. If miners must spend X amount of value to compute hashes and secure the network, and the issuance or protocol reward is not sufficient to justify this spending, the security of the network is at risk.
As a percentage of supply, Ethereum only issues about 10% as much as Bitcoin.
On top of that, a portion of Ethereum fees are burned instead of paid to stakers. The supply is still slowly increasing, but at a (fairly modest) fee level of around 16 gwei the supply starts to shrink. The higher the demand for blockspace, the faster the supply shrinks.
>In this more accurate representation, we have miners pulling money out of the pot in two ways: transaction fees, and the selling of their Bitcoin mining rewards. The latter is harmful to BTC’s value in two ways. It dilutes the circulating supply of BTC which decreases its value, and it pulls money from the pot to cover energy costs. A majority portion of the money miners are pulling from the system is being burned forever in the form of energy costs, meaning it has no way of ever re-entering the system.
"It dilutes the circulating supply of BTC which decreases its value" isn't necessarily true. Although a lot of Bitcoiners say an increased supply decreases value and that a decreased supply increases the value, that's assuming demand stays constant. If demand rises with an increase in supply then the price may remain the same or increase (if the demand was high enough), and likewise if the demand lowered with a decrease in supply then the price may remain the same or decrease (depending on how low the demand gets). The author mentions supply and demand later in their post but fails to reference it here.
>If the network is valued at $568B, but costs $7.125B/year or more to secure, that’s a pretty big leak for something that is supposed to preserve value.
It sounds like the author is trying to say that selling is a "leak" of value. This premise doesn't sound right to me considering that a miner has to sell their Bitcoin to someone who is buying in, and an exchange of Bitcoin shouldn't be seen as value leaving the system. I think the word "leaky" also doesn't help convey the overall message of the post which is that Bitcoin cannot be a store of value because the mining that secures the network is unsustainable over time and the fees will not be enough to cover this unsustainable cost ("mining is unsustainable long-term unless it is subsidized by transaction fees, which will not exist because transacting on Bitcoin is slow and expensive").
>According to Glassnode, (as of April 2022) ~63% of BTC’s supply had not moved in over a year. So it looks like our denominator is actually closer to 0.37 * $568B = $210B
It doesn't make sense to claim that the value of the network decreases by the proportion of users who don't move their Bitcoin within a year.
>So now imagine two Michael Saylor whales are just dumping ~700 BTC on the market every day or around 250,000 BTC/year. That’s essentially the energy cost of running the Bitcoin network. Who pays for that cost? Not the miners. They are profitable. They pass it onto the Bitcoin holders. Bitcoin holders pay for it in the decreased value of Bitcoin caused by this energy expense.
The miners shouldn't be assumed to remain profitable if Saylor is dumping Bitcoin. Assuming demand is consistent and the supply of Bitcoin rises, then that Bitcoin dump would negatively affect the order books and therefore the price and the amount of money a miner would get for every Bitcoin sold.
>Bitcoin was originally designed to be peer-to-peer cash, then when everyone realized it doesn’t scale, the store-of-value narrative emerged.
This is false, the store-of-value narrative didn't "emerge". Satoshi wanted Bitcoin to be used for payments, yes, but that wouldn't restrict its usage to only be for payments. Satoshi mentioned in the bitcointalk.org forums that the currency would be "deflationary" (implying it can act as a store of value as well): https://bitcointalk.org/index.php?topic=12.msg62#msg62
>What about the lightning network? I can do a separate write-up on the the lightning network, but it would simply be a more poorly written version of this article: ...
The linked article also makes a lot of assumptions about how big centralized hubs will get and ignores potential future solutions for smaller hubs of centralization and locality. They also attack the known fundamental problems with Lightning network scaling while ignoring the advances made for things like liquidity, etc.
>Would you like to know how else I know Bitcoin is not thermodynamically backed? If you could remove the high energy consumption without sacrificing security or decentralization, it would be a net positive for Bitcoin.
I agree with this, energy consumption is not the end goal but it is the only plausible way to achieve the goals Bitcoin desires. POW creates an independently verifiable ledger based off something that can't be replicated easily by the parties that secure the network (which other algos like POS can't pride themselves on).
My conclusion: While I believe the author has a point, I also believe that the mining model is sustainable. In my opinion the way forward is to build numerous decentralized protocols on top of the Bitcoin blockchain and shift the Bitcoin blockchain's primary source of transaction traffic as layer 2 settlements. This will help decouple the value of Bitcoin as an asset with the number of transactions on the blockchain and will still allow demand for on-chain transactions to grow and meet the supply-demand curve.
A big feature of BTC that there is no upgrade path and it will running for a long time. No BUG can be introduced that way. Thus is very safe compared to other chains. What if there is a BUG in a future ETH / X Y Z chain upgrade?
BTC miners er being build on places with excess energy or wasted energy places and on renewable energy which have lower costs and mining chips are becoming more and more efficient. So the 'leak' to miners probably goes down.
NOBODY is in control of BTC anymore which is big plus IMHO.
BTC is the coin that created and made the crypto space possible.
So If you force me to buy something that has to be around in 20 years. I would buy BTC.
Currently it is possible to be paid to use energy since too much of it is dumped on the main energy network because of sun / wind. Countless other examples.
Proof of work plays many roles in the Bitcoin. One role it plays is that it ties a digital token to a real world, scarce, valuable resource. The only thing a digital token can be tied to: computation, or energy. Closed loop staking tokens have no tie. It is a formless, virtual, free floating concept. Not to mention that they are all highly centralized, so they don’t even have confidence in their monetary policy to fall back on.
With Ethereum, Cardano, Solana, etc, your value is in the hands of where the developers choose to take the protocols. They can and have changed their monetary policies, and they will again.
This person’s real concern appears to be “number go up”. It seems to have infected their thinking. They see a system that decided to engineer for NGU instead of stability and confidence, and thinks that’s “not leaky”. It is extremely short sighted.
In the stormy world of crypto, Bitcoin is the port.