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Comment by tobyhinloopen | Hacker News Reader

The idea is great, but in reality these stupid crypto coins are practically useless and wasting HUGE amounts of resources.

Bitcoin is said to be consuming as much power a some countries, and still rising fast, while the amount of transactions is comically low compared to the power consumption.

Bitcoin in its current state can never be a thing to actually buy something with. I don't see any other long-term use for bitcoin than just making a couple of bucks before it eventually crashes down like the Hindenburg.

I'm not saying that all cryptocoins will suffer that fate, but I truly believe bitcoin specifically will.

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It's (looking like it's turning out to become) digital gold. When is the last time you bought a family dinner with gold?

I wonder how the environmental impact of mining gold compares to mining bitcoin?

Both are pretty bad.

Gold mining is mostly strip mining tons of ore, spraying it with cyanide, collecting the runoff, and refining that. Then you pack up and leave before someone makes you clean up.

Pollution from Gold mining: https://sciencing.com/types-pollution-generated-gold-mining-...

A very rough estimate: World wide Bitcoin mining operation spends per year around 60% as much electricity as all of USA's bank offices: https://news.ycombinator.com/item?id=15615601

With Bitcoin mining there is a high incentive to actually use renewable energy sources and could be physically outsourced to places where building green power plants is otherwise not practical due to the limits of creating a power grid to make such a power plant profitable.

https://www.hydrominer.org/

Maybe it's digital gold.

Maybe when the price stops rising no one feels any desire to buy it anymore and people are left holding worthless numbers.

Yes, maybe it will become digital gold. If it were true digital gold, it would have a similar valuation closer to gold, i.e. $8tn (a 60 fold increase of its current value).

A whole lot of the world's gold is held by governments. For BTC to reach similar valuations, it would need governments to buy it. Why would they?

Pension funds will be buying next year.

I don't know whether governments will buy Bitcoin, but I wouldn't consider it unlikely that some country decides to use crypto as a replacement to their fiat currency -- either the government of a developed nation does it, or the people just decide that their local money isn't worth the paper it's printed on, and decide to use some sort of cryptocurrency.

I know this sounds crazy, and I would've called it a ridiculous notion if someone told me this 5 years ago, but I don't consider it too unlikely anymore. It has grown on me.

Due to quantitative easing, money just isn't worth much anymore and asset prices have gone up a lot across the board. Just look at the recent acquisition of a painting by Leonardo da Vinci: $450m. That could not have happened 20 years ago.

Would a country whose currency isn't worth the paper it's printed on have the infrastructure to use BTC? Would they be able to afford the transaction fees?

BTC would really need the support of a developed government, but those governments aren't eager to give up control of their currency.

Not saying it will be Bitcoin. It could be Ethereum, or some other crypto with (very) low transaction fees.

I don't think Bitcoin is a currency anyway.

Building a crypto banking service that can be controlled through a phone (e.g. in Africa) should have tremendous value given the very high inflation in some countries there.

Like people holding gold in the period when gold does not appreciate are left holding worthless chunks of metal?

Gold doesn't require a worldwide network of specialized computers to continue operating so it will continue to be useful.

The internet needs a worldwide network of specialised computers to continue operating. I bet it won't be very useful anymore once we turn those off.

People use the Internet for a lot more than speculation.

What do people use BTC for other than speculation?

Buying drugs, money laundering, and ransomware

/s?

Gold only requires worldwide network of traders and physically secure holding places and general sense of security so it can change hands.

All that's required to to exchange gold is one person that has gold and another person who wants gold and has something the first wants to trade for it.

Really? Let's meet, I'll give you gold.

Or: for the majority of people, holding hold, recognizing gold, and exchanging gold is not possible. You need experts for that, and they all take commissions. And sometimes scam you.

You don't need experts; you can learn how to identify real gold yourself, in far, far less time than is required to learn to understand a cryptocurrency.

global BTC mining consumes approx. as much as annual Christmas light decoration in US. UsefuL?

how do you know?

How do I know what? That it will crash and burn? Because it is a useless resource. It is only worth something because other people say it is worth something, and unlike paper money it is not backed by anything significant. It is a bubble of hot air, ready to pop at any time.

It might continue rising for years or decades. But it is not usable as a real currency, so it will always remain a useless waste of resources.

There might be a replacement cryptocoin that will actually be useful in the future, but it won't be bitcoin. Bitcoin will be the thing that started the "future", but it will not be the thing that remained the future.

What do you mean by 'anything significant'? Paper money is not backed by anything material. Rather, it is backed by institutions (central banks, governments, banks) and individuals using them. To me, that's pretty much the same as cryptocurrencies.

Not exactly, if your country economy collapse you still live in your country and are onboard with your fellow citizen to start anew.

If bitcoin collapse you are totally on you own while your neighbors that never invested in bitcoin remain totally unharmed by this virtual event.

I think that was the point he was trying to make. Without major support of such institutions / individuals, bitcoin won't catch on as a "real" currency.

To be fair, I don't think paper money is backed by anything more than "trust" in the goverments that print it, and that people will accept that as payment.

If you "trust" the bitcoin network, and think that someone may accept bitcoin in exchange for something that you want, it looks pretty similar (obviously not comparable in scale yet)

Paper money also worth something because other people say it's worth something. You can't buy anything with Czech krones in some Kenyan village, because people there don't its worth.

>> It is only worth something because other people say it is worth something

That is actually the very definition of most currencies currently in use [1]. Money is actually just a promise that someone will provide you goods or services in exchange for it sometime in the future, it has no intrinsic worth. Also, paper money isn't tied to anything [2] either, let alone the "digital" money we have in the banks.

[1] https://en.wikipedia.org/wiki/Fiat_money [2] https://en.wikipedia.org/wiki/Nixon_shock

Money is traditionally backed by something though right? Isn't a currency a bunch of tokens with an army? Where's the Bitcoin army when I need them to enforce my contacts?

Actually, the main thing that gives money value is the fact that you have to pay your taxes in it. If you live in the US, you might be able to live day-to-day with nothing but BTC but when tax time comes you'll be converting some of that to dollars or facing some ugly consequences.

Not really, see e.g. the 2012-2013 financial crisis in Cyprus, there was no "army" to enforce that people got all their money back... [1] The only thing that keeps the system working is trust (see other reply to my initial comment that explained it more thoroughly).

Though I agree that there is a lot less "backing" of Bitcoin in that sense, nothing protects you from losing everything if something goes wrong.

https://www.theguardian.com/world/2013/mar/30/bank-of-cyprus...

"Fiat" money is backed by enormous sums of debt repayable only in that currency and a tax burden representing a large proportion of GDP payable only in that country, and its supply is kept in balance with demand on a day to day basis by central banks. (And even then, people are entirely justified in worrying that certain currencies will struggle to retain value because their state and central bank are very bad at doing the latter jobs) So it's basically backed by years' worth of guaranteed future demand to obtain that currency from people who will therefore be willing to provide goods and services in return.

Bitcoin is backed by optimism.

Never have seen this so well explained. Alternatively, fiat can be printed. So there is a case for something that is limited, transportable etc. You can always sell your bitcoin to pay the taxes. Is just that the limited comodity would have the tendency to sell for more if the fiat is being printed

> Because it is a useless resource. It is only worth something because other people say it is worth something

So, like art?

The burden of proof is on the side saying "this time is different", the four most dangerous words in investing.

Of course we will have to wait and see yet again, because "the market can remain irrational longer than you can remain solvent."

Same song different drummer.

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