Bitcoin Is as Legitimate as Ice Cream
qasimk.io
qasimk.io
Let's say I bought a gallon of ice cream with bitcoin. What is the energy cost of the transaction? How much waste heat did it generate? And on the other side: what is the energy cost of making that ice cream, shipping it to the store I bought it from, and keeping it refrigerated? How much waste heat did that generate?
If the bitcoin transaction cost as much energy and generated as much waste heat as the production, storage, and shipping of the gallon of ice cream, then yeah, that's a good start for saying one is legitimate as the other. But if one of them cost a couple of orders of magnitude more energy, and generated three orders of magnitude more waste heat, for something that is theoretically the same monetary value (because they are, given that we paid for that whole supply chain with the bitcoin transaction), then there is a pretty clear imbalance.
And for a bit more clarity - what is the energy/heat cost of buying that gallon of ice cream with a debit/credit card? How does that compare to both the production/shipping/storage of that gallon of ice cream, and to the cost of buying it with bitcoin?
I am not going to do the research and estimation for this. Some quick lazy searching suggests that one BTC transaction consumes about 3x the energy of 100k transactions via Visa's network, though. And that is the issue: Bitcoin is, by design, incredibly wasteful of resources. Ludicrously so.
And then theres the transaction cost to consider. Visa is a few cents, bitcoin is tens of dollars. https://ycharts.com/indicators/bitcoin_average_transaction_f...
Then watch out for the purported anonymity where the transactions are recorded forever.
There are Layer 2 solutions (Lightning Network) for cheap and instant transfers that do not warrant the security of a full Bitcoin transaction.
Anonymity has never been a purported feature of Bitcoin. This is not a downside, it keeps regulatory scrutiny somewhat at bay.
You may as well use an International money transfer service like Transferwise (which essentially is similar to a bitcoin exchange but currency to currency), that performs the same function without the bitcoin in the middle... Transaction costs will be lower and it will be faster.
That is not a given.
> You may as well use an International money transfer service like Transferwise (which essentially is similar to a bitcoin exchange but currency to currency), that performs the same function without the bitcoin in the middle... Transaction costs will be lower and it will be faster.
I could ask the same question: If Transferwise exists, why do we still have international bank wires? It's a different financial instrument with different properties. Transferwise is some company from Finland that you need to register with to send a limited amount of money to a limited amount of countries. Maybe that's better than Bitcoin under some circumstances, but it's a different thing.
Anonymity has certainly been a purported feature of bitcoin. Obviously erroneously. It's mentioned in the wikipedia article: https://en.wikipedia.org/wiki/Bitcoin#:~:text=anonymity%20en...
The mining of Bitcoin only happens once in human history, so all things considered, this should be compared with the mining of all the gold or other precious metals, again, throughout human history.
If there must be a comparison to VISA, we must look at the energy expended by every person working not just for VISA, but the entire infrastructure that makes running VISA possible, that is, the banking system as a whole.
> Bitcoin is, by design, incredibly wasteful of resources
Consider this door:
https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Wi...
Proof of work is "a waste" in the same sense as this elaborate door is a waste.
ftfy sweetheart
Literal scraps of cloth are distributed as physical stores of value. Most of the value in the economy doesn't even have a physical manifestation.
Most importantly, it's much more practical securing those pieces of cloth in the physical world in the long run than "securing the Bitcoin network" which consumes more and more energy over time when the cash and fiat handling infrastructure is already relatively mature against everything but nation states, which is arguably working as designed.
None of this warrants bringing ice cream into this fight, and to hell with the person so obsessed with cryptoccurrency as to imply that if we don't accept cryptocurrencies, we shouldn't accept ice cream.
It also conflates twodifferent industries that synergize well. Part of what makes modern logistics work is that we even have refrigeration capabilities. Those aren't going to disappear just because your cryptocurrency might have a similar energy function. Which arguably it doesn't, seeing as the BitcoinNetworks energy consumption per transaction is high enough to run household energy requirements over extended timesans, and part of those operating is stprage of and consumption of, refrigerated goods.
Now we at least know what side of things cryptocurrency people are really on.
Nobody looking out for anybody but themselves would get behind getting rid of ice cream.
Just a couple negative effects of ice cream that I could think of, put in similar morally leaning terms as people talk about Bitcoin on:
- ice cream is violence against animals because it is part of the dairy ecosystem which forever keeps cows in a lactating state even to their own detriment [1]
- ice cream contains high fat, calories, sodium, sugar and dairy components which contribute to obesity and a higher death toll [2]
- ice cream impacts the environment because it requires large dairy farms, in order to be cost effective, packed with lots of cows which produce their own green house gases [0]
I very much dislike the abundance of moral arguments. In debate a moral argument requires you to offer no alternative to solve the problem, just dictate what something should or should not be and some supporting evidence for why. In my view, a moral argument should be one that occurs in your head and is the catalyst for developing a paradigm that is better, not one you bring to the debate floor or at very least less often than we see them in debate today.
Some links:
0: https://foodprint.org/reports/the-foodprint-of-dairy/
"Mining" is an inaccurate term that draws a false analogy between cryptocurrencies and physical resources. At all times, the energy expended by proof of work must be proportional to the value represented on the shared ledger, or else there would be an incentive to perform a 51% attack. The energy expenditure is the goal, and the block rewards are the incentive that drives that goal. As the block rewards decrease, either Bitcoin becomes vulnerable to attack, or the transaction fees increase to drive the energy expenditure instead.
"Mining" implies that a resource is gained by the energy expenditure, which is fundamentally incorrect. The transactions are validated by virtue of energy expenditure, in order to gain the right to apply an update to the ledger.
> Mining may or may not consume a lot of energy, but the amount of transactions remains the same.
This is a true statement. The amount of transactions remains the same, capped at 10 per second. A pitifully small number that cannot provide any use at scale. If every person on the planet used Bitcoin, each person could be involved in a transaction once every dozen years or so. Get your paycheck today, and you can buy groceries next decade. Sounds great for a "currency".
This ignores the ability to require more blocks before considering a transaction as "confirmed". These days, due to the enormous cost of a 51% attack, 2 blocks are usually considered "enough" for Bitcoin, but it was 6 blocks in the earlier days.
Bitcoin doesn't intend to maximize energy expenditure for proof-of-work, that's just a side-effect of its (currently) high price.
> If every person on the planet used Bitcoin, each person could be involved in a transaction once every dozen years or so. Get your paycheck today, and you can buy groceries next decade. Sounds great for a "currency".
Nobody is arguing that a Bitcoin transaction is useful for everyday currency. The same can be said about gold coins or treasury notes.
If you want to use cryptocurrency like cash, there's Lightning, but there's also other cryptocurrencies (like Bitcoin Cash) which you can easily convert to and from Bitcoin.
It’s a valid argument to explore, but this piece doesn’t do any serious work.
whats second hand bitcoin?
How about porn ? ;-)
It depends a lot on what activities they displace.
It could well be a lot of other stuff, sports, resources consuming hobbies etc.
What is your argument for it not being such a giant waste ?
Remember, we are now living in a guilty-until-proven-innocent world.
Bitcoin has negative externalities beyond energy consumption.
I keep hearing this argument from bitcoin enthusiasts, and I don't understand why this is a bad thing. Electricity for heating, for cooking, for entertainment is constructively used. Cryptocurrencies are the only case I know of where electricity is deliberately used to the minimum possible effect, with verification that that was the case. The only benefit is the thrill that people get by using them to speculatively gamble.
A utility isn't an end goal, but rather in order to enable some activity from it. Utilities are provided such that they can enable some benefits to society. Using a utility in an unexpected way that benefits society is a fantastic thing. Using a utility in a way that is not beneficial to society, and that prevents beneficial uses of that utility, then it is perfectly reasonable to restrict usage.
In this case, since monitoring for cryptocurrency validation would be indistinguishable from productive high-electricity usage, a better solution would be to target the exchanges, to remove the incentive for cryptocurrency validators to waste electricity. Cycling through other currencies would then be treated like any other form of money laundering.
It could be argued that straight resistive heating is inefficient compared to using a heat pump, so on, it might not be that legitimate
> for entertainment
You don't need to use electricity to entertain yourself. Worth, why would you entertain yourself when you can think relentlessly about the betterment of Peoplekind.
> a better solution would be to target the exchanges
Crypto don't need exchanges to survive.
> Cycling through other currencies would then be treated like any other form of money laundering
Then Wall-Street traders would be the first to go to jail. Soros made his fortune betting against the british pound.
>Then Wall-Street traders would be the first to go to jail. Soros made his fortune betting against the british pound.
This seems like a complete non-sequitur. What has soros’s bet got to do with money laundering?
Did you read (and understand) the original comment ? It read:
> Cycling through other currencies* would then be treated like any other form of money laundering
Soros cycled through currencies while at war with the BoE, applying OP comment, it would then have to be treated as money laundering if applied to fiat currencies.
Sure but where is anyone talking about applying this to fiat currencies?
This seems like a red herring.
This is the classic "guns don't kill people" argument. Yes, guns wouldn't be bad if they were being sold in a perfect world with no murder. Bitcoin wouldn't be bad if we had perfect energy production with no environmental cost. But that's not the world we live in!
"Bitcoin doesn't cause carbon emissions. Energy production causes carbon emissions."
...or if the cost was fully internalized.
[0] https://www.mortaljourney.com/2010/11/1900-century/1930-tren...
...because it was spam, or because it was fraud? The postal service is very happy to send junk mail, as long as you're paying them for it (at below market first class letter rates!)
The analogy I'd use is cryptocurrency's impact on the GPU market. The sharp rise of people wanting to pay electricity in order to buy into the pyramid scheme has caused GPU prices to skyrocket. It isn't clear yet when either the bubble will burst, or regulation will catch up with cryptocurrency, so there hasn't been much increased GPU production to handle the peak demand.
The guns don’t kill people argument is based on the idea that Guns are not the proximate cause of murder even if they make it easier.
Bitcoin mining is the proximate cause of the externalities. You can’t participate in Bitcoin without directly contributing.
The schedule matters. It’s good that the block reward will be cut in half soon, but why do we have to wait four years for it to happen again? There’s no particular reason to believe that Nakamoto would choose to spend 10x Google on electricity if they were choosing a schedule today.
The schedule stays the way it is because miners like money and changing the consensus is hard, not because it’s a good idea.
And so, the only way to drop electricity spending is to make the price crash. The much easier option of changing a parameter in the software is eliminated because of the impossibility of getting a consensus to do it.
This is what happens when you remove centralized decision making.
Is this really a bad thing? ie. a system where you need consensus from all stakeholders for a change to go through, as opposed to something like the fed where they can unilaterally print trillions of dollars?
Dislike of the ‘fed’ had no bearing on this.
But changing the block reward schedule is "extraordinary consensus-making"?
If people holding Bitcoin got to vote then maybe they wouldn’t choose to give miners $1.5 billion a month in rewards?
Miners follow the users, not the other way around. We saw this with the failed segwit2x fork, which had 80% miner support but still failed.
>If people holding Bitcoin got to vote then maybe they wouldn’t choose to give miners $1.5 billion a month in rewards?
Maybe because they think a 1.75% inflation rate is worth it to secure the network?
Sure, when the market goes up a lot, maybe a 1.75% fee doesn't seem so bad. It's still 10x Google's electricity usage for a simple consensus algorithm.
Are "disgusting paper straws" really a "viable alternative" to plastic straws?
Lower the amount of money being given away and you’ll see a lot less mining. There are two ways that could be done, reducing the block reward or dropping the market price of Bitcoin.
To reflect on your other comment on mining reward and price; protocol and rules are set in stone and price can only be crashed by market meaning change in demand for Bitcoin.
Make the tax proportional to mining revenue, and maybe the "set in stone" rule would be reconsidered?
Such laws are difficult to pass, though. A tax on proof-of-work contests would politically be easier and encourage switching to better algorithms.
Best would be to do both. It's good to have incentives both to switch away from fossil fuels and to switch away from proof of work.
A non-argument.
If so, anything you like could be banned with the same rationale and you would just have to accept it.
If you were a little bit more principled, you would argue that if the CO2 emission has been paid for, it shouldn't matter how frivolous the use is.
But CO2 emissions have both individual and societal costs and both individual and societal impacts.
So I would say yes, absolutely: people, as a society, should have some say deciding for other people what CO2 should and shouldn't be expended on, because it impacts society as a whole.
You mention that if it's paid for, the particular use of the emissions shouldn't matter. That's true in a way, but you need to properly include the impact on society into the CO2 emissions price. There are a bunch of complications to that, and we (the whole world) have not gotten all that far with that.
It becomes an argument if you agree with the premise that people should not be able to prohibit others from doing things based on a spurious moral assessment. On those grounds, all kinds of frivolous activities - including eating ice cream - could be prohibited.
If you don't agree with that premise, then your opinion is bad (and you should feel bad), but at least you're being consistent.
> But CO2 emissions have both individual and societal costs and both individual and societal impacts.
Yes, but the source of these emissions doesn't make a difference regarding the impact. To stay consistent, you would have to argue that the social benefit of ice cream is too large for it to be prohibited, while the social benefit of Bitcoin is too low for it to be allowed. That's a highly subjective assessment, to be made for each and every source of CO2.
> There are a bunch of complications to that, and we (the whole world) have not gotten all that far with that.
If we can't agree on a CO2 tax, then we can't agree on a ban (or tax) on Bitcoin mining either. The same countries that would refuse CO2 taxation would become a haven for Bitcoin mining.