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Comment by superkuh | Hacker News Reader

These analyses never take into account the energy other currencies need to keep themselves stable. Usually it is in the form of a standing army, or the diplomatic trades necessary to benefit from an allied country's standing army. The energy needed to maintain a credible modern standing army is incomparably more than Bitcoin is using. And not only that, bitcoin protects itself non-violently while fiat currencies depend on violence.

These other resources it is compared to do not have to protect themselves, or, if you included the resources spent doing so, would far outstrip Bitcoin.

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Even if all fiat currencies went away and the entire world was on a Bitcoin standard, countries would still have standing armies, just as big as they have today, to protect their hard assets. The stuff you buy with money, like oil, gas, farmland, factories, and so on.

In the absence of an army, you can have all the Bitcoin you want, and still be dirt poor because somebody else with an army can just waltz in and take your stuff.

So I find it laughable to claim that the cost of standing armies should be tallied up as an operating expense specific to fiat currencies.

Also, consider the energy required to mine precious metals or to produce those hard assets you mention.

Fun fact: there exist currencies that have maintained stability despite the country in question lacking any kind of military.

Funner fact: there exists one fiat currency that maintained stability despite the government in question effectively ceasing to exist.

Funnest fact: the energy invested in the maintenance of appropriate armed forces appears to have no correlation with the stability or lack thereof of a currency.

I mean, there's just no evidence that stability of fiat currency is driven by military considerations as opposed to, say, fiscal and monetary policy.

> Fun fact: there exist currencies that have maintained stability despite the country in question lacking any kind of military.

Such as?

And for a further question, would they have remained stable if other countries had not invested in their military to the point that the world in general remained peaceful?

The US gets a lot of criticism for military spending, but the fact is, the rest of the world leeched off this by enjoying the peace and prosperity that was created by having one country be such an overwhelming superpower that it discouraged wars everywhere.

Now, the US is starting to show weakness and with the Ukraine we immediately see the effects of not having a 500 pound gorilla in the room to keep everyone else in line.

You're creating a really difficult causal link. Does the US' military create peace and prosperity?

I would disagree with your assessment of that for Ukraine.

> Such as?

https://en.wikipedia.org/wiki/List_of_countries_without_arme...

Mostly the European microstates and several Caribbean and Pacific islands, but if you don't count a gendarmerie as armed forces, you could include Costa Rica and Panama--two not-tiny countries--in the list. (If you do count them, the largest is the Solomon Islands).

> And for a further question, would they have remained stable if other countries had not invested in their military to the point that the world in general remained peaceful?

That this question is being asked is I think a concession of the underlying point: fiat currencies aren't maintained by military investment, not in the same way that Bitcon is maintained by hashing power.

Furthermore, it's not at all clear that the decrease in active conflicts over the past century or so is really due to military investment. One can argue that the establishment of international communities such as the EU, or the UN charter forswearing territorial changes via war has had as much, or more, of an impact on reducing the outbreak of wars such as the War of the Pacific as American military might did.

> Mostly the European microstates and several Caribbean and Pacific islands, but if you don't count a gendarmerie as armed forces, you could include Costa Rica and Panama--two not-tiny countries--in the list. (If you do count them, the largest is the Solomon Islands).

None of these places have a currency that is widely used. They may be offshore banking havens, but people keep their money there in US dollars.

The only possible exception might be the Swiss Franc and they do have a military as well as the leverage of holding everyone's money.

Many of those small countries don't even have their own currencies. Andorra uses the Euro, Kiribati uses the Australian dollar, Panama uses the US dollar in addition to its own currency and so on. The countries are able to exist without a military because they're under the protection of a country like the US with one.

>And for a further question, would they have remained stable if other countries had not invested in their military to the point that the world in general remained peaceful?

You can leverage that criticism against Bitcoin because that is exactly what it depends on.

Funniest fact: Fiat money was invented to wage war more easily.

That reflects poorly on Bitcoin because it has the exact same design as fiat. It doesn't neutralize liquidity preference so a society adopting Bitcoin would be equally prone to go to war.

No way you understand the connection to war based on your comment.

> The Bank of England was incorporated by act of Parliament in 1694 with the immediate purpose of raising funds to allow the English government to wage war against France in the Low Countries

https://www.britannica.com/topic/Bank-of-England

Bitcoin is fundamentally different origin of money and absolutely not would a society adopting it be equally prone to war. Total nonsense sorry.

Actually, look at the deal Kissinger cut with the Saudis in the early 1970s, creating the petrodollar system: the US dollar became the world's reserve currency because the Saudis agreed to only accept dollars in exchange for oil.

The costs of the US 7th fleet in the Gulf and the entire military industrial complex behind it are what backs the global strength of the US dollar.

https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-...

It's not currencies that are protected by threats of violence. It's countries. They would still spend all that money if everyone used bitcoin.

Counterfeiting is prevented by police forces via violence, so I would argue that some of the police energy budget could be included. Police are kept in power by militaries, so some of the military's budget should be included too.

Counterfeiting is mostly prevented through security measures on the bill itself which can be confirmed through counterfeit detectors.

The police force just makes it easier for people to not have to carry detectors and use them for every single transaction. Aka optimistic security.

Anyway, the problem is even if you do all of that, Bitcoin miners also pay taxes that fund the military and Bitcoin miners depend on property rights, landownership, electricity infrastructure, fiat currency just like any other company. Internalising these costs makes the economy more efficient, it doesn't absolve Bitcoin of benefiting from human violence.

Isn't the energy cost of this violence the real point though?

Proof of work cost is analogous to the police violence/detection/bill security costs you mention, so that is what we should be comparing. The cost of land ownership, security and electricity is included in the cost of POW, so including it is counting double.

You could argue the police help secure the miners from physical theft, but they also help prevent physical theft from fiat banks, so shouldn't that be equal if not in favour of bitcoin?

How does Bitcoin defend itself non violently if it derives its energy from infrastructure that is being protected by the standing armies you complain about? Not to mention that the infrastructure was paid for in fiat currency.

> Usually it is in the form of a standing army, or the diplomatic trades necessary to benefit from an allied country's standing army.

Citation needed.

I didn't realize "world peace" was now a selling point for bitcoin. Curious how switching currencies will stop invasions and genocide and such...

These analyses also never take into account all the energy used to make all the goods and services in the global economy that bitcoin can be used purchase. Or not comparing it to the total energy output of the sun which shines down on the earth which has people on it who use bitcoin. These analyzes are therefore flawed.

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