[rcstank]

GP claimed that generating dollars using electricity is bad. Isn't that what the majority of companies are doing?

Edit: that's my whole point: mining BTC is generating value by verifying transactions. In turn, the miner gets paid for their work.

[AaronFriel]

Bitcoin consumers more power than entire nations' economies while generating so little value that I suspect my home town in Iowa would exceed the transaction rate on a daily basis. A moderately busy food district in a major city would exceed that every day. (I'm thinking roughly 100,000 people getting lunch or dinner in 1 hour ought to generate 13 to 27 times as many transactions/second as the entire Bitcoin network supports.)

Sure, there's bitcoin cash, lightning network stuff - but uhh, where's the beef? I mean, seriously, where are the users using Bitcoin at volume?

It seems like Bitcoin is a Ponzi scheme for people mining (or HODLing) Bitcoin, not a store of value, not a mechanism of currency.

[shawnz]

Transaction rate is not the only possible way to judge the value a monetary system.

Also: Bitcoin's maximum possible transaction rate could be arbitrarily scaled up without impacting the electricity usage at all (but it would have other trade-offs not related to energy usage, which has made it hard to establish a consensus on the issue).

[AaronFriel]

> Bitcoin's maximum possible transaction rate could be arbitrarily scaled up without impacting the electricity usage at all

If it can, why hasn't it?

[shawnz]

For example, increasing the block size could have some disadvantages like increasing how quickly the size of the blockchain grows, which will make it harder for new users/miners to join the network and possibly increase centralization.

It's also not clear the market has a strong demand for an increased transaction rate yet. Eventually it will be almost unavoidable, but we might not be there yet. If that's the case then it might be harmful to increase the number of frivolous/unnecessary transactions for no reason.

[vkou]

Transaction rate is the only possible way to judge the value of a monetary system.

A system where you essentially can't transact is economically dead. The health of an economy is measured by how quickly money flows in it, not in how wealthy a dragon sitting on a pile of gold can get.

It can be a speculative system, but that's far less useful than being a monetary system. Bitcoin is a terrible currency in the same way that houses, or diamond rings are a terrible currency. Settling transactions in them is slow and incredibly expensive.

[shawnz]

Not true. For example a monetary system might be valuable because it supports high transaction volumes even at a low rate, or because it has high costs to attack.

> The health of an economy is measured by how quickly money flows in it

Bitcoin isn't an economy. It is just a small part of the overall economy

[vkou]

The cost to attack bitcoin is a lot lower than the cost to attack the euro, the usd, the yen, or even the rouble.

That's because you don't need a 50% attack to destroy bitcoin. You just need the stroke of a pen, and it's price, and utility would collapse.

[shawnz]

> The cost to attack bitcoin is a lot lower than the cost to attack the euro, the usd, the yen, or even the rouble.

Those things should ought to have a much higher cost to attack since they hold significantly more value than Bitcoin currently.

> You just need the stroke of a pen, and it's price, and utility would collapse.

Then simply valuate it on what it will be worth in a post-regulation future rather than its current value. If you really believe that will happen, then it presents a great shorting opportunity for you and you would be helping to price in risks such as that.

[lallysingh]

They're moving money out of their countries past currency export controls.

[kfrzcode]

The BTC market cap is around $650 billion. I don't understand your logic.

[AaronFriel]

Market cap is not a meaningful measure of a currency. A better measure is the velocity of money within a currency.

For context, just one part of the US economy is the stock market. The Depository Trust & Clearing Corporation (DTCC) which came up in the news recently processed $2.15 quadrillion in securities in 2019.

The 30 day average for estimated transactions in Bitcoin is around 5-6 billion, or still around 1/1000th just one art of the US economy's transaction volume.

At 5 transactions per second, the average transaction size would have to be around $1,268,2308 to equal the velocity of just one portion of one sector of the US economy. 5 transactions per second is actually higher than the average transaction throughput over the past several years.

[xur17]

No it isn't.

[cortesoft]

No, creating new dollars is just updating a database at the fed, basically.

There are no companies that generate dollars. That would be counterfeiting.

[Matticus_Rex]

> There are no companies that generate dollars

Other than banks. Banks generate new dollars through fractional reserve lending, though they also destroy them.

[jki275]

The fed certainly generates new dollars.

[cortesoft]

Yeah, and they aren’t a ‘company’

[sudosysgen]

Companies generate dollars by first generating things that some people find useful. Just generating dollars by themselves should be done with the smallest possible amount of electricity.

[bluescrn]

Or they generate dollars by trading and speculating but not actually creating anything. How much power is used worldwide by stock trading, HFT, etc?

[sudosysgen]

I agree that this is an issue, but I don't think that's anywhere near what Bitcoin uses.

[shawnz]

Bitcoin's energy usage is proportional to its market value so you might say it always uses the smallest possible amount of energy (given the current valuation).

We have yet to see if alternative systems like proof-of-stake can gain the same trust and replace proof-of-work while actually consuming less energy in practice. I'm hopeful though.

[sudosysgen]

Creating currency by itself does not create any value.

[shawnz]

Right, the creation of Bitcoins only redistributes the value. The value mining provides is actually in outcompeting potential attackers who might want to change the consensus of the network.

[X6S1x6Okd1st]

It's unclear how much value is being created by Bitcoin vs how much is being captured/transferred from elsewhere.

Plenty of reasonable people likely think that Bitcoin doesn't create any value.

[airstrike]

Companies are generating value, not dollars.

[Closi]

No, companies do not create new money. They create goods and services in order to generate value/profit.

[jld]

Banks are companies and their service is to create new money.

[Closi]

Banks that are for-profit companies add to the money supply (via loans) but don't 'create new money' in the same sense as mining Bitcoin.

Mining bitcoin is most similar to a central bank printing/issuing money (except it's issued to the person that can waste the most electricity or show proof of stake rather than being issued selectively by the central government).

Banks can add to the money supply by lending out money which has been saved in them by others, but there is nothing unique to fiat currencies about this, and the same can be done with Bitcoin or other crypto. I suspect you wouldn't say that 'banks can create new bitcoins without mining', but that's the same thing as saying 'banks can create new money without printing it'.