It is quite pathetic that a purported 'future of payments' is so inefficient in so many ways. This is why I will never participate in systems like bitcoin that consume hundreds of TwH (and growing) each year.
I don't think btc has been purported the future of payments for years, since things like ETH, ADA, ALGO have been proven better for that. BTC is considered 'digital gold', as in an alternative asset class that millenials and zoomers have adopted in lieu of gold. And now it has become mainstream for fund managers with large AUM to hold some without being laughed out of wall street.
Its a long solved problem. Just years after bitcoin went live bitcoin devs figured out that PoW just cant be the solution.
FBA (Federated Byzantine Agreement) DLT ("blockchains") where the result or making "a better bitcoin". There is no need to burn energy to solve the double spending problem. All you need is a distributed way to agree on Tx order. Whoever tries a double spend just f**ed up themself and simply wont know which one will be ordered first and which one therefore will be invalid. Thats not a problem for any honest participant.
See xrpl.org if you wanna read more in dept about this. There are plenty other protects using BFA instead of PoW/PoS by now.
In my view, "law of unintended consequences" looms large here. On the other hand, "proof of work" reminds me that the equivalence of heat and work was proven more than 150 years ago by Joule.
That equivalence exists in the domain of classical physics.
Bitcoin only exists in semiconductor systems: its ineffectiveness stems from the extra logical layer (gates on silicon) which, while based on quantum effects, does not utilize quantum effects directly for calculation.
If we had desktop quantum computers, and a computationally hard algorithm on qubits was used for proof of work instead, we would still end up in the same arms race of ever more expensive, ever more power hungry systems do that work.
What would happen if Bitcoins work function (the hardness) was made 10 times easier, would miners use 1/10th the power budget? No, they'd just 10x their mining rate. Why? Because other miners have every incentive to do the same.
Isn't there also a fundamental equivalence between information and energy in physics? And so is there not a lower limit to the amount of energy required to compute a SHA256 hash of a certain number of bytes, and by extension mine a bitcoin block?
Isn’t the Margolus Levitin theorem slightly different?
As in while it puts the maximum bound of amount of computation per J it doesn’t enforces a requirement that the entropy increase needs to be through a non-information degree of freedom as in heat.
Locally and classically, yes. But quantum effects demonstrably break locality. Call it quantum woo if you want, but the reality is that we perceive the world top-down and know incredibly little of how our universe actually functions from the bottom up.
Its not a payment system (unless the transaction is sufficiently large).
It's more like digital gold. But gold has a track record of holding value over millennia. Bitcoin is only a decade old. Will it hold up over time? Nobody actually knows.
It was an impressive proof of concept. There are technically better cryptocurrencies (along pretty much any dimension), but they just didn't get as much attention. Maybe these articles about how bad bitcoin is should call out some alternatives.
The Lightning network is an overloy network on Bitcoin that allows faster transactions and higher transactions-per-second. Due to the economics of mining, it won't decrease the overall electricity usage of the network, but will make it more "efficient" per-transaction.
Ethereum is more programmable, to the point of being quite easy to shoot oneself in the foot. (Bitcoin is intentionally not Turing-complete to avoid abuse.)
Anything with proof-of-stake instead of proof-of-work is going to be less wasteful in terms of electricity. Ethereum is trying to get there but it has been delayed a lot.
The slow pace of block creation has been a problem with Bitcoin for a long time and lots of blockchains have higher transaction-per-second capacities and quicker verification times. Ripple was promising but had some serious scandals and I don't know if it has a future. Anyway, Bitcoin is one of the slowest ones out there now.
Several have improved on the privacy/anonymity aspects. The most famous of those I think is Monero.
We could make an educated guess, however. Gold has intrinsic value, which gives it a significant advantage over a tiny arrangement of bits in an ocean of them.
It does, but that only establishes a low floor on the price of gold. If it had no value as a store of wealth, it would plummet in value to a tiny fraction of what it is actually worth.
Bitcoin has a floor of 0 in theory.
I would also guess that makes gold better as a store of wealth. But given that the price rarely ever approaches that floor means it might not matter. And bitcoin is harder to steal (at least you don't have to pay someone to guard it in a vault), easier to divide and transact and verify ownership. I don't claim to know how it will turn out.
I wonder about the value of gold. You might buy gold, but can you actually, physically hold it and own it?
As far as I know, the only way you can buy gold is if you either buy jewelry or are a jeweler to make said jewelry. Otherwise you’re just buying stocks which could theoretically be lost in the digital wind.
Aside from some industrial uses, gold really has no intrinsic value aside from cosmetic. And cosmetic use is really just shared appreciation. There's really no reason btc couldn't offer shared value as medium of exchange in the same way fiat currency serves. Just depends on enough people who agree to use it.
Your aside is an extraordinarily large aside and yet you casually toss it in there.
Humans have a nearly unlimited desire for luxury goods and always will, quite predictably. They lust after jewelry accordingly and have for many thousands of years. Nothing about that will change. The aesthetic demand for gold will remain so long as people continue to desire luxury goods.
If you drop the price of gold low enough, people will start rampantly decorating their walls and consumer goods with it. It has potent intrinsic support under the price, as much as anything can. It will remain scarce and desirable.
Most gold isn't used in jewelry either, so it didn't derive much value from a fringe use.
Ironically we go to huge effort to dig gold out of the ground, purify it, and form it into blocks and coins. Then we dig a new home in the ground, bury the gold in there and put guards outside the door. Someone here pointed out how aliens would be scratching their heads over our behavior if they could see it.
There's no such thing as intrinsic value. Gold has value because humans value it. Humans value it basically because it's shiny and somewhat rare, but the value is something we project onto it.
It is a fringe application, regardless of downvote. Usage in electronics is probably less than 1% of the demand for gold. That's the very definition of fringe.
Also, what happens when the power is out? Texas power grid was apparently a few minutes from completely collapsing recently, with some estimates that it'd take up to months to get it fully back online (and what does electricity cost around that time?). Or if a weather event seems too local, what about a major solar flare that takes out transformer capacity for years? (and it would be expensive for a long time). One could revert back to cash and gold without power, but bitcoin transactions?
Edit: I guess the summary would be that cash & gold are decoupled from electricity (even if it takes some to create/mine them), but Bitcoin's entire existence depends on continuous availability of (cheap enough) electricity.
Who needs digital gold? Why not just trade ownership rights to actual gold? We used to have gold-backed paper money and you can easily trade gold electronically today.
By putting it in a central database? We already do that. If wager you can probably buy gold online which just changes digital records while the gold doesn't move in the vault.
If you don't trust the bank our government you can put it on a blockchain. It sounds a little silly to us, but remember half the world lives in non free countries. So trust in government and institutions is a big concern. But then why bother with the gold? Proof of work ensures scarcity. So just drop the gold from the equation and now you have bitcoin.
I'm curious, did you originally own more than 50? If not, do you have a plan for when you will sell? I know if I'd bought 50 bitcoins back in 2010 I would have sold them, or at least most of them, many times over by now.
There was a YouTube video explaining how to buy bitcoin and I got curious. I bought 50 because I originally wanted to but 5 and I accidentally added 0. I intended to spend 10 dollars but I accidentally spent 100 dollars. I tried everything to get my money back but it was too late. Fast forward to 2015 I remembered bought some bitcoin in highschool and I have my key stored in a flash drive. That flashdrive was like external hard drive for me at that time.
And you weren't tempted to take some money off the table when your $100 investment hit $100,000, $500,000, $1M, $2M? Or are you saying you've lost the key?
Well, congrats on your wealth! I occasionally kick myself for not buying a few when I got interested in it back around the same time, but I console myself with the certain knowledge there's no way I would have held on to nearly these prices. I would've felt the need to diversify away as soon as it became an appreciable fraction of my portfolio. A bitcoin millionaire, I was never destined to be.
ETH is great, but it has some scaling issues that are going to take years to sort out.
One benefit of ETH over BTC mining is that PoW mechanism (ethash) has, so far, kept most ASICs off the network (1). This has prevented the speed / power race BTC faces. In addition, the fastest GPUs are not necessarily the most ROI efficient, so people aren't EOL'ing their hardware every week. Even better is that GPUs still have life after mining.
(1) Yes, there are ethash asics, but being a memory constrained algo means that at the end of the day, the limiting factor is memory, not asic chips. The other issue is availability... shipping asics out of China is expensive.
There’s definitely been improvements in cryptocurrencies since Bitcoin was launched. I’m a big fan of Cardano for example which is led by a scientific community and not apes posting diamond hands and rockets. Sadly it seems like the network effects and “brand” of Bitcoin is winning over better technology. This has to change before we spend a significant portion of our power capacity on a money system. I don’t want aliens to see us like that when they come visit.
You better not particpate in fiat currencies that maintain themselves by spending TwHs to maintain their standing armies (or diplomatic relations with countries that do have standing armies).
Don't you need the armies to protect the infrastructure that powers bitcoin? And if you get to the point where you don't need armies, do you need a massive global network to verify you can trust the people you're doing business with?
Bitcoin infrastructure is distributed widely across the world. No single country disappearing off the face of the earth entirely would take it down before the internet itself went down.
Assuming Thanos would snap away China (the whole land not just the people) bitcoin definitely could be considered "down" because it would no longer mine blocks every 10 minutes on average.
Difficulty does adjust but that take weeks. the internet would not be effected like that.
That's not how fiat currencies maintain value. I suspect, if you do a thorough analysis of history, the inflation rate is going to be mostly uncorrelated with the percentage of GDP spent on military. Perhaps it might be negatively correlated, as high military spending typically means wars which have historically (especially in pre-modern times) resulted in massive financial crises for those countries heavily involved in them.
No, nation states and their fiat currencies are locked into the bare metal layer of human relations and the only thing that matters is ability to legitimately threaten to kill humans and destroy infrastructure. (or an alliance with a country that has those capabilities)
Bitcoin is not a nationstate and doesn't have the weaknesses of nation states and their economic systems. It uses far less energy to establish and maintain itself.
Thanks. Had not considered that. An acre of property is enough to get as close as possible, earning as much as needed for taxes and utilities thru death. Few other promises in life. That sounds more defeated than I like. What I mean is that steady state life through generations should look pretty similar, because we all eat and potty and need to be cleaned, etc. Transhumanism could speciate us, no doubt. I was deep into that for a while but can’t grok consciousness downloading yet so I’ve become a lot more wait-and-see. But back to the point, thanks for that angle.
I’ve objected to Bitcoin since at least 2010ish, where I mentioned that I didn’t want to turn the polar bears black on Facebook but maybe that it looks epic and brilliant technically.