[ceilingcorner]

I have no interest in cryptocurrencies and I don’t own a single cent in any of them. But the continual barrage of hostile comments in every single HN article looks mostly like groupthink to me.

Clearly cryptocurrency will continue to play a growing role in the future. Denying this seems simply delusional.

[ahelwer]

I think it's an interesting example of people being too close to something, technically, to really see its totality. I'm a distributed systems person so I basically blew off Bitcoin two bubble-cycles ago because of the 3 tx/sec issue and the obvious deficiencies of the proposed lightning network workaround. I also took an in-depth look at a cryptocurrency with a supposed better protocol (Nano) and was very unimpressed - they didn't have a real solution to the network partition double-spend issue (a coin with a similar protocol, IOTA, solves this with a centralized "coordinator" node that they swear will be removed any time now... it won't). So I found myself in the interesting situation of knowing more about these things than 99% of people with money in them, but missing out on the large gains in value. There is a probabilistic protocol I legitimately find very interesting (Avalanche) that might succeed on a technical level, but analyzing these things at the technical level hasn't really meant much so far.

It's possible this is an enormous bubble that will all go to zero. Of note is that the entirety of Bitcoin's history fits within this larger bull market we've been in since 2008. It will be interesting to see how cryptocurrencies fare in the inevitable wider market downturn, whenever that happens. Regardless it's probably a good idea to hedge against your own ignorance by putting 1% of your money in or something like that.

[trident5000]

Just to be clear, 3 tx/sec is just incorrect and easily disproved by dividing the total transactions per day (readily available online) by the total seconds in a day.

Also the btc main layer is a major settlement layer. It doesnt even compare to ACH or wires in frequency. The fees going up if its tried to be used in that way will force it, and that is a good thing.

A chain cannot grow so fast with high tx so that it bloats and exceeds hard drive capabilities for distributed nodes or it becomes centralized. Its performing exactly the way it should. L2 solutions will take care of coffee transactions.

[ahelwer]

Okay, so it isn't 3 tx/sec. It's a bit more than that. Not an order of magnitude more, or two orders of magnitude, or the five orders of magnitude more to have the throughput required for everyone on earth to be able to transact once per day, say to buy lunch.

You talk about BTC as a settlement layer. A settlement layer for what? The lightning network? Laughable.

BTC might have a future as a store of value like gold, and it deserves credit for establishing cryptocurrencies as an entirely novel asset class. But I think other, better protocols will be used for those coffee transactions instead of hacking on a secondary layer to BTC.

[xur17]

> Okay, so it isn't 3 tx/sec. It's a bit more than that. Not an order of magnitude more, or two orders of magnitude, or the five orders of magnitude more to have the throughput required for everyone on earth to be able to transact once per day, say to buy lunch.

> You talk about BTC as a settlement layer. A settlement layer for what? The lightning network? Laughable.

Personal opinion: I think the part you are missing here is that lots of transactions shouldn't be occurring on the base layer. Remember that every transaction that occurs is stored in perpetuity on every node in the Bitcoin network. It should be expensive for a transaction like that to occur, and we should create incentives that limit the creation of these as much as possible.

Why is it "laughable" for the lightning network to use BTC as a settlement layer? I think it's perfectly reasonable to have second and third layer networks that sit on top of Bitcoin acting as transaction networks, while the main BTC chain is used for larger transactions or to settle large batches of transactions from other layers.

[grey-area]

It should be expensive for a transaction like that to occur

It should not. Current systems manage it fine, because they don't use an insane model which tries to distribute every transaction to everyone, a model you're saying Bitcoin should move away from, at which point, why does Bitcoin exist?

I think it's perfectly reasonable to have second and third layer networks that sit on top of Bitcoin acting as transaction networks, while the main BTC chain is used for larger transactions or to settle large batches of transactions from other layers.

Instead of think of what we can do for Bitcoin, why don't we think about what it can do for us?

I don't really need a globally distributed ledger and all the problems that brings.

[xur17]

> It should not. Current systems manage it fine, because they don't use an insane model which tries to distribute every transaction to everyone, a model you're saying Bitcoin should move away from, at which point, why does Bitcoin exist?

I think you missed my entire point.. I am saying that Bitcoin layer 1 should be a settlement layer for other "less distributed" state systems that sit on top of it.

> I don't really need a globally distributed ledger and all the problems that brings.

I'd be curious to hear your thoughts on how to solve this.

[lawn]

> Personal opinion: I think the part you are missing here is that lots of transactions shouldn't be occurring on the base layer.

What you're really saying is that you don't think BTC should help banking the unbanked (because they often live in poor countries where their weekly salary is your cup of coffee).

> Why is it "laughable" for the lightning network to use BTC as a settlement layer?

It's laughable because people will just use another crypto, so they don't have to pay the +2 large and expensive BTC on-chain fees.

[xur17]

> What you're really saying is that you don't think BTC should help banking the unbanked (because they often live in poor countries where their weekly salary is your cup of coffee).

That is not at all what I am saying. I'm saying that technically only a very small subset of transactions should be settling on the base BTC layer, and hence that is how incentives should be (and are) setup.

[KallDrexx]

> Personal opinion: I think the part you are missing here is that lots of transactions shouldn't be occurring on the base layer. Remember that every transaction that occurs is stored in perpetuity on every node in the Bitcoin network. It should be expensive for a transaction like that to occur, and we should create incentives that limit the creation of these as much as possible.

Serious question because this is something I have had trouble figuring out.

Why should transactions not be on the base layer? Isn't the whole point that the ledger is fully decentralized? How does pushing transactions into side channels (lightning, eth's layer 2) not end up centralizing transaction validation (they might not be completely centralized, but they seem by definition less centralized than the bitcoin base network)?

[xur17]

Because "every transaction that occurs is stored in perpetuity on every node in the Bitcoin network" means there is naturally a scaling cap. Bitcoin's lightning network doesn't really centralize transaction validation in the way I think you're thinking - it simply allows 2 counterparties to spend money between each other in a way that doesn't have to be finalized on the Bitcoin layer 1 network after every change, but can be if either party tries to cheat or steal from the other. And then the "network" part of lightning allows either party to spend funds to anyone else in the network with these same guarantees.

[pcthrowaway]

Why are we even talking about first-gen cryptos like bitcoin in regards to transaction processing. There's a whole ecosystem of 2nd and 3rd gen cryptos which address these issues and more (the environmental impact is the biggest issue posed by bitcoin in my opinion)

They're perhaps not on the general public radar yet, but Ethereum and Cardano both have a greater market cap than bitcoin had 4 years ago, and Cardano currently addresses lots of the other issues people talk about.

[rawtxapp]

> The lightning network? Laughable.

Why is it laughable?

The whole world doesn't need every little transaction to be permanently recorded on the public blockchain.

[yunohn]

Isn’t that the “advantage” purported by blockchain currencies?

[mr_woozy]

I don't see how sidechains isn't doing exactly this.

[trident5000]

Just pointing out that you dont know what you're talking about and/or blatantly lying for an underlying bias/goal.

[ahelwer]

According to this chart BTC oscillates between 3 and 5 transactions per second: https://blockchair.com/bitcoin/charts/transactions-per-secon...

What is my blatant lie?

[trident5000]

https://www.blockchain.com/charts/transactions-per-second

The maximum is about 8. But who cares at the end of the day. Settlement will be a rare event and needs to be for the reasons I just mentioned. Its the only system that works for decentralization and to deal with the bloating issue.

[bluecalm]

BTC supply is not flexible. It means it will never be usable as currency. Settlement layer, first layer, tenth layer. It can't work because by the nature of it it will go up when more people want to use it and thus rewarding rent seeking behavior of holding it. It's well understood basic economy. We had gold standard already, it wasn't workable. If the believers shove it down naive people throats we will just re-learn this lesson and it will be very costly.

[mastermojo]

Interesting. I found out about Bitcoin in 2012, took a distributed systems seminar in 2013 covering byzantine fault tolerance, paxos etc and at that point Bitcoin metaphorically blew my mind. I feel like anyone who understood how seminal Paxos was could easily draw parallels to Bitcoin.

Despite all of Bitcoin's shortcomings, I'm a strong believer in the technology and the protocol. If we compare it to the internet and TCP/IP it is pretty designed. In real life its not necessarily the perfect protocol that wins. Sometimes a "crappy" one gets a head start, but it's good enough, and people will patch it along the way. The network participants will also end up using the network in novel ways that were not designed for originally.

[tgraves83]

Since you are using an appeal from authority citing your distributed systems background, could you provide some actual detail of the "obvious deficiencies" of the lightning network?

[ahelwer]

Neglecting the DS component, it just requires a lot of weird behavior like parking money in channels in order to send/receive money, nodes having to be online in order to receive transactions, etc. Why go to all this trouble to build a second layer when you can just use a different protocol? It's the sort of thing that makes sense only if you're completely wedded to BTC.

[tgraves83]

As a systems person you don't see any benefit to having different layers? Currently you are getting to watch the issues of shoving everything into layer 1 play out on Ethereum. Bitcoin isn't just a distributed system, it's value is derived from being a decentralized one.

Almost every technical aspect of Bitcoin that people like to claim makes it "old technology" or inefficient were purposefully chosen trade offs with decentralization. It's obvious that a single centralized database would beat every cryptocurrency on transactions per second.

[mikkel]

Can you elaborate on the network partition issue that you found with nano? As far as I know nano has been live for years without a doublespend or downtime and thats pretty impressive.

[ahelwer]

Yeah this is kind of where distributed systems theory comes up against practice, and I think is very interesting. On a theoretical level Nano is just fundamentally flawed, as are all coins which use this "everyone has their own blockchain" eventual consistency concept. The problem is this, as far as I can recall (I looked at this three years ago): imagine a network partition occurs, where two different exchanges are in different partitions. For whatever reason Eve still has network access to both partitions. She broadcasts a different transaction to each partition, each transaction sending all of her Nano to a different exchange. Since Nano uses proof of stake, these transactions have to get a certain number of votes. I don't recall the exact threshold (I think 1/3 of all extant Nano has to vote?) but it is possible for both transactions to be confirmed as long as the partition stays in place. Possibly long enough for Eve to convert her Nano to a different cryptocurrency and transfer it out. Once the partition collapses one of the transactions is rolled back and the exchange is left holding the bag. IOTA solves this problem by just saying "the partition containing the coordinator is the real partition" lol. Humorously the more centralized Nano voting power is the less likely this scenario is to occur, too - although then you get the existential threat of those big-vote accounts getting hacked! They have to stay online with their private keys accessible, after all.

As you say, this has never happened (to my knowledge). So it's possible that even though the problem is real, it will never actually occur in practice. In the end the real measure of success is how well these systems perform in the real world, so we could say this analysis of the theoretical problems doesn't hold much water. On the other hand if something like this were to happen, it would probably tremendously undermine confidence in the currency & destroy it overnight. So this could be more of a thanksgiving turkey situation where each day seems better than the last until thanksgiving arrives.

[mikkel]

Thank you for your writeup. I understand the idea behind the network partition and I've been doing some digging. It looks like there are numerous commits attempting to address this edge case (they call it frontier cementing).

Here is a writeup I found on reddit that further elaborates this: """ There is a (currently hypothetical) edge-case where this could be reversed (not exactly the same as PoW chain reorganization due to forking, but similar.) In this edge-case:

We imagine the Internet has, right now, been carefully split by a malicious attacker into two exact halves

The Internet halves would be carefully contructed to each hold >60m online Nano votes. (This Internet fracture has never actually happened in Nano's lifetime. There are not 2 x 60m votes currently online.)

The attacker double-spends on a coffee (or house) in two of your stores worldwide just now

They then allow the Internet to heal

One of their transactions will be reversed by majority voting.

So while Nano transactions are fully-confirmed, they are not currently immutable.

Since there are not >120m votes currently online, it has not happened and cannot currently happen either. No previous-to-today Nano transactions will ever be reversed. """ -- throwawayLouisa https://www.reddit.com/r/nanocurrency/comments/bgdshq/what_i...

[piplikoc]

What do you think about Cardano/ADA? I am not an expert in the space, but to me it seems that they have a lot of research behind their blockchain and they solved the energy consumption problem with a proof of stake system, and their fees are pretty cheap compared to Bitcoin or Ethereum.

[basch]

HN might be sleeping on a fundamental world changing piece of software here. Interestingly enough, despite not having released the last pieces yet, a surprising amount of future value is already priced in.

The blanket dismissal of all cryptocompute/cryptocontracts, because people only see it as a currency, is going to leave a lot of people behind. This is more like the emergence of virtualization or time sharing or c++. Cardano is multiple different development platforms and languages and an entire ecosystem. It's a backbone, the kind of underlying infrastructure that will go unseen by the masses, but be underneath a many things.

[ahelwer]

Haven't looked into it. I don't really find proof-of-stake very interesting at a technical level, though. I don't know what all that "research" could be about if they are just going with proof-of-stake.

Edit: taking a peek, their proof-of-stake algorithm (called ouroboros) claims to have some formal security proof employing game theory. That would be interesting to look into as I am not familiar with that technique.

[jeanniesarah]

Have you looked into Hedera Hashgraph?

[ahelwer]

Looks like their consensus algorithm is proprietary: https://docs.hedera.com/guides/core-concepts/hashgraph-conse...

[Specie33]

I did the same thing. Following since before MT GOX. Never purchased because of that TPS issue which i felt killed the system. Was interested in SOL because they supposedly solved that problem, still havent purchased. Feel smuuckish now.. But there you go

[PragmaticPulp]

Cryptocurrency isn’t going away, but it’s dishonest to pretend that it’s not without major problems such as the energy consumption issues. The popular narrative has also become almost indistinguishable from a pump scheme, where we’re all supposed to buy and home (never sell) until we’re all rich.

If cryptocurrency becomes commonplace, it likely won’t look anything like our current crypto infrastructure. The problem is that this isn’t what all of the current holders want to hear, because they only want people to buy into whatever crypto they personally hold. This makes it difficult to have honest conversations because so many of the participants are biased toward convincing others to buy into their investment while ignoring anything else.

[trident5000]

I can name 10 other uses of energy that could be categorized as "wasteful" which is completely subjective. From large homes with the AC cranked, to rendering of pointless video on youtube and social apps, to destination aeroplane travel, idle electronics, etc.

BTC for many is a way to stop central banks from eroding their lifetime savings which they paid for with their physical labor and time. Thats not a waste of energy in my opinion.

[PragmaticPulp]

Naming other wastes of electricity doesn’t make them all okay. Multiple wrongs don’t make them all write.

The narrative about central banks eroding life savings is greatly exaggerated by people who want us all to buy Bitcoin. Inflation raises the price of assets in general (virtually the definition of inflation), meaning virtually any non-cash investment will be buoyed by inflation. The idea that Bitcoin is the only way (or even a particular good way) to avoid inflation is a myth.

[trident5000]

Shaming electricity usage is just ass backwards. Future humans will take more electricity without question especially as AI ramps up (massive rendering). The key is to transform all energy to cater to that need. Neither one of us will determine what people use as a hedge, the market will.

[177tcca]

It's directly connected to lots of power usage today being from coal.

[trident5000]

So is all that crap you buy from China that you dont need which is manufactured using dirty power. BTC is mostly renewables and will transition completely as it becomes cheaper.

[bluecalm]

If you want to defend against inflation buy stocks of major companies, land, real estate. Things that you know, are building blocks of our society wealth.

Buying into a token pool hoping you will be able to resell it for a bigger piece to people who want to enter as well is not something people should do in general.

BTC is terrible as currency fit many reasons. It has an advantage of skipping over regulations transactions in other currencies are subject to. How long it lasts is a speculation game. You can win at it but it's anything but "stopping central banks from eroding savings".

[G3rn0ti]

> major problems such as the energy consumption issues

You don’t seem to know much about crypto currencies to name energy usage as a real problem of crypto.

While Bitcoin will keep it’s “proof of work” approach to mining in the foreseeable future, there are now quite a few alternative crypto currencies in circulation employing “proof of stake” that do not suffer from large computer power usage e.g. Cardano, Solana or Algorand just to name a few. Furthermore, Ethereum, the second largest Crypto currency in circulation, plans to migrate to “proof of stake” by 2022. Stakes are already online.

So please inform yourself before stating that Crypto will destroy the planet. No one is forcing you to like Bitcoin but you need to keep in mind this project has been invented over 13 years ago. It would have been impossible for the creator to anticipate its popularity and fix all its technical issues including energy consumption.

[zucker42]

If you think that proof of stake will take over, do you think that Bitcoin will crash? When will Bitcoin stop having the insane environmental impact it has now? If proof of stake is the future, why is the market cap of BTC so high compared to other cryptocurrencies?

[G3rn0ti]

Well, Bitcoin was the first of its kind, it’s time and battle tested and technically it might still be the most reliable of all cryptos. Part of the reason for that is “Bitcoin script” not being Turing complete unlike Ethereum’s virtual machine and less prone to software bugs.

People, especially newbies trust it much more than other blockchains. That’s why everybody buys Bitcoin, currently.

I believe Bitcoin’s going to take on an important role in a value storage once it’s market value stabilizes. Essentially, it will become digital Gold. As the gold price didn’t “crash” to zero when it lost its utility as a currency, I believe we will never see a complete crash of the Bitcoin value. It will serve a niche application and, hence, keep having value. But it’s continued growth of its value will flatten over time in the future, I am sure. So I wouldn’t worry too much about its energy usage.

[zucker42]

So it seems like to me you are saying that PoW has energy issues but that's not a problem because of PoS, but at the same time PoW (BTC) will continue to exist and consume at least the same amount of energy as it currently does.

It's concerning to me that there's not even a "light at the end of the tunnel" as far as BTC's energy usage goes.

[G3rn0ti]

> but at the same time PoW (BTC) will continue to exist and consume at least the same amount of energy as it currently

No, I said that BTC is _currently_ more popular for the reasons I describe and _predicted_ it to become a niche crypto asset in the future. I might be proven wrong but this scenario I described should you make you sleep well at night, again. ;-)

[jjnoakes]

> People, especially newbies trust it much more than other blockchains. That’s why everybody buys Bitcoin, currently

How do you know this is the reason? Couldn't another reason (like bitcoin getting the most press/hype) be true instead?

(I do not know the real reason, I'm just wondering why you think the one you stated is the real reason - care to elaborate?)

[ceilingcorner]

Probably a lot of that is simply branding and first mover advantage. Everyone knows what bitcoin is and the name is nice and simple. The second largest coin, to my understanding, is ethereum, which has to be the worst name I’ve ever heard.

[mindcandy]

Proof of Stake requires that what you are staking has value. The future I'm looking forward to is POS taking over by leveraging the existing Proof of Work already invested in Bitcoin and Ethereum. So, Bitcoin will slowly go away by being burned to transmute it into the foundational value of new POS coins. During that process, the total supply of unburned coins will decrease. Eventually the market cap will decrease. Less POW mining will be necessary. And, eventually it will drop off to effectively zero.

[Geee]

Proof-of-work is still the most secure way, and also the most fair way to distribute new currency, because it's just energy converted into currency.

If proof-of-stake or something else actually works, then bitcoin's algorithm can be changed to that.

[blacksmith_tb]

I don't see anything above like a statement that Bitcoin will "destroy the planet". But the claim that its comparatively large energy footprint contributes to that destruction seems perfectly reasonable - the common comparison is that Bitcoin currently "uses more electricity than Argentina"[1]. Not surprisingly lots of mining is colocated with hydropower or geothermal power generation, but mainly because that's cheaper - I could imagine the power demands for mining reaching a level where they'd underwrite solar or wind farms (apparently we aren't there yet...), or just become economically unfeasible altogether.

1: https://www.bbc.com/news/technology-56012952

[G3rn0ti]

> Not surprisingly lots of mining is colocated with hydropower

And, hence, miners’ energy use does not correlate to their carbon footprint directly. That’s often overlooked.

Furthermore, there is a strong economic incentive for Bitcoin miners to save energy to stay more competitive. Bitcoin mining is done on specialized hardware (ASICs), nowadays, and these devices will get more efficient since the market is still in its infancy.

BTW: What do you think is the carbon footprint of Netflix, YouTube or Pornhub? And what’s their economic utility? If we start critizing IT projects for their energy usage, I don’t think Bitcoin & Co are the biggest culprits.

[berenza]

bitcoin mining does not need grid power, just internet connection. you can set up a mine in the middle of the desert, or in antarctica, and it works just fine. if grid energy gets expensive enough, a lot of things will become unfeasible but bitcoin won't be one of them.

[jki275]

You still have to have a ton of power. You won't generate all that outside of a power grid unless you own your own hydro dams or something.

[akudha]

More than energy issues, what is sad is that Bitcoin is kinda becoming what it was started against - huge amounts of bitcoin is in the hands of whales. Most ordinary people have zero interest in practical usage of btc, their only interest is greed ("when moon?"). Companies are pouring hundreds of millions of dollars into BTC, hoping to make huge profits. Just like an ordinary person can't afford to buy shares/houses, he can't afford to buy BTC either.

In other words, concentration of wealth in the hands of a tiny group of people.

Crypto is here to stay, it will take a few years, but they will be useful in some form or another. Hopefully it is useful for everyone, not just the 1%

[gruez]

>More than energy issues, what is sad is that Bitcoin is kinda becoming what it was started against - huge amounts of bitcoin is in the hands of whales. Most

Was there ever an expectation that cryptocurrencies were going to solve the concentration of wealth and/or inequality? Bitcoin's whitepaper only talked about being able to transact without a trusted third party (banks) and the famous genesis block message of "Chancellor on brink of second bailout for banks" seems to be more against government interventionism (ie. "too big to fail") than inequality.

[G3rn0ti]

> In other words, concentration of wealth in the hands of a tiny group of people.

Well, Bitcoin and Defi already serve the poor in countries where they are being denied access to financial services.

You also need to distinguish between the concentration of wealth and income. The reason for why the wealthy seemingly getting wealthier and the poor getting poorer is in fact the low interest rates payed to savings account holders. Rich people invest in equity or housing. Poor people have no safe means left in Europe and the US to save money and grow their wealth. Apart from the inflation tax the reason for this situation are indeed economic policies of our central banks that have lowered interest rates to almost zero for decades.

Using DeFi services like “Compound.finance” today you can earn significant interest on your Dollars (yes, Dollars not Bitcoin) and that’s exactly because these services are detached from the financial System governed by the Federal reserve or European Central Bank.

I would go so far and argue DeFi and Bitcoin are liberating the poor from economic suppression even in the wealthiest of nations.

[Geee]

The energy consumption issue is silly. It's like saying that Google won't be successful because they consume so much energy. It's not a major issue, it's just a silly talking point for those who oppose or don't understand cryptocurrencies.

Also, there is no such popular narrative. Your argument is like saying, "so we're supposed to buy stocks until we're all rich, that's a scam". Everyone makes their own investment decisions based on the available information. Brushing off good investment opportunities as a pump scheme is not very wise.

[paulryanrogers]

Google enhances the lives of billions by making information more accessible. So far cryptocurrency facilitates crime and gambling.

[reedjosh]

Making who's information accessible to whom? I'm pretty sure a lot of information on me is made available to parties I'd prefer privacy from.

Also one could say cash dollars promote crime. Most terrorism is cash funded.

[ceilingcorner]

Lots of things have environmental problems. I don’t understand why Bitcoin mining gets singled out for it. If the benefits of using it outweigh the downsides, then I don’t see the issue.

[PragmaticPulp]

The other wastes of electricity are also problems we should address.

The difference is that while regulations and tech advancements are improving power efficiency everywhere else, proof of work systems incentive ever-increasing wastes of electricity.

What other system is designed to get increasingly less efficient over time, while paying people to be inefficient, as a core principle of how it operates? Cryptocurrency almost stands alone in this regard.

[ceilingcorner]

But if the sociopolitical benefits of cryptocurrency are so great, then the electric cost is worth it.

It just seems like groupthink to me. Where are the armies of people against air conditioning or disposable medical tools? Both are pretty wasteful yet clearly worth it.

[PragmaticPulp]

The armies against HVAC come in the form of ever-increasing insulation and efficiency requirements. Modern construction methods are far more energy efficient than even a few decades ago and they’re increasing all the time. New construction is remarkably efficient from a heating and cooling perspective.

Contrast with Bitcoin, where the inefficiency increases with each new miner that comes online, all without producing any more transactions per second. Ironically, the mining power only seems to become more centralized over time, which was the opposite of what was intended by going to proof of work.

[zucker42]

But the sociopolitical benefits of many current cryptocurrencies are not worth it, because they process pitifully few transactions, both in an absolute sense and relative to the energy they consume.

[shawnz]

Proof-of-work systems don't use ever-increasing amounts of electricity. For example the electricity consumption of Bitcoin is proportional to its price. It won't increase unless the market price of Bitcoin increases, or electricity gets cheaper.

More power consumption also doesn't mean the efficiency is reduced. You would have to quantify the value that users are getting from it to judge the efficiency. If the value goes up with increased power consumption, then the efficiency hasn't changed.

[zucker42]

Bitcoin fundamentally wastes energy and BTC proponents don't see it as a problem to be solved. There is a big push to alter other technologies with environmental problems to make sure they don't use more energy than necessary.

[hanniabu]

> I don’t understand why Bitcoin mining gets singled out

Because then he'd need to name an actual different reason to hate on bitcoin that hasn't been debunked

[tomlagier]

Here's mine: it doesn't seem socially useful if everyone holds a small amount of bitcoin and does nothing with it, particularly if all of those holdings are centralized on a small number of exchanges. I have no idea whether that is the true use for most BTC, but (mod exchanges vs private wallets) it's been the case for every single person I've talked to that owns some.

I just don't get it - we're all holding pieces of this stuff because it keeps going up in value because we're all holding pieces of it? And that's somehow worth the enormous computing cost to maintain the network?

Yeah, I'm sure that BTC is great if you're a Syrian refugee or a billionaire evading capital controls but it feels like the majority of the stuff is just... sitting there...

I'm actually really thankful that exchanges are in the picture because ledger-only transactions aren't nearly as wasteful as on-chain transactions, but still don't understand why people want it. A cryptocurrency seems useful to me, inflationary crypto-assets seem like their only use is to reward early adopters?

The value proposition of BTC seems more-or-less like "there is a limited supply and more people will want some in the future because it has made some people rich".

[rawtxapp]

> but it feels like the majority of the stuff is just... sitting there...

It gives you the ability to actually save your money for a future use. If you need liquidity, you can borrow against it to spend money in other endavors.

Nobody wants to bring their coins to their grave, but whatever you spend it on needs to bring more value than this just sitting there, which means you would expect a lot of unprofitable or very low profit investments to go away (ex: empty housing used as real estate investment in Vancouver).

[tomlagier]

Isn't that true of any asset? Why is BTC better than, say, a bunch of emeralds?

[mr_woozy]

because it helps someone elses narrative!

[terhechte]

Most markets only work because people don't sell their share at the same time. If everybody would sell their house at the same time, the values would tumble. Same for the stock market, same for gold. I don't get why this is a criticism of cryptocurrencies.

[mastermojo]

I think I would agree that cryptocurrency is probably a less worthy allocation of energy than keeping homeless people warm or something. However, money/energy are finite resources allocated based on free market mechanics. People use energy/money how they want.

It's not a very constructive use of time to criticize how the free market allocates resources. People are going to buy and run basketball teams, Ferraris, bitcoin mining rigs whether you yell at them or not.

[mirekrusin]

I think people have problem with assesing concepts that can only improve with time.

For some reason people seem to think that all things behave like a runner "he can run fast now but he'll have to slow down and stop" kind of thinking. As if those concepts have possibility of reverting to become worse than what they are.

You could hear similar voices around wikipedia, saying it'll never compete with professionally edited encyclopedia, you can hear similar voices around AI etc.

People don't seem to understand that a) things will keep changing and b) the only reasonable change is in direction of improvement.

I'm not saying that crash is not possible - it is, but underlying concept will not crash, it'll only improve, which means with time the system will be better than it is at the moment and there is no reason for it to perform worse than today.

[zucker42]

Sometimes inventions improve continuously over time, but sometimes they stop improving and stagnate. You can't just assume away criticism of technology with the assertion that things will improve in the future.

I think what a lot of cryptocurrency bears see is that blockchain-based currencies, especially BTC, have fundamental problems. Blockchains are fundamentally not scalable; since the more throughput a blockchain has, the harder it is to run a node, since every node processes every transaction. Another current problem is the massive energy usage of PoW blockchains. Concerning is that the biggest cryptocurrency by market cap seems to have no plans to research fixes to these problems, let alone implement them, and there is widespread opposition to change in general. Also, my personal experience is that 9 out 10 cryptocurrency projects lack clear technical explanations of how they work, with all the details. These problems coupled with the fact the industry is filled with hucksters, pumpers, and scammers makes people have a rather dim view of cryptocurrencies.

Perhaps these problems can be overcome (ETH is trying) but perhaps they can't, and if they can't then cryptocurrencies will be little more than what they are now (to a large extent), which is objects to fuel speculation.

And to be clear on my personal opinions, I wouldn't classify myself as a cryptocurrency naysayer, but enthusiasm is tempered and I believe that the current market caps are driven by speculation.

[chillacy]

I feel like I always read reasonable criticism like this and find myself convinced, and then 5 or 10 years later realize that I've missed out on Amazon, Apple, Tesla, Bitcoin, etc. Granted I've probably also saved myself from investing in stuff that hasn't panned out, but in the past 20 years, it would appear that overall market returns are driven by outliers.

[zucker42]

I own a small amount of Ethereum. But I consider it more of a speculative research project that a lot of people believe in, rather than something that you'd be stupid not to own.

In general, I don't know if it's a good idea to inform your choices with FOMO.

[hanniabu]

> You can't just assume away criticism of technology with the assertion that things will improve in the future.

Unless you're aware of the topic and know that it will continue to improve.

> Blockchains are fundamentally not scalable; since the more throughput a blockchain has, the harder it is to run a node

Statelessness

> Another current problem is the massive energy usage of PoW blockchains.

Proof of Stake

> Concerning is that the biggest cryptocurrency by market cap seems to have no plans to research fixes to these problems

Which is why almost all innovation is happening on Ethereum. Many people look at "crypto" as just bitcoin as if that's the only option.

> Perhaps these problems can be overcome (ETH is trying)

Indeed they can and are being overcome on ETH

[mr_woozy]

>the continual barrage of hostile comments in every single HN article looks mostly like groupthink to me.

I think its more a sensational narrative that angry geeks don't realize they're being used to advance.

[agumonkey]

I don't attach value to web3/cryptos but I kinda recognize that there is way too much wind behind it to ignore it. It can be a total empty bubble.. and burst into nothingness, but I believe that some of it will stay alive and evolve into functional and useful ideas for another wave.

[loceng]

Hostile comments in which direction?

It's an interesting perspective too when you realize:

- people who have counter-narrative to the Bitcoin propaganda aren't financially incentivized to be negative about it, and obviously their commentary will be negative

- people who own Bitcoin are financially incentivized to speak positively about it, while also suppressing those with a counter-narrative

That Bitcoin has a future that isn't going to lead to regulatory capture trying to cause the rest of society to adopt it, so they can realize the unnecessary wealth transfer from later adopters to earlier adopters, isn't so clear - that is if you've actually thought through it.

[rawtxapp]

> people who have counter-narrative to the Bitcoin propaganda aren't financially incentivized to be negative about it

They are incentivized to be negative about it, because whether you like it or not, not buying into it has real opportunity costs. If it ends up becoming the global currency, then you'd be left behind.

[loceng]

That's quite the mental gymnastics: no - they won't be left behind, unless regulatory capture forces people to use Bitcoin vs. say USD - which is exactly why they won't be left behind, and exactly why most people aren't going to buy Bitcoin because why the hell would they want to decrease their wealth by paying into a system that transfers wealth from later adopters to earlier adopters? It's a Ponzi-Pyramid scheme because of the MLM structure + the rest of society doesn't want to be the ones "left holding the bag" as it's said in Ponzi schemes.

People aren't stupid, though there are greedy and gullible people who like to gamble and speculate - and their hope that Bitcoin will have some competitive advantage over any numerous other structures that aren't incentivized via financial gain - but are actually good for society - and not leading to "consensus" via financial gain but through actual democratic processes where, if it makes sense to, a blockchain not structured like a Ponzi-Pyramid scheme can be voted into use by its citizens.

[yks]

You will be left behind just like all the unborn billions of people. Bitcoin version of the future is catastrophic at worst, with all the unnecessary energy consumption, or inconsequential at best, cause it won't matter much for the future people how their wealthy elite got into that position.

[rawtxapp]

While they may be unborn, their parents and grand-parents aren't. As long as there's a carbon tax on the energy consumption (for everybody, not a single industry) and energy comes from increasingly green sources, I don't see any problem with it, I don't expect us to be burning coal for energy in 30+ years from now.

[grey-area]

Denying this seems simply delusional.

Is this sentiment based on the price or the actual use of it as a currency?

[f430]

The ponzi scheme will end one day and it will continue to be traded OTC without a way to redeem it for fiat.