I think he’s saying that of all the things you could power in whatever electricity consumption regime you care to mention , bitcoin competes for supply with more socially useful things.
We have a perfectly good system in place for punishing people who waste energy - it is called "the economy". It applies constant pressure to people who waste things.
If crypto manages to run that gauntlet, there is a good chance that someone with a track record thinks it is socially useful. People confidently declaring that it is useless are in the same bucket as people confidently declaring that the internet was a fad in the first big tech bubble - lacking humility. The truth is we don't know if this (likely outrageously large) bubble is a complete waste or masking something transformative.
We have a perfectly good system in place for punishing people who waste energy - it is called "the economy". It applies constant pressure to people who waste things.
That's a good theory, but it doesn't seem to be working. Because, well... gestures broadly at everything
I think the problem here is that "the economy" is not punishing miners but rewarding them.
Only a small minority of people who buy crypto genuinely have a considered belief that it's socially useful. The overwhelming majority are simply speculators who believe that they can sell it for more than they bought it for.
> ...speculators who believe that they can sell it for more than they bought it for...
Which, assuming that the individual speculators are intelligent and rational, has the emergent property of providing something that is socially useful. And if they are stupid and irrational, it'll bankrupt the lot of them so that they can't waste that much money again.
The economy is a cruel beast, but it is much better than you or I at deciding what needs to happen to get people what they need. If something like bitcoin really is just a money burning exercise with no redeeming property, sooner or later it'll go bankrupt and disappear back into obscurity. It can't be a hot new thing forever. And "speculators" only have power when they are consistently right. If they routinely make big gambles and get it wrong then they don't get to speculate for long.
>Libertarianism's attraction is based on ignoring externalities, and cryptocurrencies are no exception.
The economy as currently regulated doesn't correctly price in externalities such as the ongoing cost of global heating generated by burning fossil fuels.
I'm all for including externalities. My usual argument is if you look at positive and negative externalities, fossil fuels are a massive win.
People seem to struggle with positive externalities so the argument usually falls flat, and the situation is too clear to me to be able to spell it out easily. But without fossil fuels, 40-80% of the modern world would have been all but impossible. The knock-on effects of abundant cheap energy (and precursor materials to plastics) aren't being priced in.
The 'positive externalities' of fossil fuels are already accounted for in our economic system: When mining for raw materials, the price that the miner is paid in the first sale is payment for that. And ditto in every subsequent sale: The benefits to the buyer goes into setting the price.
I am not an expert on economics nomenclature, but ISTM you can't really call that externalities when it's already being rewarded by the current economic system. Wouldn't that be an "internality" or something? They are already included.
Unlike the negative externalities from pollution. In the absence of something like a carbon tax, they are not included.
There surely are positive externalities, but the very useful things we burn fossil fuels for are reflected in the price - cheap or no. Those primary reasons for burning fuel will have all sorts of externalities, positive and negative. And one would expect similar externalities from the work done by renewable energy.
If your position is simply that we are fortunate our planet was/is abundant in fossil fuels, I don't disagree (ideally there wouldn't have been enough to completely wreck the climate we depend on, but...). But the issue is whether we should trust the market in respect to cryptocurrency mining specifically. The history of human civilisation seems a bit beyond the scope.
This is flawed libertarian thinking. For example, if a scammer called your grandmother and got her to send them her life savings, it wouldn't be a good thing just because she is "too stupid" to have the money.
The logic does break down for criminal activity. But:
(1) Mr. Wog93 was talking about speculators, not criminals.
(2) If any of my grandmothers were still alive then they could be scammed in any asset class. Bitcoin is riskier but, frankly, anyone crazy enough to "invest" in bitcoin is probably going to lose all their money regardless of whether they get scammed or not. So this grandmother test is a bit of a wash in my eyes.
The only thing that makes me special is I'm humble enough to say maybe I'm completely wrong in my opinions so other people should be allowed to take risks I think are stupid. There is a fair-enough system that will sort out who is right and who is wrong based on evidence.
>Only a small minority of people who buy stocks genuinely have a considered belief that it's socially useful. The overwhelming majority are simply speculators who believe that they can sell it for more than they bought it for.
Replaced crypto with stocks, how does it read now?
When someone makes an argument of the sort that just because there is a market for something then it magically becomes useful, it tells me they haven’t heard or understood this quote:
“The market can remain irrational longer than you can remain solvent”
Sounds like you have to read up a lot more on tulips.
Also, strange how such prominent tulip story never resulted in adoption of tulips by any country? So weird, why is that?
And yet with Bitcoin, we see adoption not by one, but by several G-7 countries as a valid payment mechanism, one small country as legal tender, another small country preparing a bill this year, and Russia signalling it will regulate Bitcoin as currency, not property?
But anyway, here you actually presented some arguments and explanations for why bitcoin can be useful.
Now, I don’t think bitcoin will actually end up anywhere useful in the end because it doesn’t really solve anything that fiat doesn’t (except perhaps for people in the illegal payments market) but we can disagree on that.
My point was about the previous argument, that there was inherent usefulness or value in bitcoin just because there are people speculating on it, that is fallacious.
Pretty spot on, it’s a fairly popular criticism of the stock market that it’s disconnected from providing much social utility. For example that some companies have massively outsized valuations.
small people invest money in hopes of being less poor. They never get truly wealthy doing that.
The ultra-wealthy deploy or deny capital to mold the society to their views.
"Social utility" is just this mind virus the ultra-wealthy spread in everyone's mind to make their rule-by-proxy feudalism palatable to the peasant class.
You obviously don't understand the pricing mechanism and utility of basically a decentralized equity valuation engine. I mean that is what the stock market ultimately is.
These articles are pointless. No one is going to bother reading Brian Arthur of all people to have any clue.
Just the same dumb conversations over and over and over.
>Replaced crypto with stocks, how does it read now?
It reads like a false equivalence.
I do own stocks in companies such as Woolworths (retailer), BHP (mining company) and Westpac (banking company). The fact that they produce goods or services that they can sell at a profit was a huge decision in my decision to invest (and a big reason why I didn't invest in crypto).
I don't have data, but I suspect this is how most stockholders think. They accumulate shares over their lifetime and rely on the dividends to pay for their lifestyle during retirement.
Yes, Wall Street Bets exists, but the average person with stocks is not a day trader leveraging themselves up to their eyeballs to gamble on some crazy contracts.
and all of your investments did worse than Amazon or Tesla, that haven't been particularly profitable.
Amazon hasn't been profitable on paper for decades. Tesla took until 2021 to make a profit.
You'd underperform terribly if you were to wait until they make a profit, as markets are forward looking and you are paying attention to trailing indicators.
Profits today for an organization size of Amazon is execution of a plan put in place 5 years ago.
If you are about to dive into value investing: Berkshire made most of their money from Apple, which was a side bet made by a hired portfolio manager, not Buffett himself.
The system doesn't work because crypto currencies (and thus energy they use) is used directly to bypass laws of regulations we have.
It's like saying that we perfectly good system called economy and thus drug cartels are the natural results. Who knows, maybe their bloody rule will result in something transformative as well. Still I wouldn't be happy just accepting the state of things.
We will not settle Mars. That doesn’t even begin to make sense. There are places orders of magnitude more friendly to human settlement on Earth than on Mars and we don’t even settle those.
On Earth those windmill are much cheaper than nuclear power, even taking into account their capacity factor.
humanity however, needs to branch out, and quick. and windmills aren't going to help us make that jump to an interplanetary civilization.
Nuclear is cheap, very cheap. It was made expensive by political decisions, under the guise of proliferation suppression, but is actually a tool of economic suppression of potential challengers.
Germany, one of the most high-tech countries in the world, cannot make renewables work. Germany also has very electricity rates. France, on the other hand, builds nuclear, supplies Germany, and has MUCH lower electricity rates.
I guess no one told them nuclear is too expensive?
If crypto manages to run that gauntlet, there is a good chance that someone with a track record thinks it is socially useful. People confidently declaring that it is useless are in the same bucket as people confidently declaring that the internet was a fad in the first big tech bubble - lacking humility. The truth is we don't know if this (likely outrageously large) bubble is a complete waste or masking something transformative.