[lolc]

I don't like the comparison to gold, because gold just sits there. It's a stable element. Bitcoin needs a variable amount of watts for upkeep. Who is paying for those watts and why?

If we're talking about the value of a currency, we're talking about what we can get in exchange for it. And when we talk about the store of value, it's what we can get in the future. With Bitcoin, we know it must burn energy, so we can get something only less that energy. The currency may get more "believable" due to the burning, when you look at sacrifice as commitment. But what are they committing to? Burning more in the future, because they now have coins they want to keep their value?

The funny thing is that most people trade in virtual Bitcoin they don't control. Because it's more comfortable and the ledger doesn't support the volume. So they need a government to assert their claim on their coins. I guess one can't even get Bitcoin from their ETF and needs to round-trip to some other currency.

The market is settling out of chain, because it's cheaper.

[jonahbenton]

A useful contribution, another attempt to quantify the cost of attacking BTC, which is "defended" in part by burning energy.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4727999

[jonahbenton]

Thanks for the engagement. Not sure if you are asking rhetorical questions to make a point about why BTC seems pointless. I don't necessarily disagree, it's speculative. But for the sake of clarity will say that I think there is a real innovation in BTC and those questions, rhetorical or not, do slightly miss the framing of the innovation.

Will try it this way. The store of value is a derivative result of the actual innovation, which is- BTC for the first time is a computationally secure mechanism that provides a system of record, the contents of which are somewhat resistant to political attack and manipulation.

A system of record is the basis on which rule of law exists, the basis for accounting and financial transactions, the basis for property, etc. Proof of Work vs Proof of Stake vs others as the "costs" for maintaining those systems of record, are experiments, empirical discovery processes to see which one(s) over what timeframe hold water.

Specifically to the points:

> BTC vs Gold

Yes. BTC is a technology that has wider use cases than gold. Store of value is just one use case.

> Who is paying for those watts and why?

Right now, people who want to make money, it is economically viable to turn stranded energy into "mining". Who is benefiting from the use of the ledger for store of value and medium of exchange? Often, not always, elements considered criminal by most governments as well as people whose legitimate needs are not being met by their governments.

> store of value...we can get something only less that energy

This is where I think the disconnect between the mechanism that BTC is, and these "rhetorical" questions, is greatest. BTC is a system of record platform. We have lots of other ones. All systems of record require upkeep. They are out there, they are expensive, we don't think about them. They are just people's jobs. Every county has a system for property and title maintenance. Every single financial institution has a ledger- many ledgers. etc.

Many of these ledgers are private. Oracle, the database company, originally became a big business on being the underlying mechanism for millions of private systems of record around the world. In every one of those ledgers, there is a DBA who can do UPDATE X SET VALUE = Y WHERE KEY = Z and often does- certainly "legitimately" governed by the various policies and protections and business rules and so forth that apply to the ledger. But sometimes those UPDATE SQL statements are "illegitimate" and those often occur when the political and governance mechanisms in the business or in the country are breaking down.

There isn't any of that SQL manipulation in BTC. Storing asset holdings is again, just one use case. Attestations, like on off-chain ownership, are another.

And to be sure:

> The market is settling out of chain, because it's cheaper

Absolutely- or rather, there is a lot of implicit cost hiding and inertial convenience in existing systems, as one would expect. And they work "well enough" in a "worse is better" sense. BTC may be too good, too "perfect", too expensive, as a system of record, long term. We'll see.

Hope that makes sense. Cheers.

[lolc]

My questions are not rhethorical in the sense that I do wonder what makes people think Bitcoin represents something useful.

At the same time I have a hard time accepting that people could see use in the inherent waste of energy. And it irks me when it's framed as use of "stranded energy". Because that's far from reality.

I've heard two voices so which is it to you? Is Bitcoin useful now and worth the lost energy? Or is it an experiment of an interesting tech gone too far?

[jonahbenton]

I think it's here to stay. I buy the thesis that money is a technology, and BTC is a step in that evolution. Whether I think BTC is "worth the lost energy" is not really a useful question in that larger context. It is a technology that cannot be legislated or controlled to the point of shutdown, even by/in China. As a technology it has unique use cases, so even in the face of political pressure it will just shift and move and crop up in new contexts. It is a virus we are stuck with now. It can't be unmade.

Relative to other blockchains, like PoS ETH, etc- the question of whether BTC is "worth the lost energy" does have meaning. I think when one looks at the full spectrum of use and failure cases, the "lost" energy is an important part of the value proposition that BTC as technology offers. I don't see ETH or other PoS replacing it. Instead they are kind of complementary.

As a technology, like all technologies, BTC certainly has costs and externalities. Money as a technology is as important, say, as transportation technologies. So look at cars. Cars powered by internal gas-fueled combustion engines could definitely fit into the classification of "experiment of an interesting tech gone too far" given the incredible waste, ecological and sociological damage, and climate impact car-based travel and -based societies incur that, for instance, are lessened in mass transit-based societies. But we are stuck with cars, their global use continues to grow, and we're adapting, introducing and scaling electric, more efficient materials for roads and the vehicles themselves, safer automated driving, etc.

There is no going backwards. BTC and its ilk are part of the future, for both good and ill, IMO.

Specifically as a store of value, I do think BTC has a bright future. I have a small portion of my net worth in BTC, small because there are still non-nil risk and failure cases that could impact it specifically, and diversity across risks is important. It is also important to understand what one is getting oneself into in terms of one's investments. It is an "active" investment, not "passive." People who are looking for passive-like benefits should not look for them from anything in the "crypto" space.

[lolc]

Well thanks for answering! I still can't see the "value proposition". It feels weird when Bitcoin's properties are posed as sort of a natural law. Like when people compare it to the rareness of gold. Even though it's a cultural artifact!

One thing I'm wondering: did you acquire actual Bitcoin, or title to it?

[jonahbenton]

Re: cultural artifact- yes, it is, but- if you are familiar with "mechanism design"- BTC is a game that incentivizes and rewards narrow-only adherence to the rules that are in fact established by culture/behavior and seemingly could be easily changed- but won't be, because the incentives are all aligned against change. This is kind of how "inertia" in the sense from earlier in the conversation comes about. And that the game was structured this way by the author "Satoshi" I think, again, is a genius-level innovation. The first solution to the Byzantine Generals problem. Now we have a lot of them but that one was first.

In the crypto space there is data to quantify the cost of divergence. People who want to just get off the train- fine- there are others willing to play/drive.

Re: actual BTC vs title- the BTC I count is that which I only have title to, e.g. held by a custodian. Yes, not your keys, not your coins- but as both a technologist who has had to manage- and has lost data- and as someone also with a background in the financial space- custodianship is one of those essential cultural/behavioral features- it only works if people follow certain rules, and those who do not are punished. My custodians have been around for a while and are I believe properly incentivized. As such they will be better suited to asset management than I am, as a single point of failure. Once more mature multisig/social auth workflows are worked out I will probably move to those. I am lucky to have partners who can play parts in those.