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"you failed to respond to my high-level point" My response would have been redundant with what I already told michaelt: your point is wrong, waiting <1 second

by mrb 9y ago

"you failed to respond to my high-level point" My response would have been redundant with what I already told michaelt: your point is wrong, waiting <1 second for a visa transaction does not protect the merchant from potential massive losses, because of credit card chargeback fraud which is very real, exploited every day, and can be conducted up to 60 days after the purchase. Example: https://www.reddit.com/r/legaladvice/comments/5r9nqi/credit_card_chargebacks_for_100000_dollars/ https://www.reddit.com/r/legaladvice/comments/5r9nqi/credit_... "Not the same thing at all. People enjoy looking at colourful lights, and so choose to pay to display them" And people enjoy making money, and so choose to pay the electricity to mine bitcoins. Same thing. People pay for things they enjoy. "In a hypothetical large-scale Bitcoin economy, how many transactions [...], what proportion [...], and what would be [...]?" I estimate that if Bitcoin's market capitalization reaches $1 trillion, then miners will still not account for more than 0.74% of the energy consumed by the world ($1.25 billion per TWh), which is more energy-efficient than, say, Canada (whose economy produces $450 million per TWh.) See http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ "We have techniques for doing irreversible transactions in the existing financial system. They're used for a tiny proportion of transactions..." Yes and this is a physical exchange of cash/commodities. Bitcoin/cryptocurrencies make irreversible transactions possible digitally and have no other equivalent in the digital world. This is one of the biggest innovations they bring to the table. "the overwhelming majority of the time reversibility is what you want." No. Litterally 1 in 2 persons conducting transactions would prefer irreversibility. Recipients want it. Senders don't.

lmm 9y ago
> waiting <1 second for a visa transaction does not protect the merchant from potential massive losses, because of credit card chargeback fraud which is very real, exploited every day, and can be conducted up to 60 days after the purchase. And yet it remains economically viable for merchants to operate waiting <1 second for payment, because the trust-based visa system and the broader legal system have countermeasures against chargeback fraud. With bitcoin that's impossible by design; merchants don't accept bitcoin in <1 second and never will, because there is no way to deal with the fraud that would lead to. > And people enjoy making money, and so choose to pay the electricity to mine bitcoins. Same thing. People pay for things they enjoy. Not the same thing. Bitcoin isn't decorative, it's a means to an end - paying for things. And there are much cheaper ways to pay for things, unless you're a criminal. > I estimate that if Bitcoin's market capitalization reaches $1 trillion, then miners will still not account for more than 0.74% of the energy consumed by the world ($1.25 billion per TWh), which is more energy-efficient than, say, Canada (whose economy produces $450 million per TWh.) See http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ That calculation is using an artificially low energy price and an artificially high profit margin for "miner"s, and it's completely disregarding how transaction fees are intended to displace mining fees as a source of mining profits. But even using that number, world GDP is $80t; at a conservative P/E of 20 that makes the world economy's market cap around $1.6q. So bitcoin would be 0.06% of the world's market cap, but consuming 0.74% of the world's energy. > Yes and this is a physical exchange of cash/commodities. Bitcoin/cryptocurrencies make irreversible transactions possible digitally and have no other equivalent in the digital world. There are irreversible digital settlement systems (those that currently exist are even slower than bitcoin, but there's no reason they have to be - it's just that at the scale of the financial entities that can make use of such systems, waiting a couple of days for settlement is a non-issue), and we could easily make more if there were demand for it. Credit card chargebacks are a design decision, not a fundamental limitation.
- mrb 9y ago
  "the broader legal system have countermeasures against chargeback fraud" The same legal system will be used to sue thieves, regardless if they chargeback a credit card, or revert a 0-confirmation bitcoin transaction. Do you live in a fantasy world where judges tolerate theft of bitcoins? "merchants don't accept bitcoin in <1 second and never will, because there is no way to deal with the fraud that would lead to." You seem to have never heard of Gemini (second biggest US exchange) who does accept 0-confirmation transactions meeting certain criteria. Or greenaddress.it. Or services like gap600.com. "Not the same thing. Bitcoin isn't decorative" You are right, Bitcoin is not a useless decorative thing. Bitcoin is a revolutionary distributed trustless financial network. Again, it is your 3rd message, and you still failed to explain why it is ok to spend energy on useless (on a technical level) decorative Christmas lights, but not on Bitcoin. "And there are much cheaper ways to pay for things" No. Again I can send $5000 or $50 million across the world and pay a flat tx fee of $2. No system other than cryptocurrencies accomplishes this. "That calculation is using an artificially low energy price" Why do you complain? The low energy price of $0.01/kWh benefits your argument, not mine, as it allows miner to spend even more electricity in this model. "So bitcoin would be 0.06% of the world's market cap, but consuming 0.74% of the world's energy" You are missing the point. It is not market caps that need to be compared, but the GDP increase caused by Bitcoin that needs to be compared with its energy use. The market cap of Bitcoin is in itself irrelevant. The point http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ is making is that if Bitcoin's market cap is that high, then it probably will have helped increase the world's GDP by at least 0.74%, therefore it will be worthwhile to spend 0.74% of the energy on it. "There are irreversible digital settlement systems" False. You cannot name them because they do not exist. Only cryptocurrencies accomplish this.
  - lmm 9y ago
    > you still failed to explain why it is ok to spend energy on useless (on a technical level) decorative Christmas lights, but not on Bitcoin. Christmas lights produce value and there isn't a less wasteful way to provide the same value (because the value is a subjective notion of prettiness, we can't say that other forms of decoration are acceptable substitutes). Whereas bitcoin does have a cheaper substitute (because bitcoin is functional, so any other system that does the same thing is just as good). > The point http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ is making is that if Bitcoin's market cap is that high, then it probably will have helped increase the world's GDP by at least 0.74% There is no logical basis for that inference - I suspect that article is just trying to trick people by making them compare a large-sounding number ($1 trillion) with a small-sounding number (0.74%), because people don't have a good intuition for how big the world's GDP is. Compare market cap with market cap or compare production with production. > False. You cannot name them because they do not exist. Only cryptocurrencies accomplish this. https://en.wikipedia.org/wiki/Real-time_gross_settlement https://en.wikipedia.org/wiki/Real-time_gross_settlement

by mrb 9y ago

lmm 9y ago

> waiting <1 second for a visa transaction does not protect the merchant from potential massive losses, because of credit card chargeback fraud which is very real, exploited every day, and can be conducted up to 60 days after the purchase. And yet it remains economically viable for merchants to operate waiting <1 second for payment, because the trust-based visa system and the broader legal system have countermeasures against chargeback fraud. With bitcoin that's impossible by design; merchants don't accept bitcoin in <1 second and never will, because there is no way to deal with the fraud that would lead to. > And people enjoy making money, and so choose to pay the electricity to mine bitcoins. Same thing. People pay for things they enjoy. Not the same thing. Bitcoin isn't decorative, it's a means to an end - paying for things. And there are much cheaper ways to pay for things, unless you're a criminal. > I estimate that if Bitcoin's market capitalization reaches $1 trillion, then miners will still not account for more than 0.74% of the energy consumed by the world ($1.25 billion per TWh), which is more energy-efficient than, say, Canada (whose economy produces $450 million per TWh.) See http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ That calculation is using an artificially low energy price and an artificially high profit margin for "miner"s, and it's completely disregarding how transaction fees are intended to displace mining fees as a source of mining profits. But even using that number, world GDP is $80t; at a conservative P/E of 20 that makes the world economy's market cap around $1.6q. So bitcoin would be 0.06% of the world's market cap, but consuming 0.74% of the world's energy. > Yes and this is a physical exchange of cash/commodities. Bitcoin/cryptocurrencies make irreversible transactions possible digitally and have no other equivalent in the digital world. There are irreversible digital settlement systems (those that currently exist are even slower than bitcoin, but there's no reason they have to be - it's just that at the scale of the financial entities that can make use of such systems, waiting a couple of days for settlement is a non-issue), and we could easily make more if there were demand for it. Credit card chargebacks are a design decision, not a fundamental limitation.

mrb 9y ago
"the broader legal system have countermeasures against chargeback fraud" The same legal system will be used to sue thieves, regardless if they chargeback a credit card, or revert a 0-confirmation bitcoin transaction. Do you live in a fantasy world where judges tolerate theft of bitcoins? "merchants don't accept bitcoin in <1 second and never will, because there is no way to deal with the fraud that would lead to." You seem to have never heard of Gemini (second biggest US exchange) who does accept 0-confirmation transactions meeting certain criteria. Or greenaddress.it. Or services like gap600.com. "Not the same thing. Bitcoin isn't decorative" You are right, Bitcoin is not a useless decorative thing. Bitcoin is a revolutionary distributed trustless financial network. Again, it is your 3rd message, and you still failed to explain why it is ok to spend energy on useless (on a technical level) decorative Christmas lights, but not on Bitcoin. "And there are much cheaper ways to pay for things" No. Again I can send $5000 or $50 million across the world and pay a flat tx fee of $2. No system other than cryptocurrencies accomplishes this. "That calculation is using an artificially low energy price" Why do you complain? The low energy price of $0.01/kWh benefits your argument, not mine, as it allows miner to spend even more electricity in this model. "So bitcoin would be 0.06% of the world's market cap, but consuming 0.74% of the world's energy" You are missing the point. It is not market caps that need to be compared, but the GDP increase caused by Bitcoin that needs to be compared with its energy use. The market cap of Bitcoin is in itself irrelevant. The point http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ is making is that if Bitcoin's market cap is that high, then it probably will have helped increase the world's GDP by at least 0.74%, therefore it will be worthwhile to spend 0.74% of the energy on it. "There are irreversible digital settlement systems" False. You cannot name them because they do not exist. Only cryptocurrencies accomplish this.
- lmm 9y ago
  > you still failed to explain why it is ok to spend energy on useless (on a technical level) decorative Christmas lights, but not on Bitcoin. Christmas lights produce value and there isn't a less wasteful way to provide the same value (because the value is a subjective notion of prettiness, we can't say that other forms of decoration are acceptable substitutes). Whereas bitcoin does have a cheaper substitute (because bitcoin is functional, so any other system that does the same thing is just as good). > The point http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/ is making is that if Bitcoin's market cap is that high, then it probably will have helped increase the world's GDP by at least 0.74% There is no logical basis for that inference - I suspect that article is just trying to trick people by making them compare a large-sounding number ($1 trillion) with a small-sounding number (0.74%), because people don't have a good intuition for how big the world's GDP is. Compare market cap with market cap or compare production with production. > False. You cannot name them because they do not exist. Only cryptocurrencies accomplish this. https://en.wikipedia.org/wiki/Real-time_gross_settlement https://en.wikipedia.org/wiki/Real-time_gross_settlement