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Yeah, that's inaccurate. The major portion of that energy expenditure is keeping the bitcoins that aren't moving secure. Put another way, this is saying it is

Yeah, that's inaccurate. The major portion of that energy expenditure is keeping the bitcoins that aren't moving secure. Put another way, this is saying it is estimated to take about $800M it keep $40B of bitcoin secure. This is probably a bit expensive in terms of comparing to fiat currencies (But then we are probably not covering all the real costs of those currencies)... but bitcoin is still in the technology adoption life-cycle and has not yet become a currency. When the inflation of BTC has declined and it has become fully adopted (assuming this happens) then the numbers will likely start to make a lot more sense. Also, the vast majority of transactions in about 2 years will likely be happening off chain using lightening network and the like. Those transaction fees will happily be covered by merchants who are currently paying %2-%5 per transaction to Visa et. al. and will be more than happy to pay %1 or less to Bitcoin to manage a lightening channel. Really, it will be companies disrupting Visa building payment networks out of lightening channels and they will have to keep fees really low because LN is open source and anyone can compete with them.

saalweachter 9y ago
Prices are set by what the market is willing to pay, rather than what the service costs to run. Visa, et al, charges what it does because most merchants are willing to pay it, evidenced by the relatively few "cash/check only" businesses out there. This doesn't mean that merchants wouldn't switch to a lower-cost payment system if it were available and there were enough customers using it, but it does mean that you can't just assume that Visa, et al, would not lower their prices if they felt the competition was serious enough. What their actually cost is, in such a circumstance, is harder to say. Their basic payment processing cost is probably quite low, even accounting for the people who maintain it, but they also provide fraud protection and frequently kickbacks to customers (cash back, airline miles, points); whether they could switch to chip-and-pin exclusively (in the US) and severely curtail kickbacks while still offering a desirable service to customers as well as merchants... [Their credit services are presumably well-funded through their high interest rates.]

saalweachter 9y ago

Prices are set by what the market is willing to pay, rather than what the service costs to run. Visa, et al, charges what it does because most merchants are willing to pay it, evidenced by the relatively few "cash/check only" businesses out there. This doesn't mean that merchants wouldn't switch to a lower-cost payment system if it were available and there were enough customers using it, but it does mean that you can't just assume that Visa, et al, would not lower their prices if they felt the competition was serious enough. What their actually cost is, in such a circumstance, is harder to say. Their basic payment processing cost is probably quite low, even accounting for the people who maintain it, but they also provide fraud protection and frequently kickbacks to customers (cash back, airline miles, points); whether they could switch to chip-and-pin exclusively (in the US) and severely curtail kickbacks while still offering a desirable service to customers as well as merchants... [Their credit services are presumably well-funded through their high interest rates.]