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To say that one transaction costs that much power is a misunderstanding of what the power is useful for. The amount of electricity spent mining a block is a fun
by Taek 9y ago
To say that one transaction costs that much power is a misunderstanding of what the power is useful for. The amount of electricity spent mining a block is a function of the block reward, which is a function of the value of the total system. A block doesn't just protect the transactions inside of it, it also protects every single transaction in the whole history of bitcoin.
And, the high value transactions tend to dictate the value of the whole system. Not every transaction is equal in that regard. If all the high value transactions were to move to another system, the coin price would plummet, and so would the amount of energy required to mine blocks, and thus the 'per transaction' cost for low value transactions would plummet.
The right way to think about it is that we spend around a billion dollars per year protecting $70 billion in assets. Put that way, it doesn't seem so bad.
If you look at the percent of the US GDP spent on military defense, you'll see that bitcoin is quite attractive by comparison.
- SamBam 9y agoIt's hardly justifiable to imply that the entire military defense of the United States is simply to protect "$70 billion in assets." If the entire monetary system of the US were replaced by BitCoin, do you think there would be no need for an army? Would the block ledger be "protecting" all the actual physical assets, land, and people? You can argue over whether the US should have a military, or its size, but to imply that it's just to protect the dollars isn't going to sway anyone in an argument.
- Taek 9y agoI meant only to imply that the US military alone is about 3.5% of our economy, and that the protection to value ratio there is about 1:30 I did not mean to imply that bitcoin could replace the entire military, only that the ratio of spending vs. assets defended is better.
- adventured 9y agoThe protection to value ratio is drastically beyond 1:30. Your value calculation is worthless if it only takes into account annual GDP. The total value of the United States, all assets, private and public, is closer to $250+ trillion [1]. That's a 1:400+ ratio. US household assets alone are near $95 - $100 trillion at this point [2]. That's a ~1:160 ratio just for household wealth. You missed by an extreme amount in your speculation and that's just based on present value. If we were going to be rational about it, we'd want to consider that present military expenditures help to keep safe future value creation (I'll note that I'm not arguing whether those expenditures are $n too high or too low). [1] https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit... [2] http://www.reuters.com/article/us-usa-fed-households-idUSKBN18Z28Y http://www.reuters.com/article/us-usa-fed-households-idUSKBN...
- Taek 9y agoThe military is also not the only protection system in place. You are right, just considering the GDP is too limited, but considering just the military is also too limited. Police, fireman, courts, security systems, the SEC, locks, alarms, etc all contribute to protecting assets in the US. It's a hard number to measure. Bitcoin inflation has a fixed measurable cost though (12.5 coins per 10 minutes), if that's acceptable to you for the benefits you get, then it's money well spent burning electricity.