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> Apparently not. Care to enlighten me? Because seriously, .1% of global electricity consumption, if that number is accurate, is expensive. Are we going to go u

> Apparently not. Care to enlighten me? Because seriously, .1% of global electricity consumption, if that number is accurate, is expensive. Are we going to go up from there, or down, and how does it relate to a long-term stable bitcoin exchange rate, relative to mainstream reserve currencies? The electricity cost of mining bitcoin is directly related to the transaction fees, once all bitcoins are mined. This is because if mining is very profitable (transaction fees >> electricity cost), more people are incentivised to mine, thus raising the hash rate and difficulty, thus making mining more expensive. If mining is very unprofitable (transaction fees << electricity cost), people turn off their machines, hashpower and electricity cost drop, and mining becomes easier. Thus if successful BTC has ~300k on-chain transactions a day, transaction pays average $1 in transaction fees, you expect ~$300k of electricity to be used a day. -- No one expects BTC to keep deflating 500% once it reaches saturation. Currently all of BTC value is speculative - based on the 0.1% change it'll become successful and be worth $MOON, against the 99.9% change it'll fail and be worth 0. In the end-game scenario where it's an established global exchange network, with all the coins available already mined, it's only as deflationary as other currencies are inflationary. The 'inflation causes investment' theory only applies to investment that has expected return of 1-2%; given that the stock market return is estimated at ~7%, and yet people still hold cash, it seems hard to believe that inflation has significant impact on investment.

beat 9y ago
Holding cash is part of the risk/return/liquidity triangle. All investment functions against this triangle - cash is extremely low risk, and maximally liquid, at the cost of a slight negative return. (Contrast this to, say, angel investment, which has near-maximum potential returns, but very high risk and near-zero liquidity.) And contrast the low risk / high liquidity / near zero return behavior of cash with bitcoin. With bitcoin, you have very high risk (speculative bubble) / limited liquidity (can't be used for most transactions, must exchange) / absurdly high returns. It is in no way like cash. It's pure speculation. A medium of exchange needs to behave like cash. It needs to be highly stable and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to replace cash (and cash-equivalents like credit cards), it's doing an absolutely shitty job of it, and will continue to do so until the price stabilizes. As for inflation's impact on investment... read the WSJ or Forbes regularly for what the mainstream financial industry thinks about that. They're absolutely inflation-phobic. I'm old enough to remember late-1970s stagflation, which made basic investments like real estate totally absurd and nearly wrecked the economy. No one wants to go back to that. But if there's one thing worse than high inflation, it's deflation - when cash actually increases in value. It radically disincentivizes investment, when you can just stuff cash in a mattress and make a real return doing so. Why take a risk if you can make money without it?

beat 9y ago

Holding cash is part of the risk/return/liquidity triangle. All investment functions against this triangle - cash is extremely low risk, and maximally liquid, at the cost of a slight negative return. (Contrast this to, say, angel investment, which has near-maximum potential returns, but very high risk and near-zero liquidity.) And contrast the low risk / high liquidity / near zero return behavior of cash with bitcoin. With bitcoin, you have very high risk (speculative bubble) / limited liquidity (can't be used for most transactions, must exchange) / absurdly high returns. It is in no way like cash. It's pure speculation. A medium of exchange needs to behave like cash. It needs to be highly stable and highly liquid. Bitcoin is neither. So if the intent of bitcoin is to replace cash (and cash-equivalents like credit cards), it's doing an absolutely shitty job of it, and will continue to do so until the price stabilizes. As for inflation's impact on investment... read the WSJ or Forbes regularly for what the mainstream financial industry thinks about that. They're absolutely inflation-phobic. I'm old enough to remember late-1970s stagflation, which made basic investments like real estate totally absurd and nearly wrecked the economy. No one wants to go back to that. But if there's one thing worse than high inflation, it's deflation - when cash actually increases in value. It radically disincentivizes investment, when you can just stuff cash in a mattress and make a real return doing so. Why take a risk if you can make money without it?