3 ms·

For starters... >Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As

For starters... >Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As each coin is not mined over and over again, per unit of activity the electricity cost of each coin plunges over time (eventually becoming insignificant given N years). That's not true. Because in order to spend the transaction, it must be mined again. The amount of electricity cost of each coin doesn't plunge, it increases with each transaction, and stays the same if the "coin" doesn't move. At a point in the future no new bitcoin will be created, and at that time the only incentive to mine will be transaction fees which will pay for the electricity cost of the continued mining for validating transactions. It's not an insignificant cost, it's the only significant cost. >When you seek to utilize Bitcoin, all instances involving value swapping. By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground. And please don't say that it's different because it's "physical". You seem to be hung up on the "swapping" aspect, which I never said was the "value add" of bitcoin, it's not, you are correct that simply trading bitcoin doesn't add anything of value. But transacting bitcoin does, it provides the value of enabling trustless transactions quickly and without any "gatekeeper". Edit: I think I just realized the problem. Your definitions only make sense if you mine the coin once, then trade it off the blockchain forever (as in physically or virtually sending the bitcoin keys to someone else in return for some kind of good or service). That's not how most people use bitcoin, and doing it that way removes all of the benefits and "value add" that I talk about, and indeed is just a store of value at that point. So you are correct, but if you transact bitcoin in the blockchain, suddenly it becomes something more than a store of value, it provides value. It provides security, trustless transactions, immutable history, and more.

adventured 9y ago
Re: electricity To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. Their cost to hold that coin is also relatively trivial, they did not have to expend vast electricity cost to mine it just so they can receive it; they don't have to buy tens of thousands of dollars worth of hardware to hold or acquire that coin, etc. > By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground Mining leads to dramatically higher utility value extraction of the thing being mined in most cases (which is typically the point of the mining), other than eg raw gold or silver store (both of which also have some industrial use value that can significantly amplify their foundational value). You generally don't pull coal or oil or lithium from the ground to utilize it as a value swapping device. You mine them to put them into an industrial process that dramatically increases their value. Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. Mining is one of the great examples of net new wealth creation, mostly thanks to unlocking of energy over centuries of scientific advancement. You could hardly have picked a worse example. For example unlocking oil, which is considered a form of mining for economic purposes, takes a non-acting asset in the ground, which can then be unleashed due to its immense energy concentration. Our technological progress can further improve the utilization. Plastics as a global, highly useful industry for example, was impossible a thousand years ago; scientific progress unlocked that new net value. Bitcoin doesn't actually store electricity, whereas oil continues to retain its energy potential whether we think it's valuable as an energy source or not (eg if we all switch to solar). That's a literal property of oil. If the world replaces Bitcoin with the next great coin and its value goes to zero (whether in 7 years or 27 years), there's no electricity actually stored by the value-dead coins. It's the very real difference between oil having tangible chemical properties and Bitcoin being digital. Coal as another example along with oil, takes a non-acting thing from the ground, which can then unleash vast energy that previously was not being utilized. Scientific processes can further unlock and enhance that value, make it dramatically greater, as was the case in its original entry into the economy. Further, industrial processes can then amplify the things mined from the ground. In 1750, we had no means to utilize oil meaningfully, and then progress on chemistry allowed us to unlock that potential. Farming and timber are two other good examples of new net value creation systems derived from dramatically amplifying an existing thing. Blockchain and the services built on top of it, are where most of the net new value will be created ultimately. As in the case of the industrial applications of things mined from the earth, or farm land, etc. Bitcoin will very likely remain a value swapping entity. Blockchain, assumingly leading to all sorts of new services in the coming years, will likely enhance economic productivity, which is where net new wealth comes from. Most new wealth created is derived from time/labor saved and similar (thus oil applied thanks to science has been an extraordinary net new wealth generator). Bitcoin is not a very meaningful device toward that, its transaction costs have made it heavily impractical as a potential superior transaction system or currency (in which case it could have acted as a productivity booster, eg by saving people time or fees). Other crypto coins that possess superior properties to bitcoin for those purposes may fill that role.
- Klathmon 9y ago
  >To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. Yes, you do not, but someone does. Unless you are trading them off the blockchain (in which case you are correct, and they add no value), every transaction must be included in a mined block, which takes a significant amount of electricity to mine and add to the blockchain. And that must happen each and every time a transaction occurs on the blockchain. >For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. It is not, it costs a fraction of all of the electricity used to mine the block your transaction was included in, proportional to it's size compared to the rest of the block, minus the mining reward. In other words (ignoring block reward for simplicity right now), if your transaction was 200 bytes, and 5000 of your transactions can fit in a block, and it costs roughly $20,000 in electricity to mine a block (average in september 2017), then your transaction cost roughly $4 in electricity. At the rates I used to calculate the $20,000 per block, that's 480 watt-hours on the mining alone! Ignoring the cost of transmission, relaying, validation, storage, and other smaller more trivial costs. That is the whole basis behind bitcoin, and the entire reason for it's existence. I urge you to do a little reading on bitcoin and how it works before trying to speak about it. The whole "proof of work" is why bitcoin is valuable, it's the entire thing that bitcoin brought to the world, without it bitcoin is nothing more than a walmart gift card. >Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. You seem to be willfully ignoring the entire point of bitcoin, which is that it isn't mined as a value store, but as a service which secures transactions and allows them to be trustless. Just like how mining lithium isn't to use lithium as a coin, mining bitcoin isn't about using bitcoin as a simple coin, but about securing those transactions and making them trustless. As long as you continue to completely ignore this, I don't think there is any more point in discussing this. You are willfully ignoring the net value that bitcoin creates while saying that it creates no value.
  - adventured 9y ago
    > That is the whole basis behind bitcoin, and the entire reason for it's existence. I urge you to do a little reading on bitcoin and how it works before trying to speak about it. I'm fully aware of how Bitcoin works. Using argument from intimidation is not a valid argumentation line. My position was factually correct. It does not cost even remotely as much for me to buy 1 bitcoin (eg from coinbase) or accept 1 bitcoin as payment (eg as a merchant), as it does to originally mine it today. As such, the electricity cost of each bitcoin on unit of utilization, plunges over time vs the origination. That electricity cost is not going to perpetually climb such that each bitcoin represents an eventual eg trillion dollars of electricity cost, your premise is false and absurd. After each bitcoin is mined today, its electricity cost per amount of N time existing declines, it does not increase. The first action, the mining, is extremely expensive; each action thereafter, is less expensive compared to that. Further economic use of a given coin mined today involves lower cost than the initial cost of mining it. If that weren't the case, Bitcoin would collapse instantly, it would become entirely unusable over a short amount of time (and it would never be worth mining). I notice you ignored that you entirely blew the argument premise about the physical mining world. Bitcoin could hardly be any more different from oil or coal or numerous of other things we mine from the ground, precisely because natural gas, oil, coal are not primarily used as value stores or value swapping devices, as Bitcoin is. > You seem to be willfully ignoring the entire point of bitcoin, which is that it isn't mined as a value store, but as a service which secures transactions and allows them to be trustless. For someone that keeps proclaiming that I'm ignorant, you're making a very wrong claim. The supposed "point" of Bitcoin is not strictly defined and has shifted in the last several years based on circumstances. There's no single central authority of Bitcoin that can define its point. If transaction fees are very low, it will be utilized differently than if its transaction fees are very high, thus its utilization shifts. There is no singular rigid "point."

adventured 9y ago

Re: electricity To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. Their cost to hold that coin is also relatively trivial, they did not have to expend vast electricity cost to mine it just so they can receive it; they don't have to buy tens of thousands of dollars worth of hardware to hold or acquire that coin, etc. > By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground Mining leads to dramatically higher utility value extraction of the thing being mined in most cases (which is typically the point of the mining), other than eg raw gold or silver store (both of which also have some industrial use value that can significantly amplify their foundational value). You generally don't pull coal or oil or lithium from the ground to utilize it as a value swapping device. You mine them to put them into an industrial process that dramatically increases their value. Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. Mining is one of the great examples of net new wealth creation, mostly thanks to unlocking of energy over centuries of scientific advancement. You could hardly have picked a worse example. For example unlocking oil, which is considered a form of mining for economic purposes, takes a non-acting asset in the ground, which can then be unleashed due to its immense energy concentration. Our technological progress can further improve the utilization. Plastics as a global, highly useful industry for example, was impossible a thousand years ago; scientific progress unlocked that new net value. Bitcoin doesn't actually store electricity, whereas oil continues to retain its energy potential whether we think it's valuable as an energy source or not (eg if we all switch to solar). That's a literal property of oil. If the world replaces Bitcoin with the next great coin and its value goes to zero (whether in 7 years or 27 years), there's no electricity actually stored by the value-dead coins. It's the very real difference between oil having tangible chemical properties and Bitcoin being digital. Coal as another example along with oil, takes a non-acting thing from the ground, which can then unleash vast energy that previously was not being utilized. Scientific processes can further unlock and enhance that value, make it dramatically greater, as was the case in its original entry into the economy. Further, industrial processes can then amplify the things mined from the ground. In 1750, we had no means to utilize oil meaningfully, and then progress on chemistry allowed us to unlock that potential. Farming and timber are two other good examples of new net value creation systems derived from dramatically amplifying an existing thing. Blockchain and the services built on top of it, are where most of the net new value will be created ultimately. As in the case of the industrial applications of things mined from the earth, or farm land, etc. Bitcoin will very likely remain a value swapping entity. Blockchain, assumingly leading to all sorts of new services in the coming years, will likely enhance economic productivity, which is where net new wealth comes from. Most new wealth created is derived from time/labor saved and similar (thus oil applied thanks to science has been an extraordinary net new wealth generator). Bitcoin is not a very meaningful device toward that, its transaction costs have made it heavily impractical as a potential superior transaction system or currency (in which case it could have acted as a productivity booster, eg by saving people time or fees). Other crypto coins that possess superior properties to bitcoin for those purposes may fill that role.

Klathmon 9y ago
>To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. Yes, you do not, but someone does. Unless you are trading them off the blockchain (in which case you are correct, and they add no value), every transaction must be included in a mined block, which takes a significant amount of electricity to mine and add to the blockchain. And that must happen each and every time a transaction occurs on the blockchain. >For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. It is not, it costs a fraction of all of the electricity used to mine the block your transaction was included in, proportional to it's size compared to the rest of the block, minus the mining reward. In other words (ignoring block reward for simplicity right now), if your transaction was 200 bytes, and 5000 of your transactions can fit in a block, and it costs roughly $20,000 in electricity to mine a block (average in september 2017), then your transaction cost roughly $4 in electricity. At the rates I used to calculate the $20,000 per block, that's 480 watt-hours on the mining alone! Ignoring the cost of transmission, relaying, validation, storage, and other smaller more trivial costs. That is the whole basis behind bitcoin, and the entire reason for it's existence. I urge you to do a little reading on bitcoin and how it works before trying to speak about it. The whole "proof of work" is why bitcoin is valuable, it's the entire thing that bitcoin brought to the world, without it bitcoin is nothing more than a walmart gift card. >Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. You seem to be willfully ignoring the entire point of bitcoin, which is that it isn't mined as a value store, but as a service which secures transactions and allows them to be trustless. Just like how mining lithium isn't to use lithium as a coin, mining bitcoin isn't about using bitcoin as a simple coin, but about securing those transactions and making them trustless. As long as you continue to completely ignore this, I don't think there is any more point in discussing this. You are willfully ignoring the net value that bitcoin creates while saying that it creates no value.
- adventured 9y ago
  > That is the whole basis behind bitcoin, and the entire reason for it's existence. I urge you to do a little reading on bitcoin and how it works before trying to speak about it. I'm fully aware of how Bitcoin works. Using argument from intimidation is not a valid argumentation line. My position was factually correct. It does not cost even remotely as much for me to buy 1 bitcoin (eg from coinbase) or accept 1 bitcoin as payment (eg as a merchant), as it does to originally mine it today. As such, the electricity cost of each bitcoin on unit of utilization, plunges over time vs the origination. That electricity cost is not going to perpetually climb such that each bitcoin represents an eventual eg trillion dollars of electricity cost, your premise is false and absurd. After each bitcoin is mined today, its electricity cost per amount of N time existing declines, it does not increase. The first action, the mining, is extremely expensive; each action thereafter, is less expensive compared to that. Further economic use of a given coin mined today involves lower cost than the initial cost of mining it. If that weren't the case, Bitcoin would collapse instantly, it would become entirely unusable over a short amount of time (and it would never be worth mining). I notice you ignored that you entirely blew the argument premise about the physical mining world. Bitcoin could hardly be any more different from oil or coal or numerous of other things we mine from the ground, precisely because natural gas, oil, coal are not primarily used as value stores or value swapping devices, as Bitcoin is. > You seem to be willfully ignoring the entire point of bitcoin, which is that it isn't mined as a value store, but as a service which secures transactions and allows them to be trustless. For someone that keeps proclaiming that I'm ignorant, you're making a very wrong claim. The supposed "point" of Bitcoin is not strictly defined and has shifted in the last several years based on circumstances. There's no single central authority of Bitcoin that can define its point. If transaction fees are very low, it will be utilized differently than if its transaction fees are very high, thus its utilization shifts. There is no singular rigid "point."