5 ms·

Those are both activities which use up trivial quantities of those natural resources. Bitcoin uses up nontrivial quantities of electricity.

drb91 8y ago
There's a hidden cost of trust there, though, which vanishes with bitcoin (or at least reduces its cost). Maybe the value of bitcoin is more apparent from the perspective of venezuela at the moment, where the risk involved with traditional banks, currency, and security is more apparent. I am emphatically not taking a stance on which I prefer here, I might add, just pointing out that there are more variables here than you're acknowledging.
- gamblor956 8y ago
  Bitcoin and other cryptocurrencies require even more trust than normal currency. With a normal currency transaction, you need only trust at most 2 other entities entities: your counterpart to the transaction and the government issuing the currency. With a blockchain, you still need to trust the counterparty, but now you also need to trust that the coders have properly designed and programmed the system, and that the miners either don't have the power to corrupt the system or aren't corrupt, and you need to trust whatever exchange you use to get into and out of the cryptocurrency. Plus, you've added in a significant amount of time--at a minimum 20x the time with Bitcoin and significant transaction fees that as a practical matter have exceeded card interchange fees by 2x or more for the past 3 years straight. Your right about their being more variables...with cryptocurrency.
  - drb91 8y ago
    I think there are fundamentally different ways we're talking about trust: you "only" need to trust a government, you "only" need to trust a bank, vs trusting a certain proportion of miners to be following the same bitcoin specs you are, as well as trusting that people will value it tomorrow. Both of bitcoin and government-issued currency requires trust, and building that trust is fundamentally difficult, depending on your needs, and comes with tradeoffs. It seems like you're only acknowledging one end of these tradeoffs. One obvious tradeoff you're not considering is that of a criminal getting its assets frozen, for instance. There are less black and white situations where you might prefer bitcoin as well, if you have a little imagination. If you could address that, I'd probably appreciate your comments more.
    - deleted 8y ago
      [deleted]
    - bronson 8y ago
      Let's not use HN as a place to enumerate cryptocoin variables? You can find plenty of that discussion elsewhere.
  - marcosdumay 8y ago
    And you need to trust that your government won't take the currency away. There is no escaping from this one.
- dragonwriter 8y ago
  > There's a hidden cost of trust there, though, which vanishes with bitcoin With fiat, I at least have some idea who I am trusting, and if my trust is betrayed, I have some idea who to work with others to organize to work to inflict punishment. And, the people involved are aware of that. With crypto, I have to trust an anonymous network of people that I have only distant and indirect indications aren't, in overwhelming majority, mutually cooperating agents of a single potentially adverse party, and no idea of who to go after if my trust is betrayed. And the people involved know that, too.
  - morogop 8y ago
    in addition to the miners, you also have to trust a largely centralized group of software authors who make the key decisions.
- TeMPOraL 8y ago
  > There's a hidden cost of trust there Yes, except the trust is free. Bitcoin replaces that trust with burning electricity. It's kind of like standing on the ground. The surface of the Earth stops you from accelerating under gravity for free. But if you want to hover just above it, you have to burn ungodly amounts of energy, because you're now replacing surface with active propulsion. This is the same relationship as Bitcoin has with trust. And yes, flying is occasionally useful. So are trustless systems. But both the ground and trust are features that cut out a lot of unnecessary energy usage from our lives.
bufferoverflow 8y ago
You forgot to calculate how much (in resources) it costed to build all those banks and vaults and how much it costs to run and maintain, globally.
- deleted 8y ago
  [deleted]
- gamblor956 8y ago
  It probably cost a few billion dollars to build all those banks globally. It costs a few hundred million to maintain all those banks and vaults. However, these banks and vaults can handle more than 2000x the transactions of Bitcoin in a single day (Visa on its own is 750x the capacity of Bitcoin, and Mastercard handles about twice the number of transactions as Visa), so Bitcoin would need to be at least 1/2000th the price to build and maintain the network to maintain a comparative economic advantage against just those two companies. Including the entire financial system, Bitcoin would need to be somewhere in the neighborhood of 20,000x cheaper and more efficient. And since we're taking into account all of the underlying systemic costs going into banks, we need to do the same for Bitcoin. That means including all of the power utilities, factories, and mining facilities that went into making the hardware, plus the cost of shipping the hardware worldwide, plus the cost of the utilities and transmission lines needed to operate the network. And that's clearly not 1/20,000th the cost or resource usage of our current financial system.
  - slededit 8y ago
    Fort Knox has an entire military base to secure it. That alone would use up a good chunk of your few hundred million dollar budget. I think you are vastly underestimating the cost in supporting our current financial system.
    - paulgb 8y ago
      These have to do with storing something of value, they aren't inherent to gold. People are already storing Bitcoin keys in physical vaults: https://www.bloomberg.com/news/articles/2018-05-09/bunkers-for-the-wealthy-are-said-to-hoard-10-billion-of-bitcoin https://www.bloomberg.com/news/articles/2018-05-09/bunkers-f...

drb91 8y ago

There's a hidden cost of trust there, though, which vanishes with bitcoin (or at least reduces its cost). Maybe the value of bitcoin is more apparent from the perspective of venezuela at the moment, where the risk involved with traditional banks, currency, and security is more apparent. I am emphatically not taking a stance on which I prefer here, I might add, just pointing out that there are more variables here than you're acknowledging.

gamblor956 8y ago
Bitcoin and other cryptocurrencies require even more trust than normal currency. With a normal currency transaction, you need only trust at most 2 other entities entities: your counterpart to the transaction and the government issuing the currency. With a blockchain, you still need to trust the counterparty, but now you also need to trust that the coders have properly designed and programmed the system, and that the miners either don't have the power to corrupt the system or aren't corrupt, and you need to trust whatever exchange you use to get into and out of the cryptocurrency. Plus, you've added in a significant amount of time--at a minimum 20x the time with Bitcoin and significant transaction fees that as a practical matter have exceeded card interchange fees by 2x or more for the past 3 years straight. Your right about their being more variables...with cryptocurrency.
- drb91 8y ago
  I think there are fundamentally different ways we're talking about trust: you "only" need to trust a government, you "only" need to trust a bank, vs trusting a certain proportion of miners to be following the same bitcoin specs you are, as well as trusting that people will value it tomorrow. Both of bitcoin and government-issued currency requires trust, and building that trust is fundamentally difficult, depending on your needs, and comes with tradeoffs. It seems like you're only acknowledging one end of these tradeoffs. One obvious tradeoff you're not considering is that of a criminal getting its assets frozen, for instance. There are less black and white situations where you might prefer bitcoin as well, if you have a little imagination. If you could address that, I'd probably appreciate your comments more.
  - deleted 8y ago
    [deleted]
  - bronson 8y ago
    Let's not use HN as a place to enumerate cryptocoin variables? You can find plenty of that discussion elsewhere.
- marcosdumay 8y ago
  And you need to trust that your government won't take the currency away. There is no escaping from this one.
dragonwriter 8y ago
> There's a hidden cost of trust there, though, which vanishes with bitcoin With fiat, I at least have some idea who I am trusting, and if my trust is betrayed, I have some idea who to work with others to organize to work to inflict punishment. And, the people involved are aware of that. With crypto, I have to trust an anonymous network of people that I have only distant and indirect indications aren't, in overwhelming majority, mutually cooperating agents of a single potentially adverse party, and no idea of who to go after if my trust is betrayed. And the people involved know that, too.
- morogop 8y ago
  in addition to the miners, you also have to trust a largely centralized group of software authors who make the key decisions.
TeMPOraL 8y ago
> There's a hidden cost of trust there Yes, except the trust is free. Bitcoin replaces that trust with burning electricity. It's kind of like standing on the ground. The surface of the Earth stops you from accelerating under gravity for free. But if you want to hover just above it, you have to burn ungodly amounts of energy, because you're now replacing surface with active propulsion. This is the same relationship as Bitcoin has with trust. And yes, flying is occasionally useful. So are trustless systems. But both the ground and trust are features that cut out a lot of unnecessary energy usage from our lives.

bufferoverflow 8y ago

You forgot to calculate how much (in resources) it costed to build all those banks and vaults and how much it costs to run and maintain, globally.

deleted 8y ago
[deleted]
gamblor956 8y ago
It probably cost a few billion dollars to build all those banks globally. It costs a few hundred million to maintain all those banks and vaults. However, these banks and vaults can handle more than 2000x the transactions of Bitcoin in a single day (Visa on its own is 750x the capacity of Bitcoin, and Mastercard handles about twice the number of transactions as Visa), so Bitcoin would need to be at least 1/2000th the price to build and maintain the network to maintain a comparative economic advantage against just those two companies. Including the entire financial system, Bitcoin would need to be somewhere in the neighborhood of 20,000x cheaper and more efficient. And since we're taking into account all of the underlying systemic costs going into banks, we need to do the same for Bitcoin. That means including all of the power utilities, factories, and mining facilities that went into making the hardware, plus the cost of shipping the hardware worldwide, plus the cost of the utilities and transmission lines needed to operate the network. And that's clearly not 1/20,000th the cost or resource usage of our current financial system.
- slededit 8y ago
  Fort Knox has an entire military base to secure it. That alone would use up a good chunk of your few hundred million dollar budget. I think you are vastly underestimating the cost in supporting our current financial system.
  - paulgb 8y ago
    These have to do with storing something of value, they aren't inherent to gold. People are already storing Bitcoin keys in physical vaults: https://www.bloomberg.com/news/articles/2018-05-09/bunkers-for-the-wealthy-are-said-to-hoard-10-billion-of-bitcoin https://www.bloomberg.com/news/articles/2018-05-09/bunkers-f...