7 ms·

Naturally scarce stores of value like Bitcoin, gold, diamonds, etc. have always "wasted" resources, whether they be power, human resource, or polluting the envi

by gnode 8y ago

Naturally scarce stores of value like Bitcoin, gold, diamonds, etc. have always "wasted" resources, whether they be power, human resource, or polluting the environment. On one hand you could regard them as immoral because of this, on the other hand they enable the freedom to store value without trust.

cc-d 8y ago
>Bitcoin, gold, diamond You're being dishonest if you're pretending these things are identically comparable.
- deleted 8y ago
  [deleted]
- gnode 8y ago
  I didn't suggest they were identical. Only that a limited comparison can be made about their use as a store of value.
- d0lph 8y ago
  They're all arbitrary stores of value whos intrinsic value is not justified by the market price?
  - rtkwe 8y ago
    Only Bitcoin requires the continuous consumption of energy to continue being a useful asset though.
    - d0lph 8y ago
      Right, diamonds just cost human lives.
      - rtkwe 8y ago
        But that isn't an inherent fact of a diamond. Mining them doesn't require that people lose their lives it's a fact of shitty people. And most diamonds consumers will encounter aren't from that stream.
        bduerst 8y ago
        Yep. Human nature is a different problem set altogether from being intentionally designed to waste electricity.
        gnode 8y ago
        > intentionally designed to waste electricity. I strongly doubt the intention was to waste electricity, more likely it was incidentally designed that way, as it's difficult to conceive how you could create such a decentralized cryptocurrency without proof-of-work (at least at the time).
      - criley2 8y ago
        "Right, diamonds just cost human lives." If we're going to play that game, where did the electricity come from for your watt-hour-sucking GPU? A coal plant? How many died mining it? How many got life long illness or injury/disability mining it? How much poverty did the abusive mining industry inflict on poor dependent communities? How many hundreds of thousands of people were affected by it's emissions? How many thousands of cases of asthma? How many deaths? If we go nuclear : Where was it mined? Who mined it? Who processed it? Where is the waste going? Are you supporting rather despotic countries depending on ore source? Etc Or the cards themselves. Where did the rare earth materials that go into graphics cards come from? Where were the graphics card parts manufactured, and where was the board assembled? Are you benefiting from near-slave labor for your cards? I mean, if we want to play that game, there's so much to examine!
        gnode 8y ago
        > If we're going to play that game, where did the electricity come from for your watt-hour-sucking GPU? Pointing out that diamond mining is also not without externalities doesn't mean d0lph is an exponent of Bitcoin mining.
        d0lph 8y ago
        I like nuclear, it's the obvious choice, and incredibly safe. https://en.wikipedia.org/wiki/Uranium_mining_in_the_United_States https://en.wikipedia.org/wiki/Uranium_mining_in_the_United_S... "Uranium mining in the United States produced 3,303,977 pounds (1,498,659 kg) of U3O8 (1271 tonnes of uranium) in 2015" The US. I wasn't aware there were a significant number of uranium mining deaths? I also assume the US can process it and safely dispose of the waste. No despotic countries of course. China is a tough one though, I don't know how we justify it.
        criley2 8y ago
        AFAIK the US imports 80% of its uranium used in power generation?
        d0lph 8y ago
    - gnode 8y ago
      Bitcoin doesn't intrinsically require that much power. The computation to verify transactions is a tiny fraction of that required to compete for the next block by hashing. The high hash rate is because of the high difficulty, which is itself dependent on the hash rate of the entire network. If the price of bitcoin drops, the incentive to mine decreases, and thus so does the difficulty. This is comparable to gold, as an increase in the gold price also incentivises increased mining.
      - rtkwe 8y ago
        But once extracted their energy costs are negligible (especially with gold being stored and the rights traded instead of the physical asset a lot of the time). In the case of BTC you can't really separate out the cost of mining a block from validating the transaction because until it's in a block a transaction doesn't really exist (this will get much better with lightning though). But without the constant burn of mining BTC (even post lightning) will be come useless.
        michaelscott 8y ago
        Until it IS in a block. Then, like the storage cost of gold or any "real" material, the energy expenditure for maintenance is negligible. In fact, considering the storage requirements of something like bullion I'd argue the maintenance costs are considerably lower.
        rtkwe 8y ago
        Yes any given transaction is valid once it is in a block but without continuous mining it's still worthless because it cannot be spent without a new block being mined. And since mining has to be pretty continuous or the whole thing becomes unusable because of loooong processing times the maintenance of the whole network kind of becomes maintenance of the transactions. Even lightning would only last for a while without new blocks being mined because adding funds to your 'lightning channel' requires a transaction to be placed on the blockchain to open a channel.
    - deegles 8y ago
      Physical gold still needs to be mined, smelted, transported, and guarded. When you buy it and move it around energy is spent too. So if you really want an apples-to-apples comparison you'd have to count the energy needed to mine each oz. of gold.
      - rtkwe 8y ago
        The large majority of gold traded for bullion or investment isn't actually moved. It's just the rights to claim X tr. oz. of gold in the vault of XYZ company. Also value of my gold doesn't depend on the transport of all the gold out there so rolling those costs in at the individual level doesn't make much sense. BTC on the otherhand is useless without mining because the existence and transfer of BTC depends on the miners. Even post lightning mining is still critical to opening new channels.
        deegles 8y ago
        The large majority of Bitcoin isn't actually moved every block either. And those systems you describe to reassign rights to gold also use energy. As block rewards fall, profit will come from transaction fees only, and only the most efficient miners (best equipment or energy access) will remain. Sure, Bitcoin uses more energy now than a database sitting on a server, but it's solving a different problem.
        rtkwe 8y ago
        It is solving a different problem but that doesn't change the fact that the whole network's mining work is required to make it work. There are some energy costs to tracking the rights of stored gold but they're vanishingly small compared to BTC. We're getting sucked down into the weeds here and losing sight of the original point which is BTC as designed requires the use of massive amount of energy to validate and secure the transaction ledger and that ledger and the things it enables is the whole value of BTC.
        perl4ever 8y ago
    - thatcat 8y ago
      The only reason anyone cares is because it's relatively easy to compute this inefficiency compared to the vast sea of inefficient products that would require signifigant effort to even approximate.
      - d0lph 8y ago
        Precisely, I'm sure there's an enormous amount of infrastructure, extraction equipment, storage, processing and reprocessing. Without the full data such a statement is vacuous.
  - abritinthebay 8y ago
    None of them have intrinsic value. At least gold & diamonds are useful
    - ams6110 8y ago
      useful + scarce == intrinsic value, no?
      - abritinthebay 8y ago
        Useful is a subjective value judgement, so... no. But I get what you're saying - I'd say it's more correct to say it's valued, but not that it has intrinsic value. For example - over history gold has been mostly considered pretty, but not exactly high value. It was only through trade it became representative of value (of the goods).
joering2 8y ago
How can you put gold bar, diamond ring and string of 0/1 in the same sentence in terms of "resources wasted" ?
- goldenkey 8y ago
  Well for starters, if everything in the universe is computable, ie. digital physics, then they are all just configurations of information..
- gnode 8y ago
  Admittedly diamonds are not a good comparison, because they're not commonly used for investment and not fungible. Gold bullion is comparable insofar as it's used as a store of value, with scarcity controlled by natural limitations, rather than by policy. I'll admit that gold has some practical uses, such as in electronics, but that is not the primary market driving its trade or mining. Its use in jewellery I would say is just an extension of its use as a store of value; it is desirable because it is valuable. If we simply wanted a lustrous metal (as may have been an early factor in its adoption as a commonly traded precious metal) we now have many inexpensive ones to choose from -- aluminium, chromium, etc.
gwbas1c 8y ago
At this point, we know that Bitcoin doesn't scale to handle the volume of transactions needed for a global digital currency. Ultimately, if you own Bitcoin in hopes of the value going up, it will only go up if someone is willing to pay more for it. There's no other utilitarian use of it. This means that Bitcoin is a 0-sum game*, and a tremendous waste of resources. At least with gold mining we end up with a material that has important industrial use. 0-sum game: Meaning, in order for someone to profit with Bitcoin, someone has to take a loss.
- Raidion 8y ago
  I'm not a huge fan of bitcoin and have never owned more than 200 dollars worth, but that's a super weird argument to make. Of course something only goes up in value if someone is willing to pay more for it, that's true of art, cars, houses, or whatever. You could argue that a house has more utilitarian value, as you could always live there, but that completely ignores the other persons goals. A house isn't going to be much value if jobs are scarce in that area, but bitcoin would still have value in that scenario. All that energy is going to make sure you can send a large amount of value between two parties from almost anywhere in the globe with a minimum of transaction costs and a decent amount of anonymity. This also ignores the fact of risk pricing. I live in Backwatermenistan and the political stability and the currency is looking unstable. I could buy a bitcoin from someone else who has one with local currency, I lower my risk of ruin from currency inflation by paying a price that I deem reasonable, the other guy gets cash which he could use to start a business or anything else that's inside his risk tolerance. No one lost in that scenario.
  - naravara 8y ago
    >I could buy a bitcoin from someone else who has one with local currency, I lower my risk of ruin from currency inflation by paying a price that I deem reasonable You could just use dollars, euros, or yuan instead. Which is what people currently do in that situation. Or, be like the mobsters and take payment in goods like olive oil, stolen art, or drugs.
  - perl4ever 8y ago
    Issuing a $100 bill only requires about 10 cents of overhead. Mining $100 in bitcoin requires $100 of overhead because it's inherent to the hashing mechanism. This is a big difference.
walterstucco 8y ago
Diamonds are not naturally scarce nor is gold
justincormack 8y ago
You can't "store value" without trust. Value is not a thing, it is an implicit contract to exchange things over time, and requires trust that everyone will continue to adhere to the contract, ie that debts will be paid.
- gnode 8y ago
  You're right, I was wrong to say without trust. I think it would have been more apt to say trust in their integrity. Demand can of course change, but your gold won't be physically redefined by other parties. I think an interesting difference between cryptocurrencies and precious metals, is that to some extent they can be redefined by consensus of the network, or split consensus (e.g. Etherium and Etherium Classic). So I'll concede that they don't even strictly negate the need for trust in their integrity.
  - zrobotics 8y ago
    I think the bigger trust problem here is trusting that BTC will continue to have value. You have to trust that a market will continue to exist, there are plenty of cryptocurrencies that are worthless. There is no actual reason bitcoin has any value aside from market consensus, and the same could have been said about tulip bulbs at one point.
    - gnode 8y ago
      You have the same issues with gold also. Although it's very unlikely gold would lose most of its value, the price of gold throughout history has fluctuated greatly: https://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_price_in_USD.png https://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_pri... Even for assets with industrial applications, there's a risk that it may be replaced with something else, or made cheap (e.g. synthetic diamond; aluminium was a precious metal before electrolytic production; asteroid mining?). I agree with your comparison of Bitcoin to tulip bulbs. Just because Bitcoin is used as a store of value doesn't mean it's wise.
ggggtez 8y ago
https://www.investopedia.com/terms/s/scarcity.asp https://www.investopedia.com/terms/s/scarcity.asp Everything in the world is scarce (non-infinite). Just because something is scarce, does not mean it's valuable.

by gnode 8y ago

cc-d 8y ago

>Bitcoin, gold, diamond You're being dishonest if you're pretending these things are identically comparable.

deleted 8y ago
[deleted]
gnode 8y ago
I didn't suggest they were identical. Only that a limited comparison can be made about their use as a store of value.
d0lph 8y ago
They're all arbitrary stores of value whos intrinsic value is not justified by the market price?
- rtkwe 8y ago
  Only Bitcoin requires the continuous consumption of energy to continue being a useful asset though.
  - d0lph 8y ago
    Right, diamonds just cost human lives.
    - rtkwe 8y ago
      But that isn't an inherent fact of a diamond. Mining them doesn't require that people lose their lives it's a fact of shitty people. And most diamonds consumers will encounter aren't from that stream.
      - bduerst 8y ago
        Yep. Human nature is a different problem set altogether from being intentionally designed to waste electricity.
        gnode 8y ago
        > intentionally designed to waste electricity. I strongly doubt the intention was to waste electricity, more likely it was incidentally designed that way, as it's difficult to conceive how you could create such a decentralized cryptocurrency without proof-of-work (at least at the time).
    - criley2 8y ago
      "Right, diamonds just cost human lives." If we're going to play that game, where did the electricity come from for your watt-hour-sucking GPU? A coal plant? How many died mining it? How many got life long illness or injury/disability mining it? How much poverty did the abusive mining industry inflict on poor dependent communities? How many hundreds of thousands of people were affected by it's emissions? How many thousands of cases of asthma? How many deaths? If we go nuclear : Where was it mined? Who mined it? Who processed it? Where is the waste going? Are you supporting rather despotic countries depending on ore source? Etc Or the cards themselves. Where did the rare earth materials that go into graphics cards come from? Where were the graphics card parts manufactured, and where was the board assembled? Are you benefiting from near-slave labor for your cards? I mean, if we want to play that game, there's so much to examine!
      - gnode 8y ago
        > If we're going to play that game, where did the electricity come from for your watt-hour-sucking GPU? Pointing out that diamond mining is also not without externalities doesn't mean d0lph is an exponent of Bitcoin mining.
      - d0lph 8y ago
        I like nuclear, it's the obvious choice, and incredibly safe. https://en.wikipedia.org/wiki/Uranium_mining_in_the_United_States https://en.wikipedia.org/wiki/Uranium_mining_in_the_United_S... "Uranium mining in the United States produced 3,303,977 pounds (1,498,659 kg) of U3O8 (1271 tonnes of uranium) in 2015" The US. I wasn't aware there were a significant number of uranium mining deaths? I also assume the US can process it and safely dispose of the waste. No despotic countries of course. China is a tough one though, I don't know how we justify it.
        criley2 8y ago
        AFAIK the US imports 80% of its uranium used in power generation?
        d0lph 8y ago
  - gnode 8y ago
    Bitcoin doesn't intrinsically require that much power. The computation to verify transactions is a tiny fraction of that required to compete for the next block by hashing. The high hash rate is because of the high difficulty, which is itself dependent on the hash rate of the entire network. If the price of bitcoin drops, the incentive to mine decreases, and thus so does the difficulty. This is comparable to gold, as an increase in the gold price also incentivises increased mining.
    - rtkwe 8y ago
      But once extracted their energy costs are negligible (especially with gold being stored and the rights traded instead of the physical asset a lot of the time). In the case of BTC you can't really separate out the cost of mining a block from validating the transaction because until it's in a block a transaction doesn't really exist (this will get much better with lightning though). But without the constant burn of mining BTC (even post lightning) will be come useless.
      - michaelscott 8y ago
        Until it IS in a block. Then, like the storage cost of gold or any "real" material, the energy expenditure for maintenance is negligible. In fact, considering the storage requirements of something like bullion I'd argue the maintenance costs are considerably lower.
        rtkwe 8y ago
        Yes any given transaction is valid once it is in a block but without continuous mining it's still worthless because it cannot be spent without a new block being mined. And since mining has to be pretty continuous or the whole thing becomes unusable because of loooong processing times the maintenance of the whole network kind of becomes maintenance of the transactions. Even lightning would only last for a while without new blocks being mined because adding funds to your 'lightning channel' requires a transaction to be placed on the blockchain to open a channel.
  - deegles 8y ago
    Physical gold still needs to be mined, smelted, transported, and guarded. When you buy it and move it around energy is spent too. So if you really want an apples-to-apples comparison you'd have to count the energy needed to mine each oz. of gold.
    - rtkwe 8y ago
      The large majority of gold traded for bullion or investment isn't actually moved. It's just the rights to claim X tr. oz. of gold in the vault of XYZ company. Also value of my gold doesn't depend on the transport of all the gold out there so rolling those costs in at the individual level doesn't make much sense. BTC on the otherhand is useless without mining because the existence and transfer of BTC depends on the miners. Even post lightning mining is still critical to opening new channels.
      - deegles 8y ago
        The large majority of Bitcoin isn't actually moved every block either. And those systems you describe to reassign rights to gold also use energy. As block rewards fall, profit will come from transaction fees only, and only the most efficient miners (best equipment or energy access) will remain. Sure, Bitcoin uses more energy now than a database sitting on a server, but it's solving a different problem.
        rtkwe 8y ago
        It is solving a different problem but that doesn't change the fact that the whole network's mining work is required to make it work. There are some energy costs to tracking the rights of stored gold but they're vanishingly small compared to BTC. We're getting sucked down into the weeds here and losing sight of the original point which is BTC as designed requires the use of massive amount of energy to validate and secure the transaction ledger and that ledger and the things it enables is the whole value of BTC.
        perl4ever 8y ago
  - thatcat 8y ago
    The only reason anyone cares is because it's relatively easy to compute this inefficiency compared to the vast sea of inefficient products that would require signifigant effort to even approximate.
    - d0lph 8y ago
      Precisely, I'm sure there's an enormous amount of infrastructure, extraction equipment, storage, processing and reprocessing. Without the full data such a statement is vacuous.
- abritinthebay 8y ago
  None of them have intrinsic value. At least gold & diamonds are useful
  - ams6110 8y ago
    useful + scarce == intrinsic value, no?
    - abritinthebay 8y ago
      Useful is a subjective value judgement, so... no. But I get what you're saying - I'd say it's more correct to say it's valued, but not that it has intrinsic value. For example - over history gold has been mostly considered pretty, but not exactly high value. It was only through trade it became representative of value (of the goods).

joering2 8y ago

How can you put gold bar, diamond ring and string of 0/1 in the same sentence in terms of "resources wasted" ?

goldenkey 8y ago
Well for starters, if everything in the universe is computable, ie. digital physics, then they are all just configurations of information..
gnode 8y ago
Admittedly diamonds are not a good comparison, because they're not commonly used for investment and not fungible. Gold bullion is comparable insofar as it's used as a store of value, with scarcity controlled by natural limitations, rather than by policy. I'll admit that gold has some practical uses, such as in electronics, but that is not the primary market driving its trade or mining. Its use in jewellery I would say is just an extension of its use as a store of value; it is desirable because it is valuable. If we simply wanted a lustrous metal (as may have been an early factor in its adoption as a commonly traded precious metal) we now have many inexpensive ones to choose from -- aluminium, chromium, etc.

gwbas1c 8y ago

At this point, we know that Bitcoin doesn't scale to handle the volume of transactions needed for a global digital currency. Ultimately, if you own Bitcoin in hopes of the value going up, it will only go up if someone is willing to pay more for it. There's no other utilitarian use of it. This means that Bitcoin is a 0-sum game*, and a tremendous waste of resources. At least with gold mining we end up with a material that has important industrial use. 0-sum game: Meaning, in order for someone to profit with Bitcoin, someone has to take a loss.

Raidion 8y ago
I'm not a huge fan of bitcoin and have never owned more than 200 dollars worth, but that's a super weird argument to make. Of course something only goes up in value if someone is willing to pay more for it, that's true of art, cars, houses, or whatever. You could argue that a house has more utilitarian value, as you could always live there, but that completely ignores the other persons goals. A house isn't going to be much value if jobs are scarce in that area, but bitcoin would still have value in that scenario. All that energy is going to make sure you can send a large amount of value between two parties from almost anywhere in the globe with a minimum of transaction costs and a decent amount of anonymity. This also ignores the fact of risk pricing. I live in Backwatermenistan and the political stability and the currency is looking unstable. I could buy a bitcoin from someone else who has one with local currency, I lower my risk of ruin from currency inflation by paying a price that I deem reasonable, the other guy gets cash which he could use to start a business or anything else that's inside his risk tolerance. No one lost in that scenario.
- naravara 8y ago
  >I could buy a bitcoin from someone else who has one with local currency, I lower my risk of ruin from currency inflation by paying a price that I deem reasonable You could just use dollars, euros, or yuan instead. Which is what people currently do in that situation. Or, be like the mobsters and take payment in goods like olive oil, stolen art, or drugs.
- perl4ever 8y ago
  Issuing a $100 bill only requires about 10 cents of overhead. Mining $100 in bitcoin requires $100 of overhead because it's inherent to the hashing mechanism. This is a big difference.

walterstucco 8y ago

Diamonds are not naturally scarce nor is gold

justincormack 8y ago

You can't "store value" without trust. Value is not a thing, it is an implicit contract to exchange things over time, and requires trust that everyone will continue to adhere to the contract, ie that debts will be paid.

gnode 8y ago
You're right, I was wrong to say without trust. I think it would have been more apt to say trust in their integrity. Demand can of course change, but your gold won't be physically redefined by other parties. I think an interesting difference between cryptocurrencies and precious metals, is that to some extent they can be redefined by consensus of the network, or split consensus (e.g. Etherium and Etherium Classic). So I'll concede that they don't even strictly negate the need for trust in their integrity.
- zrobotics 8y ago
  I think the bigger trust problem here is trusting that BTC will continue to have value. You have to trust that a market will continue to exist, there are plenty of cryptocurrencies that are worthless. There is no actual reason bitcoin has any value aside from market consensus, and the same could have been said about tulip bulbs at one point.
  - gnode 8y ago
    You have the same issues with gold also. Although it's very unlikely gold would lose most of its value, the price of gold throughout history has fluctuated greatly: https://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_price_in_USD.png https://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_pri... Even for assets with industrial applications, there's a risk that it may be replaced with something else, or made cheap (e.g. synthetic diamond; aluminium was a precious metal before electrolytic production; asteroid mining?). I agree with your comparison of Bitcoin to tulip bulbs. Just because Bitcoin is used as a store of value doesn't mean it's wise.

ggggtez 8y ago

https://www.investopedia.com/terms/s/scarcity.asp https://www.investopedia.com/terms/s/scarcity.asp Everything in the world is scarce (non-infinite). Just because something is scarce, does not mean it's valuable.