7 ms·

The usefulness of cryptocurrency is not abstract: cryptocurrencies are useful for sending value over the internet and over international borders. Doing so witho

by mjfl 8y ago

The usefulness of cryptocurrency is not abstract: cryptocurrencies are useful for sending value over the internet and over international borders. Doing so without cryptocurrencies is very difficult and costly, requires large banks and multinational law firms.

rullelito 8y ago
Are you counting electricity or fees? Both are higher for cryptos of what I can remember.
- mjfl 8y ago
  I don't know how to quantify the electricity/carbon use of large banks and multinational law firms, but it probably isn't small? The current "safelow" gas price on Ethereum is 2.6 gWei, or $0.016. https://ethgasstation.info/ https://ethgasstation.info/ Stripe/Paypal both charge more than $0.30, or 15-30 times more.
  - village-idiot 8y ago
    Best estimates are that Bitcoin consumes a ton of power, more than Ireland or Israel at this point. Current estimates, and estimating this stuff is very hard, but the range we're looking at is in the 56-73TWh per year. Handily enough, we know exactly how much electricity Visa used in 2017, and it's about 0.19TWh[0]. Now obviously Visa alone isn't the end of the financial system, bank branches, payment processors, and other actors are involved. Personally, I highly doubt that they add up to another 55-72TWh, but if you can prove that, be my guest. Of course, at this point we're also missing a very important factor: transaction volume. Comparing financial systems in terms of total energy usage is very misleading, a far better way is to measure energy per transaction. And this is the point where it really falls apart for Bitcoin. As of today, bitcoin is averaging about 180,000 transactions a day. That's about 100 seconds of Visa's average volume[1]. Comparing fees is a terrible way to measure transaction cost in terms of kWh. First of all, Stripe and Paypal employ a lot of people, and people are quite expensive. Second, bitcoin miners are being compensated by the expected rewards of finding a block (or participating in a pool that finds one). This means that the transaction fee and the amount of electricity used simply may not be related at all, since the fee might drop below the electricity cost so long as the expected reward is bigger still. 0. https://usa.visa.com/dam/VCOM/download/corporate-responsibility/visa-2017-corporate-responsibility-report.pdf https://usa.visa.com/dam/VCOM/download/corporate-responsibil... 1. 150,000,000 transactions per day[2] / 86400 2. https://usa.visa.com/run-your-business/small-business-tools/retail.html https://usa.visa.com/run-your-business/small-business-tools/.... Theoretical (and heavily advertised) capacity is 24k, but a more prosaic 1.8k/s is more in line with a typical daily load.
madeofpalk 8y ago
As companies like Transferwise have proven, this does not need Bitcoin. Hell, my bank even has direct integration with Transferwise so I can send money back home to Australia instantly for next to free right within my iPhone app
- mrisoli 8y ago
  Well one of the selling points of Bitcoin is that this could be done in a decentralized way. I know decentralization is not a huge selling point for most people who just want to do things instantly from within their phones, I myself have little usage for it, but there has been a time where Transferwise halted BRL transfer due to currency being unstable, if I relied solely on TW for my transfers this could be a huge problem for me, one that(in theory) happens because it's a decision of a centralized entity.
skybrian 8y ago
I don't know how you define "very difficult" but plenty of immigrants are transferring money to their families and they don't seem to be using cryptocurrency. Western Union and similar firms seem pretty popular? This appears to be a well-developed industry with a fair amount of competition: https://www.nerdwallet.com/blog/banking/best-ways-to-wire-money-internationally/ https://www.nerdwallet.com/blog/banking/best-ways-to-wire-mo...
- themagician 8y ago
  It’s difficult for criminal transactions. There are tons of banking solutions in every country for transferring money. But they typically have low limits and require appropriate documentation.
  - mjfl 8y ago
    It’s difficult for non-personal transactions in general. If you have a business that delivers some digital product, it is very difficult to serve an international client base without running afoul of anti money laundering compliance issues at banks and such. Cryptocurrencies can get around that. And I’m not saying there isn’t good reason for those rules for being there, but that they are stagnant and good candidates for “disruption” provided the attempts are made in good faith.
    - TheSpiceIsLife 8y ago
      > very difficult How can this be? I’ve purchased many digital products from business outside my country of residence. I usually use PayPal or Visa / MasterCard.
      - mjfl 8y ago
        But you didn’t set up the business. Whatever business was behind the transaction either had or hired a transaction processor with a legal team experienced with international payments like Stripe or PayPal. And in general, they are doing something that’s very difficult.

by mjfl 8y ago

rullelito 8y ago

Are you counting electricity or fees? Both are higher for cryptos of what I can remember.

mjfl 8y ago
I don't know how to quantify the electricity/carbon use of large banks and multinational law firms, but it probably isn't small? The current "safelow" gas price on Ethereum is 2.6 gWei, or $0.016. https://ethgasstation.info/ https://ethgasstation.info/ Stripe/Paypal both charge more than $0.30, or 15-30 times more.
- village-idiot 8y ago
  Best estimates are that Bitcoin consumes a ton of power, more than Ireland or Israel at this point. Current estimates, and estimating this stuff is very hard, but the range we're looking at is in the 56-73TWh per year. Handily enough, we know exactly how much electricity Visa used in 2017, and it's about 0.19TWh[0]. Now obviously Visa alone isn't the end of the financial system, bank branches, payment processors, and other actors are involved. Personally, I highly doubt that they add up to another 55-72TWh, but if you can prove that, be my guest. Of course, at this point we're also missing a very important factor: transaction volume. Comparing financial systems in terms of total energy usage is very misleading, a far better way is to measure energy per transaction. And this is the point where it really falls apart for Bitcoin. As of today, bitcoin is averaging about 180,000 transactions a day. That's about 100 seconds of Visa's average volume[1]. Comparing fees is a terrible way to measure transaction cost in terms of kWh. First of all, Stripe and Paypal employ a lot of people, and people are quite expensive. Second, bitcoin miners are being compensated by the expected rewards of finding a block (or participating in a pool that finds one). This means that the transaction fee and the amount of electricity used simply may not be related at all, since the fee might drop below the electricity cost so long as the expected reward is bigger still. 0. https://usa.visa.com/dam/VCOM/download/corporate-responsibility/visa-2017-corporate-responsibility-report.pdf https://usa.visa.com/dam/VCOM/download/corporate-responsibil... 1. 150,000,000 transactions per day[2] / 86400 2. https://usa.visa.com/run-your-business/small-business-tools/retail.html https://usa.visa.com/run-your-business/small-business-tools/.... Theoretical (and heavily advertised) capacity is 24k, but a more prosaic 1.8k/s is more in line with a typical daily load.

madeofpalk 8y ago

As companies like Transferwise have proven, this does not need Bitcoin. Hell, my bank even has direct integration with Transferwise so I can send money back home to Australia instantly for next to free right within my iPhone app

mrisoli 8y ago
Well one of the selling points of Bitcoin is that this could be done in a decentralized way. I know decentralization is not a huge selling point for most people who just want to do things instantly from within their phones, I myself have little usage for it, but there has been a time where Transferwise halted BRL transfer due to currency being unstable, if I relied solely on TW for my transfers this could be a huge problem for me, one that(in theory) happens because it's a decision of a centralized entity.

skybrian 8y ago

I don't know how you define "very difficult" but plenty of immigrants are transferring money to their families and they don't seem to be using cryptocurrency. Western Union and similar firms seem pretty popular? This appears to be a well-developed industry with a fair amount of competition: https://www.nerdwallet.com/blog/banking/best-ways-to-wire-money-internationally/ https://www.nerdwallet.com/blog/banking/best-ways-to-wire-mo...

themagician 8y ago
It’s difficult for criminal transactions. There are tons of banking solutions in every country for transferring money. But they typically have low limits and require appropriate documentation.
- mjfl 8y ago
  It’s difficult for non-personal transactions in general. If you have a business that delivers some digital product, it is very difficult to serve an international client base without running afoul of anti money laundering compliance issues at banks and such. Cryptocurrencies can get around that. And I’m not saying there isn’t good reason for those rules for being there, but that they are stagnant and good candidates for “disruption” provided the attempts are made in good faith.
  - TheSpiceIsLife 8y ago
    > very difficult How can this be? I’ve purchased many digital products from business outside my country of residence. I usually use PayPal or Visa / MasterCard.
    - mjfl 8y ago
      But you didn’t set up the business. Whatever business was behind the transaction either had or hired a transaction processor with a legal team experienced with international payments like Stripe or PayPal. And in general, they are doing something that’s very difficult.