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When people realize that Bitcoin mining is a mechanism to prevent fraud, the energy consumption suddenly makes a lot more sense. How much waste in the world is

by 127 8y ago

When people realize that Bitcoin mining is a mechanism to prevent fraud, the energy consumption suddenly makes a lot more sense. How much waste in the world is the result of fraud and lack of trust? Quite a lot of it. That said, reducing the energy consumption of Bitcoin should be an absolute priority. Lightning Network and other such technologies help.

jayd16 8y ago
It doesn't really prevent fraud that isn't already a solved problem. When was the last time you had to deal with wire transfer fraud? If you buy counterfeit goods with bitcoin there's not much you can do. A credit card protects you from fraud over $50. What exactly is this bitcoin waste getting us?
- jraedisch 8y ago
  I would not call it preventing fraud, rather simplifying global money supply and making it more transparent, which in turn could prevent fraud due to smaller attack surface and more eyeballs.
  - jayd16 8y ago
    But this is just a pipe dream. You would just have fraud hidden away in Swiss bitcoin accounts and wallets in the Cayman islands. Isn't it just less privacy for the naive user and business as usual for the fraudster?
    - jraedisch 8y ago
      You are correct in that money can and will still be used for fraudulent activity. But the system itself (so far) could not be corrupted. So there is a class of systemic manipulation, that becomes a lot harder with Bitcoin (e.g. inflating money supply).
      - jayd16 8y ago
        In theory, but in practice it seems easily manipulated.
- sekai 8y ago
  It's getting us most secure decentralized network, which allows monetary exchange and storage for anyone and everyone.
- sharperguy 8y ago
  What it really gets us is a certain level of resistance against political interference. Using a simple electronic cash system is a million times more efficient, but the currency can be inflated and balances frozen by decree. Increasingly powers are being given to law enforcers to perform these actions without oversight. As the political landscape worsens, bitcoin and similar technologies will begin to be used more, regardless of environmental concerns. The best way to avoid this would be to improve the political landscape with regards to money transmission/storage, which would be no simple task.
- rellui 8y ago
  I feel like most people think credit cards are free. They are not, which is why visa and MC are billion dollar companies. The cost has just been shifted in such a way that it's not easily identifiable so people ignore it. There's definitely a cost. If the Bitcoin network can offer a lower overall cost, it could provide actual benefits.
- Shorel 8y ago
  Bitcoin is the first ever distributed ledger, that can store and publish transaction information for a number of adversarial parties. All other systems are centralized, only work without adversarial parties or both. This means Bitcoin doesn't need central banks. It doesn't need reporting transactions over 10k to some central governing entity. You can memorize a list of words that the cops can't seize in a random search from your car. It gives some freedoms to people. However, the hash difficulty/energy consumption problem is a serious issue and many people in the community are investigating alternatives for it. Also, take into account that the energy consumption is related to the hash calculation power available in a given moment, not to the number of transactions performed. This also means that Bitcoin mining will consume the same amount of power even if no new transactions are being done between the owners of Bitcoin wallets. If there's a way to make a distributed ledger that can store and publish transaction information for a number of adversarial parties without consuming the energy of an African country, I am confident someone will find it. Many alt-coins are experiments on that regard, using several different algorithms and ideas. However, this is still an open problem and I don't know any timeline about when it can be resolved.
rocqua 8y ago
If it would 'prevent fraud' it should be possible to e.g. retrieve stolen funds. Instead, it is a mechanism to ensure money is only spent once. Cash solves this rather cheaply (because it is physical). Electronic money does it a lot more efficiently that bitcoin. Perhaps the power usage of all banks is higher than bitcoin, but power per transaction is a lot better.

by 127 8y ago

jayd16 8y ago

It doesn't really prevent fraud that isn't already a solved problem. When was the last time you had to deal with wire transfer fraud? If you buy counterfeit goods with bitcoin there's not much you can do. A credit card protects you from fraud over $50. What exactly is this bitcoin waste getting us?

jraedisch 8y ago
I would not call it preventing fraud, rather simplifying global money supply and making it more transparent, which in turn could prevent fraud due to smaller attack surface and more eyeballs.
- jayd16 8y ago
  But this is just a pipe dream. You would just have fraud hidden away in Swiss bitcoin accounts and wallets in the Cayman islands. Isn't it just less privacy for the naive user and business as usual for the fraudster?
  - jraedisch 8y ago
    You are correct in that money can and will still be used for fraudulent activity. But the system itself (so far) could not be corrupted. So there is a class of systemic manipulation, that becomes a lot harder with Bitcoin (e.g. inflating money supply).
    - jayd16 8y ago
      In theory, but in practice it seems easily manipulated.
sekai 8y ago
It's getting us most secure decentralized network, which allows monetary exchange and storage for anyone and everyone.
sharperguy 8y ago
What it really gets us is a certain level of resistance against political interference. Using a simple electronic cash system is a million times more efficient, but the currency can be inflated and balances frozen by decree. Increasingly powers are being given to law enforcers to perform these actions without oversight. As the political landscape worsens, bitcoin and similar technologies will begin to be used more, regardless of environmental concerns. The best way to avoid this would be to improve the political landscape with regards to money transmission/storage, which would be no simple task.
rellui 8y ago
I feel like most people think credit cards are free. They are not, which is why visa and MC are billion dollar companies. The cost has just been shifted in such a way that it's not easily identifiable so people ignore it. There's definitely a cost. If the Bitcoin network can offer a lower overall cost, it could provide actual benefits.
Shorel 8y ago
Bitcoin is the first ever distributed ledger, that can store and publish transaction information for a number of adversarial parties. All other systems are centralized, only work without adversarial parties or both. This means Bitcoin doesn't need central banks. It doesn't need reporting transactions over 10k to some central governing entity. You can memorize a list of words that the cops can't seize in a random search from your car. It gives some freedoms to people. However, the hash difficulty/energy consumption problem is a serious issue and many people in the community are investigating alternatives for it. Also, take into account that the energy consumption is related to the hash calculation power available in a given moment, not to the number of transactions performed. This also means that Bitcoin mining will consume the same amount of power even if no new transactions are being done between the owners of Bitcoin wallets. If there's a way to make a distributed ledger that can store and publish transaction information for a number of adversarial parties without consuming the energy of an African country, I am confident someone will find it. Many alt-coins are experiments on that regard, using several different algorithms and ideas. However, this is still an open problem and I don't know any timeline about when it can be resolved.

rocqua 8y ago

If it would 'prevent fraud' it should be possible to e.g. retrieve stolen funds. Instead, it is a mechanism to ensure money is only spent once. Cash solves this rather cheaply (because it is physical). Electronic money does it a lot more efficiently that bitcoin. Perhaps the power usage of all banks is higher than bitcoin, but power per transaction is a lot better.