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Those intermediaries can be moderately to very expensive. Look at how much value credit-card interchange skims. Blockchains offer a technological solution to a

Those intermediaries can be moderately to very expensive. Look at how much value credit-card interchange skims. Blockchains offer a technological solution to a social problem- and threaten many "trusted brokers" with replacement with near-zero marginal cost software.

arcticbull 6y ago
The fact that a single Bitcoin transaction requires 561kWh of power (enough to power an average US household for 19 days) -- and produces 94g of e-waste -- means that classical intermediaries are a lot less expensive in the majority of cases. [1] Using the world average of $0.14/kWh means that a Bitcoin payment costs (or rather extracts in welfare) $79. This fee is socialized across all users in the form of block rewards, and as they diminish, end-users will have to bear the whole cost or the hash rate will drop off precipitously eliminating the security guarantees. This is on top of the $3.392 fee for processing the transaction on-chain. At a break-even of $82.39 per BTC payment, a credit card transaction would have to be at least $27,500 in Europe (based on their 0.3% interchange cap) and $4,551 in the US (based on the average interchange rate of 1.81%). ACH payments cost banks $0.11 US. Trusted brokers aren't going anywhere, and IMO, there's no such thing as a technological solution to a social problem. [1] https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/
- AbrahamParangi 6y ago
  These things are true at present but are they true in the limit? Bitcoin is the first blockchain technology to see adoption and has a present market cap of over $200B despite scaling incredibly poorly. Trusted brokers won't disappear but there's a big difference between being the only game in town and filling a niche in an ecosystem. Technology makes social solutions irrelevant all the time. How many interactions intermediated by people no longer exist because they are now intermediated by software and platforms?
  - arcticbull 6y ago
    We've had 11 years of innovation in blockchain technology and so far, nothing has improved on the status quo. 11 years ago was right around when the first iPhone came out, for reference. In my opinion, that's because you can't solve trust with magic pixie dust. No matter what, trust represents a huge optimization. That means anything you try and do to reduce trust will introduce massive quantities of friction. Trust is good and should be embraced. If something better comes along, great, but I've seen no evidence in the last 11 years that would indicate anything's at risk of coming down the pike. I've got no interest in championing a technology that hasn't budged a single iota (heh) in 11 years. If it does, I'll eat my... well. You get the joke. [edit] note that market cap doesn't mean anything for a currency. There's no market cap of US dollars, because dollars have a fixed value relative to dollars. If I exchange my dollar for a dollar, the market cap of dollars is equal to the number of dollars in circulation. End of story. You value other things relative to currency to obtain their market cap. The market cap of BTC is 21MM BTC. Less, given the huge quantities that go missing all the time.
    - cma 6y ago
      Proof of stake vs proof of work?
  - ChrisLomont 6y ago
    > These things are true at present but are they true in the limit? In the limit no more BTC can be obtained by mining, so transactions will be more expensive, because the computational cost will have to paid for by the transactor. And the computation required will be much larger than now, requiring more energy, and, given the end of Moore’s law, will likely be vastly more expensive. It is doomed to fail.
    - naveen99 6y ago
      It may be doomed to fail, but it might be useful until it’s failed by something better. And that may be a long time.
      - 6y ago
- gjs278 6y ago
  your numbers are complete nonsense. the electricity they are using to mine is way less expensive. it’s not like the chinese hydro dam electricity can be sent to kansas, using the average is pointless.

arcticbull 6y ago

The fact that a single Bitcoin transaction requires 561kWh of power (enough to power an average US household for 19 days) -- and produces 94g of e-waste -- means that classical intermediaries are a lot less expensive in the majority of cases. [1] Using the world average of $0.14/kWh means that a Bitcoin payment costs (or rather extracts in welfare) $79. This fee is socialized across all users in the form of block rewards, and as they diminish, end-users will have to bear the whole cost or the hash rate will drop off precipitously eliminating the security guarantees. This is on top of the $3.392 fee for processing the transaction on-chain. At a break-even of $82.39 per BTC payment, a credit card transaction would have to be at least $27,500 in Europe (based on their 0.3% interchange cap) and $4,551 in the US (based on the average interchange rate of 1.81%). ACH payments cost banks $0.11 US. Trusted brokers aren't going anywhere, and IMO, there's no such thing as a technological solution to a social problem. [1] https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/

AbrahamParangi 6y ago
These things are true at present but are they true in the limit? Bitcoin is the first blockchain technology to see adoption and has a present market cap of over $200B despite scaling incredibly poorly. Trusted brokers won't disappear but there's a big difference between being the only game in town and filling a niche in an ecosystem. Technology makes social solutions irrelevant all the time. How many interactions intermediated by people no longer exist because they are now intermediated by software and platforms?
- arcticbull 6y ago
  We've had 11 years of innovation in blockchain technology and so far, nothing has improved on the status quo. 11 years ago was right around when the first iPhone came out, for reference. In my opinion, that's because you can't solve trust with magic pixie dust. No matter what, trust represents a huge optimization. That means anything you try and do to reduce trust will introduce massive quantities of friction. Trust is good and should be embraced. If something better comes along, great, but I've seen no evidence in the last 11 years that would indicate anything's at risk of coming down the pike. I've got no interest in championing a technology that hasn't budged a single iota (heh) in 11 years. If it does, I'll eat my... well. You get the joke. [edit] note that market cap doesn't mean anything for a currency. There's no market cap of US dollars, because dollars have a fixed value relative to dollars. If I exchange my dollar for a dollar, the market cap of dollars is equal to the number of dollars in circulation. End of story. You value other things relative to currency to obtain their market cap. The market cap of BTC is 21MM BTC. Less, given the huge quantities that go missing all the time.
  - cma 6y ago
    Proof of stake vs proof of work?
- ChrisLomont 6y ago
  > These things are true at present but are they true in the limit? In the limit no more BTC can be obtained by mining, so transactions will be more expensive, because the computational cost will have to paid for by the transactor. And the computation required will be much larger than now, requiring more energy, and, given the end of Moore’s law, will likely be vastly more expensive. It is doomed to fail.
  - naveen99 6y ago
    It may be doomed to fail, but it might be useful until it’s failed by something better. And that may be a long time.
    - 6y ago
gjs278 6y ago
your numbers are complete nonsense. the electricity they are using to mine is way less expensive. it’s not like the chinese hydro dam electricity can be sent to kansas, using the average is pointless.