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The entire point of Bitcoin is that you irreversibly give up something you value in exchange for creating a Bitcoin in return. The Bitcoin now stands for that
by SI_Rob 6y ago
The entire point of Bitcoin is that you irreversibly give up something you value in exchange for creating a Bitcoin in return.
The Bitcoin now stands for that lost value, and there is now a corresponding psychological motive to replace the valuable thing that was lost (electricity, and all that goes with it including environmental impact) by mentally investing that loss in the Bitcoin token. So you protect it, you support the network that it exists within, you talk it up to your social circle, you do everything you can to make it as valuable to others as it is to you. All of these activities also take time and resources, aggravating the impact of the original loss commitment. You do this because someday you want to give it to someone else, whom you've convinced of its worth, in order for them give you back the value you lost by creating it.
There is no "environmental mitigation" for Bitcoin's energy use, this behavior (or a permutation of it in term of other forms of irreversibly burned value, like time* ) is an essential property of cryptocurrency, without which it would cease to exist.
Disclaimer I hold Bitcoin, not because I think it is a new form of money or "decentralized" in any way that matters (quite the opposite in fact), but because it is possibly the most clever and subtle ruse to access the gambling instinct in a demographic whose constituents commonly believe themselves to be "above" playing the lottery or falling for Ponzi schemes. Yes, the irony is not lost on me. Still, this is a huge untapped market.
* also a bit of a dodge as IIRC POS still requires keeping a machine running even if it's not dedicating all cycles to the staking algo. Anything that "recovers value" from the process of "burning value" defeats the entire purpose of burning value to create psychological motivation to mentally allocate it to the token it replaces.
Which, incidentally, is why you won't see much growth from cryptos that try to do something "useful" (like fold proteins) while also standing as a counter for burned value. If running the algo is more useful for A, because A is in a position to monetize the work outside the currency being created, than it is for B, who can't use the data or results from the work algo, why would B prefer to support that crypto over another whose work algo is equally useless for all?
- jariel 6y ago"There is no "environmental mitigation" for Bitcoin's energy use, this behavior ... is an essential property of cryptocurrency, without which it would cease to exist." This is based on the false premise that energy, or anything else needs to be given up in exchange for crypto, or any other form of currency. We could create a zillion cryptos out of thin air and just hand them out. That's one way to do it. Central banks do it another way. The 'energy' thing is just nonsense, it's just something that happens to be baked into this specific form of BTC generation.
- keymone 6y agoGo create me a zillion of bitcoin and let’s see how much energy it’ll take.
- jariel 6y agoYou are missing my point, which is, there's no material reason to 'use energy' to 'create currency' of any kind. It's just a peculiarity of bitcoin and the way some cryptos are generated. There is no theoretical generalization to the notion of energy->currency so the OPs premise of energy->value doesn't make any practical sense ... other than for BTC.
- keymone 6y agoNo, I think you are missing the point. It’s not the need to use energy, it’s a security feature that you can’t create it without using energy. It’s defense mechanism against debasement. Gold has that mechanism by being a rare metal - there’s only so much of it in our vicinity. Bitcoin gets that mechanism from universal law of physics - you can’t create energy from nothing.
- jariel 6y agoNo, again, you're confusing the issue. The 'security feature' of BTC, which happens to be related to energy has nothing to do with currency, or necessarily even crypto-currenices in the general sense. The OP was trying to imply some kind of theoretical implication between 'energy used + value creation' (and you're also tying that to energy 'secure' usage). Yes - we know BTC is 'tied to energy' - but that's irrelevant in the bigger picture, it's a specific feature of BTC - it's not a 'fundamental' problem. There are myriad ways if distributing currency, even 'security' that don't involve arbitrary amounts of energy usage. BTC/Crypto is kind of infuriating space of very smart technical people who have almost no financial knowledge 'discover' what they think of as new, but in reality, most of this has been known since the dawn of classical economics. BTC is a novel thing, that's about it.
- intotheabyss 6y agoI mean, I can make the same argument for any tech stock shares. All they give me is "governance rights" but at the end of the day, I'm trying to convince the next guy that TSLA is worth 500B in marketcap and that the TSLA stock will capture that value... somehow.
- SI_Rob 6y agoSure, I mean it is increasingly apparent that Bitcoin has, as they say these days, "said the quiet part out loud" with respect to what kinds of motives really drive the stock market, and what signals its participants actually respond to. "Gainz" are swallowing "value" everywhere. Doesn't hurt that the crypto casino is open 24/7 as well. The difference with stocks, however, is that stocks don't make a big show of pretending to be decentralized. Everyone knows and acknowledges that a relative handful of well-connected actors have enough leverage to wash everyone else out of TSLA if they so chose, but for the Bitcoin cultists it's anathema to even suggest the same inexorably centralizing forces are at work. A lot of collective effort is spent on propping up the "decentralization" meme (and its accomplice, the "anonymity" meme), effort which ironically makes the proponents value their Bitcoin all the more; they want to realize a return on that work.