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The counterpoint to this I'll make is that all financial systems engage in costly signaling. If you visit a foreign country how do you know to trust whether to
by dcolkitt 6y ago
The counterpoint to this I'll make is that all financial systems engage in costly signaling.
If you visit a foreign country how do you know to trust whether to trust a specific bank? You probably look at cues like whether it occupies an expensive skyscraper in the center of town? Do you see its ads around town? Does it sponsor the local soccer team? All credible signals that are hard to fake for a fly-by-night scammer.
All Bitcoin did was formalize this process. At any given time there are many chains that all purport to be the canonical history. How do you decide which one is authentic? By looking at hard-to-fake signals. In this case the accumulated hashing power behind the chain. Looking for whoever spent the most hash work is fundamentally no different than checking to see which bankers are wearing the most expensive suits.
Any system with trusted intermediaries will waste resources on costly signaling. The only question is whether crypto mining is more of a fundamental waste than traditional signals, like high-paid bankers and prestige real estate.
- wonnage 6y agoa building has actual value as opposed to bitcoin simply contributing to the eventual heat death of the universe
- eeZah7Ux 6y agoNot to mention the employees being able to pay rent and so on.
- throwaway7281 6y agoI don't know. I see the nice HSBC building in my city and all I can think of is that half of the business of theirs is crooked, money laundry, trafficking, drug cartels. No shiny building can change what you actually do.
- pmiller2 6y agoDoes that mean I shouldn't trust the credit union I go to because my favorite branch is in a shopping center?
- hwillis 6y ago> The counterpoint to this I'll make is that all financial systems engage in costly signaling. Bitcoin uses 600+ kWh per transaction currently. With current use, to process VISA's 1700 transactions per second would consume >36 PWh annually. That's significantly higher than global electricity consumption and capacity. At current US electricity prices it would be significantly over 4.5 trillion USD annually. Global annual banking revenue is under 6 trillion: https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review https://www.mckinsey.com/industries/financial-services/our-i... > The only question is whether crypto mining is more of a fundamental waste than traditional signals, like high-paid bankers and prestige real estate. The answer is yes. Incredibly higher.
- deleted 6y ago[deleted]
- hollerith 6y agoYou are assuming that power used by the network is directly proportional to the rate of transactions processed. I doubt that is a sound assumption. For example miners use energy to compete for the mining reward which is awarded every ten minutes. I can think of many ways of modifying the network to increase the rate at which transactions can be processed that do not increase this mining reward. (I do not understand why none of those ways have been adopted.) One of the primary reasons that reward is not lower is probably because the amount was set when Bitcoin was created, and people worry that changing it would set a precedent making other changes easier.
- hwillis 6y agoThe amount of work is what keeps transactions secure. The difficulty of computation is directly proportional, but the power usage depends on the demand for mining. Lighting attempts to decrease this load by effectively batching transactions, but its not a huge difference compared to the orders of magnitude differences that exist already.