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Traditional banks pay their electricity bill, so they naturally need to account for that. On the other hand, bitcoin network pays for that collectively. No sing
by tappio 6y ago
Traditional banks pay their electricity bill, so they naturally need to account for that. On the other hand, bitcoin network pays for that collectively. No single entity pays the bill. If a single entity had to pay for 621KWh for every transaction, I don't think that bitcoin could exists. That is the main difference here: multiple parties are doing small contribution to the energy consumption, instead of a single entity. That is the reason why bitcoin networks ecological footprint is huge compared to traditional banking per transaction.
- illustriousbear 6y agoTraditional banks are not accountable for all the electricity their services consume. One example alone is considering all the clients, pos and other systems that operate. Banks are also a very different model with different overheads compared to Bitcoin. I'd argue that banking infrastructure is quite wasteful with their physical skyscrapers and vaults. Executives at banks would argue otherwise. Bitcoin aims to disrupt financial services to some extent. A significant electricity cost shouldn't be a surprise. Does that mean it should be outlawed? I think not. If we banned every costly disruptive idea that emerged, we wouldn't get anywhere.
- tappio 6y agoOh yes. I agree, there is probably ton of waste in the entire banking sector. I just wanted to clarify why each transaction most likely costs more in blockchain compared to one transaction in the traditional network. I wonder how much energy we would consume if bitcoin would replace the whole banking sector? Back-of-an-envelope calculation: If it would be powering billion transactions per day, it would need 400 nuclear power plants to provide required energy. I don't know if we should ban bitcoin or not. I don't have any strong sentiment towards it. But if the numbers here are right, I don't think it is a viable main stream currency.
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- ogogmad 6y agoI don't think many people believe (even crypto advocates) that a large number of transactions are going to happen directly on the blockchain. There seem to be two possible futures for Bitcoin: Either most people will transact their BTC on an energy efficient network separate from the blockchain (like the Lightning network) or they will use BTC as a long-term store of value like gold*, and not use it to buy everyday things like coffee. * Of course, at the moment it's not a very good store of value because of the price volatility. But advocates argue that these are just growing pains.
- vincnetas 6y agoBut if you calculated energy expenses per transaction or per customer, i think that classic banking would look very efficient compared to bitcoin.
- illustriousbear 6y agoPerhaps but bartering grain and fruit at the local market is probably more efficient than traditional banking too.
- dosenbrot 6y agoThe only thing is, with Bitcoin we have the numbers. The classic banking system look like a few thousend banks with thousends of buildings with hundreds of thousend computers and million of emloyees. The employees again need to eat, sleep, drive around. They have money that needs to be designed, to be printed, to be distributed. All this cost ressources too, but this really hard to put in numbers.
- deschutes 6y agoBitcoin has the energy consumption of small nations. Banking is one of the many things that can be self contained in the energy budget of a small nation. On the other hand, bitcoin's transaction throughput would constrain my neighborhood's commerce at lunch. That is to say, traditional banks are doing a whole lot more to facilitate actual commerce. It would seem to me that the efficiency gap is insurmountably large.
- imtringued 6y agoThe amount of value that the financial industry provides is multiple orders of magnitude greater. The market cap of bitcoin is a joke compared to gold and gold is an insignificant percentage of all financial services.