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> the work put into the network is exactly the scarce asset that is being invested in. No! No it isn't! Gah! I'm sorry but it is so frustrating to hear this no

> the work put into the network is exactly the scarce asset that is being invested in. No! No it isn't! Gah! I'm sorry but it is so frustrating to hear this nonsense repeated over and over. Bitcoin is not valuable just because you wasted shedloads of energy to make a bitcoin! It's valuable because somebody else will exchange something of value for it. It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. [0] https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_theory_of_value [1] https://en.wikipedia.org/wiki/Red_Queen%27s_race https://en.wikipedia.org/wiki/Red_Queen%27s_race

Melting_Harps 6y ago
> It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. What's also maddening is how subjective the term 'value' has on it's intended usecase that some can be so completely oblviius to make coax it into a specific farmework: cocoa beans and shells were also equally valuable to it's respective communities, but your forcing of modernity to this matter is equally marred by illogical and quite frankly lazy conclusions. Bitcoin (lower case b, as in the token) does require a great deal of hashing power, but this model, proof of work, is what is required to ensure Bitcoin's immutability (the network capital B). And that is the cost of such a system which, if you aren't aware, is mainly operating on renewable energy [0]. That is just the cost of entry if you want to incentivize keep everyone honest and play by the rules, the fiat World is littered with countless stories of failed currencies and failed societies and cultures because man's inherit nature: greed and corruption. 0: https://bitcoinmagazine.com/articles/study-74-percent-of-bitcoin-mining-powered-with-renewable-energy https://bitcoinmagazine.com/articles/study-74-percent-of-bit...
CryptoUnchained 6y ago
I disagree, sunk cost fallacy and just plain miners needing to ROI their equipment, facilities, and energy costs sets a base psychological minimum price that is rising every year as the hash rises. Now that we've hit a wall at the 5nm process it's anyone's guess what kind of effect that will have on new entrants. I imagine China will take an even larger slice of the pie as energy costs will be the main deciding factor of profitability.
CryptoUnchained 6y ago
The reason Proof of work is set apart from its POS clones is because the inflation/emission brought to market every day has real costs to obtain... Fiat being printed cost 1% of its nominal value to create, which is devaluing every single dollar already in existence, POW psychologically adds more value to existing coins, because each new coin cost even more to mine than the one before it.
deleted 6y ago
[deleted]
heckerhut 6y ago
Your reasoning is purely tautological and contains no actual explanation. Wondering why cannot see that yourself.
- cecja 6y ago
  The funny thing with people like you is even if they are proven wrong they are still "believing".
cuillevel3 6y ago
Scarcity is the important thing here. Making Bitcoin hard to compute increases their scarcity. The amount of work that was put in, does not directly drive the price. The point of "Marxist" labor theory, is that you shouldn't pay workers less, than the value of what they produce. I don't think Bitcoin miners ever made that claim, unionized and found their class consciousness to get paid the real value...
mckirk 6y ago
But why are people willing to exchange something of value for it? Because they can trust in it serving as a secure way to transfer tokens of ownership. And that is only possible thanks to the PoW computations, which have to be expensive enough that attacking the system would be more costly than the value you could extract through an attack. So, in a sense its value indeed derives directly from the work put into the system. Which is not to say there aren't alternatives (I'm really curious how Proof of Stake will change the Crypto landscape), but at least for BTC, that's how it is currently.
- jonhendry18 6y ago
  Doesn't sound like it's worth torching the only inhabitable planet for.
  - inter_netuser 6y ago
    It also happens to be a huge incentive for clean nuclear power. I'm sure you don't want that though, because solar+batteries will power interplanetary civilizations somehow.
    - tsimionescu 6y ago
      It's a huge incentive for more power, not for any particular kind of energy. In fact, the value of BTC is actually putting a floor on how efficient it is to close down a fossil-fuel plant.
  - mckirk 6y ago
    I see PoW more as a stepping stone to bootstrap a crypto currency, and I think it might just go away over time. Ethereum has done it this way: First you build a stable blockchain, secured through tremendous amounts of power. Then, once your system has been widely adopted and people have "skin in the game", you switch to Proof of Stake to minimize power consumption while still maintaining security. PoS is the better solution, environmentally speaking, but it necessarily depends on there already being value in the system that people can be held accountable with and thus kept honest. But to reach that state, people have to trust your system first, and if you're not an already trusted entity, PoW is one way of achieving that initial phase of trust building.
midjji 6y ago
The value lies not in the energy but in its utility to facilitate transfers without the expressed permission of some authority. The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste.
- fakedang 6y ago
  Some authority could just demand your bitcoin on some gimmicky pretext (USA) or draft laws largely stymying its use (China). Also I've yet to find a reason to transfer $30k in one go for any reason - I've yet to fall victim to some kidnapper or blackmailer who wants cash by the evening without raising any alarms on my part.
- ForHackernews 6y ago
  The energy is a pure waste. The "difficulty" of bitcoin blocks is continually increasing but the utility of being able to transact in bitcoin is not greater today than it was in 2015 (arguably less, since fewer merchants will sell goods in bitcoin)
- tsimionescu 6y ago
  > The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste. This would be somewhat true if Bitcoin were the only mechanism for trustless transactions, but there are others that consume far less energy, such as https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala.
  - jasdine817 6y ago
    In what way is Hawala trustless?
    - tsimionescu 6y ago
      Oops, you're absolutely right, I was thinking of distributed payments and somehow confused that in my head with being trustless...
inter_netuser 6y ago
It's valuable because of unforgeable costliness. And to make it difficult to forge transactions it asks you provably(!) burn some electricity.
- tsimionescu 6y ago
  No, it's valuable because people trust that others will buy it. That trust is somewhat motivated by Satoshi's protocol, but it is much more motivated by simply seeing that others trust it.

Melting_Harps 6y ago

> It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. What's also maddening is how subjective the term 'value' has on it's intended usecase that some can be so completely oblviius to make coax it into a specific farmework: cocoa beans and shells were also equally valuable to it's respective communities, but your forcing of modernity to this matter is equally marred by illogical and quite frankly lazy conclusions. Bitcoin (lower case b, as in the token) does require a great deal of hashing power, but this model, proof of work, is what is required to ensure Bitcoin's immutability (the network capital B). And that is the cost of such a system which, if you aren't aware, is mainly operating on renewable energy [0]. That is just the cost of entry if you want to incentivize keep everyone honest and play by the rules, the fiat World is littered with countless stories of failed currencies and failed societies and cultures because man's inherit nature: greed and corruption. 0: https://bitcoinmagazine.com/articles/study-74-percent-of-bitcoin-mining-powered-with-renewable-energy https://bitcoinmagazine.com/articles/study-74-percent-of-bit...

CryptoUnchained 6y ago

I disagree, sunk cost fallacy and just plain miners needing to ROI their equipment, facilities, and energy costs sets a base psychological minimum price that is rising every year as the hash rises. Now that we've hit a wall at the 5nm process it's anyone's guess what kind of effect that will have on new entrants. I imagine China will take an even larger slice of the pie as energy costs will be the main deciding factor of profitability.

CryptoUnchained 6y ago

The reason Proof of work is set apart from its POS clones is because the inflation/emission brought to market every day has real costs to obtain... Fiat being printed cost 1% of its nominal value to create, which is devaluing every single dollar already in existence, POW psychologically adds more value to existing coins, because each new coin cost even more to mine than the one before it.

deleted 6y ago

[deleted]

heckerhut 6y ago

Your reasoning is purely tautological and contains no actual explanation. Wondering why cannot see that yourself.

cecja 6y ago
The funny thing with people like you is even if they are proven wrong they are still "believing".

cuillevel3 6y ago

Scarcity is the important thing here. Making Bitcoin hard to compute increases their scarcity. The amount of work that was put in, does not directly drive the price. The point of "Marxist" labor theory, is that you shouldn't pay workers less, than the value of what they produce. I don't think Bitcoin miners ever made that claim, unionized and found their class consciousness to get paid the real value...

mckirk 6y ago

But why are people willing to exchange something of value for it? Because they can trust in it serving as a secure way to transfer tokens of ownership. And that is only possible thanks to the PoW computations, which have to be expensive enough that attacking the system would be more costly than the value you could extract through an attack. So, in a sense its value indeed derives directly from the work put into the system. Which is not to say there aren't alternatives (I'm really curious how Proof of Stake will change the Crypto landscape), but at least for BTC, that's how it is currently.

jonhendry18 6y ago
Doesn't sound like it's worth torching the only inhabitable planet for.
- inter_netuser 6y ago
  It also happens to be a huge incentive for clean nuclear power. I'm sure you don't want that though, because solar+batteries will power interplanetary civilizations somehow.
  - tsimionescu 6y ago
    It's a huge incentive for more power, not for any particular kind of energy. In fact, the value of BTC is actually putting a floor on how efficient it is to close down a fossil-fuel plant.
- mckirk 6y ago
  I see PoW more as a stepping stone to bootstrap a crypto currency, and I think it might just go away over time. Ethereum has done it this way: First you build a stable blockchain, secured through tremendous amounts of power. Then, once your system has been widely adopted and people have "skin in the game", you switch to Proof of Stake to minimize power consumption while still maintaining security. PoS is the better solution, environmentally speaking, but it necessarily depends on there already being value in the system that people can be held accountable with and thus kept honest. But to reach that state, people have to trust your system first, and if you're not an already trusted entity, PoW is one way of achieving that initial phase of trust building.

midjji 6y ago

The value lies not in the energy but in its utility to facilitate transfers without the expressed permission of some authority. The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste.

fakedang 6y ago
Some authority could just demand your bitcoin on some gimmicky pretext (USA) or draft laws largely stymying its use (China). Also I've yet to find a reason to transfer $30k in one go for any reason - I've yet to fall victim to some kidnapper or blackmailer who wants cash by the evening without raising any alarms on my part.
ForHackernews 6y ago
The energy is a pure waste. The "difficulty" of bitcoin blocks is continually increasing but the utility of being able to transact in bitcoin is not greater today than it was in 2015 (arguably less, since fewer merchants will sell goods in bitcoin)
tsimionescu 6y ago
> The energy isnt wasted though, the safety of the trustless transaction is proportional to the expended energy. While not the source of value, it is a necessity, not a waste. This would be somewhat true if Bitcoin were the only mechanism for trustless transactions, but there are others that consume far less energy, such as https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala.
- jasdine817 6y ago
  In what way is Hawala trustless?
  - tsimionescu 6y ago
    Oops, you're absolutely right, I was thinking of distributed payments and somehow confused that in my head with being trustless...

inter_netuser 6y ago

It's valuable because of unforgeable costliness. And to make it difficult to forge transactions it asks you provably(!) burn some electricity.

tsimionescu 6y ago
No, it's valuable because people trust that others will buy it. That trust is somewhat motivated by Satoshi's protocol, but it is much more motivated by simply seeing that others trust it.