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Im answering his question why bitcoin is not the best use of money: (1) Most people don't settle on large volumes (thats typically banks/states/institutionals)

Im answering his question why bitcoin is not the best use of money: (1) Most people don't settle on large volumes (thats typically banks/states/institutionals) so small volumes have a high cost percentage making it not a good daily driver. The fact that there is any transaction cost makes it challenging to work with as a daily money vehicle for consumers. (2) It requires energy to exist and keep a ledger, it also requires energy to mine. Your comment on renewable energy isn't accurate sadly and unused energy works only if you can get access to it which isn't universally available. In some jurisdictions renewable energy beats on price but this is largely on huge projects that are bid into utility grids (At least in North America). It will get there but still needs more time. I don't see how mining subsidizes research in cheap energy. Understand they have been debated ad nasueum and the reason is that they haven't really passed muster for the use case we are talking about. Don't equate my arguments as saying bitcoin is bad - it doesn't have a good universal use case for money and it does have negative environmental benefits associated with it.

ballofrubber 6y ago
(1) I think people assume that just because bitcoin exists banks will vanish. Bitcoin is the protocol that banks can use, but individuals as well. Also, micropayments on Bitcoin exist today. I encourage you to download a lightning network wallet (e.g. Breez Wallet: non-custodial and open source) and send me a "lightning-invoice" I can pay you in the sub-cent range. (2) It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug. Renewable energy is the cheapest though[0] and thus the one that competitive miners need to use. Non-competitive miners get driven out very fast thanks to the difficulty adjustment. Any percentage of optimization you can get in your energy production you can use to outperform other miners, thus get more of the block subsidy and drive out inefficient miners. Bitcoin mining de-risks investments in energy producing facilities. You always have a buyer for your energy, which is a problem especially in renewables. [1] [0] https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source [1] https://www.sciencedirect.com/science/article/abs/pii/S1364032120308054 https://www.sciencedirect.com/science/article/abs/pii/S13640...
- arrosenberg 6y ago
  > It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug. Such a horrific, unproductive use of energy is definitely a bug from a scientific perspective, maybe not for a financier.
  - lottin 6y ago
    Proponents of Bitcoin are rarely financiers. It's clear to me that they don't understand finance.
  - ballofrubber 6y ago
    I think from a scientific view, allowing and observing the experiment bitcoin is extremely interesting. Nothing like it has challenged economic thinking in the last decades. It is very productive for a large population of the world.[0] Not everyone gets paid in a stable currency or has easy access to it. [0] https://www.youtube.com/watch?v=xLYYh4aPXAM https://www.youtube.com/watch?v=xLYYh4aPXAM
    - arrosenberg 6y ago
      How it is challenging economic thinking? There is a near-zero chance cryptocurrencies replace an actual currency as the global reserve, so it's going to continue to be a novelty until people move on to something shinier. > Not everyone gets paid in a stable currency or has easy access to it. Bitcoin doesn't appear to solve this issue at all. How is private manipulation of Bitcoin any different than an authoritarian manipulating the local currency? If I was in a country with unstable currency, I'd want Euro or US Dollars, not bitcoin.
      - ballofrubber 6y ago
        I think that the chairmen of the fed and ecb arguing about bitcoin is a strong signal of a challenge. As I and the video mentioned Euro and USD is not easily accessible in those countries, Bitcoin doesn't need permission though. What you refer to as private manipulation is called supply and demand, maybe try reading Econo101 :)

ballofrubber 6y ago

(1) I think people assume that just because bitcoin exists banks will vanish. Bitcoin is the protocol that banks can use, but individuals as well. Also, micropayments on Bitcoin exist today. I encourage you to download a lightning network wallet (e.g. Breez Wallet: non-custodial and open source) and send me a "lightning-invoice" I can pay you in the sub-cent range. (2) It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug. Renewable energy is the cheapest though[0] and thus the one that competitive miners need to use. Non-competitive miners get driven out very fast thanks to the difficulty adjustment. Any percentage of optimization you can get in your energy production you can use to outperform other miners, thus get more of the block subsidy and drive out inefficient miners. Bitcoin mining de-risks investments in energy producing facilities. You always have a buyer for your energy, which is a problem especially in renewables. [1] [0] https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source [1] https://www.sciencedirect.com/science/article/abs/pii/S1364032120308054 https://www.sciencedirect.com/science/article/abs/pii/S13640...

arrosenberg 6y ago
> It requires real world resources to be spend and uses the most globally available resource, energy. I see it as a feature not a bug. Such a horrific, unproductive use of energy is definitely a bug from a scientific perspective, maybe not for a financier.
- lottin 6y ago
  Proponents of Bitcoin are rarely financiers. It's clear to me that they don't understand finance.
- ballofrubber 6y ago
  I think from a scientific view, allowing and observing the experiment bitcoin is extremely interesting. Nothing like it has challenged economic thinking in the last decades. It is very productive for a large population of the world.[0] Not everyone gets paid in a stable currency or has easy access to it. [0] https://www.youtube.com/watch?v=xLYYh4aPXAM https://www.youtube.com/watch?v=xLYYh4aPXAM
  - arrosenberg 6y ago
    How it is challenging economic thinking? There is a near-zero chance cryptocurrencies replace an actual currency as the global reserve, so it's going to continue to be a novelty until people move on to something shinier. > Not everyone gets paid in a stable currency or has easy access to it. Bitcoin doesn't appear to solve this issue at all. How is private manipulation of Bitcoin any different than an authoritarian manipulating the local currency? If I was in a country with unstable currency, I'd want Euro or US Dollars, not bitcoin.
    - ballofrubber 6y ago
      I think that the chairmen of the fed and ecb arguing about bitcoin is a strong signal of a challenge. As I and the video mentioned Euro and USD is not easily accessible in those countries, Bitcoin doesn't need permission though. What you refer to as private manipulation is called supply and demand, maybe try reading Econo101 :)