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"Energy used / total value secured" is a better measurement. "Double-spend prevented" isn't calculable. Important to remember that the energy used on mining bo

by BluSyn 5y ago

"Energy used / total value secured" is a better measurement. "Double-spend prevented" isn't calculable. Important to remember that the energy used on mining both secures current and *PAST* transactions, that's the entire point of the blockchain. I think "total value secured" captures this point. I find it frustrating that crypto-currencies are judged by their energy usage, meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today. The problem is one is easier to calculate, so it generates easy headlines from lazy journalists. Fundamentally energy usage isn't a worthy argument for or against a currency. It's the wrong measurement to use. It seems to be the go-to straw-man argument for those who already made up their minds about cryptocurrency before hand. Yes, Proof-of-Stake exists, but notably it does not exist at a reasonable scale yet. If it could work as well as Proof-of-Work then it eventually would displace it. All attempts so far have not lived up to their hype.

ericjang 5y ago
Do you have an estimate of energy used / total value secured ? If I am understanding correctly, an upper bound on "total value secured" would just be the total transaction volume moved in a block?
- clarkmoody 5y ago
  Each block secures the entire chain. The lower bound of the total value secured is market cap of the coin. In the case of Bitcoin, the upper bound is the value of the entire "crypto" ecosystem, including all tokens, companies, jobs, infrastructure, etc.
throwaway9980 5y ago
I don’t think you’re going to be able to secure the blockchain without those governments and militaries. Maybe you replace the massive banking industry with a new massive crypto financial industry? “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”
ffggvv 5y ago
>> I find it frustrating that crypto-currencies are judged by their energy usage, meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today. 1. By that logic bitcoin is also supported by the military, education system, banking industries etc. It relies on a secure society that has power and internet and computers and wealth for citizens to have and use these things as a prerequisite. 2. The military etc you mention actually is the basis of alot more in society than just fiat currency. So your formula "Energy used / total value secured". If you want to include those things in "energy used" then under "total value secured" you need to include basically all value ever created by humans in western countries which is in the hundreds of trillions (if not more). Not just fiat currency. And actually if we went back to the gold standard all those institutions would still need to exist to secure society. (banks, governments, and militaries existed long before we abandoned the gold standard.) Overall its a silly concept/argument.
analog31 5y ago
>>> meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. Crypto-currencies are also secured by those things in their present state. So long as crypto remains a small portion of the overall economy, it depends on the mainstream economy for its existence. For instance, it can't exist without an economic infrastructure that can develop and produce computer chips, telecommunications, the electric grid, and so forth. The energy cost of Crypto is on top of the cost and externalities of the present day economic infrastructure.
- fidelramos 5y ago
  But computer chips, telecommunications, the electric grid, etc., don't require for governments to exist for them to exist and work. I would even argue that they would work better and more efficiently under a free market economy, so governments, in general, are holding back progress.
  - Nursie 5y ago
    > I would even argue that they would work better and more efficiently under a free market economy That sort of argument would need some extraordinary evidence, given the sort of chaotic, crime-ridden, violent state places without governments tend to devolve into.
    - fidelramos 5y ago
      I didn't say "no government" or "no laws", I asked for free market. For a free market to work one of the important aspects is open competition with low barriers of entry. I believe most governments today do the opposite: their laws add barriers to competition, leading to inefficiencies that are in detriment of the general public. Examples are all around us, from cities forbidding Uber as a competition to taxi companies to states restricting use of cryptocurrencies as a method of payment. If you compound everything the damage that most governments do to the economy, and therefore to the wellness of humankind, is immense.
      - 5y ago
ComodoHacker 5y ago
>I find it frustrating that crypto-currencies are judged by their energy usage Carbon footprint is a totally valid measure for anything we create or maintain, including crypto and fiat currencies.
homedepotdave 5y ago
“The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today.” No way. You hear this argument all the time — that fiat currency also uses tons of energy - but I just don’t think it’s true (relative to the amount of transaction throughout, and also in absolute terms). Bitcoin mining uses something like 0.5-0.6% of global electricity consumption for a tiny, tiny fraction of (purely speculative, not economically meaningful) transactions. What % do you think fiat uses?
- fidelramos 5y ago
  That is one of the important points point made by jtoomin in the first post of this thread: the energy consumption of a PoW blockchain if not proportional to the number of transactions. This means we could have everyone, everywhere, using a PoW blockchain with the same percentage of energy consumption as today (although it would probably rise as price would arguably also rise as demand increases, but it would eventually find an equilibrium, it will never "consume all electricity").
  - michaelt 5y ago
    Didn't bitcoin have the chance to double their transactions-per-second for a constant amount of power consumption, in the form of Segwit2x, and decide not to do so? The fact Bitcoin could be more efficient and chooses not to isn't really an improvement over being unable to be more efficient IMHO - in fact arguably it's worse.
    - fidelramos 5y ago
      I completely agree, increasing the maximum block size is the simplest way to scale. Bitcoin BTC refused to do that, keeping the 1 MiB maximum block size instituted by Satoshi Nakamoto in 2010 as a spam-prevention measure, which led to raising transaction fees as users compete for the scarce block space. That is also the reason why Bitcoin Cash BCH was born in August 2017: to raise the maximum block size and allow the Bitcoin blockchain to process more transactions per second while keeping fees low. At the technical level BCH has showed that the network is stable in production with 20 MiB blocks, but the goal and ongoing work is to support gigabyte and eventually terabyte blocks so it would scale to worldwide usage while keeping transaction fees low. The counterargument by Bitcoin BTC is that large blocks centralize the network, as not everyone can afford to run a full node. That's a different debate that I would be happy to discuss, but I want to start by pointing out that keeping the block size low also centralizes the network, as many users will not be able to afford the increasing transaction fees (which rose to $50 at recent times). Does it make sense to restrict the network so anyone can run a $50 node but not be able to transact on it? I think decentralization is a means to an end (electronic P2P cash), not a goal in itself. In other words, blockchains should be decentralized enough that no single entity can take control of the network, but too much decentralization is inefficient, so an equilibrium must be found.
root_axis 5y ago
> traditional fiat currencies are secured by massive banking industries, governments, and militaries This argument makes no sense. Bitcoin doesn't obviate the need for militaries, banks, or governments, those things would exist regardless of the type of currency being used. Furthermore, these institutions have functions that go far beyond "securing fiat currency", not to mention the fact that bitcoin's existence relies on the massive infrastructure that facilitates the power grid and internet (which are secured by governments and militaries). Beyond that, bitcoin's value is inextricably linked to the utility of government issued currencies since bitcoin is not a suitable unit of exchange in a real economy due to its miniscule transaction capacity. In a world where fiat currencies collapsed the value of bitcoin would also plummet due to the fact that bitcoin's poor throughput could not sustain the the market for staple goods such as food, water, and medicine.
- Gatsky 5y ago
  I would like to offer a different perspective. The end of gold backed currencies in the 70s and replacement by fiat currencies hinged on the middle east oil states agreeing to sell oil in USD, in return for global policing by the US[1]. There is thus an intimate relationship between the current system and fossil fuels and the military, which goes beyond just ‘existing infrastructure’ arguments. This doesn’t mean we should countenance burning coal to mine bitcoin, but we shouldn’t forget history either, and as such the argument of the OP has some merit. Second point is about transaction volume. Compared to total global money, the transaction volume of fiat is also very small. The recent money printing should make this obvious. The amount of fiat in fixed income markets and derivatives is staggering compared to what you mean by ‘transactions’[2]. Bitcoin has payment solutions in the works, it is likely that transaction volume and unit of exchange utility will increase over time. Additionally, if we take an actual example of a collapsing fiat as occurred in the hyperinflationary period in Brazil in 1994, the Government fixed the problem by inventing a new currency [3]. It is quite possible that in the current era, countries with collapsing fiats would use cryptocurrencies for this purpose, as there are some obvious advantages. [1] https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ [2] https://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18 https://www.marketwatch.com/story/this-is-how-much-money-exi... [3] https://en.m.wikipedia.org/wiki/Hyperinflation_in_Brazil https://en.m.wikipedia.org/wiki/Hyperinflation_in_Brazil

by BluSyn 5y ago

ericjang 5y ago

Do you have an estimate of energy used / total value secured ? If I am understanding correctly, an upper bound on "total value secured" would just be the total transaction volume moved in a block?

clarkmoody 5y ago
Each block secures the entire chain. The lower bound of the total value secured is market cap of the coin. In the case of Bitcoin, the upper bound is the value of the entire "crypto" ecosystem, including all tokens, companies, jobs, infrastructure, etc.

throwaway9980 5y ago

I don’t think you’re going to be able to secure the blockchain without those governments and militaries. Maybe you replace the massive banking industry with a new massive crypto financial industry? “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

ffggvv 5y ago

>> I find it frustrating that crypto-currencies are judged by their energy usage, meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today. 1. By that logic bitcoin is also supported by the military, education system, banking industries etc. It relies on a secure society that has power and internet and computers and wealth for citizens to have and use these things as a prerequisite. 2. The military etc you mention actually is the basis of alot more in society than just fiat currency. So your formula "Energy used / total value secured". If you want to include those things in "energy used" then under "total value secured" you need to include basically all value ever created by humans in western countries which is in the hundreds of trillions (if not more). Not just fiat currency. And actually if we went back to the gold standard all those institutions would still need to exist to secure society. (banks, governments, and militaries existed long before we abandoned the gold standard.) Overall its a silly concept/argument.

analog31 5y ago

>>> meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. Crypto-currencies are also secured by those things in their present state. So long as crypto remains a small portion of the overall economy, it depends on the mainstream economy for its existence. For instance, it can't exist without an economic infrastructure that can develop and produce computer chips, telecommunications, the electric grid, and so forth. The energy cost of Crypto is on top of the cost and externalities of the present day economic infrastructure.

fidelramos 5y ago
But computer chips, telecommunications, the electric grid, etc., don't require for governments to exist for them to exist and work. I would even argue that they would work better and more efficiently under a free market economy, so governments, in general, are holding back progress.
- Nursie 5y ago
  > I would even argue that they would work better and more efficiently under a free market economy That sort of argument would need some extraordinary evidence, given the sort of chaotic, crime-ridden, violent state places without governments tend to devolve into.
  - fidelramos 5y ago
    I didn't say "no government" or "no laws", I asked for free market. For a free market to work one of the important aspects is open competition with low barriers of entry. I believe most governments today do the opposite: their laws add barriers to competition, leading to inefficiencies that are in detriment of the general public. Examples are all around us, from cities forbidding Uber as a competition to taxi companies to states restricting use of cryptocurrencies as a method of payment. If you compound everything the damage that most governments do to the economy, and therefore to the wellness of humankind, is immense.
    - 5y ago

ComodoHacker 5y ago

>I find it frustrating that crypto-currencies are judged by their energy usage Carbon footprint is a totally valid measure for anything we create or maintain, including crypto and fiat currencies.

homedepotdave 5y ago

“The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today.” No way. You hear this argument all the time — that fiat currency also uses tons of energy - but I just don’t think it’s true (relative to the amount of transaction throughout, and also in absolute terms). Bitcoin mining uses something like 0.5-0.6% of global electricity consumption for a tiny, tiny fraction of (purely speculative, not economically meaningful) transactions. What % do you think fiat uses?

fidelramos 5y ago
That is one of the important points point made by jtoomin in the first post of this thread: the energy consumption of a PoW blockchain if not proportional to the number of transactions. This means we could have everyone, everywhere, using a PoW blockchain with the same percentage of energy consumption as today (although it would probably rise as price would arguably also rise as demand increases, but it would eventually find an equilibrium, it will never "consume all electricity").
- michaelt 5y ago
  Didn't bitcoin have the chance to double their transactions-per-second for a constant amount of power consumption, in the form of Segwit2x, and decide not to do so? The fact Bitcoin could be more efficient and chooses not to isn't really an improvement over being unable to be more efficient IMHO - in fact arguably it's worse.
  - fidelramos 5y ago
    I completely agree, increasing the maximum block size is the simplest way to scale. Bitcoin BTC refused to do that, keeping the 1 MiB maximum block size instituted by Satoshi Nakamoto in 2010 as a spam-prevention measure, which led to raising transaction fees as users compete for the scarce block space. That is also the reason why Bitcoin Cash BCH was born in August 2017: to raise the maximum block size and allow the Bitcoin blockchain to process more transactions per second while keeping fees low. At the technical level BCH has showed that the network is stable in production with 20 MiB blocks, but the goal and ongoing work is to support gigabyte and eventually terabyte blocks so it would scale to worldwide usage while keeping transaction fees low. The counterargument by Bitcoin BTC is that large blocks centralize the network, as not everyone can afford to run a full node. That's a different debate that I would be happy to discuss, but I want to start by pointing out that keeping the block size low also centralizes the network, as many users will not be able to afford the increasing transaction fees (which rose to $50 at recent times). Does it make sense to restrict the network so anyone can run a $50 node but not be able to transact on it? I think decentralization is a means to an end (electronic P2P cash), not a goal in itself. In other words, blockchains should be decentralized enough that no single entity can take control of the network, but too much decentralization is inefficient, so an equilibrium must be found.

root_axis 5y ago

> traditional fiat currencies are secured by massive banking industries, governments, and militaries This argument makes no sense. Bitcoin doesn't obviate the need for militaries, banks, or governments, those things would exist regardless of the type of currency being used. Furthermore, these institutions have functions that go far beyond "securing fiat currency", not to mention the fact that bitcoin's existence relies on the massive infrastructure that facilitates the power grid and internet (which are secured by governments and militaries). Beyond that, bitcoin's value is inextricably linked to the utility of government issued currencies since bitcoin is not a suitable unit of exchange in a real economy due to its miniscule transaction capacity. In a world where fiat currencies collapsed the value of bitcoin would also plummet due to the fact that bitcoin's poor throughput could not sustain the the market for staple goods such as food, water, and medicine.

Gatsky 5y ago
I would like to offer a different perspective. The end of gold backed currencies in the 70s and replacement by fiat currencies hinged on the middle east oil states agreeing to sell oil in USD, in return for global policing by the US[1]. There is thus an intimate relationship between the current system and fossil fuels and the military, which goes beyond just ‘existing infrastructure’ arguments. This doesn’t mean we should countenance burning coal to mine bitcoin, but we shouldn’t forget history either, and as such the argument of the OP has some merit. Second point is about transaction volume. Compared to total global money, the transaction volume of fiat is also very small. The recent money printing should make this obvious. The amount of fiat in fixed income markets and derivatives is staggering compared to what you mean by ‘transactions’[2]. Bitcoin has payment solutions in the works, it is likely that transaction volume and unit of exchange utility will increase over time. Additionally, if we take an actual example of a collapsing fiat as occurred in the hyperinflationary period in Brazil in 1994, the Government fixed the problem by inventing a new currency [3]. It is quite possible that in the current era, countries with collapsing fiats would use cryptocurrencies for this purpose, as there are some obvious advantages. [1] https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ [2] https://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18 https://www.marketwatch.com/story/this-is-how-much-money-exi... [3] https://en.m.wikipedia.org/wiki/Hyperinflation_in_Brazil https://en.m.wikipedia.org/wiki/Hyperinflation_in_Brazil