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Why do people always forget that credit cards are powered not only by electricity, but with an absurd amount of bureaucracy as well. Has it ever crossed your mi

Why do people always forget that credit cards are powered not only by electricity, but with an absurd amount of bureaucracy as well. Has it ever crossed your mind how many man power and work hours goes into management of traditional banking systems? And how much energy that consumes? Across every country and every town. In PoW blockchains, on the other hand, it's just electricity.

cool_dude85 5y ago
That's right, no wasted man hours or pointless nonsense in the blockchain world. Side note, got a hot tip on an ICO I can invest in?
toiletfuneral 5y ago
a-priori 5y ago
You don't have to imagine, because VISA is a public company. According to their 2021 financial report (year end Sept 30, 2020), VISA logged $8.3B in operating expenses. The majority of this is "personnel" at $4.2B (covering the salaries, benefits, etc. for their staff), $0.7B is "network and processing" (covering the expenses to operating their payments network), and the remainder is stuff like general administrative, marketing, professional fees and legal fees. But for comparison I'll use the $8.3B in total operating expenses. Over the same period VISA processed 164.7B transactions, so if you divide you get that on average it costs VISA $0.05 in total expenses to process a transaction, of which $0.004 is for actually operating the payments network. By comparison, it currently costs the Bitcoin network $176.39 to process a transaction (transaction fees plus block rewards per day / total transactions per day), over 3500x the expenses of VISA. Maybe you'll say that's still not the same thing, because "total transaction fees" represents _revenue_ to miners, not expenses. Fine. VISA's revenue over the same period was $24.1B, which works out to revenue-per-transaction of $0.14. That's still over 1200x as much as VISA. https://s29.q4cdn.com/385744025/files/doc_downloads/Visa-Inc_-Fiscal-2021-Annual-Report.pdf https://s29.q4cdn.com/385744025/files/doc_downloads/Visa-Inc... https://ycharts.com/indicators/bitcoin_average_cost_per_transaction https://ycharts.com/indicators/bitcoin_average_cost_per_tran...
- metabagel 5y ago
  I think the penultimate sentence in your comment should start, “Bitcoin miners’ revenue over the same period…”
  - bzbarsky 5y ago
    No, that sentence looks correct: if you treat bitcoin transaction fees as revenue, then you compare to Visa's revenue, which was $24.1B.
- MitPitt 5y ago
  For some reason you only decided to include VISA, while I meant the whole traditional finance system, including central and other banks. VISA can't operate by itself.
  - vorpalhex 5y ago
    Your local bank branch running a few ATMs is not exactly a mining farm and provides other services other than "processing transactions". Even the central banks are just office buildings with regular data centers.
    - MitPitt 5y ago
      You missed the part where I said that this is not about electricity but man hours. Those office buildings are filled with people whose whole lives are to be spent managing these traditional finance institutions. That wastes much more energy, money, and human life.
  - gokdisjtrdcvv5 5y ago
    I’m confused. How would adding more stuff change the picture that dramatically? No matter how you slice it Bitcoin has extremely prohibitive transaction costs
    - latchkey 5y ago
vinnie-io 5y ago
i like visa being able to reverse fraudulent transactions
vinnie-io 5y ago
anything based on PoW has to fail long term. PoW benefits from economy of scale, which leads to centralization, which defeats the purpose of the thing being PoW'd
timeon 5y ago
It is not just electricity. For companies and individuals involved with Bitcoin there is still marketing, flying and meetings around the globe, managing infrastructure etc. And Bitcoin adoption is still relatively small - especially for everyday use. I can imagine that centralized bureaucracy of VISA per volume of that market will always be smaller then Bitcoin.

cool_dude85 5y ago

That's right, no wasted man hours or pointless nonsense in the blockchain world. Side note, got a hot tip on an ICO I can invest in?

toiletfuneral 5y ago

a-priori 5y ago

You don't have to imagine, because VISA is a public company. According to their 2021 financial report (year end Sept 30, 2020), VISA logged $8.3B in operating expenses. The majority of this is "personnel" at $4.2B (covering the salaries, benefits, etc. for their staff), $0.7B is "network and processing" (covering the expenses to operating their payments network), and the remainder is stuff like general administrative, marketing, professional fees and legal fees. But for comparison I'll use the $8.3B in total operating expenses. Over the same period VISA processed 164.7B transactions, so if you divide you get that on average it costs VISA $0.05 in total expenses to process a transaction, of which $0.004 is for actually operating the payments network. By comparison, it currently costs the Bitcoin network $176.39 to process a transaction (transaction fees plus block rewards per day / total transactions per day), over 3500x the expenses of VISA. Maybe you'll say that's still not the same thing, because "total transaction fees" represents _revenue_ to miners, not expenses. Fine. VISA's revenue over the same period was $24.1B, which works out to revenue-per-transaction of $0.14. That's still over 1200x as much as VISA. https://s29.q4cdn.com/385744025/files/doc_downloads/Visa-Inc_-Fiscal-2021-Annual-Report.pdf https://s29.q4cdn.com/385744025/files/doc_downloads/Visa-Inc... https://ycharts.com/indicators/bitcoin_average_cost_per_transaction https://ycharts.com/indicators/bitcoin_average_cost_per_tran...

metabagel 5y ago
I think the penultimate sentence in your comment should start, “Bitcoin miners’ revenue over the same period…”
- bzbarsky 5y ago
  No, that sentence looks correct: if you treat bitcoin transaction fees as revenue, then you compare to Visa's revenue, which was $24.1B.
MitPitt 5y ago
For some reason you only decided to include VISA, while I meant the whole traditional finance system, including central and other banks. VISA can't operate by itself.
- vorpalhex 5y ago
  Your local bank branch running a few ATMs is not exactly a mining farm and provides other services other than "processing transactions". Even the central banks are just office buildings with regular data centers.
  - MitPitt 5y ago
    You missed the part where I said that this is not about electricity but man hours. Those office buildings are filled with people whose whole lives are to be spent managing these traditional finance institutions. That wastes much more energy, money, and human life.
- gokdisjtrdcvv5 5y ago
  I’m confused. How would adding more stuff change the picture that dramatically? No matter how you slice it Bitcoin has extremely prohibitive transaction costs
  - latchkey 5y ago

vinnie-io 5y ago

i like visa being able to reverse fraudulent transactions

vinnie-io 5y ago

anything based on PoW has to fail long term. PoW benefits from economy of scale, which leads to centralization, which defeats the purpose of the thing being PoW'd

timeon 5y ago

It is not just electricity. For companies and individuals involved with Bitcoin there is still marketing, flying and meetings around the globe, managing infrastructure etc. And Bitcoin adoption is still relatively small - especially for everyday use. I can imagine that centralized bureaucracy of VISA per volume of that market will always be smaller then Bitcoin.