5 ms·

How is it negative sum, and not just zero sum?

by twox2 5y ago

paxys 5y ago
There are middlemen extracting fees at every step
FabHK 5y ago
Miners are paid some $40m/day, through 1) creating more BTC (called "coinbase" here, "Seigniorage" more generally, leading to inflation) and 2) fees. For now, the $100 miners siphon off per transaction are predominantly from 1), so those costs are not very visible. And then of course the exchanges charging 20 to 120 bp (or more) for a roundtrip against money you can actually use. Coinbase (the exchange) alone takes around 0.4% of the entire crypto market cap per annum into its pockets.
- jklm 5y ago
  If that seems crazy, wait until you hear about these companies called Stripe and Visa.
  - FabHK 5y ago
    Not sure what you are talking about. 1. Stripe has revenue of $bn 8, Visa $bn 25, and Coinbase $bn 8. Are you suggesting that Coinbase provides as much utility as Stripe? 2. The equity market cap is about $tr 100, so Stripe and Visa together take about 0.03% of that per annum. Mind you: That is way too much. Credit cards are an inefficient oligopoly, and they've been fined by regulators for their extravagant fees. That's a whole topic in itself. But: Crypto is 10x worse.
jshen 5y ago
Carbon footprint, and convincing people that a JPEG is an asset that will go up.
- loup-vaillant 5y ago
  The real stuff is the waste of resources. Not just the carbon footprint, the staggering amount of silicon wasted on those. Though that sure makes GPU prices go up…
dragontamer 5y ago
A lot of miners have access to free electricity, often through corrupt officials on some unsavory countries... or even US Army folk who are abusing their home's utility bills (Uncle Sam pays for that electricity). Under these conditions, the utility company has to pay for say $100 in electricity to make $80 of cryptocoin. But since the miner has "free electricity" and doesn't see these costs, they only see the $80 of cryptocoin that they sold off.

How is it negative sum, and not just zero sum?

by twox2 5y ago

How is it negative sum, and not just zero sum?

paxys 5y ago

There are middlemen extracting fees at every step

FabHK 5y ago

Miners are paid some $40m/day, through 1) creating more BTC (called "coinbase" here, "Seigniorage" more generally, leading to inflation) and 2) fees. For now, the $100 miners siphon off per transaction are predominantly from 1), so those costs are not very visible. And then of course the exchanges charging 20 to 120 bp (or more) for a roundtrip against money you can actually use. Coinbase (the exchange) alone takes around 0.4% of the entire crypto market cap per annum into its pockets.

jklm 5y ago
If that seems crazy, wait until you hear about these companies called Stripe and Visa.
- FabHK 5y ago
  Not sure what you are talking about. 1. Stripe has revenue of $bn 8, Visa $bn 25, and Coinbase $bn 8. Are you suggesting that Coinbase provides as much utility as Stripe? 2. The equity market cap is about $tr 100, so Stripe and Visa together take about 0.03% of that per annum. Mind you: That is way too much. Credit cards are an inefficient oligopoly, and they've been fined by regulators for their extravagant fees. That's a whole topic in itself. But: Crypto is 10x worse.

jshen 5y ago

Carbon footprint, and convincing people that a JPEG is an asset that will go up.

loup-vaillant 5y ago
The real stuff is the waste of resources. Not just the carbon footprint, the staggering amount of silicon wasted on those. Though that sure makes GPU prices go up…

dragontamer 5y ago

A lot of miners have access to free electricity, often through corrupt officials on some unsavory countries... or even US Army folk who are abusing their home's utility bills (Uncle Sam pays for that electricity). Under these conditions, the utility company has to pay for say $100 in electricity to make $80 of cryptocoin. But since the miner has "free electricity" and doesn't see these costs, they only see the $80 of cryptocoin that they sold off.