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> 2.3% to support so little economic activity is just insane. It kind of is! But honestly that's the price we pay for not having sound monetary systems. At th

> 2.3% to support so little economic activity is just insane. It kind of is! But honestly that's the price we pay for not having sound monetary systems. At this point BTC is, functionally, just an alternative asset that hedges against inflation. As governments print increasingly more money, and the amount of BTC stays the same, each BTC becomes worth more. It's very simple. The demand for such an asset is apparently quite high; high enough to spend up to 2.3% of total US energy. If the world operated on non-inflationary systems there would perhaps still be a small need for BTC, such as providing liberty in committing financial transactions, but I doubt it'd be nearly as big as it is today on that basis alone.

FireBeyond 3y ago
> But honestly that's the price we pay for not having sound monetary systems. Are you implying that BTC is a "sound monetary system"? Because many people will argue with that.
- pton_xd 3y ago
  Not at all, I'm saying BTC is an asset that hedges against unsound monetary systems.
  - lottin 3y ago
    No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine. Bitcoin is neither an alternative to the international monetary system, nor a hedge. It's a joke. A gambling instrument for financially illiterate people.
    - pton_xd 3y ago
      > No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine. Obviously it is functional, I never said it wasn't! Inflationary systems have a lot of benefits -- they encourage consumption, erode the value of debt over time, etc. But there are downsides, too. Savings and purchasing power are destroyed over time. They encourage investment in hard assets like real estate and BTC to protect wealth. And so you get some waste, too. There is no free lunch.
      - lottin 3y ago
        The international monetary system isn't a deflationary system per se. It can accommodate a variety of monetary policies, including deflationary policies. As far as bitcoin being a hard asset, this isn't entirely correct either. Not only does bitcoin not generate income, but it consumes income. You see, the bitcoin network is extremely expensive to maintain, and the owners of bitcoins are the ones who bear the cost. Either they pay with fees -unlikely-, or they'll pay by losing value in their investment -most likely. There's no way around it.
    - t0bia_s 3y ago
      It's not. Fiat money drives inflation. The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Since then, huge increases in the supply of paper money have occurred in a number of countries, producing hyperinflations – episodes of extreme inflation rates much greater than those observed during earlier periods of commodity money. https://en.m.wikipedia.org/wiki/Fiat_money https://en.m.wikipedia.org/wiki/Fiat_money
      - lottin 3y ago
        Hyperinflation is extremely uncommon, especially in developed countries, and when it occurs it's always caused by incompetent or corrupt governments, not by the currency itself.
        t0bia_s 3y ago
        Sure, it multiple effect of devaluation of money. So it's just a matter of time when citizens loose trust in fiat currency and start looking for other solutions, like decentralised cryptocurrency.
        lottin 3y ago
        Wishful thinking. Cryptocurrencies have failed to gain traction even in countries experiencing hyperinflation. People don't trust a fiat "currency" that is issued by anonymous entities and is backed by nothing. Especially when it's been known to depreciate dramatically in the blink of an eye. People trust fiat currencies that are issued by reputable institutions that give credible assurances about the purchasing power of said currencies. This is why such currencies as the US dollar and the euro are used all over the world for international trade, and cryptocurrencies are not.
        t0bia_s 3y ago
        Trust in traditional currency shaken quite significantly in last 3 years. Especially when inflation ruins many businesses and government justify inflation by war and green energy. When you cannot make living from money that you get from your hard work, naturally, you are forced to look at alternatives. As more people adopt cryptocurrencies, the less value traditional currencies had and eventually ignores inflation. Which, for now, bitcoins does. It just isn't that much popular yet. No one would expect ten years ago that some cryptocurrency would survive or be adopted by more and more people. But somehow, it's still there and grows every year. If crypto wouldn't be a thing, there wouldn't be plans for digital Euro by ECB for example. Basically same thing as BTC, except with regulations with centralized bank. To be clear, I'm not a fan of digital currencies. Cash is still most private and free way of exchange method. For digital, you need electricity, device and data which many cannot afford to have.
MichaelZuo 3y ago
It already exists it’s called gold. There are some hassles associated with physical storage and transport of gold but not 2.3% of total US power consumption worth of hassles.
- VikingCoder 3y ago
  To people who love gold, I always want to ask what you think should happen if Elon Musk claims a meteor one of his robot ships landed on, that's got 1000 times more gold inside it than there is gold on Earth. What do you think should happen?
  - ben_w 3y ago
    This kind of thing is why we stopped using the gold standard. On the other hand, BTC prices changes are so wild that it makes gold seem like a constant-value asset.
  - MichaelZuo 3y ago
    Why should anyone respond and speculate based on a hastily written hypothetical? You need to put in some genuine writing effort for folks to take it seriously. Offer some substantial, falsifiable, claims/arguments/etc.
    - VikingCoder 3y ago
      If someone wants the world economy to be based on a commodity such as the metallic ore gold, then I wonder what they think would happen to the world economy, and more importantly all of the people in it, if all of a sudden, the world supply of the metallic ore gold went up by three orders of magnitude, all owned by literally one person. Do they think people would continue to use the metallic ore gold as their currency, and they would just accept the insane inflation? And the fact that 99.9% of the world's wealth is now concentrated in the hands of one person? Or do they think we would rapidly switch to a different commodity as our currency? Also, why should anyone respond? Because they think the topic is interesting. I thought that would be clear. If you cannot imagine the nightmare scenario and you need "genuine writing effort" for you to imagine it, then it sounds like you don't think the topic is interesting. Maybe just let other people hash it out.
Workaccount2 3y ago
Hedging against inflation with a wildly volatile asset. Genius. You might lose 30% of your value, but hey, you didn't lose that 3.2% to inflation!
- sak5sk 3y ago
  you can't be serious, have you seen how much bitcoin is up?
JumpCrisscross 3y ago
> BTC is, functionally, just an alternative asset that hedges against inflation Bitcoin is a terrible inflation hedge. This is quantitaitvely demonstrable over its entire existence. It's a good gambling asset, and in my opinion, should be taxed as such.
- rcxdude 3y ago
  In some countries, that would decrease the taxation! (In the UK, for example, gambling income is tax-free)
teachrdan 3y ago
> At this point BTC is, functionally, just an alternative asset that hedges against inflation You are completely ignorant. I'm not saying that in a mean way, I mean it in the purest sense possible: You have no idea what you are talking about. According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems." Bitcoin is obviously a speculative asset whose value goes up when inflation is low and people have money to spend on speculative assets. The fact that we use 2.3% of our nation's electricity on it is unjustifiable. https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/
- pton_xd 3y ago
  > According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems." > https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/ That graph is charting BTC price to BTC supply inflation, not general economic inflation (which is what I'm talking about).
  - teachrdan 3y ago
    I apologize, I think you may be correct there. Could you please refer me to a graph showing the relationship between BTC and inflation? Because inflation over the last 12 months is relatively low, at 3.4%, while BTC is very high, at $47,621. Then again, BTC hit a high of $65,000 back in November of 2021, when inflation rates were indeed high at 6.8%. This seems to suggest a weak relationship at best between BTC and inflation rates.

FireBeyond 3y ago

> But honestly that's the price we pay for not having sound monetary systems. Are you implying that BTC is a "sound monetary system"? Because many people will argue with that.

pton_xd 3y ago
Not at all, I'm saying BTC is an asset that hedges against unsound monetary systems.
- lottin 3y ago
  No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine. Bitcoin is neither an alternative to the international monetary system, nor a hedge. It's a joke. A gambling instrument for financially illiterate people.
  - pton_xd 3y ago
    > No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine. Obviously it is functional, I never said it wasn't! Inflationary systems have a lot of benefits -- they encourage consumption, erode the value of debt over time, etc. But there are downsides, too. Savings and purchasing power are destroyed over time. They encourage investment in hard assets like real estate and BTC to protect wealth. And so you get some waste, too. There is no free lunch.
    - lottin 3y ago
      The international monetary system isn't a deflationary system per se. It can accommodate a variety of monetary policies, including deflationary policies. As far as bitcoin being a hard asset, this isn't entirely correct either. Not only does bitcoin not generate income, but it consumes income. You see, the bitcoin network is extremely expensive to maintain, and the owners of bitcoins are the ones who bear the cost. Either they pay with fees -unlikely-, or they'll pay by losing value in their investment -most likely. There's no way around it.
  - t0bia_s 3y ago
    It's not. Fiat money drives inflation. The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Since then, huge increases in the supply of paper money have occurred in a number of countries, producing hyperinflations – episodes of extreme inflation rates much greater than those observed during earlier periods of commodity money. https://en.m.wikipedia.org/wiki/Fiat_money https://en.m.wikipedia.org/wiki/Fiat_money
    - lottin 3y ago
      Hyperinflation is extremely uncommon, especially in developed countries, and when it occurs it's always caused by incompetent or corrupt governments, not by the currency itself.
      - t0bia_s 3y ago
        Sure, it multiple effect of devaluation of money. So it's just a matter of time when citizens loose trust in fiat currency and start looking for other solutions, like decentralised cryptocurrency.
        lottin 3y ago
        Wishful thinking. Cryptocurrencies have failed to gain traction even in countries experiencing hyperinflation. People don't trust a fiat "currency" that is issued by anonymous entities and is backed by nothing. Especially when it's been known to depreciate dramatically in the blink of an eye. People trust fiat currencies that are issued by reputable institutions that give credible assurances about the purchasing power of said currencies. This is why such currencies as the US dollar and the euro are used all over the world for international trade, and cryptocurrencies are not.
        t0bia_s 3y ago
        Trust in traditional currency shaken quite significantly in last 3 years. Especially when inflation ruins many businesses and government justify inflation by war and green energy. When you cannot make living from money that you get from your hard work, naturally, you are forced to look at alternatives. As more people adopt cryptocurrencies, the less value traditional currencies had and eventually ignores inflation. Which, for now, bitcoins does. It just isn't that much popular yet. No one would expect ten years ago that some cryptocurrency would survive or be adopted by more and more people. But somehow, it's still there and grows every year. If crypto wouldn't be a thing, there wouldn't be plans for digital Euro by ECB for example. Basically same thing as BTC, except with regulations with centralized bank. To be clear, I'm not a fan of digital currencies. Cash is still most private and free way of exchange method. For digital, you need electricity, device and data which many cannot afford to have.

MichaelZuo 3y ago

It already exists it’s called gold. There are some hassles associated with physical storage and transport of gold but not 2.3% of total US power consumption worth of hassles.

VikingCoder 3y ago
To people who love gold, I always want to ask what you think should happen if Elon Musk claims a meteor one of his robot ships landed on, that's got 1000 times more gold inside it than there is gold on Earth. What do you think should happen?
- ben_w 3y ago
  This kind of thing is why we stopped using the gold standard. On the other hand, BTC prices changes are so wild that it makes gold seem like a constant-value asset.
- MichaelZuo 3y ago
  Why should anyone respond and speculate based on a hastily written hypothetical? You need to put in some genuine writing effort for folks to take it seriously. Offer some substantial, falsifiable, claims/arguments/etc.
  - VikingCoder 3y ago
    If someone wants the world economy to be based on a commodity such as the metallic ore gold, then I wonder what they think would happen to the world economy, and more importantly all of the people in it, if all of a sudden, the world supply of the metallic ore gold went up by three orders of magnitude, all owned by literally one person. Do they think people would continue to use the metallic ore gold as their currency, and they would just accept the insane inflation? And the fact that 99.9% of the world's wealth is now concentrated in the hands of one person? Or do they think we would rapidly switch to a different commodity as our currency? Also, why should anyone respond? Because they think the topic is interesting. I thought that would be clear. If you cannot imagine the nightmare scenario and you need "genuine writing effort" for you to imagine it, then it sounds like you don't think the topic is interesting. Maybe just let other people hash it out.

Workaccount2 3y ago

Hedging against inflation with a wildly volatile asset. Genius. You might lose 30% of your value, but hey, you didn't lose that 3.2% to inflation!

sak5sk 3y ago
you can't be serious, have you seen how much bitcoin is up?

JumpCrisscross 3y ago

> BTC is, functionally, just an alternative asset that hedges against inflation Bitcoin is a terrible inflation hedge. This is quantitaitvely demonstrable over its entire existence. It's a good gambling asset, and in my opinion, should be taxed as such.

rcxdude 3y ago
In some countries, that would decrease the taxation! (In the UK, for example, gambling income is tax-free)

teachrdan 3y ago

> At this point BTC is, functionally, just an alternative asset that hedges against inflation You are completely ignorant. I'm not saying that in a mean way, I mean it in the purest sense possible: You have no idea what you are talking about. According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems." Bitcoin is obviously a speculative asset whose value goes up when inflation is low and people have money to spend on speculative assets. The fact that we use 2.3% of our nation's electricity on it is unjustifiable. https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/

pton_xd 3y ago
> According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems." > https://charts.woobull.com/bitcoin-inflation/ https://charts.woobull.com/bitcoin-inflation/ That graph is charting BTC price to BTC supply inflation, not general economic inflation (which is what I'm talking about).
- teachrdan 3y ago
  I apologize, I think you may be correct there. Could you please refer me to a graph showing the relationship between BTC and inflation? Because inflation over the last 12 months is relatively low, at 3.4%, while BTC is very high, at $47,621. Then again, BTC hit a high of $65,000 back in November of 2021, when inflation rates were indeed high at 6.8%. This seems to suggest a weak relationship at best between BTC and inflation rates.