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This does, however, bring into question whether bitcoin can ever compete with the conventional financial system. It seems that the cost of preventing counterfe

This does, however, bring into question whether bitcoin can ever compete with the conventional financial system. It seems that the cost of preventing counterfeiting, and other comparable attacks against the conventional financial system, is much lower than than the cost of the proof-of-work calculations done in bitcoin. In fact, by design the cost of these calculations must be significant, otherwise it would be cheap to hijack the bitcoin system. I'm aware of some alternatives to proof-of-work, but until we see more of this in practice, I will continue to bet on fiat money as the future of money.

pcbeef 13y ago
It's not just proof-of-work though. It's everything. It's maintaining the entire balance sheet since the beginning of the first minted coin by Satoshi himself. Doing a simple google search shows that counterfeiting costs the USA alone $200bn a year which is 1.2% of annual GDP. Current market cap of bitcoin is $10bn. This means that $100m would be comparative. Maybe someone can give me the numbers on mining hardware and electricity prices. To be completely accurate, we need to include cost of minting physical dollars etc...maybe someone can do a better analysis on all this but I'm highly skeptical that bitcoin costs more to run than conventional financial systems.
- yetanotherphd 13y ago
  That is counterfeiting of goods, not money. Maybe edit your comment and I will reply again? Also the correct figure to compare with the market cap of bitcoin is M1 (approx 2.5 Trillion) not US GDP (approx 16 Trillion)
runeks 13y ago
> It seems that the cost of preventing counterfeiting, and other comparable attacks against the conventional financial system, is much lower than than the cost of the proof-of-work calculations done in bitcoin. What do you base this assertion on? I have no idea what the US spends annually on preventing counterfeiting. Do you?

pcbeef 13y ago

It's not just proof-of-work though. It's everything. It's maintaining the entire balance sheet since the beginning of the first minted coin by Satoshi himself. Doing a simple google search shows that counterfeiting costs the USA alone $200bn a year which is 1.2% of annual GDP. Current market cap of bitcoin is $10bn. This means that $100m would be comparative. Maybe someone can give me the numbers on mining hardware and electricity prices. To be completely accurate, we need to include cost of minting physical dollars etc...maybe someone can do a better analysis on all this but I'm highly skeptical that bitcoin costs more to run than conventional financial systems.

yetanotherphd 13y ago
That is counterfeiting of goods, not money. Maybe edit your comment and I will reply again? Also the correct figure to compare with the market cap of bitcoin is M1 (approx 2.5 Trillion) not US GDP (approx 16 Trillion)

runeks 13y ago

> It seems that the cost of preventing counterfeiting, and other comparable attacks against the conventional financial system, is much lower than than the cost of the proof-of-work calculations done in bitcoin. What do you base this assertion on? I have no idea what the US spends annually on preventing counterfeiting. Do you?