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Bitcoin Sees Wall Street Warm to Trading Virtual Currency

nytimes.com

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Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#31

Post by eof »

hudon wrote: post #28
eof wrote: post #23

Earlier quoted context omitted.

i have paid and been paid overseas in bitcoin. as have others.. how is this not valuable? no one judge can take it away from me, and i value that as others do. i fail to see how a decentralized store of value and exchange is nil value

I think you're arguing for the remittance use case but this has been shown to be inefficient compared to other methods [0][1][2]. Maybe lightning network will change that but again, it is just a wild guess from crypto-fans right now... and that's my point: why are we spending so much on hunches? Why aren't we building this thing responsibly if we know it costs so much in electricity? [0] https://www.coindesk.com/why-…

i am not talking about remittances though that is also a legit use case. i just meant overseas business.

i don't really see its electricity use as a big issue since market forces will inevitably reduce cost or increase supply.

part of the reason though people will put a lot into an experiment like this is that the network effect is important to its success. needs to be very liquid.

for me personally having a fungible electronic currency that cannot be taken away by law or inflation is itself valuable

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#32

Post by conanbatt »

selectodude wrote: post #2

Wall Street will trade anything they can make money on. Better to make money on transactions than trying to win the ponzi scheme.

"And I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, ‘I can’t be left out.'” - Charlie Munger

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#33

Post by hndamien »

hudon wrote: post #26
hndamien wrote: post #11

Earlier quoted context omitted.

You are focusing on the wrong thing. Energy production is the issue, not energy use. There is an equilibrium to be found in the free market based on the value of BTC that is provided and the economic expenditure to mine it with the cost of electricity used to get there. Oh wait! I found the link in the causal economic chain! We don't put a price on carbon! Put your energy into yelling there and not at yelling at Bitc…

Nations and corporations already compete at finding means of cheap or sustainable energy production. How does Bitcoin provide an efficiency here? Furthermore, if we can't find a stable use case for the blockchain and there are no more greater fools investing--the bubble collapses and all the ASICs end up in landfills--does society suddenly stop innovating in energy production? Can you point me to any good literature…

I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders).

The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it costs to secure the network in relation to the reward paid for it. In these costs are electricity costs, for which miners will find the most efficient means such that they are profitable. The energy prices are determined by the economic actors producing it. The will charge what the market will bear such that they are profitable and competitive. All this is a wonderfully efficient system except for the fact that the externality you are worried about (pollution from energy production) is not accounted for anywhere in the system. In fact, it is almost incentivised, since it is likely that I can produce dirty power cheaper than I can clean power (although this is changing). If you did account for this, dirty power would become more expensive, miner using it would disappear or choose clean energy.

Hence, the problem is not "It uses too much energy! So wasteful!!!!" The problem is "We don't account for externalities!!!! So bad!!!"

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#35

Post by hudon »

hndamien wrote: post #33
hudon wrote: post #26

Earlier quoted context omitted.

Nations and corporations already compete at finding means of cheap or sustainable energy production. How does Bitcoin provide an efficiency here? Furthermore, if we can't find a stable use case for the blockchain and there are no more greater fools investing--the bubble collapses and all the ASICs end up in landfills--does society suddenly stop innovating in energy production? Can you point me to any good literature…

I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders). The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it…

Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful:

"Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that equilibrium capacity acquisition in proof-of-work mining is excessive. Second, proof-of-work mining generates greenhouse-effect negative externalities, whose order of magnitude is significant. As of January 2018, the electricity consumed for Bitcoin mining was equal to the electricity consumption of over 3,400,000 US households, with an average consumption per transaction of around 300 KWh. Pigovian taxation could curb overinvestment in mining, but it might also be difficult to put in place, given the international decentralisation of mining."

source: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#36

Post by hndamien »

hudon wrote: post #35
hndamien wrote: post #33

Earlier quoted context omitted.

I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders). The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it…

Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful: "Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that…

I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#37

Post by Fomite »

mrb wrote: post #15
hudon wrote: post #9

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing pay…

Don't refer to the Digiconomist BECI for electricity consumption figures. The author makes fundamentally flawed assumptions, causing him to overestimate the consumption by 1.5× to 2.8×, and likely by 2.2×. BECI starts with calculating average mining revenues based on a 439-day (variable) moving average of the Bitcoin and Bitcoin Cash prices. Then BECI assumes a fixed 60% share of these revenues are spent on electrici…

That's a really big "only" even if we accept all those assumptions.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#38

Post by hudon »

hndamien wrote: post #36
hudon wrote: post #35

Earlier quoted context omitted.

Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful: "Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that…

I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.

You’re proposing we fix energy production instead of fixing Bitcoin AFAIU. However, until we know how to do that OR until we have strong use cases for Bitcoin, why not put tight controls on proof-of-work mining to reduce electricity consumption?

The “let the market find equilibrium” philosophy is reckless when we’re talking about global environmental concerns IMO.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#39

Post by Fomite »

DINKDINK wrote: post #29
jonny_eh wrote: post #22

Earlier quoted context omitted.

Has the growth in popularity of BTC affected the perceived value of gold? You seem to be asserting that crypto-coin popularity will save the planet by reducing gold mining, I'm very skeptical.

Advantages of gold over bitcoin: If there's a total internet && computer && electricity apocalypse, a physical barter exchange with gold is more trustless than bitcoin. You can still transact bitcoin but there's trust involved. Advantages of Bitcoin over gold: No trusted third party (If you're moving sizable sums of gold, you're doing it with a trusted third party[TTP)) 99.99226%[1] transaction uptime (Your TTP keep…

I've always thought the Bitcoin use-case (admittedly from a subset of Bitcoin users) of "Complete collapse in the banking system" but somehow the internet still works without issue was...somewhat tenuous.

Re: Bitcoin Sees Wall Street Warm to Trading Virtual Currency

#40

Post by hndamien »

hudon wrote: post #38
hndamien wrote: post #36

Earlier quoted context omitted.

I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.

You’re proposing we fix energy production instead of fixing Bitcoin AFAIU. However, until we know how to do that OR until we have strong use cases for Bitcoin, why not put tight controls on proof-of-work mining to reduce electricity consumption? The “let the market find equilibrium” philosophy is reckless when we’re talking about global environmental concerns IMO.

No, I am suggesting that the only problem here is accounting. If you have a price on carbon, the rest will sort itself out. The lack of this cost being accounted for creates the false equilibrium where we plunder the environment to efficiently meet our needs within an otherwise well designed economic system - that is only made better by Bitcoin.
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