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Old December 7th, 2017, 04:47 PM   #1
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Unintended consequences, Bitcoin chapter

I think about this:

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Digital financial transactions come with a real-world price: The tremendous growth of cryptocurrencies has created an exponential demand for computing power. As bitcoin grows, the math problems computers must solve to make more bitcoin (a process called “mining”) get more and more difficult — a wrinkle designed to control the currency’s supply.

Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day. And miners are constantly installing more and faster computers. Already, the aggregate computing power of the bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined.

The total energy use of this web of hardware is huge — an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy annually. And that power-hungry network is currently increasing its energy use every day by about 450 gigawatt-hours, roughly the same amount of electricity the entire country of Haiti uses in a year.
Bitcoin could cost us our clean-energy future | Grist
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Old December 7th, 2017, 04:54 PM   #2
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And the use of bitcoin as a currency has been greatly curtailed. It's way too volatile.
And when they run out of "greater fools", the price goes back down, in a day or two.
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Old December 7th, 2017, 05:15 PM   #3
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Lol.


Its unstable they say...it will never last they say...

Years later...its for terrorists and criminals...when that doesn t stick.



Oh, look at all of the power it is using.


Crypto currency is the future. You guys don't have to get used to it as, well... because future.


Them darn horseless carriages.
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Old December 7th, 2017, 06:05 PM   #4
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Two things to consider:

1. As the semiconductor fabrication technology to produce integrated circuits (ICs) improves, mainly or essentially in the form of trace linewidth reduction, the GPUs, FPGAs, and ASICs (for the hash function) that are used for crypto-mining will use less energy for the same hash rate. The older GPUs/FPGAs/ASICs that take more energy will no longer be profitable, so they'll become obsolete & no longer be used for crypto-mining (meaning they'll no longer be consuming the larger amounts of energy they take to run).

2. Currently we have the computers used by banks, check clearing houses, the credit card industry, money wiring services, which are currently using up a certain amount of energy, and those systems could be replaced by Bitcoin. That's just what we have on the surface. Cash registers, for example, use energy. The armored trucks that are used to pick up and deliver cash between businesses and banks use energy. The manufacturing of coins and bills use energy and resources to produce. There's also the overhead for facilities & staff for these financial businesses or institutions, and Bitcoin can replace all of that too. There's probably much more than this which can be added to this list before we even get to irreducibles.

Keep in mind that Bitcoin is a world-wide network, so all of the bank or other financial activities throughout the world have to be taken into account.

Anyways, in order to analyze this accurately, we have to take into consideration all of the resources and energy that the entire conventional financial industry that pertains to what Bitcoin could replace consumes, and subtract that from what the crypto-miners with improved IC technology will consume. Suppose crypto-miners take 1 gigawatt (it's half of that according to this IEEE source: https://spectrum.ieee.org/energy/pol...to-run-bitcoin ) and the conventional financial industry collectively takes 3 gigawatts (that's just a guess I pulled out of my fanny pack), that would be a net reduction of 2 gigawatts.
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Last edited by Neil; December 7th, 2017 at 06:08 PM.
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Old December 7th, 2017, 06:46 PM   #5
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A root issue as far as I am concerned is that people curse fiat currency because it doesn't have any backing. Well, what backing does bitcoin have?

A dollar bill and a bitcoin are both worth the same, what someone is willing to trade for it, be it some minutes of their labor or some fraction of a steak.
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Old December 7th, 2017, 07:25 PM   #6
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A root issue as far as I am concerned is that people curse fiat currency because it doesn't have any backing. Well, what backing does bitcoin have?

A dollar bill and a bitcoin are both worth the same, what someone is willing to trade for it, be it some minutes of their labor or some fraction of a steak.
That's a good question. Bitcoin, or cryptocurrencies (as mined, decentralized digital currencies) in general, are backed by their intrinsic value as a medium of exchange in the same way that gold or silver as a former medium of exchange were (and still are) backed by their intrinsic value.

Here's a pretty good article that goes into more detail: https://tradeblock.com/blog/refuting...-bitcoin-money

Bitcoin is probably more stable than gold, since it's limited to 21 million and that number doesn't change, and it's not inconceivable that one day we might start mining asteroids full of gold; that would increase the supply of gold and as a result reduce its scarcity.
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Old December 7th, 2017, 07:44 PM   #7
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A root issue as far as I am concerned is that people curse fiat currency because it doesn't have any backing. Well, what backing does bitcoin have?

A dollar bill and a bitcoin are both worth the same, what someone is willing to trade for it, be it some minutes of their labor or some fraction of a steak.
Governments manipulate their currencies to hide the costs of things that would otherwise infuriate their subjects.


W/o the USD there would be no MIC or endless wars.
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Old December 7th, 2017, 08:30 PM   #8
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That's a good question. Bitcoin, or cryptocurrencies (as mined, decentralized digital currencies) in general, are backed by their intrinsic value as a medium of exchange in the same way that gold or silver as a former medium of exchange were (and still are) backed by their intrinsic value.

Here's a pretty good article that goes into more detail: https://tradeblock.com/blog/refuting...-bitcoin-money

Bitcoin is probably more stable than gold, since it's limited to 21 million and that number doesn't change, and it's not inconceivable that one day we might start mining asteroids full of gold; that would increase the supply of gold and as a result reduce its scarcity.
What intrinsic value does bitcoin have that a paper dollar doesn't?
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Old December 7th, 2017, 08:31 PM   #9
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Governments manipulate their currencies to hide the costs of things that would otherwise infuriate their subjects.


W/o the USD there would be no MIC or endless wars.
And nerds in their mother's basements manipulate bitcoins.
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Old December 7th, 2017, 09:21 PM   #10
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And nerds in their mother's basements manipulate bitcoins.
To buy Lamborghinis.
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