I've been using Bitcoin to get paid for a couple of years at this point (programming work for overseas clients), and I haven't gotten scammed yet. I'm not engaged in money laundering, vaporware, fraud, ransomware, or gambling, and only the usual amount of delusion. And I don't even buy illegal drugs!
And, yeah, 13 years after the internet's invention was 01982; not only couldn't you get so much as a weather report online, much less IRC, but many of the early interesting experiments like NLS at SRI had shut down, and more and more places were disabling guest access to their hosts — you couldn't run so much as a game of ADVENT without getting a username. And a password. Things were seriously regressing. The only people you could talk to on the internet were other people who really bought into the subculture, of which there were a few tens of thousands.
So why does Bitcoin have tens of millions of users 13 years after its inception, instead of only tens of thousands like the internet?
If you live in a country with a highly functional banking system and
no kleptocracy, Bitcoin is probably a bit puzzling unless you have
family in Cuba. But it’s not puzzling at all for those of us who live
somewhere in the middle of the broad spectrum between Switzerland and
Somalia, because most places have a little kleptocracy. Argentina
is a stable democracy, far from being “a failed state,”† but if you
want to send US$500 abroad via non-Bitcoin means it’s basically
impossible, and the only broadly available savings vehicle is real
estate (“ahorrar en ladrillos”), which of course grossly inflates
real-estate prices, with a substantial part of the capital city
occupied by empty apartments someone bought “as an investment”.
Historically, Argentines have saved by buying dollars, but that’s
limited to US$200 a month now, and then only if you have a
non-under-the-table job (about a third of total employment is under
the table):
You can see that in September 02019 when this measure was imposed the
price of a dollar was AR$63.50; now it’s AR$155. So whatever savings
you had in pesos in 02019 have lost 59% of their value to peso
devaluation.
In 02001 a lot of Argentines had saved dollars in their
dollar-denominated bank accounts. This did not preserve their savings
through the financial crisis that year; the cash-strapped government
limited withdrawals to a trickle, then converted dollar deposits to
pesos at a one-to-one rate, then released the exchange-rate peg, at
which point peso went overnight from being worth US$1 to being worth
US$0.25 before settling at about US$0.31 for the next few years. The
US did something similar in 01933.
Some might suggest using “alternatives to banks like credit unions
where customers—as owners—hold more power,” but Credicoop depositors
suffered the same two-thirds confiscation of savings as depositors in
for-profit banks. And they pay the same 3% tax on bank transactions
including checks. That’s more than a fast Bitcoin transaction fee of
US$15 for transactions over US$500.
But we’re not a failed state. There are no gangs of bandits roving
the streets in Argentine cities (though there are some pretty bad
slums where you’ll get robbed if you wander in without knowing
anybody). Courts, free public hospitals, and roads continue to
function, though there are more potholes than a year ago. Argentine
infant mortality is 10 per 1000 live births, down from almost 20 in
the late 01990s and the same as the late 01980s in the US; life
expectancy at birth is 77 years, worse than Switzerland’s 84, but the
same as China and Hungary, and better than Saudi or Mexico. (Somalia
is 54.)
Most of the world is worse off than Argentina, although not
necessarily in such a statistically transparent fashion. About one
fourth of the people in the world are unbanked, 51% here in Argentina;
even advanced countries like Russia, Hungary, and Uruguay have roughly
a quarter of the population unbanked:
And if your family lives in a country like Iran or Venezuela subject
to US sanctions, and you live in the US? Good luck sending them an
ACH, instant or otherwise!‡ It’s well known that Bitcoin is very
popular in Venezuela, which kind of is a failed state, so one of the
Venezuelan governments is trying to tax Bitcoin remittances at 15%.
Bitcoin handles a few billion dollars per year in such
remittances. This might seem like a trivial amount of money to someone
in a rich country, but in poor countries, it’s enough to keep several
million people alive.
Even in the US, it’s common for the police to confiscate large amounts
of paper currency just because they can (“civil forfeiture”); US bank
accounts are probably fine for US$100K but probably somewhat risky for
US$10M if the bank thinks you don’t seem like the kind of person who
ought to have it. US$10M in US$100 bills fits in a box you can wheel
around on a dolly, but Bitcoin is a lot more practical. (And of course
US$10M in dollar bills loses about US$200k per year to inflation.)
Transaction fees are usually high enough that you wouldn’t want to use Bitcoin
to pay for a can of Red Bull or even a restaurant dinner. But it’s
extremely practical as an alternative to Western Union or US$100 bills
or gold, even with the current very high transaction fees. At the
moment, the Bitcoin transaction fee is very low—the median Bitcoin transaction fee
in the last block was 0.00678 millibitcoins, which is US$0.25:
Three months ago it was at what I think of as a more normal rate of 0.31 millibitcoins, US$11, which is lower than the 3.4% spread you’d pay to a jeweler or black-market money
changer for transactions over US$350:
So, Bitcoin doesn’t have to be a cypherpunk utopia to be a big
improvement on the status quo ante. For those of you living in
stable countries where your worries are things like “instant and
extremely low-fee ACHs” and “decentralized utopia”, this may be very
confusing, but try to remember that most of the world lives in places
with much more pressing concerns, concerns that Bitcoin helps a lot
with. And you may live there too, soon—the loyal subjects of Kaiser
Wilhelm in 01913 certainly didn’t expect that in 15 years they’d be in
the middle of a hyperinflation episode that remains legendary a
century later.
I think that, by providing workarounds to the people who need them, cryptocurrencies probably not only ameliorate the most immediate and pressing concerns of poor parts of the population like Venezuelan immigrants, but probably also adjust the power balance in a more liberal and democratic direction. This will improve the chance of those concerns being ameliorated by public policy over the next decades as well. But it's hard to tell what will really happen. The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what's happened in the US over the last 50 years, in fact, only more so.
However, at this point I think the modern welfare state is already doing a good enough job of destroying itself without any significant help from cryptocurrencies—as evidence, I can point to Maduro, Macri, Bolsonaro, Trump, and Brexit, and metonymically to the social changes they betoken. So at this point I'm more worried about cushioning the collapse than preventing it.
† We’ve remained democratic since 01983, electing presidents from
three different political parties (UCR, PJ, and PRO), and there’s no
serious insurgency. It’s the economy and government policy that
are ruinously unstable, to a point that seems satirical to anyone
accustomed to the US, but is lamentably common worldwide. Rich people
sometimes say they don't know of legitimate uses of Bitcoin outside of
“failed states”.
You give convincing arguments in favor of BTC for folks living abroad in less-than-stable states. But these very arguments for which it is acclaimed have clear flip-sides that should be worrisome for those very same folks you claim it's suited for.
Safeguarding hard physical cash is something most everyone, old and young, technically literate or technically illiterate, poor or rich, intrinsically knows how to do. And when it is stolen or lost, there are viable approaches to pursue with favorable probabilities of a happy resolution: tell a police cop to see if they can catch the thief using detective work, you could try looking around if you think you might have misplaced it, etc.
With BTC on the other hand, ensuring your wallet isn't had by committed and technically proficient bad-actors or that your wealth isn't all erased in the blink of an eye with a hdd crash or a distressed acquaintance wiping your data away, you can't expect normal people to be up to the task of combatting all of this. And retrieving stolen BTCs from bad-actors living a continent away is a task that police cops are not up to doing or even the slightest bit capable of. You are a really smart guy kragen, I'm sure you won't forget your computer's password one day or have your wallet compromised, but someone like my mom or grandma would, and the thought that simple mistakes and viruses and computer illiteracy could and probably would be the thing that leaves someone's wealth irretrievably erased without much avenue of recourse saddens me, and makes me wish that people in our profession who understand this would stop encouraging its usage.
I come from a nation that ranks lower than Argentina in stability. My family went through this very dance of receiving money from abroad and having to go to WU to get it. The risk of a bad accident happening is infinitesimally small in that than with BTC.
I agree, Bitcoin isn't zero risk. But compared to my experiences with banks and WU the risk is manageably low. I have to give someone my passport and home address in order to receive money via WU, so I'm exposed to the risk that buddies of the WU employees will rob my house later. I've had to pay a collection agency thousands for fees charged on a bank account that was empty and that I thought was closed. I've had my bank ATM card cloned by a skimmer on an ATM while I was traveling overseas, and I've had my bank credit card stolen out of my pocket on the bus. I've had WU give me ridiculously unfavorable exchange rates, and there was nothing I could do about it. In none of these cases are the police of any help; they exist to help the rich, not normal people.
With either banks or Bitcoin, you can hedge your risks by converting to fiat currencies. But with fiat currencies, you can hedge your risk by converting (partly) to Bitcoin.
So maybe you should buy your grandma a Trezor. What country does she live in?
> I'm exposed to the risk that buddies of the WU employees will rob my house later
In comparison to getting your wallet compromised by viruses searching for it (and they will probably become more aggressive and adept as BTC usage increases), the chance of this happening I feel is exceedingly low. And avenues of recourse exist: there are clear leads to follow on for an investigative team.
> I've had my bank ATM card cloned by a skimmer on an ATM while I was traveling overseas
I know that my credit card covers me for this and I would get my money back if such a thing were to happen to me.
> I've had WU give me ridiculously unfavorable exchange rates, and there was nothing I could do about it
And BTC transaction fees are ever-increasing. And so is its environmental cost.
My grandma lives in .pk. I fear she would not be capable of understanding the concept of BTC or Trezor as she can barely understand how a TV remote works. She does very much grok the concept of cash money though, and is quite fond of exercising her freedom with it.
When I first explained bitcoin to my mom and her friends, they didn't get it.
The second time, I explained it, they didn't get it. The third time, I sat them down, and made them learn how to run full nodes, run a few commands on the command line, and use bitcoin. Western Union is certainly not guaranteed, nor tyranny proof. If the governments of Argentina or Pakistan need the USD bad enough, they will every dollar Western Union is holding for recipients. To keep the story quiet and the money flowing in, they may imprison the recipients and their families. Desperate times call for desperate measures.
Reminds me of the old adage about technical solutions to social problems. Cryptocurrency isn't going to un-fail these states, all it does is enable the wealthy to evade currency controls and reinforce the downward spiral. If someone lives in an oppressive regime it's governmental change they need, not worldwide abandonment of financial regulation just so the lucky few can escape.
The majority of the Venezuelan economy exists outside its borders, because that's the only place where it can exist.
Currency controls are actually preventing the recovery of the country. They are a short term fix for a short term problem but they create long term problems in the process and those long term problems are definitively the worse poison.
The wealthy can already evade currency controls; that's what it means to be wealthy, at least in a place that has them. Bitcoin and similar systems enable the poor to evade currency controls, as well as frankly confiscatory regulation like the bank-deposit-conversion episode I mentioned, precisely because it's accessible to everyone, not just the lucky few.
I've already addressed your point about governmental change.
In Argentina? Some of them use LocalBitcoins, while others walk into a storefront that advertises Bitcoin or remittances to Venezuela, and hand over their pesos to the guy behind the counter. There are also groups on WhatsApp and Facebook to find counterparties. That's the reality: Venezuelan refugees, who I guess are "criminals" to Maduro's regime and people like you, and illegal aliens like me, who I guess are "wealthy".
In reality what's probably happening is the person in Argentina is taking Pesos and transferring the money in some manner to a US account that supports Zelle, which has become the payment method of choice in Venezuela. The remittance is then sent to someone's friend's account using Zelle, and then used for payments. Bitcoin transaction fees have just been too high to make it viable for remittances.
Maybe in some cases, and maybe sometimes the settlement method changes behind the scenes without the customers being aware of it, but keep in mind that opening US accounts is pretty difficult for Venezuelans in either Venezuela or Argentina. And Bitcoin transaction fees have never been so high as to make them unusable or even uncompetitive for weekly or monthly B2B settlement, and, as I pointed out above, today Bitcoin transaction fees were around US$0.25, which is low enough to be viable even for a pack of cigarettes, though I think US$10 is more normal.
Over the counter? People still trade and meet in person, you know? The reality is the US petrodollar is the preferred currency of choice for criminals.
The poor can’t afford btc. If it were to become the normal method of transacting, people would get on average one transaction each per decade or so. That means that transaction fees will be obviously way too high for the global poor to possibly use.
> I've been using Bitcoin to get paid for a couple of years at this point
How do you turn your Bitcoin into food, housing, utilities, and other necessities?
> And, yeah, 13 years after the internet's invention was 01982
The Internet was not available to virtually anyone in 1982 much less 1969. Nor was the ARPANET of 1969 even remotely similar to the Internet. TCP came about in 1974. IPv4 in 1982.
> So why does Bitcoin have tens of millions of users
It doesn't. It has a lot of speculators, and a handful of users. And no one knows or could possibly know how many there are.
> How do you turn your Bitcoin into food, housing, utilities, and other necessities?
I sell it for dollars to people in person; some of the dollars I have to change into Argentine pesos before I can spend them. Isn't that how everybody does it?
> The Internet was not available to virtually anyone in 1982 much less 1969
It was available to almost anyone who knew someone who had access, which is the same situation as Bitcoin. Precisely what Maciej is complaining about is that so little of the economy is hooked up to Bitcoin is that most of us can't buy a pizza with it without going through intermediaries.
> Nor was the ARPANET of 1969 even remotely similar to the Internet
It was remotely similar; it provided telnet over a packet-switched network, with routing. You could argue that substantial technical changes happened in Bitcoin over the last 13 years, too. Maciej did, in fact, make that argument: he pointed out in particular the dramatic shift to centralized intermediaries like Coinbase (the ANS.NET of Bitcoin?) and from CPU mining to GPU, FPGA, and then ASIC mining, as well as the proliferation of alternative cryptocurrencies. We could also mention segwit, the BCH schism, Lightning, BIP39 and Electrum seed phrases, and lightweight clients like Electrum. Those changes are not over yet. So the situations are in fact quite closely parallel.
> I sell it for dollars to people in person; some of the dollars I have to change into Argentine pesos before I can spend them. Isn't that how everybody does it?
No, most people just spend their currency directly on the things they need to purchase, actually.
> It was available to almost anyone who knew someone who had access
That's not even remotely true, and is also a tiny number of people.
> It was remotely similar
But... it wasn't. As I already have shown.
The ARPANET, then the Internet, have all gone through steady evolution. It has not spent 13 years stagnant or regressing in terms of either design or use.
Just because you read somewhere that "ARPANET was the predecessor of the Internet" does not mean that ARPANET was the Internet.
This is willfully ignorant and motivated reasoning. Crypto has more uses than I care to even list, in fact it’s quite easy to come up with many of them, but it’s weird that people who’ve set in their ideology against it won’t ever budge. In another thread I listed out a handful, and it was so interesting to see people do what always happens in political fights: they take a small subset of the idea or just one of the things that they feel they can best counter, and counter that, conveniently ignoring that they aren’t really engaging with the point at all but rather very small branches of the argument.
If you care to see, it’s in my comment history not long ago. And the thread is fascinating because at best the replies just cherry pick and do semantic tricks like this.
Crypto has a wealth of interesting uses. Tech company co-ops, incentivizing content curation, new and organic stock distribution mechanisms for open source projects, and of course the giant one of providing a far better investment and transfer vehicle to the non-first world countries.
I mean, I can totally see the arguments that it is wasteful, or a bubble, overhyped, and not reaching its potential. But the ones who say it has no or next to no uses are in my opinion on the same plane as Krugmans “the internet will be less useful than the fax machine” or the classic Slashdot iPod “less space than a nomad” comment. It may take even 20 years to prove it, IMO that’s not unreasonable, but it will be claim chowder I’ll be happy to revisit.
If proof of stake works out, there’s no doubt the next Google will be a crypto company that gives revenue back to the user base to incentive good contribution. Content sites absolutely will be totally disrupted. Well look back at writing reviews for the Yelps and Googles as being anachronistic, “why did we used to give all this content to the largest company in the world for free”. Instead, a crypto-based Yelp or Reddit that used a coin and distributed it fairly in relation to contribution would absolutely blow up.
I think VC is also better done with coins in general. Take any traditional tech company that has nothing to do with crypto and just change one thing: instead of paying early adopters who help the platform grow $150 bucks, which is nothing, pay them in what is essentially a micro-dose of stock. That’s a 10x more incentivized early adopter because they actually could make something more than lunch money.
The reason crypto is blowing up isn’t because it’s a ponzo scheme. It’s because laws around accredited investing are truly the most egregiously disgusting instantiation of class warfare ever to exist, and finally small guys have a chance to do what the wealthy have been doing since forever: take their extra money and invest it. All the “pure” crypto companies are total bullshit, minus many BTC and ETH, because they have no product. That I agree with. But in time you’ll see a huge growth in companies that are simply normal tech companies with novel tech/uses, but who build in community ownership, rewards and incentives that actually share profit with their user base.
Again: why do people not get paid for contributions to Pinterest, Yelp, Reddit? These are companies paying millions of dollars to employees, and 100% of their content is given to them by users. In a better world they are actually run by the community, owned by the community, and developed in the open.
> If proof of stake works out, there’s no doubt the next Google will be a crypto company that gives revenue back to the user base to incentive good contribution.
Any company could do this with fiat currency today. "Crypto" has nothing to do with it.
> Take any traditional tech company that has nothing to do with crypto and just change one thing: instead of paying early adopters who help the platform grow $150 bucks, which is nothing, pay them in what is essentially a micro-dose of stock.
Likewise, there is nothing stopping a company doing this today without "crypto".
> finally small guys have a chance to do what the wealthy have been doing since forever: take their extra money and invest it
You're ignoring the existence of the stock market, index funds, exchange-traded funds, fractional share purchasing, Robinhood no-fee trading, etc.
Crypto gives the ability for the community to actually control and be confident they won’t get slowly squeezed out, because you can actually codify control. So no, you can’t do that with a traditional company. And I’m somewhat sure it’s not legal to pay users in micro shares of common stock, but even if it was, you have the same issue of the stock having almost no value as it could at anytime be devalued as the company has total control. Again, it may be possible, but crypto makes it obvious and easy and strongly enforced, whereas some sort of legal paperwork setup will never achieve the same confidence.
And your final response is an absolutely perfect example of cherry picking. I said VC, you reply with index funds. Laughable.
> Crypto gives the ability for the community to actually control and be confident they won’t get slowly squeezed out, because you can actually codify control.
This is nonsense. Sure, on a technical level, you can ensure that Google2 will only have 10,000 crypto-shares, and will never issue any more. Regular Google can issue new stock and there's not much that can be done.
But the volume at which public companies or even private companies trade stock is so huge that there's no use case you can imagine that would tank the stock. You're talking about micro-payments -- Google2 is not going to pay people $30 an hour (crypto or USD) to upvote comments or submit useful content. I know this because Google1 barely pays YouTubers (outside of the top x% who make real money, and even they have ad dollars siphoned off by Google). Google1 could issue a million new shares of the stock to pay its moderators, and all they'd do is tank the stock price. But all their most valuable employees are paid heavily in stock. They wouldn't be happy and would quit or riot. It's a soft-regulation on that kind of silly behavior.
Despite 20+ years of "pay users to use the site" being an obvious conclusion, almost no site has done this in a meaningful way. There are hardly any even paying people in funny money / company scrip. All I can think of are Eve Online and Steam. You can't convert money OUT (regulations) but you can use their chuck-e-cheese tokens to buy stuff within their business. On Steam, the money you get per value the user puts in is a pittance. Valve takes a 30ish % cut on almost everything you do, even "secondhand" trading card transactions.
You can speculate that financial regulations are preventing it, but I think it's more likely that the owners of Google2 would much prefer to keep as much capital for themselves and not let its users/"staffers" get a slice. Similarly, Google1 pays its low-level moderator staff very little (compared to an engineer or upper level manager). Most corporations turn a profit. That's a very clear indicator of 'money on the table' - money that the owners chose not to return to the people performing labor for the company, whether volunteer or employee.
You imply a kind of 51% governance of an open source or community driven project. History shows that community projects fork all the time over personal differences, and majority does not always rule. Google2 coin won't matter if people get mad at Google2's governance and fork it for Google2.5 coin. If you can't fork the coin, then it sounds like regular stock or company scrip.
The argument of traditional stock being worthless isn’t just that they could dilute, which they could in any number of ways, but they could end sharing anytime, change the % share, or do any number of the squeezes for-profit VC companies end up doing like ”introducing” prioritized white-labeled content. Again, the trust is what matters.
> Google2 is not going to pay people $30 an hour (crypto or USD) to upvote comments or submit useful content. I know this because Google1 barely pays YouTubers (outside of the top x% who make real money, and even they have ad dollars siphoned off by Google)
Google pays tons of content people, they also have 130 billion in cash.
Google2 may make the mistake of being greedy, but GoogleN may not because they have a team that realizes less greed = users paid more = more incentive. Forking is a feature not a bug.
Success being correlated with fairness in equity distribution, users having stake and say in the platforms they use, creators having contracts with how they earn their living that can’t be changed on a whim, and if they ever do change, it’s by a democratic process, and creators then being able to vote with their feet to fork.
Seems like a good thing.
> even they have ad dollars siphoned off by Google
> That's a very clear indicator of 'money on the table' - money that the owners chose not to return to the people performing labor for the company, whether volunteer or employee.
To be clear, I think these companies need to be non-profit but still pay their team well (a fixed rate to some sort of inflation basket that tracks competitive engineer salaries, for example).
What is unclear to me, is how these remittances work in practice. I get that in the US you can exchange USD to Bitcoin with a credit card and then send that to a person in, say, Venezuela (or share the wallet password). But how is it converted back to Venezuelan Bolivar? I can't imagine you buying a pizza with bitcoin in Caracas.
Side question, why do you write your years with a leading zero? I've never seen that before and it has quite a cognitive strain for me.
I haven't been in Venezuela since 02006 so I don't know how people there cash out of Bitcoin. I'm guessing nobody has a clear view of the whole system, since being transparent to Maduro's thugs is not in the interest of any of the participants. If I had to guess, I'd guess that Venezuelans who are fleeing the country sell their dollars for Bitcoin, and Venezuelans whose family is abroad buy them.
One thing I do know is that a lot of overseas Venezuelans whose remittances are via Bitcoin don't know Bitcoin is involved. They know a storefront where people transmit money to Venezuela, and the guy there tells them where to instruct their family members in Venezuela to pick up the money. How the agent in Venezuela gets paid is no concern of the customers; they only care that the money they give the guy arrives safe and sound.
Are you in Venezuela? I notice that that article is about something that was expected to happen, not a report on things that actually have happened... what's the story on the ground?
> why do you write your years with a leading zero? I've never seen that before and it has quite a cognitive strain for me.
Not OP, but I had the same question and did a few seconds of cursory searching to no avail. But rather than cognitive strain, I found it opened up a much larger vista on the perception of time and our seeming place in it. While I am unlikely to adopt it, perhaps the experience would be even broader with a few more zeros tacked on! ;-)
Relatedly, I like the Human Era notation for expanding the idea of years, where 1 AD is equal to 10,001 HE to denote approximately ten millennia since the start of human cities and agriculture, i.e. civilization. We're living in 12021 HE now.
I have no idea why you are being downvoted. This is absolutely valid reasons for bitcoin to exist, but you don't have to be a failed state.
I'm from Canada, and moved to Australia. I was moving money from Canada to Australia, it was easier, faster, and cheaper for me to move that money via crypto (I used Eth rather than Bitcoin at the time) than going through the banking system.
It’s the long date concept, promoted by the Long Now foundation [1] which promotes long-term thinking and gives a nod to this by writing years in 5-digit format.
The irony with the GP’s post is that I can’t see using Bitcoin, with its current incredibly-high power usage and associated environmental destruction, as long-term thinking in any way, shape or form.
Bitcoin doesn't have associated environmental destruction right now that I know of. I assume you're referring to its energy consumption, but at the moment it's a subsidy to renewable energy, because nuclear energy and fossil fuels (except for flare gas) are too expensive to compete with super-cheap wind, geothermal, hydroelectric, and photovoltaic energy.
Now, at some point in the future, Bitcoin might become an environmental problem; the cheapest ways to get energy have been environmentally destructive in the past, and they may be so again. Maybe in 50 years we'll have to campaign against Bitcoin miners who want to convert the mass of Jupiter into energy with their fusion reactors or black-hole clusters. But right now the only places that Bitcoin is causing environmental damage are places where some government has unwisely subsidized fossil-fuel consumption, and Bitcoin itself is what puts an end to those subsidies.
It is simply not true that if governments removed all fossil-fuel subsidies today then electricity production would become 100% carbon-free overnight. There are massive issues around supplying base load (requiring cheap energy storage tech that doesn't exist yet), construction lead time, limited materials, workforce, and so on and so on. Then the non-fossil-fuel energy sources have their own environmental costs, e.g. we aren't able to recycle grid-scale batteries or turbine blades yet and those produced today may never be recycled.
For the forseeable future energy production cannot be carbon-free. All uses of energy, including Bitcoin mining, will continue to impose an environmental cost. For those of us who believe Bitcoin achieves nothing useful that can't be done better some other way, that cost translates into a pure negative.
> The Harvard Business Review article I linked above goes into some detail about how this happens.
It doesn't make the argument you have just elucidated, which is an interesting one. I'll think about it.
> Because you judge our lives useless, you engage in motivated reasoning to find excuses to sweep us away,
"Bitcoin not useful" != "your life is useless". I think you have invested rather too much of your identity into Bitcoin.
Regarding "Roca", please check my HN bio. My real name is "Robert O'Callahan" and 'roca' is a handle I've used online since 1990. I have never heard of your "Roca" before.
I explained that for years I've been making a living by getting paid in Bitcoin, and that there isn't a better alternative. To argue that Bitcoin's uses are unimportant, you must argue that it is unimportant for me to make a living, much as Roca did with the Native Americans he murdered and enslaved.
1) You could just as fucking well be paid in something that doesn't use as much electricity as Switzerland.
2) Electricity is one of the few things that are about as fungible as money. All your blithering about how "crypto uses only the most environmentally friendly energy!" is bullpucky, since that only means that some actually useful stuff must now run on other, less environmentally friendly energy.
3) You misspelled "I sincerely apologise for my unfounded and calumnious accusation". Please stop being such an egregious arsehole.
① actually there isn't an alternative, except for working for Argentines, who are desperately competing for the available jobs.
② electricity is fungible, but not portable or storable, and is almost all generated within 200km of its point of use (and well under 10 milliseconds). Also, the supply of electrical power is not fixed; it is rapidly expanding in response to demand. So one use of electricity does not imply less electrical power available even for other things in the same location. https://news.ycombinator.com/item?id=27449443 has a much deeper dive on the issues.
WRT "roca", I guess the Author of my story has quite a sense of humor. You clearly didn't create the account or choose the name to argue against measures that limit the powers of the Argentine government to abuse fiat currencies, since you've been using the name on HN since 02014, and I believe you when you say you've been using it online since 01990.
Yet imagine my perception when I find that someone has popped up here to argue against such safeguards, and he's using the name of the guy whose face is on the $100 bill, whose fame primarily derives from commanding genocidal Argentine government abuses against the peoples in Argentina who didn't use the Argentine currency, and who is also the most famous person in the world by that name. The Roca $100 bills are gradually being replaced—all the ones I have here have Eva Perón instead of Roca on them—but it's only been, I think, a couple of days since the last portrait of that white-supremacist rapist visage has been inflicted upon me, when I got my change at the supermarket on Monday.
So, I hope you can forgive my error of assuming that the astounding degree of relevance of your chosen name to the topic at hand, which I take to be the social value of alternatives to the state-imposed currency system in Argentina, was intentional partisan trolling on your part, rather than a sort of absurd coincidence of cosmic proportions. I should have at least checked your HN bio, as you say, before assuming ill intent.
I continue to maintain that your dismissal of the utility of Bitcoin bespeaks either an astonishing degree of willingness to prioritize your own interests, and the interests of people like yourself, over the interests of people like me; or an astonishing degree of confidence in your own judgment of what causal relations obtain in Argentina over the judgment of those of us who live here.
After this exchange, though, I don't blame you if you don't think much of my judgment!
There are cases of Bitcoin mines stealing electricity and fossil fuel powerplants being retrofitted for Bitcoin mining there is no way miners care about the source of their energy.
Patently false. Bitcoin put a dollar value on under-utlized energy. That can be coal, hydro, whatever. If you believe that Bitcoin is just a more wasteful version of Paypal or ACH, then it matters a lot that this subsidized energy is being converted into waste heat by a bunch of special-purpose ASICs that have no use outside of *coins, and take a lot of metals and energy to create and ship, on limited-capacity fabs.
I ctrl-F "subsid" in your link and don't see any source for your claim. Bitcoin puts a dollar value on (subsidizes) -ALL- energy. If there's a dirty coal plant you can run in your backyard without the government shutting you down, Bitcoin wants to know about it.
Your claim is (1) bitcoin takes energy (2) renewable is cheaper than nonrenewable (3) bitcoin is causing tons of new renewable capacity.
If that were true, why isn't every power plant in the US renewable? How on earth did Bitcoin manage to get this capacity that nobody else has? Money talks, right? Why aren't the mayors of San Francisco, New York, Chicago etc. trumpeting their new 100% renewable grids?
Then you might say that Bitcoin is tech-enabled and decentralized, you can run a mining rig near any energy+internet source. But that's equally true of a cloud compute farm. The fact that bitcoin is pointless hashes and not cloud compute is a historical quirk. Any Bitcoin node/farm could be replaced with an identical-power-usage server farm and do more good for society.
I'd like a source on your Bitcoin only uses renewable claim. I think if I run a miner on my home PC, which I believe has some natural gas in the energy mix, that argument fails.
> But right now the only places that Bitcoin is causing environmental damage are places where some government has unwisely subsidized fossil-fuel consumption, and Bitcoin itself is what puts an end to those subsidies.
I wrote this whole comment without getting to the end of your inane post. We agree that implicit subsidies are bad (burning fossil fuels creates externalities, failing to tax them is a subsidy). But your wordsmithing here is bad faith. Your argument is basically "governments thought people wouldn't be complete jerks, and Bitcoin sure proved them wrong!" Yeah it's human nature and perhaps inevitable, but 50+ years for some of these hydro dams without a problem until Bitcoin came in and ruined everything.
Bitcoin is an ongoing real time climate catastrophe. Get back to me when China and the US ban all forms of carbon-emitting energy production. Until then, those "subsidies" continue, and it matters quite a lot what use for the subsidized energy we find. I suggest cloud computing as a baseline. "environmental destruction right now" is exactly the current state of things.
It's disappointing that you felt the need to post such an aggressive and poorly informed comment, without, as you admit, even bothering to read the comment you were ostensibly responding to. There is a great deal more information about most of the points you touch on in my comments from today: https://news.ycombinator.com/item?id=27449443
I don't think bitcoin is "causing tons of new renewable capacity", if by that you mean inducing people to bring up many new power plants; its overall power usage is estimated at only about 12 GW. By comparison, PRC installed 71.7 GW of new wind power in 02020; at China's historical wind capacity factor of 22% that'll be 15.8 GW, more than the entire bitcoin network. Including the parts that are running off hydropower and the parts that are outside China.
> We agree that implicit subsidies are bad (burning fossil fuels creates externalities, failing to tax them is a subsidy)
I wasn't talking about implicit subsidies, which aren't enough to make fossil-fuel power price-competitive with renewables. I was talking about explicit subsidies. Like when I was in Venezuela you could fill up the 20-gallon gas tank on an old car for 19¢, because the gasoline was subsidized. That's the kind of subsidy that can make fossil fuels cheaper than renewables: you can run your bitcoin farm off a gas generator. It's not just "failing to tax them".
> 50+ years for some of these hydro dams without a problem until Bitcoin came in and ruined everything.
Yeah, that's not what I'm talking about.
> those "subsidies" continue, and it matters quite a lot what use for the subsidized energy we find.
Not really. I mean, a little? That 01967 Buick swilling that 1¢ per gallon gasoline is producing almost exactly the same amount of CO₂ as if the gasoline were getting burned by a nice new Honda motorcycle (or generator), and it's also producing a fair amount of unburned hydrocarbons and even methane. That matters a lot to the kids with asthma who live next door, and the global warming potential of the total horrific exhaust cocktail is a bit higher than if it were cleanly burned to CO₂ and H₂O. But, from a climate-change point of view, the high-order bit of the problem is that the government was subsidizing the burning of fossil fuels, which results in a lot more fossil fuels getting burned.
So the real problem is not what the energy is getting used for, but that the subsidies make it attractive to get that energy from fossil fuels instead of solar, because you pay for solar but the government pays for gasoline. If bitcoin mining could bring those subsidies to an end by making them suddenly much more costly, which I doubt, then so much the better.
But really, zooming out a bit, Venezuela is not the main culprit in climate change. Whatever happens there isn't going to have a big effect on climate change, one way or the other, until things chang a lot. Europe and the US are the main culprits.
> Bitcoin is an ongoing real time climate catastrophe.
12 GW is about 0.07% of total world marketed energy consumption. There's an ongoing real-time climate catastrophe, but at the moment Bitcoin is almost as much of a distraction as plastic straws. Not that it couldn't get bigger.
That seems like a compelling use case. The next thing I wonder though is whether that can exist without the ponzi scheme on the side. Is it the remittances, or the ransomware and speculation that funds the infrastructure?
And, yeah, 13 years after the internet's invention was 01982; not only couldn't you get so much as a weather report online, much less IRC, but many of the early interesting experiments like NLS at SRI had shut down, and more and more places were disabling guest access to their hosts — you couldn't run so much as a game of ADVENT without getting a username. And a password. Things were seriously regressing. The only people you could talk to on the internet were other people who really bought into the subculture, of which there were a few tens of thousands.
So why does Bitcoin have tens of millions of users 13 years after its inception, instead of only tens of thousands like the internet?
If you live in a country with a highly functional banking system and no kleptocracy, Bitcoin is probably a bit puzzling unless you have family in Cuba. But it’s not puzzling at all for those of us who live somewhere in the middle of the broad spectrum between Switzerland and Somalia, because most places have a little kleptocracy. Argentina is a stable democracy, far from being “a failed state,”† but if you want to send US$500 abroad via non-Bitcoin means it’s basically impossible, and the only broadly available savings vehicle is real estate (“ahorrar en ladrillos”), which of course grossly inflates real-estate prices, with a substantial part of the capital city occupied by empty apartments someone bought “as an investment”. Historically, Argentines have saved by buying dollars, but that’s limited to US$200 a month now, and then only if you have a non-under-the-table job (about a third of total employment is under the table):
https://www.ambito.com/finanzas/dolares/cronologia-del-cepo-...
You can see that in September 02019 when this measure was imposed the price of a dollar was AR$63.50; now it’s AR$155. So whatever savings you had in pesos in 02019 have lost 59% of their value to peso devaluation.
In 02001 a lot of Argentines had saved dollars in their dollar-denominated bank accounts. This did not preserve their savings through the financial crisis that year; the cash-strapped government limited withdrawals to a trickle, then converted dollar deposits to pesos at a one-to-one rate, then released the exchange-rate peg, at which point peso went overnight from being worth US$1 to being worth US$0.25 before settling at about US$0.31 for the next few years. The US did something similar in 01933.
Some might suggest using “alternatives to banks like credit unions where customers—as owners—hold more power,” but Credicoop depositors suffered the same two-thirds confiscation of savings as depositors in for-profit banks. And they pay the same 3% tax on bank transactions including checks. That’s more than a fast Bitcoin transaction fee of US$15 for transactions over US$500.
But we’re not a failed state. There are no gangs of bandits roving the streets in Argentine cities (though there are some pretty bad slums where you’ll get robbed if you wander in without knowing anybody). Courts, free public hospitals, and roads continue to function, though there are more potholes than a year ago. Argentine infant mortality is 10 per 1000 live births, down from almost 20 in the late 01990s and the same as the late 01980s in the US; life expectancy at birth is 77 years, worse than Switzerland’s 84, but the same as China and Hungary, and better than Saudi or Mexico. (Somalia is 54.)
Most of the world is worse off than Argentina, although not necessarily in such a statistically transparent fashion. About one fourth of the people in the world are unbanked, 51% here in Argentina; even advanced countries like Russia, Hungary, and Uruguay have roughly a quarter of the population unbanked:
https://www.gfmag.com/global-data/economic-data/worlds-most-...
And if your family lives in a country like Iran or Venezuela subject to US sanctions, and you live in the US? Good luck sending them an ACH, instant or otherwise!‡ It’s well known that Bitcoin is very popular in Venezuela, which kind of is a failed state, so one of the Venezuelan governments is trying to tax Bitcoin remittances at 15%.
https://archive.fo/ZRXzS
Bitcoin handles a few billion dollars per year in such remittances. This might seem like a trivial amount of money to someone in a rich country, but in poor countries, it’s enough to keep several million people alive.
Even in the US, it’s common for the police to confiscate large amounts of paper currency just because they can (“civil forfeiture”); US bank accounts are probably fine for US$100K but probably somewhat risky for US$10M if the bank thinks you don’t seem like the kind of person who ought to have it. US$10M in US$100 bills fits in a box you can wheel around on a dolly, but Bitcoin is a lot more practical. (And of course US$10M in dollar bills loses about US$200k per year to inflation.)
Transaction fees are usually high enough that you wouldn’t want to use Bitcoin to pay for a can of Red Bull or even a restaurant dinner. But it’s extremely practical as an alternative to Western Union or US$100 bills or gold, even with the current very high transaction fees. At the moment, the Bitcoin transaction fee is very low—the median Bitcoin transaction fee in the last block was 0.00678 millibitcoins, which is US$0.25:
https://btc.com/0000000000000000000778ef382c1697706e34634696...
Three months ago it was at what I think of as a more normal rate of 0.31 millibitcoins, US$11, which is lower than the 3.4% spread you’d pay to a jeweler or black-market money changer for transactions over US$350:
https://btc.com/00000000000000000000476ab57eea9be8ada36e2680...
So, Bitcoin doesn’t have to be a cypherpunk utopia to be a big improvement on the status quo ante. For those of you living in stable countries where your worries are things like “instant and extremely low-fee ACHs” and “decentralized utopia”, this may be very confusing, but try to remember that most of the world lives in places with much more pressing concerns, concerns that Bitcoin helps a lot with. And you may live there too, soon—the loyal subjects of Kaiser Wilhelm in 01913 certainly didn’t expect that in 15 years they’d be in the middle of a hyperinflation episode that remains legendary a century later.
I think that, by providing workarounds to the people who need them, cryptocurrencies probably not only ameliorate the most immediate and pressing concerns of poor parts of the population like Venezuelan immigrants, but probably also adjust the power balance in a more liberal and democratic direction. This will improve the chance of those concerns being ameliorated by public policy over the next decades as well. But it's hard to tell what will really happen. The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what's happened in the US over the last 50 years, in fact, only more so.
However, at this point I think the modern welfare state is already doing a good enough job of destroying itself without any significant help from cryptocurrencies—as evidence, I can point to Maduro, Macri, Bolsonaro, Trump, and Brexit, and metonymically to the social changes they betoken. So at this point I'm more worried about cushioning the collapse than preventing it.
(I posted an earlier version of this a couple of months ago at https://news.ycombinator.com/item?id=26654767.)
____
† We’ve remained democratic since 01983, electing presidents from three different political parties (UCR, PJ, and PRO), and there’s no serious insurgency. It’s the economy and government policy that are ruinously unstable, to a point that seems satirical to anyone accustomed to the US, but is lamentably common worldwide. Rich people sometimes say they don't know of legitimate uses of Bitcoin outside of “failed states”.
‡ Family remittances are specifically exempted from the US sanctions on Iran, but good luck finding a US bank that’s willing and able to take that risk: https://www.wiggin.com/wp-content/uploads/2019/09/26580_advi...