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Over 2 percent of the US’s electricity generation now goes to bitcoin
(arstechnica.com)
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this post was submitted on 03 Feb 2024
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Bitcoin was developed on the idea that no one can be trusted and that everyone will act selfishly for their own self interest. This is patently not true, while many are selfish and are not to be trusted, a truly trustless society does not and cannot exist. People do come together and work in collectives and organisations and people do defer to the expertise of others. Imagine not being able to go to the doctor without first getting a medical degree because you can’t trust what the doctor will tell you or having to learn electrical engineering before having any electrical work done in your home. That is the ideology that helps spawn the no middleman trustless system that formed bitcoin in 2009. The truth is people don’t want to do that an the easy way to demonstrate this is to simply point at the huge amount of transactions that occur off-chain through exchanges (who serve as middlemen) vs the pitiful small number of transactions that occur on chain.
Trustlessness comes with huge costs. Firstly, you have huge amounts of redundant work to prove/verify everything. That’s why bitcoin is so terribly inefficient. Rather than having some you trust approve a transaction you now need to spend huge resources solving useless puzzles to prove that your transactions is the real deal. Secondly, without a middleman there is no one to hold to account. Make a mistake on your transaction? Your money is gone. Get scammed? Same deal. Accidentally leak your private key? Ditto.
Bitcoin is also based on the ideas of Austrian economics. Basically a ridiculous field of economics that doesn’t work. There are reasons why we left the gold standard and there are reasons why so called ‘sound money’ is a terrible idea. Just to simply illustrate. Bitcoiners love to celebrate the first transaction for real world goods using bitcoin. Some guy bought two pizza’s for 10000 btc around 2010 or something. They mock now for how much ‘money’ he wasted on two pizza’s. What good is a currency if you’re too afraid to spend it because its ‘value’ might skyrocket. In no uncertain terms Austrian economics is incredibly stupid. Bitcoin is built on this ideology.
Also Bitcoin is full of middlemen. Mining pools tend to congregate into large organisations lead by a small group of individuals due to economies of scale making larger pools more efficient than smaller pools and, because bitcoin has no real economy underneath it everything has to run back to fiat currency at some point. Whether you’re a baker or a drug dealer you have bills that need to be paid in fiat at some point; therefore, you need to exchange your crypto to fiat and, this is almost unanimously controlled by large exchanges who act as middle men. A big government like the US blocks the exchanges and bitcoin and crypto in general basically dies.
So in summary, bitcoin is based on the idea that no one can be trusted, which is false, that Austrian economics is a good idea, which is wrong and finally that it’s free from middlemen which it isn’t. The assumptions that made bitcoin are wrong.
It’s not that no one can be trusted. It’s that there is enough bad people and incentive to do real damage to everyone else (even the majority of good people) and unfortunately they may need to be protected from that. If we get another Great Recession that doesn’t snap back bitcoin will have its value proven, if that doesn’t happen then it’s a waste of time and effort. It’s really more of a hedge at this point until things play out
Bitcoin tracks the wider economy and as a risky ’asset’ its ‘value’ fluctuates more aggressively than safer assets. It’s basically the first thing unloaded when times look difficult. Trust me it won’t be a hedge. It never has before and will never now. Secondly, the problem with centring your entire philosophy on trustlessness is that when you introduce a little bit of trust you defeat the whole purpose of trustlessness in the first place. The moment you have a middle man that can block transactions, change transactions or interfere in transactions in other ways your trustless model collapses, and if you argue that it’s alright this actor is well vetted and trustworthy then it begs the question. Why not have all of your transactions managed by that actor and just drop the vestigial decentralised nonsense in the first place. To illustrate my point for those who don’t understand what I’m getting at. All cryptocurrencies are useless at verifying anything in the real world. Think things like supply chain verification for example. Why? Well it’s all because of something called the oracle problem. You need somebody to verify and enter the physical world’s data into the blockchain, the oracle. The problem is that there is no way to prove that the oracle is telling the truth. You have to trust the oracle; however, the oracle can lie. The oracle and feed you bad data and modify the blockchain. Your trustless model has collapsed. You might as well just find an oracle you can trust and abandon all the wasteful blockchain nonsense at this point.
Bitcoin spiked when the latest banking crisis emerged and several US banks collapsed. This is not bitcoin tracking the wider economy. Bitcoin should track the wider economy only in a sense of cost of compute, electricity, against inflation and supply. Hypothetically if demand was to remain exactly the same for the next 10 years the price would increase.
Here's the thing -- do you trust the alternative power holders more? Sure, it's less centralized, but at the end of the day there's still power brokers.
No not really but at least there’s transparency
So many words Bitcoin and so little about the idea behind it.
Are you aware that not each and every cryptocurrency that was created after Bitcoin is bad?
Although admittedly most are. Yet some took the idea further and implemented better versions of value transfer, that doesn't rely on middlemen.
The article is about bitcoin so I talked about bitcoin. But it doesn’t really matter because all cryptocurrencies are bad. They are all negative sum internet funny money that is used by and controlled by some of the people who you would least want to be able to do that.
You replied to my comment, which was broader than Bitcoin alone; you could've considered that.
Not all cryptocurrencies are bad in my book. Let's agree to disagree.
So you're basically saying that Bitcoin is the libertarian of currencies. Blech.