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I agree this is puzzling, but as I mentioned, lots of Democrats have gotten more aware of the possibility of government takeover lately, so maybe they'll be more open to hearing about it than the last five thousand times I've tried this.

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Dec 8, 2022·edited Dec 8, 2022

Scott, this is why I'm crying laughing reading this. The party of "bake the cake, bigot!" is now oh gosh oh golly oh maybe you know Bad People could get court judgements to make people do things that they don't want to do because those things violate their principles? The party of the "Dear Colleague" letter is concerned about governmental overreach?

Bit late in the day to start worrying about that, isn't it?

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This is how adversarial systems work. The Democrats do work showing us how the Republicans might be authoritarian, the Republicans do work showing us how the Democrats might be authoritarian, and hopefully we take both seriously and prepare for them.

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Yuval Noah Harari thought that there was at least a small chance that 2024 would be the last free election in the United States. He mentioned this on Bill Mahr’s show immediately before the midterms. This was essentially the same message as the Nancy Pelosi fund raising emails.

He probably thinks that chance is even smaller after seeing the rejection of candidates claiming the 2020 election was stolen.

Repeatedly debunked lies did not carry the day, thankfully.

This wasn’t a case of both sides being a threat though.

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Dec 9, 2022·edited Dec 9, 2022

I am way more cynical about politics, having had any idealism around it burned out of me. When I vote, I do vote for one particular party but given the carry-on of many of its incumbents, minor to major, over the past thirty or more years, I also think they should be flogged at the mast.

And now the two main parties in my country, which were as adversarial to each other as the Democrats and the Republicans, have happily settled down to a power-sharing agreement where Tweedledee and Tweedledum swap the office of (equivalent to) Prime Minister. They've settled on a mutual bête noire party to point at and go "if *they* get into power, think of the horrors that will ensue!" for the public to consume.

America doesn't have any kind of third party that the Republicans and Democrats can do the same for, but if there were, I'm happy to assume that Nancy (if she hadn't retired) would be perfectly comfortable in a similar arrangement where the Dems and the Republicans swap 'who holds the big seat'* while both of them pointing at third party as the real menace. Oh, I sent out fundraising emails five years ago claiming that my new best buddies were a threat to all that was true, good, and the American Way? Yes well, that was then, this is now.

So in conclusion, *my* take on that is not to take either of them seriously when they claim "if the Other Lot get into power, they will start up the re-education camps!"** and to want a check on *both* of them because *either* of them could carry out abuses when in office.

*Not the presidency, because that is different in the US, but I could see them doing a "Party X president candidate, Party Y vice-president candidate" selection where the public gets a choice of "do you want to vote for the Demopubs or the Republicrats?"

** You know the ones, as in this article: https://www.washingtonblade.com/2018/04/30/brandon-wolf-i-misspoke-vp-wants-gays-in-conversion-camps/

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We can always rely on a party that loses some or all control of government to suddenly become concerned about unrestrained power of government. Those concerns will again become silly paranoia as soon as the party regains power.

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That's my view of it, Carl. It may be that we are both older and in my case, much less nicer, than Scott.

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Well handsome is as handsome does, D. For what it's worth, my experience is that a fair lot of those who are deeply skeptical -- I did not say cynical -- about politicians and politics are by nature the soul of kindness, but have had that tendency exploited once or thrice or eleventy-twelve times too often.

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Good luck.

I seem to mean this both sincerely and sarcastically at the same time, but that's probably the margaritas.

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I don’t know that the point is to reach those urging for a hardline crackdown but rather those who listen to the urging with some sympathy but aren’t fully committed to that hardline stance.

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It is a hard sell but I don't think it is impossible. As an example, Germany has strong privacy laws in response to what was the Nazis had done.

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To accept this argument you need to belive that an acceptable compromise is possible. If you sincerely think that your enemies are literal Nazis, that's clearly out of the question.

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(Banned)Dec 8, 2022·edited Dec 21, 2022
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Dec 8, 2022·edited Dec 8, 2022Author

This is mostly just Bitcoin now - Ethereum and most other modern currencies have solved all their environmental impacts. I agree this is a point against Bitcoin.

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Proof of stake chains are pointless as they have no externalized effect on society. They should just be databases in AWS.

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Dec 9, 2022·edited Dec 9, 2022

Wouldn't a database in an account owned by 1-or-a-few entities on some cloud company's private platform break the decentralization of the whole idea?

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Yes but isn't this most people's experience with crypto already? I.e. it's supposed to be great because you can just have a wallet and have people send crypto directly to your wallet, but most people in practice have some third party provider manage the technical side for them. Thus recreating the centralization (but worse).

Which leads to my question about Vietnam - are the people there actually sending crypto to other people's wallets without the help of any intermediary, like in the original conception of bitcoin? Or is it like people in the US who are using FTX or Robin Hood or whatever the equivalent over there is?

If it's the latter then Vietnam isn't actually breaking free of centralization, they're just using a central authority other than their own country's institutions.

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> If it's the latter then Vietnam isn't actually breaking free of centralization, they're just using a central authority other than their own country's institutions.

You might be surprised how much additional freedom you can get that way. The authority they're using, unlike their own country's government, can't compel them to keep using it.

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Sure, but at that point the invention is not crypto. The invention is giving acces to foreign authorities. You could just give them acces to Bank of America.

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"The authority they're using, unlike their own country's government, can't compel them to keep using it."

Unless it's "if you ever want to see your money back again, keep using our services, otherwise we will mysteriously lose or misplace all your bitcoin and good luck getting us to cough it up, the government can't make us do that, you know".

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Digital wallets connected to blockchains through the pocket network are not relying on a centralised third party.

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The difference is the power of exit. Even if I'm using a centralized platform like Coinbase or whatever, if I'm unhappy with Coinbase I can move the entirety of my holdings off Coinbase in literally 30 seconds. Either to a competitor or to a fully self-custodied wallet.

I still expect even with fantastic decentralization, many if not most users will prefer centralized entities for ease and convenience. That isn't ideal, but as long as those centralized entities sit on top of a low-friction decentralized base layer they're subject to extreme levels of competitive discinpline.

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"if I'm unhappy with Coinbase I can move the entirety of my holdings off Coinbase in literally 30 seconds."

That is, unless the reason you're unhappy with Coinbase is that they've frozen assets six hours before the company goes up in flames. Not like that has happened to any major crypto companies, though, right?

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Seems to me this is really that you trust Coinbase more as a central authority than the Vietnamese government. But then that raises the issue of why. Three possibilities come to mind:

- Coinbase is doing some blockchainy shit and you can theoretically withdraw your assets and trade on the bare metal

- Coinbase is subjected to the free market

- Coinbase is subjected to legal regimes that you trust more than Vietnam's (like the US's)

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> Yes but isn't this most people's experience with crypto already?

This is my big hang-up about crypto (plus apathy I suppose). But centralization-by-design isn't the same as centralization-by-bad-UX. The latter is a bug that can be fixed -- hopefully, eventually -- while the former is a feature.

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Most people's experience with spaceships is designing them while it's on the ground. The point is decentralization, you can't just propose an alternative that doesn't have it.

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Crypto is already centralized in practice.

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Dec 10, 2022·edited Dec 10, 2022

True -- mostly anyway -- but that's different from centralization by design. Centralized control of ideal crypto is an eventually fixable bug whereas it's a feature of a private platform.

"eventually" and probably "ideal" are both doing a lot of the work in that point, though, which is why I'm not a crypto booster or user myself.

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You don't know what you are talking about.

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Unless you explain why he's wrong, that's an empty and worthless response.

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Databases are centralized and whose owner is explicitly trusted by their consumers. IT isn't a replacement for blockchain.

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That is not so Scott. Ethereum may turn less energy into entropy in their process than Bitcoin does, but the number is a long way from zero. All cryptocurriencies use energy to create and maintain their operations. All energy production creates some environmental impact.

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I'm pretty sure than any currency transfer will involve some energy: Visa, Paypal, bank wire, driving someone's house to give them my gold coins, ...

Numbers would help here. I remember when iPhones/iPads were becoming popular and a poster (at another site) was worrying about the energy consumption. The key insight was that an iPad3 battery held about 10 watt-hours of energy. Using an iPad3 for 8 hours was roughly the same as having a 100 watt lightbulb on for six minutes. Which people tend to not obsess over.

How does Ethereum stack up against the alternatives?

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According to the "Crypto Carbon Rating Institute" the ENTIRE Ethereum network uses 2.601 MWh per year (post Proof of Stake)

That is about three months electricity for an average US household. ( average us household is ~900 KWH / Month )

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Thank you. This does not (yet) seem to be anything worth worrying about (assuming that the Ethereum number is correct :-)).

2.5 MHh also seems to be comparable to the energy needed to fly a single passenger 4,000 - 5,000 miles using a reasonably modern airliner.

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How much energy does the US Mint go through to produce coinage? How many trees have to be cut down to make the paper for it's notes?

It's plausible to me that this is still less ecological impact than Ethereum. Is it closer to 30% or 1% ?

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"How many trees have to be cut down to make the paper for it's notes?"

Trick question: As was explained in the movie 'Inside Man,' "Paper" currency is actually made of cloth. Cotton and linen to be specific.

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If you wish to be very specific about it sure.

Feel free to interpret "number of trees cut down" as a general shorthand for the overarching environmental impact of leveraging the textiles growing industry, the shipping and transport costs, the various expenses of operating the printers themselves, and hauling the final notes to the various banks that use them. Then repeated for everything that goes into metal coins.

The intention of the question is that if we're going to worry about the environmental points, then at least presenting metrics for both sides instead of just one seems like it's an important part of reasoned argument.

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Dec 10, 2022·edited Dec 10, 2022

... Anything that humans could possibly make uses energy to create and maintain, though. What is the alternative?

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Banks also consume a lot of energy - the fact that ETH uses energy isn't sufficient to be hostile towards it.

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If Ethereum has solved serious issues that Bitcoin hasn't then they shouldn't be trading almost identically still, they should be fundamentally different. Can you get rid of Bitcoin and have the Ethereum network still function? Market signals imply that answer is likely no- this isn't definitive as maybe the easy money aspects which have driven Bitcoin's price have also overwhelmed the differences but if Ethereum is markedly different from Bitcoin then you would expect divergence in their price action. Without that you are basically projecting a disconnect which hasn't happened yet, but are treating it as having happened- either that or there isn't an efficient market and you can be rich by shorting Bitcoin relative to Ethereum.

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" Can you get rid of Bitcoin and have the Ethereum network still function"

Yes of course...

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You clearly don't understand the question.

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I understand the question you wrote but it's poorly formed. The network would of course be fine, it's not in any technically way necessary to ethereum for bitcoin to exist. You're implying that they price of the two coins tends to be cyclical, but so are most stocks and no one asks whether Ford could exist if Toyota ceased.

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The question is not about if the Ethereum network can technically function, its about the utility and adoption of crypto without bitcoin. Currencies/payment methods- whatever you want to call crypto depend upon networks of trust, and you cannot assume they will function if you remove a major trust node. Your statement about stocks shows that you don't understand- stocks are not nearly as correlated at ETH and BTC are. Car companies will, at times, be inversely correlated as they compete for market share, as one company doing well typically comes at the expense of others not doing well. To take the specific names you mentioned- in the early 2000s to just before the GFC Ford lost over half its value while Toyota doubled. That is the relationship you expect between competitors where one has an obvious advantage over another, that doesn't happen with ETH and BTC.

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The cryptocurrency used in all of those third-world countries you've listed is mostly bitcoin. Much of your article basically just defends bitcoin specifically.

And Ethereum caused tremendous damage to the environment before switching. Infinite hostility is still warranted against someone who used to be an arsonist and recently stopped.

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Arsonist here means "spent a lot of energy on something I don't like?"

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Spend a lot of energy on what is, at best, a *currency*, something that can be constructed by fiat (or by proof of stake or by many other methods that don't spend a lot of energy).

That's the best version of events. The more realistic version is that the energy is spent on (1) Ponzi schemes, and (2) crime (like allowing ransomware payments, thereby encouraging a lot of ransomware).

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Nobody knew how to build a cryptocurrency that worked until Bitcoin, so it was a new thing under the sun. The fact that you don't like its applications doesn't mean that its heavy energy use is analogous to arson. People routinely make arguments like this about the environmental destruction due to people eating meat, flying, or driving cars, and it works the same way--the real complaint is expending lots of resources on stuff I don't think you should want. Weirdly, people who don't agree with you on what they should want never seem to find such arguments convincing.

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Well said.

There's a prayer I like to remember "Lord, help us forgive those who sin DIFFERENTLY than us"

Plus, there is a whole argument to be made that 1 kW =/= 1kW, since the where, when and how that kW is generated has a huge influence on its cost and utility. Bitcoin is the buyer of last resort, ensuring that an energy project can always find a buyer as long as there is internet (and with Starlink, there always is).

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Lots of energy is spent moving fiat currency around too.

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Not really. One bitcoin transaction takes around 1450 kWh in energy. One fiat transaction by my bank... how do we even measure that? The computational time used would be in milliseconds. It's likely at most 0.01 Wh. That would be 100,000,000 times less energy per transaction. Even if I'm off by an order of magnitude, that's 10,000,000x less energy per transaction.

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You'd be infinitely hostile to someone who used to be an arsonist, but recently stopped? There is no way your hositility could possibly be higher to someone who is still an arsonist and is for example currently setting fire to your house? Or someone who after murdering their way to supreme leader is currently engaged in a campaign of ethnic cleansing who's causuality count already runs in the millions?

I don't think most people appreciate how big infinity is. It's *really* big.

(By all means continue to be hostile to crypto, I certainly am, but Scott's persuaded me I should be less than infinitely hostile.)

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Nobody on the planet is literally *infinitely* hostile to crypto. This is a motte-and-bailey strawman and everyone using this point should be ashamed of themselves.

The argument Scott is making is that we should not be hostile to crypto. But we should be. Scott is wrong. The "infinitely" stuff is a distracting hyperbole that overly-literal people are tripping on.

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No, we should not be hostile to crypto. As the article clearly points, it has fair and valid uses all over the world, maybe not just that much for regular occidentals. Reading your previous comments it really feels you, at best, skimed the points in the essay and went straight with your pre-formulated, unchallenged opinion about crypto

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That's fair. I came into this article thinking everything about crypto was bad, and Scott convinced me that there are some good use cases for crypto in the developing world i.e. it's a mixture of good and bad. I think the bad dominates and I remain hostile to crypto, but the article moved me from 'entirely hostile to crypto' to 'on balance hostile to crypto'. Infinitely is a hyperbolic way of describing that, but it is a real thing being described. I assume you meant it that way as well when you took up Scott's language in your original comment?

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Dec 13, 2022·edited Dec 13, 2022

I guess I agree with this, with one caveat.

I am not convinced Scott is right about the third-world use cases. I'd be more supportive of crypto if Scott is right about that, but I suspect he is wrong.

Scott demonstrated that crypto is, in fact, being used in the third world. What he did not bother showing is that crypto is better than what they would be using instead; that the third world is *benefitting* instead of being scammed. I mean, I have no doubt bitcoin is better than the local currencies, but I am unconvinced that the bitcoin apps these people use are better than some USD apps they could be using instead.

("So why aren't they using the USD apps?" You ask. My answer is that they think crypto is a get-rich-quick scheme, just like people in developed countries.)

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Its actually mostly dollars on Ethereum and Tron.

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There is also a pretty convincing case that can be made that proof of work has the potential to be very good for green energy: https://bitcoinmagazine.com/culture/bitcoin-is-a-green-energy-battery

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This is not convincing at all, his description of money is wildly wrong, and is trying to convert an analogy into a real property with (bad) rhetoric. His description of 'green' energy is also mostly wrong. You can just build out a solar field over time rather than building a very large one now to take care of future demand, and since solar panels degrade over not that long of time frames (plus incremental improvements in design efficiency) you wouldn't do that anyway. Then there is the flat dumb idea that increasing demand for electricity via bitcoin mining would alleviate price issues, higher demand is not a good way to combat energy shortages.

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No, they warrant some large amount of hostility, which is still infinitely smaller than infinity. Your comment amounts to, "environment, therefore BOOO". We can do better than this, and readers of this blog in particular should do better. Give an order-of-magnitude estimate of the problem and of the benefits, suggest alternatives, write a poem about carbon offsets, anything but this.

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I mean, the point is 'boo', nothing else needs to be said. You're inventing an arbitrarily high standard so you can debate it, but the argument is really so simple that it's a farce. Proof of work is a joke, no weird arguments about carbon offsets are necessary and they would not strengthen the argument. (Proof of stake.. we'll see.)

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I think justifying "infinite hostility" should require a high standard.

Proof of Stake is here what are you waiting to see?

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I'm just saying that the infinite (or 'effectively infinite', since you don't seem to like that as a shorthand for 'much higher than any other factor by orders of magnitude') argument applies to proof of work. So it's a complete condemnation of Bitcoin only.

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> Proof of work is a joke

Proof of work + longest chain was a theoretical breakthrough that enable bitcoin to work in the first place.

Staking was known approach and has been around for decades.

If proof of work is "a joke", why didn't people just create staking based cryptocurrencies before? Why did bitcoin suddenly blow up when multiple attempts to create digital money failed?

Can you steel man proof of work?

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In my mind, there are at least two original contributions in the Bitcoin whitepaper. The first was Nakamoto consensus, and the second is the concept that one can bootstrap a digital currency by having a consensus mechanism maintain the ledger while at the same time incentivizing individuals to participate in the consensus while rewarding them in that same currency.

I think there's an interesting argument to me made about the accessibility of PoW. You could say that it's hard to start a cryptocurrency with PoS because it will necessarily be the developers who start with all the stake at the beginning, by virtue of them being the only ones who know about the protocol. But I don't think this prevents a PoS chain from eventually becoming decentralized, and I wouldn't count it against a chain if their security properties at some point in their history were suboptimal, but it was a problem that had since been fixed.

Another argument in favor of PoW is its simplicity. You can teach a competent student how PoW works in a day, whereas Byzantine consensus takes a whole course.

I remember a time in my life when I was learning about blockchain, and I had averse feelings to proof-of-stake, because I didn't understand the details of how it worked, and I did understand proof-of-work. I still don't know the details of how Ethereum's proof-of-stake works, but at some point I took a course on Byzantine consensus, and I began to feel that my earlier aversion was irrational. I wonder sometimes if proof-of-work proponents I see on the internet are being victims of this kind of mentality, especially when they say things like "proof of stake can never work" (I don't think you are doing this, your Bitcoin maximalist arguments have been cogent).

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There is a saying in software security: either your system obviously has no bugs, or it has no obvious bugs.

I don't think even bitcoin is simple enough to be in the 'obviously has no bugs category.' The attack surface for ethereum is orders of magnitude larger. The operational risk of doing something wrong during a hard fork is even larger as well.

There are numerous problems with proof of stake. The easiest one to understand is that it is a form of centralization, because 70% of all Ethereum in existence were created at the premine, and staking will give these people an even higher share of the ethereum. When you combine this with all staked etherem being on a small number of us-run entities, i think there's a very good chance the US regulators say "it is illegal for an ethereum staker to process a transaction that is going to a blacklisted address" and then for all the staking entities to say "ok, we'll do that,' and now, boom, the censorship resistant property is totally dead.

Ethereum and bitcoin have always had very different values and motives from the start.

Bitcoiners have always been focused on one thing: sovereign digital money that can't be stolen directly or through inflation. Money that no one controls.

For Ethereum, this was always about 'world computer' 'digital apps', etc - "decentralization" was "one of many properties." For bitcoiners, it is the only property that really matters, and anything that compromises it in the slightest is not acceptable.

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Well said.

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It's not at all obvious that staking is sufficient. The argument that proof of work works for the purposes of bitcoin originally (byzantine fault-tolerance etc) was solid and neat. But it turns out that it was deeply undesirable as an actual physical institution in the world. This became increasingly obvious over time.

of course the people who were making money hand-over-fist on PoW were also the types not to care about the externalities. That's not an argument for you or me being okay with it, it's just an explanation of why it got so big.

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There are many people who don't find "boo" convincing. It is not at all self-evident that the environment impact of bitcoin outweighs the interests of the Vietnamese, Ukrainians, and Africans to have money they can actually use.

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Dec 9, 2022·edited Dec 9, 2022

Well the main argument, as mentioned everywhere else in this thread is, is not "bitcoin versus no money" it's "bitcoin versus USD" (or gold or whatever). So yeah, I think that's a pretty easy one -- and that's before you get into the highly dubious temporality of the claim that it's "money they can actually use" _at the moment_ they have money they can use but, bitcoin being bitcoin, it's hard to say if it will inflate 0.1x or 10x in the next 3 months, and then I guess we should hope they're not holding the bag.

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Dec 9, 2022·edited Dec 9, 2022

Proof of work is not a joke, it's a fantastic distributed computing algorithm solving a well known computer science problem (https://en.wikipedia.org/wiki/Atomic_broadcast, briefly summarized : how can you make a bunch of independent computers agree on a set of facts as well as their *order*, without any central coordinator ?)

PoW's solution is : make it expensive to declare a fact (and trivially easy to falsify it if it's wrong), so that liars are de-incentivized and the honest prevail. The only problem is that liars have one hell of a deep pocket, and so the "expensive" thing for them is really fucking expensive. But, in the same way that PageRank is not a joke just because it turns out it can be gamed rather easily by spammers, PoW is not a joke just because it turns out its guarantees are catastrophically expensive in real world terms.

This youtube channel https://www.youtube.com/@bitcoinandcryptocurrencyte3219 and its website https://bitcoinbook.cs.princeton.edu/ go into way more technical detail underlying bitcoin, I wish more critics go through it first before they open fire. Cryptocurrency is a genius idea coming from the wild west internet of 2008, its only sin is that a religion has formed around it starting from about 2015-2017.

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> its only sin is that a religion has formed around it starting from about 2015-2017.

What are religions if not attempts to materially reify value?

Currencies and religions are, i think, much more alike than they are different.

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Proof of work, the concept, is fine and neat. Proof of work as an actual implementation in practice that we use to run a system is (it is now clear) an unfortunate tragedy.

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founding

That arbitrarily high standard is barely reasonable debate. If you think it's too high, than with all due respect this really is the wrong place for you.

I get the original comment - it's a poke at bitcoin, and it made its point. But to unironically double down and insist that's the kind of conversation we want to be standard here... no.

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Thank you. This kind of attitude, “who needs evidence or reasons or to consider that they may be wrong” really does deserve infinite hostility.

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Dec 13, 2022·edited Dec 13, 2022

Well, the rhetorical point is to say: somehow we have ended up (in my opinion) in a twisted situation where people by default think that "huh, maybe this can be a new currency system" and then other people have to say "doesn't the fact that it intentionally consumes as much energy as possible make it a non-starter?", and how it should be is the opposite: the default stance should be "this system is clearly terrible" and the crypto-enthusiasts have the onus to defend it. It does not seem like "maximizing energy usage is a bad thing" is a stance that needs defending. If it's not obvious, then the interesting conversation is about a difference in values, not a debate about, like, the utilons of defi vs scorching the earth. The "isolated demand for rigor" when disagrees with the article is unfair.

That is, the meaning of the OP (and my defending it) is more like: "what is up with you people such that this isn't a HUGE PROBLEM to you? how do you justify that in your value system?". Scott's article doesn't even mention it. It's the most glaring of the many ways that it feels totally disconnected from reality.

Also you seem to have decided for yourself that the measure of a good comment is how much it's jumping into the debate, and I guess a lot of people agree with that, but there is something to be said for some comments existing for other reasons, such as to "give a position which is otherwise unrepresented a voice", like it's doing here with the position that "crypto's impact on the environment is totally shameful".

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Dec 13, 2022·edited Dec 13, 2022

You should probably just use the word 'bitcoin', since that energy is mostly being used by bitcoin.

If you think bitcoin is not doing any good at all, talking about the environment is just a hidden way of saying “bitcoin is worthless.” Unless you are willing to acknowledge bitcoin is doing some good (are you aware of it’s use by people in dictatorships to protect themselves?) and then attempt to compare that good with carbon emissions, you’re not really arguing with the premise at all.

If your default stance is “this is clearly terrible” you aren’t remotely open minded. You’ve made a judgement and are only pretending to be reasonable.

If you want to appear reasonable, you could consider, for the sake of argument, asking "what if the bitcoiners are right, then is their project worth this energy it's burning?" This way you can separate the question of "is it bad for the environment" from "is it any good", since i think these two boil down to the same thing.

Here's an article comparing bitcoin's energy usage to major industries. Among other things, it uses substantially less energy than gold mining:

https://bitcoinmagazine.com/business/bitcoin-energy-use-compare-industry

But you're not all up in arms about the energy used in gold mining. Why not?

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Dec 14, 2022·edited Dec 14, 2022

It's disingenuous to compare the absolute energy usage of two industries instead of the ratio of energy to whatever value is provided. There's another thread on here that did that and it's so egregiously disingenuous that it undermines the point of the person making it completely, like they'll say anything no matter how dumb to defend their side instead of caring about being right.

But anyway. I don't have a sense of the value-to-humanity of the gold mining industry, although I have no doubt that it's much higher than bitcoin since people use gold for all kinds of things. But if your point is: because I didn't say so, I'm implicitly okay with the energy use of every other industry... what are you doing? of course that isn't implied by anything I've said. I happen to think lots of energy use is embarrassingly wasteful, but at least it mostly produces something of value that someone wants, so it's gonna be marginally better. I have no doubt that if I studied what gold goes to I'd be able to say "this whole part is obviously stupid" (presumably, the part where it has intrinsic value as a precious metal, and presumably you would agree?) and wish it was gone, but that's not what this comment section is about.

Anyway, yes, bitcoin does seem near worthless; the examples of "use in dictatorships" is so small as to be trivial (I suspect, a lot smaller than Scott thinks it is) and anyway not convincing at all -- the counterfactual "what if not bitcoin" is, and has always been "some other kind of currency", not "nothing at all", and those economies literally exist (although they're kinda lame, like currencies in video games... but still bigger than some countries' GDPs, I seem to recall). So yes, if your conundrum is "how do we build a system that lets us send value to people in dictatorships" and your answer is "it's gotta be crypto", then you're just, like, totally wrong, and buying the hype, as far as I can tell.

Of course it's a hard sell to convince anyone to adopt a currency that's not crypto, the hype is certainly helping with that. But that's the point about griping it on the internet, in hopes of gradually changing public opinion, I guess.

Anyway, as you can see, none of this is an argument about utility of bitcoin versus cost of bitcoin. You really, really want a utilitarian debate, and you're not going to get one, because that's not the position your counterparty has. I think Bitcoin is bad because it's _stupid_, as a solution to anything except an esoteric computer-science problem, and it confuses me to no end that that's not more obvious here. Although I was very happy to see that other very-smart people understand that, e.g. here: https://www.tbray.org/ongoing/When/202x/2022/11/19/AWS-Blockchain.

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> No, they warrant some large amount of hostility, which is still infinitely smaller than infinity.

This is not something you should take for granted; the difference between a large finite quantity and an infinite quantity is not necessarily infinite.

I was always charmed by a description of Eratosthenes' calculation of the circumference of the world which observed that he "accurately assumed that the sun was infinitely far away".

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Dec 9, 2022·edited Dec 9, 2022

>the difference between a large finite quantity and an infinite quantity is not necessarily infinite.

I mean, in calculus' conception of infinity at least, it literally is. Infinity - x = Infinity for any x in R that is not infinity (https://tutorial.math.lamar.edu/classes/calcI/typesofinfinity.aspx).

My impression is that other, more sophisticated, conceptions of infintiy (e.g. Cantor's transfinite numbers) still preserve this intutive quality, but I can't be really sure as I didn't study them in any detail.

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Dec 13, 2022·edited Dec 13, 2022

That's only true at a rudimentary level. Infinity, as they say, is not a number, and to deal with it with any rigor you don't treat it as a single symbol so much as a placeholder for a limit. And two placeholders for limits can be reduced to a finite value, as in the reductions of any of the indeterminate forms in calculus such as (infinity - infinity).

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In addition to what Scott said: Standard banking uses significantly more energy than bitcoin overall. Almost 50x iirc. And things like ethereum use significantly less. So the abolishing of the traditional banking and the movement over to ethereum stable coins could now reduce total power. Are you now going to switch your position and support the immediate change over because it will reduce power consumption? If not, why not?

If plain energy use is an issue then you presumably have to adopt a full degrowth mindset. Otherwise this is just an isolated demand for rigor. After all, it's not as if bitcoin requires a particular kind of power that's especially polluting. It's the same as any other industry.

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Standard banking uses significantly more energy to do enormously more "stuff" (transaction volume). If you tried to immediately scale bitcoin up to do everything the standard banking system is doing, and you could manage it at all, the energy difference wouldn't still tilt the same way, not even close.

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Bitcoin does use a whole lot of energy for what it accomplishes. But that's just Bitcoin, basically every other chain is on Proof of Stake, which uses a trivial amount of power. Solana as an example calculated that a transaction used as much energy as a google search

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Bitcoin yes, others (like ethereum) no. If you assumed ethereum kept its same per transaction energy cost it would be a net decrease even if it covered all banking transaction. That's not a completely safe assumption. But if scaling does work out are you going to support replacing all banking with crypto?

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Depends. With bitcoin most of the indicators go the same direction and only the ambiguous ones "resistance to censorship" and "resistance to remote confiscation" might go "against", but traditional banking comes with a lot of conveniences that crypto doesn't have, so it really depends on whether banking could move more toward crypto in energy budget or whether crypto could move more toward banking in features, as well as the relative prevalence of crime and tyranny, etc, which way the analysis would come out.

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Dec 8, 2022·edited Dec 8, 2022

Depends on what? Is your belief a falsifiable one based on reasoned logic? If so what evidence would cause you to change your mind?

To clarify what I'm doing: I've seen this argument before and I've never seen it actually defended successfully. So I'm poking a little to see what happens.

I suspect you just don't like cryptocurrency and have seized on the environment as an excuse to justify your dislike. And the fact I point blank asked you whether you'd change your mind if crypto was better for the environment and you still said, "maybe but probably not" makes me more certain in that thesis. But I'm open to having my mind changed.

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The rest of the comment was answering "depends on what?" The environmental cost has significant, but not infinite weight. Things like being able to reverse transactions in case of fraud are significant compensating value. Resistance against purely-third-party censorship weighs on both sides of the balance because it enables both virtuous outlawhood and vicious criminality. The reason I can't just give a straight answer is that it *is* a falsifiable set of beliefs based on logic, and so it's hard to figure out the right answer. In particular it depends on the future evolution of both low-energy crypto and traditional banking as they compete with each other. (This is not as simple as "let the market decide". I'm not at all confident the market will choose the right thing in the moment, though in the longer run it will probably create a self-fulfilling prophecy as it often does in such cases.)

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Other people have tried comparing the energy used for bitcoin mining to that used for gold mining, reasoning that bitcoin is not money to replace all cash but a store of value like gold. Exact estimates vary for which form of mining is worse, but the two are very similar in scale.

The energy used for bitcoin mining has steadily increased with the price, however, and it will continue to do so.

That probably puts some rough limits on price. Like, bitcoin isn't going to a million dollars this year, if that attracted more miners to keep the profitability constant, it would end up using 10% of the world's power:

https://medium.datadriveninvestor.com/wheres-the-bottom-for-bitcoin-51693997dadb

It could maybe go to a million dollars in a decade, as a few more halvings reduce the mining incentive.

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You could have banks using Bitcoin as a settlement layer, you don't need to have all world transaction on-chain.

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This comment is brain dead.

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Ceci nes pas une pipe

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To quote the famous "Line goes up" video: "Yes, globally, the entirety of the banking industry consumes a lot of power, and a non-trivial portion of that is waste that could be better allocated. But it's also the global banking industry for 7 billion people, and not the hobby horse of a few hundred thousand gambling addicts."

The energy costs of a single transaction in the traditional banking industry are fractions of a cent. The energy costs of a bitcoin transaction are, what, 20$ at retail electricity prices? That's why moving away from bitcoin offers significant saving potential (as did the move of Ethereum to PoS, which they thankfully did). And before we switch banking to a new unproven system, I would like to see evidence that it does, in fact, consume less energy, and if so, I would encourage banks to try to improve their energy efficiency.

And "just plain energy use" is an issue if the value that is derived from it is disproportionately small, compared to the alternatives. I am in favor of cars that consume 4 or 5 liters/100km over cars that consume 10 or 12, at a similar level of driving comfort. If there were a car that did the same with 0.1 liters/100km, I would be in favor of switching to that. That is not a "full degrowth mindset", that's "being responsible". And I am a little surprised that I have to spell all this out.

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Dec 9, 2022·edited Dec 9, 2022

It's a sign of the weakness of your position that you and others have to repeatedly return to bitcoin when I purposefully put the hypothetical in other terms. But I do give you honesty points for admitting that even if it were true cryptocurrency were more energy efficient you wouldn't support it.

Or is that not your position? Your last paragraph seems to imply it isn't (in contradiction of your second paragraph). But your failure to engage with my actual hypothetical and its purpose (as well as your snarky end comment) makes me think what you really want isn't to defend your position but just to accumulate a bunch of dunks.

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If crypto were proven to be more energy-efficient, I would consider that as a argument for switching. I would still need a lot of convincing that moving all of the monetary transactions of everyone in the world onto a public database is a scalable solution; and that it does not represent a complete disaster from a privacy point of view; and that the so-called stablecoin is actually backed by actual cash, not held up by some smoke-and mirrors algorithm right until someone decides to challenge it.

And yes, I was snarky, because you introduced your "hypothetical" using sleight-of-hand: "Standard banking uses significantly more energy than bitcoin overall. Almost 50x iirc. And things like ethereum use significantly less. So the abolishing of the traditional banking and the movement over to ethereum stable coins could now reduce total power. " - I don't read that as a "hypothetical", I read it as a claim - "we could save energy, if only we decided to do it". And that claim is completely unfounded unless you compare the power consumption per transaction, which you didn't even attempt.

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No, you weren't being snarky because of anything I said. You were being snarky because you think you already know the answer and that it's so obvious you shouldn't have to make the case. Combined with the usual attempts at a power move based around shaming the other side.

To wit, you again have to make things up. I said it COULD have that effect. Not that it would. And then later clarified it was a hypothetical. This hasn't stopped your strawman. You are justifying your rather snarky attitude not by something I said but something you made up I said. And you are now defending your putting words in my mouth ("I don't read it as...") to avoid confronting that you're acting poorly.

Which is a long way of saying: less of this please. If you want to have your criticisms taken seriously you would do better to make them cogently rather than acting like a high school bully.

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>You were being snarky because you think you already know the answer and that it's so obvious you shouldn't have to make the case

And you have never been guilty of the same sin?

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I think the environmental impact is enough to justify considerable hostility to proof-of-work, but there are several other models - proof-of-stake, proof-of-space, etc.

But yes, the amount of electricity used on Bitcoin is pretty scary.

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It's not scary. An enormous amount of energy that is produced is wasted or stranded. Bitcoin miners are happy to use this wasted/stranded energy as it's extremely cheap. This can help, for example, poor Africans with abundant hydro energy have their energy costs subsidized by bitcoin miners (https://www.coindesk.com/business/2022/12/06/east-african-bitcoin-miner-gridless-raises-2m-seed-round/). Or it can help consume methane gas that would otherwise be vented, and actually contribute to reducing emissions of the worst greenhouse gas (https://bitcoinmagazine.com/business/methane-reduction-profitable-bitcoin-story). An interruptible consumer of energy that is location agnostic has enormous value.

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The negative environmental impact is a common misconception. In reality Bitcoin is the best tool we have to protect the environment. With a disinflationary currency, holders are incentivized to save their money instead of consume. We will all agree that reducing consumption is a necessary step with our growing population. When money is debased, you must consume quickly to not lose purchasing power.

I won't make any arguments for or against other crypto projects. Most if not all of them are unregistered securities. Bitcoin is a digital commodity, and in a class of its own. An army tank and a Reliant Robin are both vehicles, but that doesn't mean much. Bitcoin, the digital commodity uses more energy than these other things that are different and unregistered securities, okay? Bitcoin's security is based on energy consumption. This makes it resistant to counterfeiting. Using energy is not bad for the environment. Bitcoin miners do not produce CO2, bitcoin miners produce heat. If you are unhappy with where your local energy grid sources its electricity, let your government know.

Bitcoin mining is a highly competitive industry. To stay profitable, you have to get energy for a very low cost. This forces miners to be creative. Miners seek out stranded energy sources, such as geothermal and hydroelectric. In most cases, renewable energy sources are cheaper. Bitcoin is not stealing energy away from people, most energy used by the network would have been otherwise wasted, or never generated to begin with. Don't even get me started on how Bitcoin incentivizes the buildout out renewable infrastructure by providing immediate profitability.

New businesses are popping up left and right to use methane as an energy source for miners. You know methane? That pesky greenhouse gas that has 80 times the warming effect of CO2? Generators that run off methane are being installed that power bitcoin miners, wherever they are needed! Oil drilling sites that hit pockets of natural gas, should we flare it? No! Boom, free energy to mine bitcoin. Rancid landfills leeching methane into the atmosphere with no capture system due to cost? Start collecting that methane and use it to mine bitcoin, cost problem solved. Making money by reducing greenhouse gases? Now we're talking. When you look at the data, Bitcoin is actually on track to be carbon negative within a decade.

Notice I said making money, not currency. Let's face it, the U.S. dollar is decent, but it's still a fiat currency. Like Ray Dalio says, “Of the roughly 750 currencies that have existed since 1700, less than 20% now exist, and all of them have been devalued.” It is time for the fiat currency experiment to end. It did some good things, but it also did many terrible things. When Bitcoin gets to around $1,000,000, it will become the governor of governments, forcing more responsible monetary policy for those who still issue their own currency.

I realize this all sounds a bit far-fetched and perhaps poorly written, but I'll kindly point anyone who is genuinely curious about any of my claims to some quality sources.

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Every single watt spent on crypto currency could be spent on something either meaningfully productive or entertaining for the rest of humanity.

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If you think bitcoin has zero value, then it's circular: all that energy is spent is worthless just by your definition of bitcoin as having zero value.

If you don't value censorship-immune, state-free, unseizable money, fine. Lots of people do. At the very least, we find it 'entertaining.'

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It’s not unseizable.

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"Significantly harder to seize than many other common options", then.

If this kind of trivial rewrite can obviate the counter you're trying to make, consider whether the counter was worth making in the first place.

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Bitcoin cannot be seized from a willing holder who has properly stored their keys.

Nothing you can do will take bitcoin from someone who has them stored in a brainwallet with the seed phrase known only to them, unless that person choose to give them to you. You can coerce them, of course, but that person could also chose just to die and thus destroy those bitcoin from the world forever.

Nothing else has that property. There has never been a form of wealth like this.

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It is worth making, because it is often sold on exactly those terms. Perfect secruity, perfect anonymity, etc.

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You didn't find FTX entertaining?

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Dec 9, 2022·edited Dec 9, 2022

Mining bitcoin from the methane gases released during drilling just monetizes flaring, it does not stop flaring. And, having fossil fuel companies profit from wasted natural gas through bitcoin mining actually incentives them to continue drilling so I don't see that as a win for the environment at all.

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> just monetizes flaring, it does not stop flaring.

This is false. Flares are only ~75-90% efficient. When a generator+miner is installed atop the flare, the efficiency is much much higher.

https://www.cnbc.com/2022/02/12/23-year-old-texans-made-4-million-mining-bitcoin-off-flared-natural-gas.html

> Having fossil fuel companies profit from wasted natural gas through bitcoin mining actually incentives them to continue drilling so I don't see that as a win for the environment at all.

They already have plenty of incentives to keep drilling anyhow. Are you saying it's bad for the emissions to go down?

And if you're going to consider incentives for energy production, how does that compare vs. the incentives created by bitcoin for clean energy buildouts which can't change their production rate in the evening to match demand?

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Dec 9, 2022·edited Dec 9, 2022

Once you use a word like 'infinite' it tells me that you are not being a rational, reasonable person open to evidence. But I'll pretend that this is just rhetoric here and what you are really saying is, "bitcoin is very bad for the enviroment and it is therefore reasonable to be hostile to it"

By 'environmental impact' of bitcoin, are you considering:

A) its use to capture flare gasses and combust them effectively, reducing their emission to the atmosphere, including methane, thereby _lowering_ emissions

B) it acting as a reliable buyer of renewable energy, making renewables more price competitive, to the point of even being used to bring the world's oldest hydroelectric plant back online

C) it acting as an initial customer to bring on new sources of energy that aren't cost competitive if they have to be hooked up to the grid?

How would you value A,B, and C roughly, as compared to the fact that yes, people do use energy on this thing?

Lastly, what do you think the equivalent emissions of similar existing financial systems?

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I have a suspicion that the energy "wasted" in proof of work systems is nothing more than a tokenization of the energy necessarily "wasted" in the unavoidable bureaucratic processes humans rely on to reach consensus themselves. I'm skeptical (but hopeful) that alternative systems like proof of stake can actually avoid this waste rather than just shifting it into other parts of their overall ecosystem.

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The first part is right, but maybe consider digging deeper.

War is a consensus algorithm. The way it works is, people who are dead stop objecting. Same with people who fear for their lives.

Bitcoin replaces war, says US Space Force engineer Jason Lowery.

https://www.trustnodes.com/2021/08/14/bitcoin-is-a-war-deterrent-and-in-the-interest-of-us-national-security-says-space-force-engineer

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I agree with this, war is just "proof of military might" and the potential that Bitcoin could reduce the necessity of war is a very promising idea.

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Also what if all countries could just make a smart contract not to wage wars or all their money will be forfeited - thus no more wars. Such takes always amuse me. They sound eligthening at first, but as soon as you think about them for literally five seconds it's clear that it will never work and be a terrible idea to try.

Yes war is a consensus algorithm. So is politics. And conventional economy. We've had alternative consensus algorithms other than wars throughout the whole human history and yet the wars still happened. They happened exactly in the situations when the alternative consensus wasn't satisfying. Through the years we've managed to refine our consensus algorithms making using them more and more preferable to war. Replacing them with much less nuansed consensus mechanism of cryptocurrency is going to make much worse

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I agree that "what if countries could just make a smart contract not to wage wars" is fanciful and not going to happen. I think this is just as unlikely as "all countries will agree to ban bitcoin." Countries will always follow their incentives, and there's a really strong incentive for lots of smaller countries to escape the dollar empire, especially if the bigger countries ban bitcoin.

Countries will go to war if they believe it is in their incentive to do so. Countries will not go to war if they believe it is not in their incentive to do so. It helps to understand my perspective if you get that Bitcoiners believe that bitcoin fundamentally changes global economic incentives. What I am describing is not a collaborative agreement to stop fighting war, but a Nash equilibrium where fighting wars is now a losing strategy for economic advancement.

You're totally right that there are multiple consensus algorithms and that these have existed for all of human history. What you may not have considered is that these consensus algorithms are arranged in something like a stack, based upon a tradeoff: cheaper consensus algorithms don't reliably provide consensus. The more likely a consensus algorithm is to _really_ provide consensus, the more expensive it is.

Talking it out between the two of us is cheaper than getting lawyers involved. Having the lawyers reach a settlement is cheaper than going to court. Accepting the court's judgement is much cheaper than trying to fight it out in a war. Surrendering is cheaper than fighting to the death.

Conflicts between nation states follow a similar path, but with economics being the last 'layer' before war. As of right now, two things hold:

- economics isn't' that definitive as a consensus mechanism

- success in warfare allows you to rewrite the history of the economic game, changing who owns what, meaning there is a strong economic incentive for winning wars

Bitcoiners believe that in the future, the following will be true:

- credit will be much, much harder to come by, especially for operations like war which aren't likely to provide a return on investment

- most wealth will be ephemeral, i.e. personal relationships, networks, brands, customer trust, and bitcoin, which means it'll be extremely difficult to impossible to steal by means of warfare

So, bitcoiners think warfare will still exist, it won't be nearly as effective as a top-layer consensus mechanism for determining political outcomes. War will be limited to 'who has control over this piece of land here' - which is still, to be sure, plenty of room for violent conflict. It's just much less room than the present.

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> What you may not have considered is that these consensus algorithms are arranged in something like a stack, based upon a tradeoff: cheaper consensus algorithms don't reliably provide consensus. The more likely a consensus algorithm is to _really_ provide consensus, the more expensive it is.

I don't think I get any new insights here. Of course, peope prefere to do cheaper consensus algorithm at first and then raise the stakes and use more expensive ways to arrive to the desired outcome if they are not satisfied with the output of the previous algorithm.

I believe, you claim is that bitcoin is going to produce the actual consensus cheaper and more reliably? Why would that be the case? Can you maybe give an actual example?

Like, right now there is the first country with its borders which are acknowledged by the United Nations. Then there is the second country that wants part of the territory of the first one. The second country send an ultimatum to forfeit the land or there would be war.

However in the bright crypto future there is the first country with its accets written in the blockchain. Then there is the second country which wants the accets. The second country sends an ultimatum to transfere the assets they want to their cryptowallet or there would be cyberwar. What's the difference?

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Dec 13, 2022·edited Dec 13, 2022

> I believe, you claim is that bitcoin is going to produce the actual consensus cheaper and more reliably?

Oh no, the opposite. Bitcoin's layer 0 is an extremely expensive as a consensus algorithm. This is necessary because it produces definite, global consensus on a socially constructed fact. This is why it needs to use that much energy; systems that aren't using that much energy aren't really producing a trustless global consensus. Systems with proof of stake just playing the old game: a group of persons with ownership over a system agree on the state of that system.

An actual example of how i think this plays out, is as follows: Hopefully, (if not for the sake or argument) we can both agree that economics constrains a country's ability to engage in warfare. I think Bitcon will constrain the economics of a nation to prevent them from issuing too much credit. If americans had to pay the financial cost of the wars in afghanistan and iraq in real time, we'd probably have seen them very differently than we did.

Bitcoin, once it's widely seen as a means to escape inflation over long periods of time, constrains a countries economics by preventing them from borrowing enough money to fund the kind of warfare that characterized the early 20th century. The Bank of England wasn't able to raise funds to fight world war 1, so they had to print a huge amount of money and lie to the public about it. If bitcoin had been a thing, i believe deceit would have been more visible, English morale would have faltered, and the war wouldn't have been such a long-grinding, bloody mess. State-backed fiat money lets nation states fight with literally any amount of wealth inside their borders, instead of having to negotiate and letting the citizens keep some of their wealth intact.

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A centralized financial system means you reach a consensus of "we all agree that this bank is extremely good at record-keeping and unlikely to steal anyone's money" and then only a few entities (the bank and its governmental auditors) have to continue to expend energy on keeping the ledger accurate.

Also, Bitcoin's consensus algorithm doesn't give you consensus on *anything* other than "these coins were sent to this wallet by this user." It doesn't save you a single joule of energy on the social component of the transfer - whether you can trust the person they're being sent to, whether those funds were transferred intentionally, fraudulently, or by mistake. So I think it's simply wrong to say that the energy Bitcoin uses is saved from other parts of "humans coming to consensus" - it's not capable of affecting the most important parts of that process at all.

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As a sibling commenter alluded to, you need to at least partially factor in the cost of the military in maintaining the centralized financial system you're describing

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The military is a cost you need to pay regardless of if your financial system is centralized or decentralized. Your coins aren't worth anything unless you can defend the underlying goods and services that they represent. How does Bitcoin reduce the amount of money you need to spend on the military?

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There is a bitcoin sticker that says, "Make War Unaffordable."

Any major war you can point to in the last 100+ years was funded by massive amounts of debt. If your opponent can steal from the wealth of their entire populace to fund their war, you can too.

Hard money makes this kind of large scale impossible by dramatically increasing the cost of seizing your citizen's wealth.

To fund the first world war, Britain had to break their gold standard in secret and lie about it to the world, because they couldn't raise the funds necessary to go to war:

https://www.ft.com/content/1a9f7e7e-7c43-11e7-9108-edda0bcbc928

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How many wars were fought *before* the abolition of the gold standard? Napoleon was perfectly capable of arming a million men and marching them off to Russia without the help of fiat money.

Also, nothing about hard money or Bitcoin prevents a government from taking out absurdly huge loans to fund a war, the loans just have to be denominated in Bitcoin.

(War has gotten more unaffordable lately, but that has more to do with its increased destructiveness and a lack of return on investment.)

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> "we all agree that this bank is extremely good at record-keeping and unlikely to steal anyone's money"

Lots of us do not agree that banks are 'unlikely to steal our money'.

Billions of people in developing nations would like to have a word with you about how American banks are stealing their wealth by means of exporting inflation, and making deals with corrupt local governments which take out debt in their names.

> It doesn't save you a single joule of energy on the social component of the transfer - whether you can trust the person they're being sent to, whether those funds were transferred intentionally, fraudulently, or by mistake.

This is a good point.

Advocates of hard money argue that in atmospheres of easy money creation, people's way of thinkin about everything changes. When asset prices are blowing up, everyone gets greedy ad thinks really short term. We believe that he root of civilization is the capacity to delay gratification, and that easy money creation shreds this.

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You're completely ignoring that some solutions are orders of magnitude more efficient than others. Yes, proof of work does replace some bureaucratic processes. That does NOT mean "it's all the same, nothing matters."

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Dec 10, 2022·edited Dec 10, 2022

Sure, but I guess what I am saying is that we should consider the possibility that proof of work might already be maximally efficient. I'm not fully convinced that the alternative solutions which claim greater efficiency actually achieve the same "consensus-reaching power" without just shifting the "inefficiencies" into more external parts of their ecosystem.

But of course, it would be great if I was wrong about that. I'm just not convinced.

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Btc block reward falls 50% every 4 years, so as price stabilises (stops going up 10,000x) energy use should slowly tail off.

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^ conflates energy with carbon, misunderstands the importance of decentralization and how it is actually achieved, ignorant of the positive effects on demand on renewable energy technology and baseload generation, doesn't care at all about disadvantaged masses around the world who need a monetary system that doesn't exploit them.

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I'm not really interested in a debate with crypto shills, but I recommend you actually speak to some people from the developing world and ask how they transact. Overwhelmingly it is not through crypto.

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What about the infographic at the beginning of Scott's post?

(I may be biased, since I am from a developing country myself with a corrupt government.)

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I already do. As part of my primary employment. Bitcoin, not crypto.

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They really, really don't. Do they warrant hostility? Sure, maybe. Personally I don't find it that compelling, but I think a reasonable person can say "this is genuinely bad". But infinite hostility? Almost nothing in the entire existence of the human race warrants infinite hostility, let alone crypto.

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This is a crazy take. All human activity has 'environmental impact' and it's not for you to decide which is legitimate. Bitcoin uses about a thousandth of the world's electricity production, paid for by willing users; and I don't see any grounds for you to oppose it, just as you have no say over the remaining 99.9% of electricity use.

Moreover (not that it changes the moral issue), Bitcoin mining is geographically flexible and incentivises the consumption of low-cost, sometimes stranded energy, so that the electricity mix used is almost always greener than the local grid as a whole.

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Geez, I really wish you'd communicate those first two sentences to the California Legislature.

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Read a bit more about the incentives of bitcoin mining. There are unprecedented global implications of a decentralized energy consumer of last resort. We will see massive buildout of low cost energy supply, with positive effects on the globe. Miners are capturing energy from flare gas and methane from landfills, and converting these to CO2 in an economically stable and mutually beneficial way. The ability to monetize stranded sources is driving buildout of hydro power in areas where no energy infrastructure yet exists; there are a few very exciting projects in Nigeria in recent months. This does not even take into account the possible benefits of an open, permissionless, and immutable monetary supply for the globe. This OP, and the comments at large, are remarkable in showing how early we are on the bitcoin adoption curve.

BTW I have no time or sympathy for ‘crypto,’ which is generally a cesspool.

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Is the environmental impact greater or lesser than that of the banking system that isn't crypto? What is the environmental impact of the Bank of America or the New York Stock Exchange?

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Please stop spreading misinformation.

Alternatively, there are many other things which are actively polluting and destroying our environment. I'm not opposed to your principals, but your anger is misplaced. I would ask that you redirect your concerns to things which are actually negatively impacting our environment.

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Also gaming has environmental and social impacts which are far more impactful than crypto. Should be infinitely hostile to gaming?

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Compared to what? Banks waste a lot of resources buying fancy clothes and fancy buildings so that people will trust them, etc. Bankers commute in cars to jobs that could be automated. Fiat currency with artificially low rates incentivises malinvestment in extremely-low-return-on-assets boondoggles that undoubtedly have environmental impacts.

Proof of stake is still shitty. Staked eth is indefinitely locked up and can't be used for anything else. The security and decentralization are much worse than bitcoin.

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this puts bitcoin's energy usage in perspective: https://ccaf.io/cbeci/index/comparisons

It's somewhere between the amount of energy Americans spend on TV and Refrigerators. Much less than gold mining.

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Dec 8, 2022·edited Dec 8, 2022

Do note that all of these countries may have economies or banking systems that are basket cases but still have, you know, functioning internet infrastructure. Crypto is cool online money but it sits astride a gigantic technological and social edifice that is substantially more vulnerable to circumstance than a good old greenback. And it doesn't do anything an international bank couldn't do in principle; of course, these banks are regulated in PRACTICE, and in the case of crypto, while censorship resistance is theoretically possible, it's quite a bit harder than the blockchain concept makes it seem, and most of its virtues in this regard are a function of its novelty rather than any actual cryptography.

In other words, no, you can't program your way out of society. The metaverse is just a special case of the actual universe.

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I have no idea who you are arguing against. I've never heard anyone express the claim that crypto would be just fine even if there was no Internet.

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Just the idea that crypto can step into the fold in the case of state failure which was somewhat suggested by the examples of "high-crypto" countries. Crypto is great in the narrow sliver of probability space where your banking system is in deep trouble but the economy is still halfway functional. Is that a virtue, or is it damning with faint praise?

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I think that's actually a lot of countries, eg the long list of countries I cited here that do in fact use lots of crypto. I think with Starlink the number of places where Internet infrastructure outpaces financial infrastructure is only going to increase.

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That long list of countries all use less crypto than Vietnam, and that chart gives me no information about how much crypto Vietnam uses relative to, like, the size of its actual economy. Maybe they do! I have no idea though, because chainalysis normalized their statistic to whatever the level of Vietnam is.

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the number of countries that fit into that "small sliver" is independent of the their current crypto adoption. If you are right you have just identified the potential market size. No one is claiming that crypto is mazed out on its adoption

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Would you like to give a rough estimate of how much crypto they'd need to be using for you to change your mind? I ask only because it looks like some goalpost-moving has been done / is going to be very likely.

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It's also totally unclear where the actual data the chart is based on comes from. There's some explanation of the measures used to construct the data but nothing on the underlying source of data.

This source--in one article--cites one survey saying 6% of Vietnamese people own cryptocurrency and another saying that 41% do, with no sources and no explanation of the discrepancy: https://vietnamnet.vn/en/vietnam-in-global-top-10-for-cryptocurrency-ownership-rate-814640.html

The Statistia global consumer survey is the most clearly described data source I've been able to find: https://www.statista.com/chart/18345/crypto-currency-adoption/

According to this survey, 32% of Nigerians and 21% of Vietnamese respondents owned cryptocurrency.

However, it's important to note that the survey is "Representative of the online population." It looks like what this means in practice is that survey respondents are recruited via online ads, and then samples are reweighted/stratified to be representative by age and gender.

This means that heavy internet users will be oversampled within age and gender, and this will skew results more in countries where internet access is less equal. In other words, the design of this survey (and presumably other surveys attempting to measure cryptocurrency penetration) is almost certainly going to exaggerate crypto usage everywhere, but especially in developing countries.

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Hmm take the amount of crypto use in the USA and multiply by 5 (or whatever the factor is.) (I'm assuming the scale is dollars)

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Dec 9, 2022·edited Dec 9, 2022

What would the value of BTC be in $$ if everyone believed the solid practical use case was poor bankless farmers in Vietnam buying some animal feed from another bankless poor farmer? One surmises far less than $17,000. It's hard to imagine a large number of First World miners burning megawatts to mine BTC out of an altruistic desire to assist Third or even Second World people without access to a good banking system (but prosperous enough to afford Starlink receivers and the monthly subscription, which I assume Elon Musk insists on receiving in dollars).

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Strike (a bitcoin company) allows people to send their preferred local currency over the bitcoin network. The price in USD per bitcoin is irrelevant as to its utility in sending money. Strike accepts whatever currency, swaps it to bitcoin, sends it to the receiver via the lightning network instantly and nearly free, then swaps it back to the preferred currency of the receiver. Neither the sender or the receiver touched bitcoin yet it facilitated their transaction. It's brilliant.

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I guess. But smartphone banking apps did this years ago and have already transformed Third World access to the financial system in a way that is still in the hypothetical future for crypto.

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...I mean, Musk is right there working on decoupling internet access from regional infrastructure, and if you can't afford Starlink you probably can't afford the Bitcoin transaction fees either

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What is your definition of a halfway functional economy? Are there economies in worse shape than Venezuela? This doesn't seem like an actual limiting factor in practice

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I have definitely heard goldbugs make this argument before. Both ways - either that crypto will still be valuable after societal collapse, or that it won't be worth anything and you need gold.

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We cannot achieve what is possible, unless we dream of the impossible.

Crypto may not be perfect, but it's a great reason for hope.

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> you can't program your way out of society

Citation needed, and in the recent decades we've been pretty successful at programming our way into society being our bitch.

You need barely any bandwidth to transact on-chain, even running a full node is not that expensive, and with brain wallets you don't need connectivity nor even any physical item to transfer an arbitrary amount of wealth out of your authoritarian shithole country.

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All of the supposed benefits that cryptocurrency brings the developing world could be solved much more efficiently by letting them use the US dollar, the euro, the yen, the pound, etc. (This was a large discussion in one the last open threads). There already are stable currencies that aren't prone to hyperinflation or confiscation- they're just not widely available to people in say Venezuela for 'regulatory' reasons. (And trust me, people in 3rd world countries really want US dollars- like really really want them).

Maybe crypto will magically their problems. But seeing as its utility has been speculative for a decade now ('in the future crypto will do x!'), I think it's just as reasonable to say 'in the future people in Venezuela or Ukraine or Vietnam will be able to use eurodollars (1) freely, and thanks to [unnamed technological advance] their government won't be able to stop them'.

Or, maybe there's a synthesis where DollarCoin, EuroCoin or PoundCoin blends the two

1. https://en.wikipedia.org/wiki/Eurodollar

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I'm willing to bet that the US dollar is used 10x more in Vietnam than Bitcoin. The chart at the beginning is normalized to one, there's no absolute scale on the y-axis and it's no proof at all that crypto transactions play a meaningful role in the economy.

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I live in Vietnam. Nobody uses the US Dolla here. I don't even know what you'd use it for. People who are afraid of inflation, currency devaluation, and bank safety use gold.

Bitcoin definitely gets used more than the US Dollar.

But nobody "uses" Bitcoin here. It is all just people speculating because they've heard other get rich quick stories.

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I agree that crypto would have no utility in the counterfactual world where there are no dictators or counterproductive regulations and everyone in the Third World can efficiently access First World level services. This seems a lot like saying "all the supposed benefits that chemotherapy brings could be solved much more efficiently by having there be no cancer."

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I guess my argument is that many future uses for crypto are famously speculative ('crypto's going to do x in the future! Just wait!'). So it seems just as fair to imagine a world where residents of developing countries can freely access the US dollar to pay for goods & services, rather than Hyperinflating Local Currency. That's not any *less* speculative to imagine than typical crypto-talk

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I think it's less speculative to imagine that people working on a technological problem will solve the technological problem, than that dictators will suddenly become nice. Even if these two things are both equally unlikely, I think it's useful to be exploring both possibilities in parallel, so that we have two lottery tickets instead of just one.

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I am referring to a possible future technological advance that will allow people in other countries to use the dollar or euro more easily, for banking and to pay for goods & services. Imagine someone with the risk tolerance of Travis Kalanick creates a banking app for Latin America that transacts in dollars exclusively. I'm sure the government of Argentina would be Very Very Mad about this, but if tons of Argentines are using it.... are they going to lock up half their population?

So, Uber for 3rd world payment infrastructure, in dollars. I'd still argue that's *more* realistic than everyone in Argentina using Bitcoin or Ethereum for banking, payments, etc.

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Dec 8, 2022·edited Dec 8, 2022Author

I think stablecoins are exactly the thing you're proposing here!

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I think that stablecoins are the thing he's proposing here *in space*. And that he is proposing that a similar thing is achievable *on earth*

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In stablecoins, the stable part is based on trust in some entity. Presence of an entity that's trusted to devalue everyone's money makes the technical problem simpler, but stablecoins don't seem to try to use that. For example, letting that same entity roll back transactions _en masse only_ is not a significant (or any?) additional vulnerability. Letting that entity stop all transactions from occurring is obviously not an additional vulnerability.

So, Chaum-style cash with such an entity as the "bank" would obviously not have some properties that stablecoins-using-some-variant-of-byzantine-consensus have. But maybe we could have something that's somewhere inbetween that would be just as good, _without the assumptions that PoW byzantine consensus requires_? (Note that in PoS setups, that entity can censor transactions, because they can inflate their stake arbitrarily.)

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I'm in Argentina, and there are various competing local crypto apps that use stablecoins pegged to the dollar, but from what I know, most try to use binance the most since they are reasonable afraid that the government will regulate the local ones. You can use a debit card from the app that converts the crypto at time of purchase for $ARS and buy anything at any business.

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You don't need a technological advance at all, you need a policy change in Eurozone countries or the US. It would be trivial for a bank to let random third-world users sign up for an online account and receive and send US dollars to any other user of that same online bank (to pick a shitty but still good-enough MVP). Something like that would compete directly with crypto and probably win for most use cases.

The problem is such a bank would get shut down by their host government because allowing easy signups by people who never show up in person and don't have a verifiable identity would immediately make it a hotbed of money laundering and payments for illegal things. The US cares more about stopping that than it cares about helping Vietnamese citizens avoid shitty banking systems.

See the wikipedia page for Liberty Reserve for an example: https://en.wikipedia.org/wiki/Liberty_Reserve

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I've considered this and I basically agree, but I think in practice if a US-based bank were to offer accounts to the citizens of say Latin America, and it allowed them to transact with each other in dollars and store money outside of those countries' purview- those governments would complain to the US so much that it's impractical. Part of the appeal is that the citizens of say Argentina want to store money outside of the government's control, so they can't seize it. This is of course illegal to do under Argentine law, and the government would get very very angry at the US for allowing this. And letting the citizens of Argentina transact directly with each in dollars and not the Argentine currency..... Argentina would be Big Mad. I think that's why the bank idea is unrealistic, and decentralized currencies are more likely

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Cryptocurrency problems are pretty much entirely self-created. Thinking they will be solved without creating more I don't think assesses history well. And that someone might someday find a use case cryptocurrency is good for is kind of half the point. Why would those people share profits with present projects at all? Creating new coins is a command line parameter and happens continuously. Ergo, if someone solves these problems they will not share with current coin holders, and all current coins have an eventual value of zero.

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I think Scott's main point there is not speculative at all; he's saying it's already happening that crypto is being used in the case of authoritarian governments and crappy banking systems.

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Well, that's true but people already use cash transfers and dollars to avoid those problems. The main advantage of crypto over those is anonymity, but even that is dubious in countries like China.

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Why are people using crypto if they already get what they need from cash transfers and dollars.

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Clearly some people currently think that crypto is more useful and others think that cash, wire transfers, bank deposits, and various other alternatives like airtel minutes are more useful. If crypto has become/is becoming the primary way to send and receive remittances in some countries (as an example) that would be strong evidence that crypto has a valid long-term use.

I haven't been able to find data that seems credible on the actual use of cryptocurrency in developing countries relative to alternatives, for instance for sending and receiving remittances. If you know of any good data I would love to see it!

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I wonder about the rate of use of crypto compared to other mean to transfer money. But overall the main advantage of crypto is that it mostly flies under the legal radar. That happens to be also its biggest flaw.

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Dec 8, 2022·edited Dec 8, 2022

My feeling here is "let's let people use crypto if they want, and see if they find that they obtain some advantages that cash transfers don't offer".

My expectation would be "yes, that's why they use it now", but that could be wrong.

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Also, the big cryptocurrencies like Bitcoin are only pseudoanonymous, and realistically, all transactions are public. Actually private cryptocurrencies are a little-discussed niche.

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that would be fair if you were comparing two things that don't exist today, but instead you are arguing that something that does exist today is not valuable because it is theoretically possible to solve the problem a different way.

All of the supposed benefits that airplanes brings the developing world could be solved much more efficiently by letting them use teleporters

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Dec 8, 2022·edited Dec 8, 2022

They don't have dollars in the 3rd world now? The title of this article- 'Argentina's black market dollar trade: illegal but part of life' https://www.france24.com/en/live-news/20220701-argentina-s-black-market-dollar-trade-illegal-but-part-of-life

They have black market dollars, and insane demand for them, in Latin America and Africa and Asia and Russia.... and everywhere else too. Do you know anyone who lives in the 3rd world? Earlier this year I had a long conversation with my Pakistanti contractor about the lengths he goes to use US dollars in his country

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I didn't say that they don't have access to USD today. I was replying to your comment that "So it seems just as fair to imagine a world where residents of developing countries can freely access the US dollar to pay for goods & services, rather than Hyperinflating Local Currency."

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The proper comparison is the current state for someone in a 3rd world country to use USD vs crypto. As you said right now it is very challenging to to transact in USD in places like Pakistan. Which makes crypto a better option in many cases. How do we know that crypto is better in those cases? Because people are using it.

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As nifty775 (him-/her-)self mentions, "they have [...] insane demand for [black market dollars]" — suggesting that supply limitations create a use case for crypto right there, even absent any other advantages.

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But people obviously cannot transact in crypto now- we see this most recently with the El Salvador Bitcoin debacle. Merchants refused to accept it, consumers refused to use it, and the whole attempt failed. Famously, 90+% of Bitcoin is held and not used for transactions. It doesn't work as a currency in practice. 'Because people are using it' is wrong- they're.... they're not using it. Crypto is a moderately interesting store of value but has basically failed as a currency at this point.

Here are a couple of good articles about how much the dollar is used on the black markets in Argentina. Bloomberg (saved in archive) https://archive.vn/SgTVD and an Al Jazeera piece from 2019 https://www.aljazeera.com/economy/2019/9/13/the-us-dollar-is-sewn-into-argentinas-economy-and-its-culture

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US dollars are easy to confiscate.

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A stable coin pegged to the dollar backed by a reputable company (e.g. Goldman Sachs .... don't laugh, or Fidelity) would be pretty useful.

It would even be very profitable for the backer because it would basically be a Money Market Fund (on the Internet!) where the provider keeps all the return from the cash (currently around 3% per year).

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I do have to wonder why no bank has yet come out with a crypto product that's basically "Tether, but the reserves aren't held by a weird shady company that doesn't want to be audited."

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Dec 9, 2022·edited Dec 9, 2022

It would be illegal. Banks are required to know who their customers are. They're required to attempt to detect and stop criminal transactions. If you built KYC and the ability to roll back transactions into a stablecoin, it would no longer be a stablecoin. It would be a bank account which happened to be kept on the blockchain.

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"It would be illegal. Banks are required to know who their customers are."

Does every major country have a "know your customer" law? Because the stable coin doesn't have to be backed by a US bank. A reputable Swiss, British, Swedish, Japanese, ... bank would work.

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It used to be possible to open a Swiss bank account where the bank knew nothing about you except the number on your bank account. This is the "numbered bank account" of Hollywood fame. It was frequently used to dodge taxes, launder money, and accept bribes. You can imagine that other countries were not pleased by this. Under international pressure, they gradually started asking customers for more information, including their name. These days the numbered account still exists, but largely as a marketing gimmick.

I don't think there's any country with literally zero KYC laws. There are probably some where the laws aren't well enforced, or where you can give a kickback to the banking regulator to ignore it. But then we get back to whether or not it's being run by a weird shady company. ;)

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Also, Japanese banks now can issue stablecoins:

"Japan's parliament has passed legislation allowing Yen-linked stablecoin cryptocurrencies, thus becoming one of the first countries – and by far the largest economy – to regulate a form of non-fiat digital money.

The regulations stipulate that only banks and other registered financial institutions – like money transfer agents and trust companies – can issue the alterna-cash. Intermediaries, or those who are responsible for the circulation of the currencies, will be required to adopt stricter anti-money-laundering measures. The rules also define stablecoins as digital money and guarantee face value redemption."

https://www.theregister.com/2022/06/06/japan_regulates_stablecoin/

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This is literally what Facebook tried to do a few years ago. The government gave them so much shit that they ended up scaling back and eventually giving up on the plans.

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FWIW, Circle, the issuer of USDC, is a reputable, US based and regulated company

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