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Is Bitcoin Mining a Real-World Environmental Problem?
First time accepted submitter HeadOffice writes "Mark Gimein points out that Bitcoing mining uses a lot of power, enough that it is a real world problem: 'About 982 megawatt hours a day, to be exact. That’s enough to power roughly 31,000 US homes, or about half a Large Hadron Collider. If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically. If that makes you think of the vast efforts devoted to the mining of precious metals in the centuries of gold- and silver-based economies, it should. One of the strangest aspects of the Bitcoin frenzy is that the Bitcoin economy replicates some of the most archaic features of the gold standard. Real-world mining of precious metals for currency was a resource-hungry and value-destroying process. Bitcoin mining is too.' However, not everyone is convinced that virtual mining is as bad for the environment as the real thing."
"About 982 megawatt hours a day, to be exact"
982 MWh/day / 24 = ~41 megawatts
Come on reporters, convert brain-dead units into normal units.
On where the power is coming from. Wind Powered bittcoin mining wouldn't be so bad right?
The Blade Itself
982 MWH/day costs approximately $100,000 per day. Is the marginal utility of mining bitcoins worth more than $100,000 per day to the world economy? If so, carry on. If not, everybody please stop.
Hard to say how bitcoin compares to mining gold and silver when you don't even know how much bitcoin is worth. If bitcoin gains enough value, they might be better for the environment than printed paper money.
How much is bitcoin worth? There was an interview recently with some 'bitcoin millionaires', people who had a million dollars worth of bitcoin. That of course raises the question: if they sold their bitcoin, would there be enough buyers to actually get them a million dollars? Or would such a large sale cause the market to collapse?
"First they came for the slanderers and i said nothing."
That's "41 megawatts" for those of you who prefer it in non-retarded units. In case you were wondering, that's 0.003% of the US's electrical generation capacity. Yeah, that's a real environmental disaster, there. It's not a problem, it's a rounding error.
Bitcoin mining does not replace traditional mining. So, the fact that bitcoin mining has a smaller impact on the environment is irrelevant. It still counts as added impact.
Knowledge is power; knowledge shared is power lost.
So we take a controlled monetary system and try to create a better monetary system and then spend effort analyzing how it fails?
.. you're kidding yourself. Quit wasting time analyzing why bitcoin isn't going to get anywhere and just accept it.
The problem with the existing monetary system isn't that it's controlled by a small group of people, it's that those people are corrupt and are manipulating the system. Bitcoin has the same problem, it's just obscured because the people 'mining' the system aren't a central group, they're a distributed group.
This is crowd sourced corruption, nothing more. If you didn't expect there to be costs related to tens of thousands of people running resource intensive software to game a system designed to protect people from responsibility
If you're able to game the monetary system, then it's lost it's value.
Digital mining has one massive advantage over real-world mining - Moore's Law. In 5 years when FPGAs and GPUs are churning out 2-3x the current bitcoin rate at far less power requirements per bitcoin less power will be required to do the same work.
Continuing my tradition of using Hydro-Québec's installed capacity as a unit of measurement, this "environmental problem" is only consuming 0.0011 Hydro-Québecs.
"enough to power roughly 31,000 US homes, or about half a Large Hadron Collider."
Holy cow the LHC uses a ton of electricity! What a waste!
One thing I don't really understand is this:
> The number of bitcoins in existence will never exceed 21 million.
So once 21 million is hit...no more power is needed, because you can't generate more?
When I read that, I thought 21 million is not a lot of coins for the whole world to use. It seems screwy to me. You run into the issue that you run into with gold, if that is the case. You can't buy a loaf of bread with gold because it is worth so much.
> While the number of bitcoins in existence will never exceed 21 million, the money supply of bitcoins can exceed 21 million due to Fractional-reserve Banking.
I've tried and tried to wrap my head around this, but it makes no sense to me. How can you have fractional-reserve banking if the coins have to match a digital signature? Fractional-reserve banking creates money out of thin air. How can you create bitcoins out of thin air? And if they are just used as backing for a fiat currency, who is to say that someone kept enough bitcoins in stock to cover the fiat money?
Doctors destroy health, lawyers destroy justice, universities destroy knowledge, religion destroys spirituality
You'll need to look at the economic value of mining, and also compare the numbers to the cost of the infrastructure those of current currency/payment systems. I have no substantial information on both, but let's not pretend cash and credit cards are cheap to maintain...
45% of all toxics released by all USA industry come from hard rock metal mining. 14 of the 15 largest Superfund Sites are hard rock mines. Mining of tanatalum for electronics (coltan) is responsible for the disappearance of half of the lowland gorillas. It kind of bothers me when "environmentalists" have zero depth perception, no ability at all to prioritize risks.
Gently reply
And how much energy does it take to make, say, minted currencies? Surely many orders of magnitude more...
If washing your hands takes 2 liters of water, isn't that an environmental problem if it could be done using just 1/10th that amount?
Perhaps, but is that a problem? If that amount of water costs $100: probably. If that amount of water costs $0.01: probably not.
I know so-called externalities can blur the picture, but in general the cost of things reflects how much effort was needed to produce them. So if Bitcoin mining is profitable, that probably means a produced Bitcoin is worth more than the effort it took to produce the required energy. No doubt Bitcoin market developments, and efficiency improvements (FPGA / ASICs) will change the actual numbers here.
Problem much, why? There are so many human activities that require energy, and (often) don't produce results that would be considered useful or valueable. So if you spend (for example) $10 worth of energy to find (is that the correct description?) $100 worth of Bitcoins, you could have spent that energy worse.
Btw: article would do good to report how many/what worth of Bitcoins were mined using the stated amount of energy.
With the advent of specially design ASICs to perform bitcoin mining, the new miners will mine 100 fold better than conventional GPU and FPGA methods currently used. The new ASICs use a fractional amount of power compared to current mining. Once the new ASICs are on the network, they will push the GPUs and FPGA miners off the network because the proportion of mining work being done will be low enough to make it not worth mining with these devices. Multiple manufacturers such as Butterfly labs and Avalon are scheduled to ship in a couple months.
But as more Bitcoin fans adopt mining ASICs, the Bitcoin network will increase the difficulty toward the point where the power needed to run all the ASICs is close to the power needed to run all the current GPU miners.
I don't think many critics actually understand the dual purpose of mining. It's not only to govern the supply of new money, but also to protect the block chain. Many attacks require that the attacker control more computational power than 50% of the network, which is a lot of hardware.
Eventually mining slows down and transaction fees become the dominant reward for mining new blocks. So transaction fees will essentially be the "security cost" for protecting the network against a centralized attack. It's anyone's guess where they'll eventually stabilize.
So once 21 million is hit...no more power is needed, because you can't generate more?
The 21 million BTC figure is asymptotic. The reward for a successful hash halves every so often as the total minted value approaches 21 million. But each Bitcoin transaction can include a voluntary "transaction fee", a tip paid to the miner who includes the transaction in the next block. After that point, miners will seek tips rather than newly minted bitcoins.
Don't be silly. Pennies and nickles are an insignificant part of the dollar economy. Make money minting them, lose money minting them, either way it's such a trivial value compared to the value of bills that it doesn't matter. Stop minting them both and it won't make any noticeable difference to the government spending levels.
Bitcoins, on the other hand, are 100% of the value of the bitcoin economy.
although there are 21 million bitcoins there is an endless fractal 0.00000001 of a bitcoin
1e-8 BTC is nicknamed a "satoshi" after the pseudonym of Bitcoin's creator. Why not call it an "ash" outside Japan? It'd make sense on two levels: an "ash" is a very small particle, and Ash is the name for the Pokemon character Satoshi outside Japan.
It's so it's much harder for those that join in the pyramid late and to give the early adopters a deliberately designed very major advantage so long as the pyramid grows.
Largely irrelevant. The new chips will allow people to mine coins 'faster', so the cost of production WILL rise to compensate. It's the artificial scarcity of bitcoin that is the fundemental principal of how it works. Once you build rigs that can produce 10x the number of coins in a given time / power input, by that time the rate of coin production will have been adjusted to make it take 10x longer to produce. 10x longer on a rig that uses 1/10th of the power - nett result zero gain.
Shut down antiquated banks.
I'm sure we can save a fair wack of power by pissing them off.
What does the Winklevii having USD11M in bitcoins say?
http://dealbook.nytimes.com/2013/04/11/as-big-investors-emerge-bitcoin-gets-ready-for-its-close-up/
There's several trillion with a T dollars flowing through electronic systems every hour all over the world. I suspect there's a carrying cost of 'making' that. Are these tools suggesting we end all electronic trading systems and revert to what? Pebbles? Ruuuuhhhhhhhtards.
With the advent of specially design ASICs to perform bitcoin mining, the new miners will mine 100 fold better
You appear to make the same mistake as Anonymous Coward and Bananatree3. Please read replies to their comments.
It's not like the existing currencies don't take any power to produce, maintain, transaction, ect... Just saying that mining costs power is just a means of cutting down the idea of digital mining. The same could be said about SETI@Home and a hundred other distributed computing projects.
People Mag's intent is more honest.
I wonder how much power the millions of Visa and Mastercard point of sale card swipers consume in comparison?
Anyone have access to one they can plug into a Kill-A-Watt for a few minutes?
Cheers!
That 982 MWh or 41 MW sounds impressive or 31000 homes sounds impressive until you realize that 5 - 7 million homes are built in the US alone every year.
I'm all for finding more efficient ways to do things but we can likely realize much greater benefit from the traditional financial institutions cleaninp up their act than from halting the wasteful mining of bitcoins.
If it'll make you happy, perhaps Bitcoin mining can be done only when power is cheapest.
Pain is merely failure leaving the body
there is a point where the marginal mined coin will be worth less than the price of mining it.
After newly minted coins stop being the primary reward for mining, transaction fees will. Miners gonna mine, be it in Minecraft or Bitcoin.
The value of a penny isn't derived from creating arguments and spinning it out into copper wire. It is a valuable trick used for tracking theft at a cash register. For example, the number of sales of cash items ending in $0.99 is statistically tied to the number of pennies being consumed at a checkout. A significant movement in any register's use of pennies sparks an investigation into a theft problem.
But there are 2.457 trillion USD, right now: http://www.federalreserve.gov/releases/H6/Current/
So if bitcoin were worth as much as the total USD in circulation, and the same amount of electricity percentage wise was used, it would use :
(2.457 Trillion USD in circulation) * 1000* 1000 * 1000 * 1000 / (11027500 total mined bitcoins) / (100 USD per bitcoin) * (982 / 24 megawatts) = /100 * 982/24 = 91,165 megawatts or 91.2 gigawatts!
2.457 * 1000* 1000 * 1000 * 1000 / 11027500
To put that in perspective, according to wikipedia: http://en.wikipedia.org/wiki/Electricity_sector_of_the_United_States
the total generative capacity for the USA is 1050 Gigawatts.
So if Bitcoin ever became as big as the USD, we'd need 10% USA's worth of power generation to support it 24/7, and given current average prices of 0.15 kilowatt hours, it would cost (91165 megawatts) * 1000 * 0.15 (kilowatt hours) * 24 (hours) = 91165 * 1000 * 0.15 * 24 = 328.2 Million dollars per day or 120 Billion dollars per year. (and miners would be making a revenue of 24*6*25 * 2.457 * 1000* 1000 * 1000 * 1000 / 11027500 = 802 Million dollars a day. I know that the bankers are stealing money from us, but still...)
You're completely wrong and the article is correct.
People Mag's intent is more honest.
Selling subscriber eyeballs to advertisers?
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Not even close to true. If bit coins catch on their value will rise. That will make mining that otherwise wasn't profitable, profitable. So more people will mine, using more energy.
The number of bitcoins are asymptotically limited. That means that so long as the bitcoin economy keeps growing, it will always at some point pay to mine. Faster growth, more energy use. Growth of bit coin is linked to energy use by the laws of supply and demand.
According to Wikipedia, if that power was generated by coal alone, that would produce nearly 1000kg of CO2 A DAY. that's not exactly an environmentally friendly number, but then the CO2 emmisions from all the complete unconstructive computer games many of us play must be a hell of a lot more in comparison....
If you gave me a choice between a printer and a giraffe with explosive diarrhoea, i'll get my ladder and my raincoat
IMO, that's arguably the BEST part of the whole bitcoin thing! It's a working experiment in creating a new, world-wide currency free of any central banking controls.
Right now, we're seeing ALL of the quirks and roadblocks one could imagine, ranging from security hacks and issues to questions about when a currency truly becomes a currency versus an investment (like a stock purchase). For that matter, there are still some who propose the suggestion that the entire thing could even be a gigantic scam. (After all, nobody seems to know who really created the whole thing. It's a complex enough system that, I suppose, it's at least theoretically possible that there's a component of all of it we don't know about yet; some way for its creator to manipulate the currency flow in a way to benefit him financially when he decides the time is right to pull the trigger on it.)
Complaints about the environmental impact of CPU/GPIU time used to keep it going are very premature, IMO, since it's probably a great investment in running the experiment, so far. By the time bitcoin goes completely mainstream as a primary source of currency (if it even does?), we'll be generations ahead in computer power, as always happens with time. Perhaps as bitcoin demand rises, the whole mathematical model would even be adjusted to make mining new coins a little less processor intensive, to prevent massive deflation.
There is a lot of unused energy off-peak.
So, instead of shutting down generators, heating water, or pumping water uphill, energy companies could run on constant load and mine bitcoins during off-peak hours. With the newly acquired bitcoins they could then buy farmland to expand on fracking.
Correct me if I'm wrong, but from my amateur knowledge of Bitcoin, doesn't mining both find coins in new blocks, as well as verifying transactions in exchange for a portion of the fee set aside for such? ie. when a transaction is performed, a small amount (under 1%) is typically marked as compensation for those who verify the transaction, which is needed as otherwise no-one would waste power on verifying transactions.
According to that understanding, the mining process makes sense, as it's providing an incentive for early adopters to adopt. It will gradually taper off to zero, at which point all miners are paid by the transaction fees, which is the ultimate goal of the system.
And honestly, computers verifying Bitcoin transactions has to be a lot more eco-friendly than the number of people needed to watch over credit and debit card transactions.
I've told this to several of my friends, that mining Bitcoins is a mechanism to convert carbon into currency. Where I live, that life cycle looks like coal -> electricity -> Bitcoin. Of course you have to pay for that electricity, which pretty much guarantees that while you're melting the polar caps due to your mining, you're also loosing money at the same time.
Of course, you're probably not paying for the electricity. Your parents, or employer, or some other unwitting person probably is. Which means your shitting on the environment and stealing at the same time. Way to go!
You use what you want, my currency is my labour.
Fiat currency is a necessary evil, I'm afraid; it's a lie, but it's a lie most of us are comfortable ignoring. Gold is something we can all agree on as having consistent intrinsic value. Silver as well, though not so much. But if I can buy a sack of potatoes in exchange for an hour's unloading the truck they arrived in into the back of the shop, I'm great with that.
Screw you, at least I can eat the potatoes. Can you eat what's in your wallet?
Operation Guillotine is in effect.
I'm not going to place to much weight on your bullshit armchair economics.
It's hard to argue greed when they didn't really profit from it.
Not having a limit is actually why most fiat currencies fail. Governments order their central banks to produce more when they need to pay off their debts. The worst example of this is the Weinmar Republic.
Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
Perhaps some web of trust based version that pays well performing nodes could replace mining, though that would be a different currency, not bitcoin. This would pay the people running the network directly, not some other guys (the miners). It might be possible, but it would be hard. Any volunteers?
Too centralized. Why not just set up a foundation, and they can sell everyone the currency as they see fit, like the Federal Reserve or something? That would be about what you are proposing.
If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically.
It doesn't work that way.
Bitcoin mining is set up to be a diminishing-returns thing, as the maximum number of Bitcoins, 21 million, is approached. Over half of those have already been generated. The "difficulty level" is already high enough that "mining" with an ordinary CPU is futile, mining with GPUs is marginal (currently, it seems to pay for the power used but not new hardware), mining with custom FPGAs is still profitable, and mining with custom ASICs is just becoming available. This last threatens to make everything else unprofitable.
There's a fixed number of Bitcoins generated per unit time, and the system increases the "difficulty" to adjust that rate. The more computational effort put into mining, the less cost-effective it becomes. This is completely independent of the number of users.
You should ask the people of the B-Ark how well their unlimited currency worked out for them. As I recall, before the drastic measures kicked in, it took roughly 3 forests in order to buy one ships peanut.
Of course those useless bastards in the B-Ark are the ones who survived, while everyone else on Golgafrincham died as an indirect result of dirty telephones.
Get The Hitchhikers Guide to the Galaxy. Read it, get the point of that particular bit of the story.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
I would say it's just finally begun rebalancing to a sane pricing range.
Price stability is important to it's long term feasibility, so the bubble was really a bad idea.
Can we please just try to avoid the most blatant, egregious errors of fact in submissions here?
As soon as you do, by no longer pretending BitCoin is a viable currency.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
Outdated bullshit. The new ASIC mining chips run a 2 watts and are 12x faster than my 220W graphics card. This is a non-issue.
No. The rate of coin generation is fixed. The difficulty, however, is not. It increases.
Or decreases if the computational power of the network drops (granted advances in technology make that unlikely in the long term, and only minimally impactful in the short term). The difficulty self adjusts SO that the rate of coin generation remains largely fixed.
They're not independent variables, the more power you have the faster you can compute an equation to match the current difficulty, and earn more coins, it just also happens that the difficulty is self adjusting so that the rate which coins are found stays apx. = to 1 per 10 minutes. If the computational power of the network is strong enough that it's taking less than 10 minutes for someone to find a block, the difficulty rises until that is no longer true, and if the computational power of the network drops enough that it's taking more than 10 minutes for someone to find a block the difficulty drops.
In a bit of shameless internet panhandling, I accept Litecoin Donations at Lbd2oH9QsthD1GfuUXPyka12YxvWJYnBVf
Wrong. They've just increased the right of mining, the power requirements will not go down. It just doesn't work that way in the real world.
If you could previously stick 10 units into a rack due to power and cooling, and now you can stuff 20 ... you put in 20, when you pull those 10 out. Those 20 are going to be more economical or you wouldn't be swapping them out in the first place.
The only restriction on mining bitcoins is your CPU power. Its not like mining Gold where a vain is only so large and then you have to go find a new one. BitCoin miners are all part of the same big pool and when it runs out, no amount of searching will find more, they'll be done.
As such, due to greed, efficiency and profit go out the window as everyone races to find all the hashes as fast as possible. If you don't replace your 10 CPUs with 20 ASICs, the other guy will, and then you're really screwed.
Its a race to the bottom, only the early adopters had a chance to make anything out of it. This is how scams work.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
Maybe this whole Bit-Mining thing is an elaborate and effort by environmentalists to get us techies to ramp down on our big irons and blinken-lights.
Everyone's in on it.
- GreenPeace.
- Al Gore.
- That hipster evironmentalist chick at the corner of the road trying to elist me into her crusades...
Which doesn't, however, necessarily reduce the overall energy demand, since it just means that people spending the same energy cost with newer gear get a bigger share of the bitcoins mined, but since the processing it takes to mine bitcoins scales with the processing power in the bitcoin network, decreasing the energy cost per unit of processing power doesn't necessarily do anything to the energy cost per bitcoin.
This would pay the people running the network directly, not some other guys (the miners).
The miners are the ones that run the network.
On the other hand, if your house uses electric heaters, you could mine Bitcoins in the winter with no additional waste of energy. You might as well get some computation out of your electricity before it turns into heat.
We're right on the cusp of a paradigm shift in mining technology where GPU mining is about to be phased out and power efficient ASIC miners are about to ship (and in some cases already shipping). Not to mention the short lived glory of the FPGA miner. This post seems like slander.
Not to mention the total damage to the environment caused by real mining is lightyears beyond the damage caused by cryptocoin mining. I'm just as much to blame for environmental damage as a bitcoin miner for living in a house with electric heating/cooling and energy inefficient appliances.
`That’s enough to power roughly 31,000 US homes, or about half a Large Hadron Collider.' Hmmm, so we are worried about bitcoins which provide fun and money to many, while ignoring something that wastes much more money on just one teeny weeny little particle...
Although I agree that it is not a pyramid scheme in the classical sense, it shares some similarities. By designing the algorithm to have exponential complexity, the creators definitely designed it in their favor. The reason why it works and the price is rising, is because there are more and more users joining, if it was not the case the price of Bitcoins would slowly fall as the volume rises but the value is constant. This is the second similarity to a pyramid scheme, in that to sustain the current trend of raising price, it needs to have more value flowing into it. The current state of affairs is similar to a pyramid scheme.
On the other hand I would not know how to design a hashing scheme, that is not exponentially complex as the uncovered hashes exhaust. In addition the economic implication is interesting, once the Bitcoins are all uncovered, there is no room for any fiscal policy. Currently the most of the rise of Bitcoin is not about actual Bitcoin use, but rather economic speculation. And this will be a fun bubble to see burst.
Eventually the mining reward is due to be phased out, so your only reward from processing block will be the transaction fees...
Coupled with that, is the creation of new custom hardware designed specifically to process bitcoin, this custom hardware uses orders of magnitude less power than generic GPUs.
And also consider for a moment how much power the existing banking industry consumes, each bank operates hundreds if not thousands of servers not to mention all the high street branches and atms which consume power too.
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You should ask the people of the B-Ark how well their unlimited currency worked out for them. As I recall, before the drastic measures kicked in, it took roughly 3 forests in order to buy one ships peanut.
And with built-in scarcity at a creation rate that tends towards zero, you'll have the opposite extreme: it'll take a fraction of a single molecule of the leaf of a tree to purchase an entire planet. What's needed is some sort of in-between; an ability to match the rate to the value societal output. This is, of course, why currencies cannot be backed by gold or silver - there is no way to adjust the value easily if societal output changes. It's also why bitcoin isn't a good currency.
I'm a minority race. Save your vitriol for white people.
Now, I'm not saying Bitcoin won't become an energy problem in the future, but I think we might want to look at high-frequency trading first.
The dozens of enormous data centers that are used for this probably consume a LOT more energy than Bitcoin mining does at the moment.
Congratulations, you've discovered the moot point.
Bottom line here is that the differences between a Pyramid Scheme and what they're doing with BTC are immaterial. People who get in early can reap large rewards at the expense of people coming in later and since the currency is designed to be deflationary ultimately it will end up being hoarded and subject to high levels of instability.
Certainly walking, swimming, flying and quacking like that duck. Maybe it is a duck?
I don't think so. The very recent manipulation of bitcoin prices was much less subtle: a massive DDOS against most bitcurrent sites, causing panic in the market and rapid drop in bitcoin value. It lost like 70% value in matter of hours, and there was no elaborate cryptography behind it, just a stupid botnet pounding several big sites - followed by avalanche of panicked investors who DDOSed them more efficiently than the botnet did.
45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
It is isn't a pyramid scheme, it is just ruined by speculators. And the worst kind of speculators, the dumb kind that buys gold from vending machines because prices are at record heights.
If you know ANYTHING at all about successful speculation, you know that you buy LOW and sell HIGH. The dumb speculators are however slow as well as dumb and only dive on say speculating in gold when prices are already high. Buy Apple stock 10 years ago. Smart. Buying Apple stock right now. Dumb.
Bitcoin is seen as having a high value right now, like say comic books had a while ago and dumb people think that this is then worth investing in with the logic that if you buy high, you can sell at even HIGHER! And really cleanup!
It doesn't tend to work that way. Instead, you can buy high because smarter speculators are SELLING high and they are selling because they don't think it is going to go any higher. Bitcoin as a anonymous paypal alternative has some merrit. As an investment, not so much. As a currency, none whatsoever. It would be like creating a currency out of comic books or bottle caps.
Fallout fans may be familiar with that idea, it is silly but do you fully understand HOW silly it is? Bottle caps were garbage once. How can you put a real world value on an item someone may at any point find a whole stockpile off, or worse, the machines that make them in the millions? North Korea has its defacto currency, the US dollar. Even loyalty taxes to the state have to be paid in it. NK ALSO had projects to create huge piles of counterfeit US dollars. Some ended up in the rest of the world but the majority of counterfeit US dollars is in NK circulation. NK has flooded its own economy with counterfeit currency they can't even hope to spend anywhere because if you had any brains and a North Korean handed you a wad of dollars you check every note individually.
Almost anything can be used as a currency, and has. Stamps have been used as currency almost exactly as Terry Pratchett described it in one of his latest books. In fact, paper money is an alterntive not that different from bitcoin to using real precious metals as barter counters. Nobody has a need for gold however, it was just for thousand of years convenient to barter for goods with a in between mechanism of gold/silver. I trade you my chickens for X gram of precious metal I have no need off because I know that I can barter that for clothes with that other guy.
ANYTHING will do for that, and has. There have even been cases of shops creating their own low currency for giving chance to small for real currency. You give me your silver coin and I give you produce and a chit saying that you still have some spending power left in this shop.
But what you NEED for a currency to be usable is some stability. Deflation is bad because it causes people to hoard and to much inflation hurts as well because if you pay me now, I will have far less tomorrow. Rampant speculation causing a currency to go rise and fall thousands of percent are useless. How am I going to price my goods when every second the currency has a different value.
Say you are going to sell beer for REAL (and not just as a novelty value, bars can afford to "sell" some beer just for a smile if 99% of the customers buy it for hard cash) for 1 bitcoin you might get within a day get anywhere between a dollar and a 400 dollars.
There is a reason people talk about HARD cash. Hard cash needs to be hard, have a consitent value. Salt worked once because people had a stable need for salt, a stable market existed so it could be reliable used to barter with. Comic books, baseball card, tulip bulbs and bitcoins don't.
It makes no sense to invest in it, you can only speculate in it if you understand what buying low, selling high really means AND until the idiot speculation stops it is even useless as a paypal alternative because you can't mark your products in bitcoins when that goes up and down per minute.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Why don't we use the generated heat for warming up water to be used in homes, for example? I've always wondered why we don't have huge power-consuming computers in our homes to generate heat AND do something useful while generating heat. Of course, this means less bitcoins or SETI or whatever in the summer, but I have better things to do in the summer anyway.
"I'm cold, honey. Could you turn up the bitcoin miner?"
Like getting in early to any company stock early adopters will usually benefit.
In my humble opinion this article is bulls**t and it should not be on front page of Slashdot. Why should anyone care how much time/energy someone uses on his own computer? Bitcoin bubble bursts, so journalist must create some brain-dead articles about it, but why you post in on Slashdot???
I think it's a pyramid scheme in the same sense Visa corporation is. It's a currency system indelibly tied to a payment processing system. The currency and the network for sending payment are fundamentally linked. This is a feature that is not shared by any other currency. Credit card processors presently extract huge sums of money from the economy to process payments and bitcoin dramatically reduces or eliminates those costs. I wouldn't accuse initial investors in Visa of colluding to create a pyramid scheme. Likewise I see early bitcoin adopters as investors in a novel mixed currency/payment processor. They go out and promote use and spread of bitcoin the same way any stockholder in a nascent credit card company would. It's just traditional investor-driven marketing.
I'd just like to point out that gold have had the same characteristic, in the beginning it's easy to mine/wash/find, but as time goes it's getting harder and harder as all the easy spots are cleared out. And it's only economical to mine those harder spots out because the value of gold have risen.
Would you say gold is a pyramid scheme, because it was easier in the beginning? Bitcoin is in many ways digital gold, where the rarity comes from the resources it takes to "extract" bitcoins. Gold itself is not currency, but can be bought and sold. And also have fluctuations in value.
Personally I think bitcoin will be doomed in the long run, since there's a max limit to amount of coins, and coins will slowly fall out of the system (if the cryptographic wallet key is lost, all coins in that walled will be unable to be moved to a new address - and with time and Murphy's law, more and more coins will be rendered inactive).
It's The Golden Rule: "He who has the gold makes the rules."
You had me until you said nobody nobody needed gold. If that were true then there would be no gold recycling.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Perfect time to buy then, it would seem?
The thing about value is that it's entirely relative. The value of a Bitcoin means nothing to you if you don't have any. The current value (low, but certainly nowhere near the lowest its ever been) means it's an ideal time to buy (if you don't mind the risk, which many don't). The high value - no matter how brief - probably made a lot of people very rich in real terms. People were happy to give them $266 for something that, today, is only "worth" $100.
The only problem is people who think a currency will ever stay still, not drop in value, or that putting $100,000 into an account for 25 years and not touching it while others gamble it away is a worthwhile venture. The people who play the market and buy low, sell high are making money with Bitcoin now, today. Thus, it has *value* in terms of its ability to make real cash using it, as any other commodity / currency.
Which would you rather have now? Zimbabwean dollars or Bitcoin? Which would you rather have had ten years ago? Which do you think you'd rather have in ten years time? It's all a guessing game and the people who point out that the price "plummeted" to a certain level etc. in horrified terms as if its the end of the world, but would rather point out the volatility rather than TAKING ADVANTAGE of that volatility and almost doubling their money - maybe they aren't cut out to tell me what financial products I should be using, or currencies I should be investing in.
I am buy no means an investor, a financeer, I've never owned a stock of shares in my life, etc. But even if can see that it doesn't matter what price Bitcoin had yesterday or what it will have tomorrow unless you're USING them. And if you are using them, it doesn't matter what price they had the day before you bought them or the day after you sold them.
If someone would like to give me $40 for the $20 worth of test Bitcoins that I put onto my Bitcoin wallet today, I don't really care what the value of the Bitcoin is, was or will be. That's a good deal. And while people were willing to spend $266 on something that you could have bought for $100 a few days before - surely that's a missed opportunity.
It's all about risk. But next time you write a Bitcoin comment, replace Bitcoin with Euro or Dollar or whatever else. Chances are that the same thing is happening with real-world currency. It doesn't mean that the world collapsed, that the Euro is dead, you can't buy bread, or that (if the Euro is dead) it was because of the software it was based on and not high-up investment companies lying about the value of junk they were selling to banks.
Technically, one of the best investments in the world was a Royal Mail First Class Stamp (to send letters). You could buy them 50 years ago and they would still be valid postage for a first class letter today - they cost pence back then and an equivalent is nearly 100 times that today. The only problem is buying them, predicting that, and then finding buyers for them now - none of which are to do with the actual price fluctuation.
Hell, the price of my fuel tank varies every single day I look, and even from just a few hundred yards of travel - up AND down. If I could find a legal way to make money from that, you know that I would.
Fair enough, you are correct that it's the block rate that's fixed, not the rate of coin generation, just that the 'block reward' happens to be what most people care about when it comes to a new block.
In a bit of shameless internet panhandling, I accept Litecoin Donations at Lbd2oH9QsthD1GfuUXPyka12YxvWJYnBVf
How much electricity does the credit card network require?
how EXACTLY is Bitcoins not a pyramid scheme?
When Bitcoin is done mining all of the coins in the chain, there will be a usable digital currency (assuming no flaws are discovered).
When a pyramid scheme is done building, all of its value collapses.
Both share the aspect of rewarding the early investors, but let's not make a composition error here.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
The phrase you are looking for is path dependent rent.
Fugue for Aaron Swartz
If there is less demand for gold then is available the price will drop as well.
You think that is a sort of a pyramid scheme as well ?
New things are always on the horizon
Are fast cars an environmental problem? People don't need them, ban them.
Is gaming an environmental problem? People don't need to do that, ban it.
Is eating meat an environmental problem? People don't need that either, ban it.
Is central heating an environmental problem? People can be cold, ban it.
Is any food stuff that isn't produced locally an environmental problem? Ban all of that too.
And flying is bad for the environment. Ban that as well.
Actually ban everything and make the whole world one big North Korea.
Stuff your stupid story and go moan to VISA, Mastercard, or even beloved Google about their power usage.
Avalon ASICs are out.
They destroy ecosystems and pollute groundwater,
Industry needs gold. The average consumer does not.
The overwhelming majority of individual participating entities in a mature economy has no practical use for any "precious metal" material exchange token. In a sense, paper bills is more useful day-to-day than a stack of gold coins. You can wipe your nose or your butt with a $1 bill. You can burn it for kindling or light. You can scribble that cute girl's phone number on it. (Just don't buy the condoms with that bill.)
Welcome to the Panopticon. Used to be a prison, now it's your home.
I let others do the mining, say the energy consumption and environment destruction is their responsibility and not mine while I make the profit.
Fossil oil, minerals, wood, palm oil, rice, corn. Think about it.
Privacy is terrorism.
fiat is a scheme. and much worse than that of the pyramid variation.
evidence: people in scheme denying vehemently that it's a scheme.
How prevalent are industrial bitcoin mining operations? That is - people setting up racks of optimized servers that only run when the very lowest electricity rates are available. Does anyone know anything about this? Such an operation would not seek to hold bitcoins. but merely produce them and cash them in to collect pay the bills and make a profit in conventional currency. Of course the could hold their bitcoins, but that would be combining a separate line of business with the mining.
If the cost per bitcoin some are estimating here (~$30) is correct then this would be a compelling business opportunity. Once the servers are paid for, a crash in bitcoin value only leads one to turn the servers off until the value rises again (making running them profitable), much like oil wells that only produce when oil prices are high.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
Thank you, that's all I'm saying. And to those comparing it to gold? I didn't just magically make gold appear one day by pulling it out of my behind like they did with bitcoin and hashing. The way bitcoin works, with the guys at the front being able to make a ton of them for practically nothing, whereas the guys at the bottom as I said can't break even and you require more and more getting into it to keep its value? Sure as hell sounds like a classic pyramid to me. I mean take the word bitcoin out of it and see if it isn't a classic description of a pyramid.
ACs don't waste your time replying, your posts are never seen by me.
Not true, people in early on with a new stock are taking a disproportionately large risk that the business will go under, which is why they'll usually wind up with more earnings. What's more, early on in the lifecycle of a business the growth rate will be much larger than later on which also leads to greater profit potential when you choose correctly.
With BTC there's no wealth being created, 100% of the proceeds are coming from later people into the system. And to compare it with stocks indicates a complete lack of competence in either BTC or common stocks.
Industry needs gold. The average consumer does not.
The average consumer has stuff in which gold plays a functional role, so you're wrong. They do, in fact, need gold.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
This is in line with Nobel Laureate Paul Krugman's view of bitcoin as gold currency as expressed in his article Adam Smith Hates Bitcoin"
To highlight a paragraph from the op-ed piece, in which he quotes Smith:
"The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country."
The purpose of bitcoin isn't to hold coins for investment, but to use them for transactions, because they have useful properties for anonymousish internet payment that other payment processing systems don't have. Except for a few silly applications, transactions aren't priced in Bitcoins, they're priced in dollars or Euros or RMB or whatever, and you buy $x worth of Bitcoins on an exchange, use them to order easily shipped illegal pharmaceuticals or send money to your parents back in the old country, and the recipient sells them back on an exchange to get ~$x of locally useful currency.
You're not buying Bitcoins to hold them until they appreciate or the latest bubble bursts or the pyramid crashes, you're buying them to use for half an hour for a transaction, and they're almost always stable enough that any price fluctuation is within your tolerance for money transmission service fees (i.e. hopefully cheaper than Western Union, possibly competitive with Paypal, and certainly much smaller than the 90% markup the dealer is getting for a sheet of LSD or the 50% markup they're making on other drugs, and even if it's more expensive than Visa, the lack of record-keeping is a feature, not a bug.) And yes, if you're using it for illegal transactions, the lack of record-keeping is also a risk, because your dealer might not actually ship you the products, but you're probably only buying a $100 retail quantity, or if you're buying more you can structure it as multiple phases so you don't pay for the third 25% chunk until you've received the second one. And it wasn't like the credit card $50 loss limit was going to reimburse you if your sheet of "psychedelic artwork" arrived but didn't actually have any acid in it.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Not money or an accepted medium of exchange either so number one is out. Do you really think circular definitions are going to fool many potential victims? You appear to be angry because people are not demonstrating the stupidity you require in the marks you wish to con.
Bitcoin should be pegged to an asset e.g. OPEC oil.
https://en.wikipedia.org/wiki/Petrodollar
Bitcoin must be REGULATED to prevent scams.
https://en.wikipedia.org/wiki/Pump_and_dump
Casteism
Look, if you're trying to be pedantic, you have to at least be on-point.
Consumers need products which contain gold. They don't need the gold itself, only the functional attributes that the gold fulfills in a product.
Try not to intentionally miss the point so obviously next time.
Welcome to the Panopticon. Used to be a prison, now it's your home.
about half the roof of this house is solar panels (chinese model, cheap with just as much lifetime expectancy put there while the govt still subsidised it) so how does that translate into carbon footprint ? i have no clue but it should be less, right ?
Free speech was meant to be free for all... how can anyone grow up in a nanny state ?
If true, it would mean that nearly 1/1000 of the total energy use in the US is currently devoted to bitcoin mining. That is preposterous. According to wikipedia, the total usage in the US is 3,886,400,000 MW-h/yr. The stated value for mining is 358,000MW-h/yr. The ratio between them is 9.23e-4. That energy usage figure includes all industrial activity, all computers running in the US, all street lights, all TVs, all electric stoves, etc. Everything. So, I simply don't believe the figure given.
The figure probably originates from http://blockchain.info/stats. I'm guessing it is either made up, or using bogus energy figures.
Go to Heaven for the climate, Hell for the company -- Mark Twain
That is indeed my point. I buy products, not gold. Some products contain gold, some used gold in the process but I do not need a 100 gram bar of gold.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Yes, what you say is correct, that is the way it was intended. It is not the reality. With hoarders, miners spending fortunes for creating more bit coins, the original idea has been lost.
If I wish to make a purchase in dollars through bitcoins, I first have to transform real currency in bitcoins, then perform the transaction and the other party has to transform them back. If the value changes during this, bitcoins are useless as a payment mechanism.
SAME as if I did it through paypal and during the transaction the value of the currency changed massively.
Bitcoins hasn't been stable for half an hour consistently. And that hurts because people ARE buying/mining them as an investment.
Original idea: Good.
Ruined by: Greed.
Well, that never happened before.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.