Yes, this supports my earlier point that blockchain technology has useful applications, but likely not as a currency. I use BTC as a proxy for other cryptocurrencies because it’s by far the largest. Since cryptocurrencies became well known in 2017 they trade more like meme stocks than useful financial assets. As currencies they so far have shown two useful purposes - money laundering and cross-border transactions, which have frequently been the same thing.
Cryptocurrency
- Thread starter Playboi Carti
- Start date
I hear the money laundering argument every now and then, but have honestly never seen any data to back it up. Do you have any resources with some data about it?
Here’s a good one from this week. Pretty amazing story. Audacious.
General article
www.tookitaki.ai
Another from last week. This one is close to home because I have a family member who works for the parent company of wormhole. They ponied up $320 mil to cover the loss in order to protect their investment in the space. I work in trading systems for investment banks and financial exchanges in NY and Chicago, but don’t know the nuances of the crypto space.
www.theverge.com
Redirect Notice
www.google.com
General article
The Rise in Cryptocurrency Money Laundering Cases in 2021
While criminals are quick to adapt technological advancement such as cryptos, financial institutions need to be more proactive to counter the misuse.
www.tookitaki.ai
Another from last week. This one is close to home because I have a family member who works for the parent company of wormhole. They ponied up $320 mil to cover the loss in order to protect their investment in the space. I work in trading systems for investment banks and financial exchanges in NY and Chicago, but don’t know the nuances of the crypto space.
Wormhole cryptocurrency platform hacked for $325 million after error on GitHub
The hacker likely found details of a security flaw in open-source code.
All of these are crypto is stolen and the thieves need to do something with it. So you could apply these stories to anything stolen.
I first bought BTC in 2017. At that time I would have affirmed your position on its usefulness or lack there of. However, since that time I have taken the time to understand the technology. Could you adequately explain hash rate, the purpose of mining, nodes, SHA-256, nonce, and keys to me? Not asking you to, but could you? Also, could you provide a cliff notes version of the history of money, from shells to fiat? This is not intended to question your intelligence, but rather, to assert that if you cannot you would be in no position to adequately weigh in on the value of bitcoin.
Why would they do it on blockchain? What's the value add? Why is it better for the government to host for example property title records on a blockchain rather than a traditional database? The state could easily post copies of car titles online without using any kind of blockchain or distributed ledger. Especially in this case, when it is not something that can even possibly be distributed - it's a government function so you can't say you want it to be trustless.
Web 3.0, whatever it ends up being, could result in massive changes to the web. Personally though, I think that NFTs for anything other than digital native fine art are the Pets.com of Web 3.0. They'll be gone once people see past the hype.
NFTs totally could be beanie babies or some fad. But with so much happening online and someday in the metaverse it might not be a fad. Give a 20 year old the choice of a Lambo and Bored Ape and I think you'd be surprised which they pick. At the end of the day both are just flexes.
It's better tech. You get a record that can't be altered saved for all time. No worries about databases being hacked or going down. Imagine GM makes a car they put an NFT of it on the blockchain. They send it to dealership A in Iowa. Person A buys it. Person A totals it. Insurance company writes it off. It ends up Texas and person B is trying to register it. Texas gov pulls up the car and can see all that. No one can wipe it off the blockchain.
I think it actually happens with tickets first. You buy your tickets on ISU website or app just like now. You can sell it to someone else via the same website. You scan the ticket in at the game. It all works pretty much how it works now.
But in the backend the ticket is an NFT. It goes into your accounts wallet. When you sell the royalty for ISU is baked into the NFT. The scanners at the stadium are just checking the blockchain. All the standard interfaces for people that don't understand it and some features for those that do.
If it's all done on a public blockchain a lot of things happen. I could take my ticket NFT and sell it anywhere. ISU gets their cut. If it's a stubhub type site ISU still gets their cut and the ticket moves instantly and verifiably. If you were buying from random person outside the stadium you could actually check the blockchain to see if they had a real ticket.
Now since the wallet is holding the ticket ISU could issue POAPs. NFTS that are proof of attendance. When you are talking to your friends you could prove you were at a game. Or maybe ISU has some special event and it's for everyone who attended every single home game. They just check your wallet at the door with whatever requirements they have and boom you are in. Maybe on senior day ISU issues an NFT player card for each senior to any wallet who attended all of that players games. They could just do a wallet check and airdrop the NFT.
If they wanted to get really into it ISU could say Brock is player of the game. Anyone at that game gets a highlight pic of Brock's big TD pass as an NFT airdropped into their wallet. Then if anyone resells that NFT ISU gets a cut and Brock gets a cut. Now players are getting paid and it's all happening automatically.
The value of bitcoin isn’t going to be decided by hash rates, mining (what’s better, proof of work or proof of stake? besides the energy consumption makes mining a ridiculous concept), nonce, keys, etc. It will be decided by whether the public and regulators favor disparate public ledger-based currencies or the existing government currency system which is currently far simpler, safer, cheaper, and more ubiquitous than cryptos. All still to be decided.
Until then cryptos will continue to trade like meme stocks. You very well could be right about the long-term value of cryptos but I’m not seeing it right now. If the Fed grows a pair and stops cowering to Wall Street it will put a lot of pressure on the names below.
I mean proof of stake largely removes the energy consumption argument... So yeah it kind of does have a factor on price. ETH 2 being proof of stake is a large part of the reason I think it does well in the future vs BTC.
And yes the gov could and will have a huge impact on price.
@clonehome
The energy argument is rubbish imo. Bitcoin is around 55-60% renewable right now. Bitcoin POW mining incentivizes cheap energy. Mining companies continue to push into renewables and because of increasing belief of Bitcoins longevity and the economics of upfront costs for renewables are making more and more sense. This number will only continue to go up.
Also, the legacy banking/insurance represents 7.5% of GDP. You think that is cheap? What they heck are they doing to make that kind of revenue? The financial services/insurance system is a relic in need of a tech overhaul. That was more of a rant, sorry
Agreed for so many reasons. But people aren't going to do anything more than read headlines and they want to believe crypto is out there killing the environment. So ETH 2 just removes the argument entirely. Way better than having to win the argument.
It would seem that the public already has decided it has a large and growing appetite for the bitcoin ledger.
The value of bitcoin has grown exponentially without the vast majority of institutional investors jumping on the wagon, and now they're starting to. Wells Fargo just put out a report a few days ago indicating crypto appears to be in the early stages preceding a parabolic, long-term upswing. Chase predicts $150k bitcoin. BlackRock just indicated it will be offering crypto trading. Banks and investment firms are starting to capitulate which was unthinkable two years ago. Having bitcoin and eth on their balance sheets is around the corner.
The energy argument is tired. Most crypto organizations realize the benefit in moving to proof of stake over proof of work as green-friendly. The difference in energy consumption between the two is vast. Like any sector, however, it takes time for an organization to move in the direction that public demand dictates. Some companies will do it, others won't. Many will die, a few will make it. Green does matter in crypto and it's moving in that direction.
Our government a) will realize that crypto is wonderfully taxable; and b) has always ultimately welcomed innovation. We can expect those two things to continue. That aside, crypto law/adoption isn't fully dictated by one country.
Regulation will come which I view as a good thing that rids the space of the dogsh!t coins and worthless projects.
Opinions/feelings don't matter. What has happened/is currently happening and network effects/adoption matter and they certainly do not indicate "cryptos will continue to trade like meme stocks".
Kevin O'Leary has suggested that he will start a BTC mining operation this calendar year. Previously, he has mentioned how he supports miners wrapping BTC mined with green energy. That would be interesting and cause increased push for renewables because the green coins would demand a premium, or non green a discount, however you want to think about it.
I don't think Blockchain is implicitly better tech. It has certain advantages and certain disadvantages relative to normal databases. Blockchain records can indeed be altered (51% attack is probably a lot simpler for something like a blockchain used to maintain car records), and as always garbage in = garbage out. I wouldn't doubt someone might want a BAYC over a lambo. If you offered me the choice, I'd take whichever was more valuable and immediately sell it. If you were asking which one a person would get and have to keep, I think the vast majority would choose the Lamborghini. If someone said you can have an original physical Picasso painting or a Lamborghini but you're not allowed to sell either, I'd choose the one I could do something with - it's nothing to do with the fact that one is an NFT.
In your car example, the existing system is already capable of all that. You have a title for a vehicle and it stays with the vehicle. I'm not going to say I'm an expert on vehicle titles, so I don't know all the detail of how it works. But I doubt you could go to Texas and register a totaled vehicle under the current system. And an NFT/blockchain based database can't prevent you from entering fraudulent information, it only prevents someone from changing that information after it's been entered. The only difference is, you're using distributed ledger technology to record the information rather than traditional databases. So, your advantage is that it's probably more difficult to hack a blockchain based vehicle registration system relative to the current vehicle registration system. But, do we really hear of people hacking into government databases to change vehicle registration? I don't, but I won't say that it doesn't happen.
In your ticket example, the current system is already capable of doing everything you described as well, but more efficiently without the processing burden of using blockchain. ISU already has a ticket exchange that allows you to buy, sell, and transfer your tickets and can already take a cut. You can bet that they track who is actually using those tickets and who gets scanned in to the games. If they wanted, they could send you an image of Brock's big TD pass for attending. During this current fad, making that image an NFT may be able to get you and/or Brock some money. But long term, I am extremely skeptical that anyone will want to pay money for a jpeg or a gif, especially one that is just a digital photo. Like I said earlier - digital native fine art as NFTs I can get behind, but photos... I have a hard time seeing that. It might be possible. So let's say the NFT thing sticks and ISU generates the "Top Shot" of CFB and it's widely successful and long lasting. That's fine - you could easily just use a normal database with their existing functional system that gives you a link to claim your NFT. No need to bog down the rest of an already functional process with blockchain technology.
Personally, I think we need to separate cryptocurrency from NFT/Web3 hype. Crypto is something real and at the end of the day it will probably be around at least in the medium term. I personally hope it goes to proof of stake, but regardless I think it will be around. NFT/Web3/Metaverse is (imo) overhyped nonsense and only a very small handful of the things being hyped in it now will ever actually exist.
As someone who works in the utility business - that's a bad argument. Energy use is a true negative of proof of work cryptocurrency. Sure, you can argue it is now using green energy. It's not as bad as those old stories of people buying up retired coal plants and firing them back up to run mining operations, sure. And I am glad for that. But it's still bad. It's using a process that is intentionally energy intensive as a means of preventing fraud because it doesn't want to use a system of trusted authority.@clonehome
The energy argument is rubbish imo. Bitcoin is around 55-60% renewable right now. Bitcoin POW mining incentivizes cheap energy. Mining companies continue to push into renewables and because of increasing belief of Bitcoins longevity and the economics of upfront costs for renewables are making more and more sense. This number will only continue to go up.
Also, the legacy banking/insurance represents 7.5% of GDP. You think that is cheap? What they heck are they doing to make that kind of revenue? The financial services/insurance system is a relic in need of a tech overhaul. That was more of a rant, sorry
Unless these miners are building their own renewable generators and operating islanded from the grid (I highly doubt any meaningful number are), then they are adding load to the system and taking up resources. For simple numbers, let's say there are 1000 MW of generation available in Iowa. Maybe 400 MW are wind, 400 MW are natural gas and 200 MW are coal. On a given day, load might be 700 MW and therefore we've got all the wind running and 300 MW of natural gas. Now, we add 300 MW of crypto mining load. You could claim it's 100% renewable because there is enough wind on the system to cover the crypto load. But, what it really did was cause 300 MW of fossil fuel generation to turn on that wouldn't have been needed otherwise. They are taking resources from the grid - causing more expensive and generally nonrenewable generation resources to have to come online, raising the environmental impact and the price of electricity.
Siting crypto mining operations near low cost renewables like hydro is not efficient for the grid or the market. Electricity is not priced based on supply and demand, it's a regulated market where utilities are allowed a fixed rate of return over operating costs. If you put in a crypto miner near large scale hydro in Washington, it doesn't mean those plants will raise the price of power until supply meets demand. It means the price will remain the same, but all those expensive peaker plants that should run only for a few hours during the highest loads now have to run more often because the cost effective base load generation is being used up by wasteful crypto mining.
Last edited:
What would you say about the miners that run on oil rigs and use the wasted energy to mine?
Or how about the miner on the east coast that let's the energy provider control how much of the miners are running in real-time. So during the day they might run 50% and at night 100% and during a freak weather event 0%. It let's them have someone buying power as they need it bought so they have it for a worst case.
I will trust you on the 2nd and 3rd paragraphs of your response to me. However, I don't see any mention of wasted renewables? Mining companies are scouring the globe to take advantage of cheap energy from off time renewable sources that would otherwise be wasted.
I still think you have a problem with your argument as well. It seems you do have an understanding that the energy cost of mining (and equipment) essentially protects the network from attack. Putting it another way, it protects the funds in the network for all of the people in the world that use it as a means to store their value.
Keep in mind that Bitcoin is hard coded to halve mining rewards every 4 years. Since it is built to decay rewards over time, the energy use will actually begin to plateau and then go DOWN in the future as adoption continues to grow. Miners will begin to drop off the network and the chain will slowly move to being supported by non miner validator nodes (which are far less costly). In other words, the network is designed to become CHEAPER in energy use over time per user.
You say it takes too much energy? What are the parameters of your argument? How much exactly is too much to support growing a network with such promise which accomplishes the following for anyone in the world who wishes to participate?
Bitcoin’s Energy Consumption vs. Traditional Monetary Systems
Although Bitcoin’s Proof-of-Work energy consumption receives increasing media scrutiny as the network continues to grow, it remains the most direct transformation of energy into money. Today, central banks around the world may print new fiat money by expending very little energy, which makes it easier to debase the currency. Accordingly, Bitcoin’s Proof-of-Work offers higher security and immutability in exchange for energy consumption. In addition, Bitcoin’s energy intensive consensus mechanism is a tradeoff for the guarantee that no government can increase its supply. Proof-of-Work allows Bitcoin to avoid reliance on trusted centralized authorities, making its monetary policy more trustworthy and predictable than any Central Bank.
Although Bitcoin’s Proof-of-Work energy consumption receives increasing media scrutiny as the network continues to grow, it remains the most direct transformation of energy into money. Today, central banks around the world may print new fiat money by expending very little energy, which makes it easier to debase the currency. Accordingly, Bitcoin’s Proof-of-Work offers higher security and immutability in exchange for energy consumption. In addition, Bitcoin’s energy intensive consensus mechanism is a tradeoff for the guarantee that no government can increase its supply. Proof-of-Work allows Bitcoin to avoid reliance on trusted centralized authorities, making its monetary policy more trustworthy and predictable than any Central Bank.
The report from fidelity that I posted earlier does a decent job explaining why BTC is fairly different that other coins like ETH. Doesn’t judge as better or worse, but different.
Ultimately, it will come down to what future scenario plays out in crypto. One winner takes all or a universe where multiple currencies/tokens exist, but are optimized for different use cases (hard money, smart contracts, etc). I tend to lean towards the later, and in that case the probability of something else overtaking BTC as the best monetary good/hard money is very low.
Ultimately, it will come down to what future scenario plays out in crypto. One winner takes all or a universe where multiple currencies/tokens exist, but are optimized for different use cases (hard money, smart contracts, etc). I tend to lean towards the later, and in that case the probability of something else overtaking BTC as the best monetary good/hard money is very low.
Interesting video - I wouldn't say the interviewer was very professional, but the interviewee is a typical NFT snake oil salesman type. His argument is "these things could potentially have value if people decide they will" which is true as far as it goes. But he provides no reason as to why they will or should. He just tries to hype people up on the idea that they might get big, so buy now! And I will grant you, something out of this will get big. But most of it won't.
Miners on oil rigs - not a bad thing, but I would imagine a very niche and minor portion of overall mining.
Energy Provider Control on East Coast - one individual, using the type of demand side management that is common practice for large utility customers. I would say this behavior makes this person better than many miners, but still fundamentally bad.
The bottom line is that you are using huge amounts of energy for something that is unnecessary. You can argue the value of crypto in general and I'm willing to listen, but the proof of work method is certainly unnecessary.
I can appreciate that the energy cost of Bitcoin will eventually go down once all the coins are mined. There will probably be some point toward the end where (assuming Bitcoin is still viable by that point) even the large value of a coin will not be enough to justify many people mining. But as the value of the coin goes up and as it becomes harder and harder to get those few available coins - isn't this just going to proportionally increase energy usage? And I do get the point - the reason for proof of work is to make it too costly in terms of electricity to generate a 51% attack so an attacker would get less than they spent. I've also heard people say the value of a bitcoin is basically the value of the electricity used to mine it. I get the concept. And I get that there are people who don't like Proof of Stake because it requires a trusted authority to at least some degree. I get why crypto enthusiasts like proof of work and what advantages it has. I think it's just something that isn't good for our society, when applied at a large scale.
In terms of how much is too much - I'd say when it costs 10-20% more energy than any other currency system, that's when it's too much. Currently, on a per user basis Bitcoin consumes 30x more energy than traditional banks. Total use by banks is higher than Bitcoin, but they serve many more users. 5% of all the world's electricity is used on Bitcoin alone. Put the energy use of cryptocurrency in a +/-10% range of regular banks and I think you'd see the problems go away.
