The article misses the point. Bitcoin mining in China was a legal way to get money out of the country. Buy a share in a mining pool in yuan, get Bitcoin delivered, sell it in Hong Kong or elsewhere, get dollars or yuan. That was viewed as "manufacturing and exporting", which is legal, encouraged, and sometimes subsidized. That's what powered Bitcoin mining in China.
China has exchange controls. You can't just exchange yuan for dollars or euros. there's a limit of about US$50,000 per year per person, and even that is sometimes restricted. No other major country has exchange controls like that.
I am listening to "The Bitcoin standard" right now and just came by the part where the author explains why he thinks bitcoin is a case of "any publicity is good publicity". And it does not seem very far fetched to me
I have a long standing issue with crypto that's starting to bug me...
When i buy stock i'm hoping for two things. first that it increases in value but also that i get to collect some dividends because i own a tangible piece of a company.
When i buy ETH or XLM my only goal is to sell it on to someone else for more, i get nothing while i hold it and can't actually use it for anything. All i'm doing is searching for a bigger idiot to buy it off me.
What am i missing?
Edit: I get crypto is emotive and a lot of you guys are balls deep in the cult but it'd be nice to get some answers rather then my post just getting hidden.
Warren Buffet said the same thing, you are not missing anything:
"Cryptocurrencies basically have no value and they don't produce anything. They don't reproduce, they can't mail you a check, they can't do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person's got the problem. In terms of value: zero.""
One obvious thing that nobody seems to mention is a store of value that the government can't devalue (that requires a more stable crypto system, I will grant you that), can't tax[0] and can't control. You may have all sorts of objects to that, they point is that there are good solid people out there, with long memories, deep understanding of the financial system and no trust in the governments ability to handle it.
As for stocks, I buy and hold them, but yes I am explicitly looking for a the next sucker who is willing to pay more when I need to liquidate them.
[0]: they will have to tax something else, like a sales tax. I am fine with that, I just don't want them to be able to take what I own.
I concluded a while ago that there's an uncrossable chasm between the people who understand/agree with your first paragraph and those who don't. Any argument beyond that is just people talking past each other.
You earn interest (varying) while you delegate the coins to a stake pool.
This is basically the same (details matter, ADA for example keeps the coins in the wallet all the time - AMP coins are transferred elsewhere) for all PoS (Proof of Stake) coins.
Bitcoin, on the other hand, is a PoW (Proof of Work) coin.
Edit since i can't reply downthread:
You're of course free to cash out your staking rewards however you want, but mind 2 things:
My understanding is that you can largely think about crypto in a similar way you think about regular currencies and economics: staking rewards are similar to governments printing money via bonds or whatever, there's an internal inflation rate etc, and the value of a currency relative to the rest of the world is to at least some degree related to its governance (but in the case of crypto, governance is restricted to the health of its own ecosystem only, rather than expanding to all industries like a regular country)
The main difference, to my understanding, is that rewards are kinda like getting paid directly by voting (in many cases, in a "republican" fashion via delegation), whereas with regular currencies, the mechanisms that correlate bond yield to economic activity are too complex and abstract for the average joe to grasp.
I am curious, why did you believe that posting this comment to HN would benefit the community? It has no new information and, to somebody like me with a more nuanced view of crypto, just appear stupid and arrogant.
Compare Bitcoin's energy consumption to a country like China. It's not so devastating to the planet. Bitcoin currently consumes around 110 TWh per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden. China as of 2019 was ~39,000 TWh, with the China ban the energy consumption can only improve. As miners move away from coal and on to more renewable sources and countries.
That's more than the whole world (per your own numbers, 110 / 0.0055 = 20,000). I am seeing more like 7,500 TWh for 2019.[0]
Also, 1.4 billion people live in China and they make a huge amount of the world's durable goods, so it makes sense that they will consume some power. Bitcoin does jack shit.
If China uses 3900TWh a year, that would be twice the global consumption by your claim that 110TWh = 0.55% global. Of course that number is about an order of magnitude off.
If Bitcoin being as useless as it is consumes 0.55% of global electricity isn’t alarming I don’t know what is.
Okay, I misread your energy to electricity-only comparison. Divide 0.55% by 5 and it’s still alarming.
You also need to quantify all the non-electricity energy use going into the Bitcoin equal system, including but not limited to hardware production, transportation, depreciation, etc. I’m not sure if those are negligible.
Why would anyone compare electric consumption of a country with digital currency? That is the most ridiculous comparison I've ever seen. In terms of reaching, this reaching to mars and possibly beyond. Lets compare energy consumption of bitcoin with online banking. That's at least in the same neighborhood. A country contributions to mankind include infrastructure, manufacturing, mining, powering hospitals, airports, schools, sewage system, trains, telecommunication, research labs, libraries, warehouses, ..... list goes on. What does bitcoin does? nothing. There is no comparison.
> Why would anyone compare electric consumption of a country with digital currency?
Because we don't operate in GW / TW units typically, so some size comparison is needed for mental visualisation. In the same way I'd say "about the size of a basketball" rather than "it's 250 cubic cm".
No you didn't just compare to demonstrate difference in units, you asserted that bitcoin energy consumption is harmless as it only makes a tiny percentage of China's total consumption. Which is like saying oh these shoes cost $8k but that's nothing compared to your house! what???
This will only affect the flow of new, mined bitcoins which are a small percentage of the total supply. Bitcoin's protocol also has a difficulty adjustment built into it, so when hashrate goes down mining difficulty goes down to compensate so the rate of new bitcoins being mined stays pretty even over time.
Maybe. That also depends on if demand is there to increase the price also. I can have a one of a kind piece of art work. Yet because it looks like something I scratched out on a napkin a few mins ago (I did) it is still not worth much. As there is low demand.
Assets like this can do that. Where the demand is there just because everyone else is demanding it (oil had this a few years ago). But if that demand collapses so will the price.
I think the alg has a built in rate limiter too to pick up the slack. That limiter can go up or down too. Keeping new supply coming in at a particular rate.
Overall though bitcoin looks like a deflationary style monetary system. So speculation will be more common too.
Clearly the problem is your measure of success. For the author, success means HODL to the Moon! Who cares about transaction volume or if anybody actually spends bitcoin in everyday life?
The problem is that in economic terms, there hasn't been a "long-term average" yet. It's a new financial instrument, and during what duration it's had, its price has been driven by an influx of interest.
At best, you can hope for a logistic curve, where the growth will flatten off when everybody on the planet (at least, those with money) has collectively decided to accept it. That will level off the price.
At worst, when that happens, the people who depended on the exponential growth will cash out their earnings in search of new opportunities. If that happens, the entire thing will crash rapidly.
I can't tell you which it's going to be. I'd call it a coin toss. But that makes it hard for me to consider it a "long term value". It's a valid best case scenario, but we haven't seen that best case yet, only an influx of new buyers who are drawn more by the upward curve rather than the potential flattening.
You were able to say the same about beanie babies. Bitcoin could lose trust in it at any time. There’s hardly an intrinsic use in a Bitcoin and there’s also hardly any demand for it except as a gambling opportunity. (Fiat money has government demand through taxes).
I don't necessarily disagree with you, but OP was talking specifically about adoption, which appears to remain very low. It seems the only practical use for Bitcoin today is as a store of value. Which can be rephrased to mean that it's a tool of speculation for those wealthy enough to buy it.
There were news recently about Fidelity expanding crypto-related staff by some 70%. I hear crypto is also growing in popularity in Central/South America (the El Salvador Bitcoin move, Brazil's Mercado raising money w/ Softbank, etc). Though, full disclosure, I'm not familiar enough w/ the space to tell whether that offsets whatever is happening in China.
I'd think in terms of how much it costs to hire these people and what Fidelity's profit-per-employee rate is, as that should in theory give an idea of a lower bound for how much they expect to earn from crypto. One would expect trading volume to be several to hundreds of thousands times that amount, assuming fees similar to Coinbase/Kraken/et al.
No, that's bad! The article makes it clear that China banning bitcoin and bitcoin mining is good, so other countries making more use of it must be bad.
Are you hijacking the topic to rehash the well-known tirade about energy usage? The article says less mining being concentrated in China means more decentralization (which is "good" as far as the philosophy of cryptocurrencies goes)
Also, just a reminder that not all crypto is PoW. Nano, for example, claims to be extremely energy efficient.
I googled daily transactions and it was in the 200ks whereas before it was in the 300ks.
Meanwhile, there are 109 million credit card transactions a day in the US alone and who even knows how many wires or cash payments (or what happens when you go beyond the US).
It seems that at least one country, El Salvador, has even less stable value than btc and have declared it a national currency to stabilize the economy.
Oh c'mon. Bitcoin mining is defacto a waste of electricity which might have been used more productively elsewhere. Let's not live under rainbows and suggest that miners are using electricity somebody else threw away or were gonna "bury" or take offline.
I think bitcoin / cryptos is not as safe from governments as people think. Look at EU banning deposits on binance. I think governments banning ways people can deposit and buy crypto would kill it pretty quickly. We are entering dark times in how people can control us by how we can spend our money, and I don't think crypto is going to save us from that.
I also hate those cancel culture people who are like 'it doesn't provide utility in my narrow minded view on how the world should be, so it should be banned'. If you don't like or understand something, breath and move on with your life. Keep it to yourself and let others live in peace.
If you really want to go down the rabbit hole of removing stuff that's not 'necessary' to 'save the planet', ok, lets ban air conditioning. You don't NEED it. How about we stop the mass castration of animals and all the unnecessary spending on them and ban pets. Oh they have use and meaning to you? well not to me, ban them.
>We are entering dark times in how people can control us by how we can spend our money
Who said bitcoin is currency? It doesn't even meeting definitional requirements for currency. Moreover, if bitcoin and its crypto advocates were just OK with letting it run side by side with fiat currencies that'd be one thing. But the perhaps not express still implicit goal of crypto is to replace fiat currency which necessarily puts it into conflict with the Gov. whether in the east or west. There's an anarchist theme there. So how can it really be surprising there's push back? Let's not forget spending fiat currency --- well, at least in the west (the good side) --- has no overlord limits other than criminal you think exist.
I didnt say it was a currency, I said the powers that be may prevent us from using our currency to buy / transact with it or what ever they find socially unacceptable.
I said Bitcoin wasn't a currency. You said bitcoin isn't a currency too. So that's it then. The only thing really left on the table is fiat currency which, as I already said, isn't constrained by (insert adjective here e.g. deep-state) overlords except for criminal acts at least in west. Well, another problem sorted out!
I agree crypto has no utility but I also really don't want to live in a world where governments ban me from buying and selling knowledge of numbers because of the particular algorithm which produced them. Or from using my computer to compute whatever I want.
This is not a good analysis. Their proposition is that anything that is for Freedom of Expression is banned in China. I think their examples: Google, Xhamster, Youtube, Netflix, Reddit, Bitcoin are examples that that is not what is happening at all. I don't think any of these promote freedom of expression, whatsoever. Especially when you consider that these companies have recently made it a their mission to influence politics and culture in the United States.
This is China wanting to stop foreign influence, and also more importantly protect their own companies. China has video sharing and micro blogging and social networks. Is it really evil intent that China allowed these local companies to form instead of ceding to foreign monopolies?
Bitcoin while proponents talk about how its freedom and the revolution to tech that the blockchain will be, has produced nothing more than something to gamble on in the stock market.
Why not both? The CCP has strong state censorship on all native platforms. If they allowed Reddit or Google, that would allow their populace to access unmoderated (from their point of view) platforms, which is not acceptable. They allow expression, just with more and stricter limits than in the west.
> "This is China wanting to stop foreign influence, and also more importantly protect their own companies. China has video sharing and micro blogging and social networks. Is it really evil intent that China allowed these local companies to form instead of ceding to foreign monopolies?"
what is a bit confusing to me is how they are crushing any company that gets successful. I invested in alibaba because I figured China realized having a strong and successful tech sector is critical to their goals of hegemony, but then they just crushed them and any other company that pops up. So when my friend said 'what about Didi', I was like stay away, china will hit them like the next wakamole, and they did within days.
I really don't know what their game is, but they are up to something.
It's really not my intention to turn this into a political flame wars, but isn't there stuff in the works by the Biden administration now to clamp down on industry hegemonies (e.g. "big tech") in the name of healthy competition? How's that different? IMHO, what China is doing strikes me as having the same rationale, with it looking like protectionism against foreign powers being just a side effect. EU doesn't look too kindly on the American flavor of corporate warfare either, for example.
With this said, I think the CCP's rationale for Alibaba is different from their rationale for crypto. One other commenter mentioned something that I think is quite valid: China has a capital exodus problem; there are a non-trivial number of people who got rich through corruption who want to hide money outside of the country and China has been aggressively clamping down on this via exchange controls and other measures. Brazil has a similar problem (though not to the extent of banning the purchase of foreign capital over a threshold) and it tries to keep track of it via taxation. Brazil started to treat outgoing crypto like it does foreign currency purchases, China just looks to be doing the same, but using China's policy framework.
I am not speaking on Biden's actions or intentions, I am speaking on China's. I am also not speaking on what is 'right' or 'wrong'. just that is confusing given their stated goals.
IMHO, it matters precisely because if we don't ascribe preconceptions of right vs wrong (particularly when that tends to be married to US-vs-China narratives), neither of the efforts seems like illogical courses of action, nor all that different at all in the first place.
Is it really confusing that a communist government doesn't like monopolistically-inclined companies? How so? Shouldn't that be a given, all other things considered?
> I really don't know what their game is, but they are up to something.
Their game is absolute power. It's not hard to see that anything that strays from the party line or amasses any degree of power that poses a potential risk will be squashed.
People ridicule with "all news is good news for Bitcoin" but it's somewhat obvious that this is a credit to the power of Bitcoin - they wouldn't take swift action against something harmless.
China has exchange controls. You can't just exchange yuan for dollars or euros. there's a limit of about US$50,000 per year per person, and even that is sometimes restricted. No other major country has exchange controls like that.
A big use case for Bitcoin just went away.
Getting money out of China is 1) hard, and 2) often illegal.[1]
[1] https://www.bloomberg.com/news/articles/2021-03-11/from-cryp...
When i buy stock i'm hoping for two things. first that it increases in value but also that i get to collect some dividends because i own a tangible piece of a company.
When i buy ETH or XLM my only goal is to sell it on to someone else for more, i get nothing while i hold it and can't actually use it for anything. All i'm doing is searching for a bigger idiot to buy it off me.
What am i missing?
Edit: I get crypto is emotive and a lot of you guys are balls deep in the cult but it'd be nice to get some answers rather then my post just getting hidden.
"Cryptocurrencies basically have no value and they don't produce anything. They don't reproduce, they can't mail you a check, they can't do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person's got the problem. In terms of value: zero.""
As for stocks, I buy and hold them, but yes I am explicitly looking for a the next sucker who is willing to pay more when I need to liquidate them.
[0]: they will have to tax something else, like a sales tax. I am fine with that, I just don't want them to be able to take what I own.
ETH should be possible to stake soon-ish, other examples are ADA, ALGO and many more..
This is basically the same (details matter, ADA for example keeps the coins in the wallet all the time - AMP coins are transferred elsewhere) for all PoS (Proof of Stake) coins.
Bitcoin, on the other hand, is a PoW (Proof of Work) coin.
Edit since i can't reply downthread:
You're of course free to cash out your staking rewards however you want, but mind 2 things:
- taxes
- transfer fees
- the interest compounds..
I still end up with more of the same asset with no intrinsic value.
I assume they aren't paying me out in GBP or freedom bucks?
The main difference, to my understanding, is that rewards are kinda like getting paid directly by voting (in many cases, in a "republican" fashion via delegation), whereas with regular currencies, the mechanisms that correlate bond yield to economic activity are too complex and abstract for the average joe to grasp.
To most people, Bitcoin is synonymous with crime - ransomware, scams, drugs.
That's more than the whole world (per your own numbers, 110 / 0.0055 = 20,000). I am seeing more like 7,500 TWh for 2019.[0]
Also, 1.4 billion people live in China and they make a huge amount of the world's durable goods, so it makes sense that they will consume some power. Bitcoin does jack shit.
[0]https://www.climatescorecard.org/2021/01/electricity-consump...
It's a store of value that just survived displacement from a despotic regime without breaking a sweat.
If Bitcoin being as useless as it is consumes 0.55% of global electricity isn’t alarming I don’t know what is.
You also need to quantify all the non-electricity energy use going into the Bitcoin equal system, including but not limited to hardware production, transportation, depreciation, etc. I’m not sure if those are negligible.
Because we don't operate in GW / TW units typically, so some size comparison is needed for mental visualisation. In the same way I'd say "about the size of a basketball" rather than "it's 250 cubic cm".
Assets like this can do that. Where the demand is there just because everyone else is demanding it (oil had this a few years ago). But if that demand collapses so will the price.
I think the alg has a built in rate limiter too to pick up the slack. That limiter can go up or down too. Keeping new supply coming in at a particular rate.
Overall though bitcoin looks like a deflationary style monetary system. So speculation will be more common too.
Where is this adoption that everyone is talking about? Is there at least some credible chart that shows growing transaction volume?
If you ignore the stomach-churning 80% drawdowns and instead look at the long-term average, there's a power law that explains the price quite well:
https://digitalik.net/btc/long_term_power_law
At best, you can hope for a logistic curve, where the growth will flatten off when everybody on the planet (at least, those with money) has collectively decided to accept it. That will level off the price.
At worst, when that happens, the people who depended on the exponential growth will cash out their earnings in search of new opportunities. If that happens, the entire thing will crash rapidly.
I can't tell you which it's going to be. I'd call it a coin toss. But that makes it hard for me to consider it a "long term value". It's a valid best case scenario, but we haven't seen that best case yet, only an influx of new buyers who are drawn more by the upward curve rather than the potential flattening.
You got me curious: 70% corresponds to 100 people. The article is here: https://news.yahoo.com/fidelity-digital-assets-plans-70-1850...
Also, just a reminder that not all crypto is PoW. Nano, for example, claims to be extremely energy efficient.
> Don’t be snarky.
You should have known this after being here for a decade.
Meanwhile, there are 109 million credit card transactions a day in the US alone and who even knows how many wires or cash payments (or what happens when you go beyond the US).
https://safemoon24.com/index.php/bitcoin/bitcoin-btc-now-dec...
If China banning bitcoin use and mining isn't an obvious indicator to you that Bitcoin is looking good, I don't know what would convince you :)
Bitcoin mining in China was legal. Because it can convert the waste electricity to money.
Now, the main reason for the ban is that China don't have enough electricity to manufacture due to the robust demand in export.
When China export drops or waste electricity increase, Bitcoin Mining will become legal again. This is where you can make money.
I also hate those cancel culture people who are like 'it doesn't provide utility in my narrow minded view on how the world should be, so it should be banned'. If you don't like or understand something, breath and move on with your life. Keep it to yourself and let others live in peace.
If you really want to go down the rabbit hole of removing stuff that's not 'necessary' to 'save the planet', ok, lets ban air conditioning. You don't NEED it. How about we stop the mass castration of animals and all the unnecessary spending on them and ban pets. Oh they have use and meaning to you? well not to me, ban them.
Who said bitcoin is currency? It doesn't even meeting definitional requirements for currency. Moreover, if bitcoin and its crypto advocates were just OK with letting it run side by side with fiat currencies that'd be one thing. But the perhaps not express still implicit goal of crypto is to replace fiat currency which necessarily puts it into conflict with the Gov. whether in the east or west. There's an anarchist theme there. So how can it really be surprising there's push back? Let's not forget spending fiat currency --- well, at least in the west (the good side) --- has no overlord limits other than criminal you think exist.
The key quote is here: https://ibb.co/Sm8LW0x
Asked and answered + 1.
Also crypto has no utility and should be banned.
This is China wanting to stop foreign influence, and also more importantly protect their own companies. China has video sharing and micro blogging and social networks. Is it really evil intent that China allowed these local companies to form instead of ceding to foreign monopolies?
Bitcoin while proponents talk about how its freedom and the revolution to tech that the blockchain will be, has produced nothing more than something to gamble on in the stock market.
So then why did China ban it?
what is a bit confusing to me is how they are crushing any company that gets successful. I invested in alibaba because I figured China realized having a strong and successful tech sector is critical to their goals of hegemony, but then they just crushed them and any other company that pops up. So when my friend said 'what about Didi', I was like stay away, china will hit them like the next wakamole, and they did within days.
I really don't know what their game is, but they are up to something.
With this said, I think the CCP's rationale for Alibaba is different from their rationale for crypto. One other commenter mentioned something that I think is quite valid: China has a capital exodus problem; there are a non-trivial number of people who got rich through corruption who want to hide money outside of the country and China has been aggressively clamping down on this via exchange controls and other measures. Brazil has a similar problem (though not to the extent of banning the purchase of foreign capital over a threshold) and it tries to keep track of it via taxation. Brazil started to treat outgoing crypto like it does foreign currency purchases, China just looks to be doing the same, but using China's policy framework.
How does that matter?
I am not speaking on Biden's actions or intentions, I am speaking on China's. I am also not speaking on what is 'right' or 'wrong'. just that is confusing given their stated goals.
Is it really confusing that a communist government doesn't like monopolistically-inclined companies? How so? Shouldn't that be a given, all other things considered?
Their game is absolute power. It's not hard to see that anything that strays from the party line or amasses any degree of power that poses a potential risk will be squashed.
People ridicule with "all news is good news for Bitcoin" but it's somewhat obvious that this is a credit to the power of Bitcoin - they wouldn't take swift action against something harmless.