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Old 13th April 2021, 07:40 AM   #1
Puppycow
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Cryptocurrencies and the economy

I realize that there's already a thread about bitcoin, but I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.

It does seem weird to me, how volatile they are. I admit, I don't really understand why people think they have value. Bitcoin is over $60,000 now. Ethereum over $2,000. Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable? How much energy does it all consume, anyway?

The popularity of cryptocurrency mining graphics cards may have surprised even Nvidia

Quote:
Nvidia expects its CMP lineup will net $150m in its first three months, three times more than initially expected.

In the same breath as announcing a bleak outlook for GPU shortages this year, Nvidia has revealed that its CMP (Cryptocurrency Mining Processors) lineup is set to make more money than it had first expected.

Launched last month, Nvidia had initially expected a return of $50 million from its CMP lineup. In a short period of time, however, it has scaled that up three times, to $150 million for these cards' first three months.

Nvidia's CMP lineup is made up of four cards that share some similarities with existing and past GeForce generations from Nvidia. However, they are not one and the same. While they may share some silicon, the CMP cards are said to be built with GPUs unable to deliver what's required for Nvidia's GeForce lineup. They also do not feature any outputs and probably cost a lot more.

One major cryptocurrency outfit recently ordered $30 million in CMP GPUs, which accounts for a rather large chunk of Nvidia's new CMP revenue alone. It appears as though scale takes precedent over savings here—the order value could easily see Ampere and Turing chips going for thousands of dollars. It appears as though some of the larger mining operations are desperate for higher hash rates while cryptocurrency value is up, and are willing to pay extra for it.
If you stop and think about it, that's really an incredible amount of real resources being diverted to this. The $150 million is just a drop in the bucket I'm sure.
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Old 13th April 2021, 08:14 AM   #2
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Originally Posted by Puppycow View Post
Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable?
Of course not. Requiring computers to work like crazy to generate currency is insane.

Quote:
How much energy does it all consume, anyway?
A lot.
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Old 13th April 2021, 08:55 AM   #3
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Originally Posted by Belz... View Post
A lot.
OK, you're in.
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Old 14th April 2021, 06:22 AM   #4
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Originally Posted by Belz... View Post
Of course not. Requiring computers to work like crazy to generate currency is insane potentially profitable.
ftfy.
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Old 14th April 2021, 06:29 AM   #5
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Originally Posted by Puppycow View Post
I realize that there's already a thread about bitcoin, but I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.

It does seem weird to me, how volatile they are. I admit, I don't really understand why people think they have value. Bitcoin is over $60,000 now. Ethereum over $2,000. Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable? How much energy does it all consume, anyway?

The popularity of cryptocurrency mining graphics cards may have surprised even Nvidia



If you stop and think about it, that's really an incredible amount of real resources being diverted to this. The $150 million is just a drop in the bucket I'm sure.

I can only refer you to what I posted in the bitcoin thread:
Originally Posted by psionl0 View Post
You must admit that proof of work or even proof of stake are terrible validation techniques because of the energy they waste. If we could come up with an equitable "block" reward system for nodes participating in the consensus process then I am sure that we would have a crypto that was a winner.
As to whether cryptos have any use in the real world, the answer is "that depends". If the global printing press strategy that countries around the world adopt in their currency wars backfires (like has happened to individual countries many times in the past) then crypto-currencies might offer a way forward because their supply can't be manipulated.
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Old 14th April 2021, 01:43 PM   #6
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My interest is in the construct that bitcoin is digital gold.

But the elements on the periodic table are a finite set, and will be forever. Gold is one of them.
The list of cryptocurrencies has no limit, and can be added to at will, so is infinite.

Gold is 1 /104 of a set.
Bitcoin is one of an elastic set to infinity, so can lapse back to zero value, divide any number by infinity.
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Old 14th April 2021, 01:50 PM   #7
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I'd been planning to build my first gaming PC about a month ago.

A few hours later I ordered a pre-built rig.

Edit: Also, its carbon footprint is horendous.

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Old 14th April 2021, 02:57 PM   #8
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Originally Posted by Puppycow View Post
How much energy does it all consume, anyway?
More than Holland, and half as much as the entire consumption of all the data centres on earth*: https://www.bbc.com/news/science-environment-56215787

I have a tech mate who shifted to Australia so they could set up their own solar array to have enough power to mine BTCs, because the cost of paying for it was prohibitive, and he is a PhD++ level computer genius, so if there was an easier way, he'd know about it.

*Most of their consumption is cooling/HVAC systems.
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Old 14th April 2021, 04:06 PM   #9
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Originally Posted by The Atheist View Post
More than Holland, and half as much as the entire consumption of all the data centres on earth*: https://www.bbc.com/news/science-environment-56215787

I have a tech mate who shifted to Australia so they could set up their own solar array to have enough power to mine BTCs, because the cost of paying for it was prohibitive, and he is a PhD++ level computer genius, so if there was an easier way, he'd know about it.

*Most of their consumption is cooling/HVAC systems.
Wow. And that's just for bitcoin. Doesn't include other cryptocurrencies I take it?
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Old 14th April 2021, 05:11 PM   #10
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It looks like it's just BTC. It's so dominant I expect the rest probably only use as much power as Tajikstan.
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Old 14th April 2021, 05:18 PM   #11
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I know someone that isn't that happy about the increase in bitcoin recently, as it takes ages to do transactions.
For them the value of bitcoin is in the convenience which is being affected now.

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Old 14th April 2021, 05:48 PM   #12
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Originally Posted by psionl0 View Post
ftfy.
Casinos are profitable too - for the staff and owners. For the gamblers (and everyone else) not so much.

But Bitcoin is potentially worse, because fund managers could be gambling with your money. So long as only a few are doing so the damage is limited, but imagine if Bitcoin became the dominant currency its inventors hoped for - it would be an ecological disaster and massively destabilize world markets.

Originally Posted by p0lka
I know someone that isn't that happy about the increase in bitcoin recently, as it takes ages to do transactions.
For them the value of bitcoin is in the convenience which is being affected now.
And once again Bitcoin fails to deliver on its promise.
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Old 14th April 2021, 11:32 PM   #13
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Originally Posted by Samson View Post
My interest is in the construct that bitcoin is digital gold.

But the elements on the periodic table are a finite set, and will be forever. Gold is one of them.
The list of cryptocurrencies has no limit, and can be added to at will, so is infinite.

Gold is 1 /104 of a set.
Bitcoin is one of an elastic set to infinity, so can lapse back to zero value, divide any number by infinity.

Just because this is a new thread, it doesn't mean that you can repeat ancient arguments from the old bitcoin thread that have been thoroughly rebutted:
Originally Posted by psionl0 on 22nd May 2020 View Post
This exchange took place 6 months ago.
Originally Posted by psionl0 on 12th November 2019 View Post
Other than the highlighted, I can't make any sense out of this word salad.

You seem to insist that if you divide a finite crypto market by infinite cryptos, you get $0 per crypto.

That just illustrates your abysmal maths. Consider the sequence {1/2, 1/4, 1/8, 1/16, . . . }: This has an infinite number of terms and a finite sum but many of the terms are an appreciable fraction of the total (not zero).

The same is true of cryptos. No matter how many are invented, most will not amount to anything and won't drag money away from the top cryptos.
Originally Posted by Samson View Post
I accept that zero is an unrealistic valuation, but that is all.
Originally Posted by psionl0 View Post
I wish I could believe that but no doubt, you will soon go back to your "there are infinite bitcoins so bitcoins have no value" line again as if this exchange never happened.
No doubt, Samson was hoping that after all this time, the exchange will have been forgotten so that he could again rabbit on abou "infinite supply of digital money" as if it had never been discussed again.
Originally Posted by Samson View Post
For a moment putting to one side the technical picture, the fundamentals never change.
There is an infinite supply of digital money.
It is a matter of time to patiently watch infinite supply catastrophically atrophy demand.

Rat poison .
Nailled It!!!
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Old 14th April 2021, 11:34 PM   #14
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Originally Posted by Roger Ramjets View Post
Casinos are profitable too - for the staff and owners. For the gamblers (and everyone else) not so much.

But Bitcoin is potentially worse, because fund managers could be gambling with your money. So long as only a few are doing so the damage is limited, but imagine if Bitcoin became the dominant currency its inventors hoped for - it would be an ecological disaster and massively destabilize world markets.

And once again Bitcoin fails to deliver on its promise.
Can't you tell the difference between mining for bitcoins and buying/selling the crypto?
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Old 14th April 2021, 11:45 PM   #15
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Originally Posted by Puppycow View Post
I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.
Before this thread becomes a duplicate of the bitcoin thread and gets merged with it I might add that the crypto market is currently worth about $1T which is pocket change in the global economy. How high the market cap will go to is anybody's guess.

As far as energy consumption is concerned, that is the biggest failing of cryptos. Their success is bad for the ecology. Until we get a crypto that is scalable and uses a consensus based (instead of competitive based) validation mechanism, cryptos aren't likely to be considered seriously as a currency.
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Old 15th April 2021, 07:23 AM   #16
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Originally Posted by The Atheist View Post
It looks like it's just BTC. It's so dominant I expect the rest probably only use as much power as Tajikstan.
Found this page:

https://digiconomist.net/ethereum-energy-consumption/

Apparently Ethereum (currently) consumes as much energy as Belarus. 35 TWh. About a third of Bitcoin (99 TWH).

(And my auto-correct keeps trying to change it to "Ethereal".)

But graphics card makers cannot keep up with the demand, so it is likely to keep increasing for as long as the price stays high.

The Bitcoin page above says that a single bitcoin transaction consumes over 900 kWh of electricity and generates over 400 Kg of CO2.
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Old 15th April 2021, 08:45 AM   #17
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Originally Posted by Puppycow View Post
The Bitcoin page above says that a single bitcoin transaction consumes over 900 kWh of electricity and generates over 400 Kg of CO2.
If you are going to make this all about bitcoin then there is no point in having a separate thread.

The energy consumption figures show a need to find some workable consensus validation model and to ditch the POW, POS and other competitive validation schemes. There is definitely a demand for cryptocurrencies.
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Old 15th April 2021, 11:26 AM   #18
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There's no denying that bitcoin is profitable, at least for those lucky enough to be on the right side of the volatility, but the real question is if it is useful or even beneficial.

Seems that almost all the interest in crypto is purely speculative and not very beneficial, societally speaking. Hell, the intense speculative nature of crypto makes it less useful as a currency, and has a lot of negative externalities like power and material usage.

ETA: Strip mining the rain forest for precious metals might be something that is profitable for the person doing it, but we generally understand that such activities are not a good thing. Perhaps it's time to start looking at this pointless energy consumption in the same way.
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Old 15th April 2021, 11:42 AM   #19
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Originally Posted by Puppycow View Post
Apparently Ethereum (currently) consumes as much energy as Belarus. 35 TWh. About a third of Bitcoin (99 TWH).
Wow, that's a lot higher than I expected. Ethereum's only 1/30th the price of BTC, so it's well out of kilter.
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Old 15th April 2021, 11:52 AM   #20
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Originally Posted by SuburbanTurkey View Post
There's no denying that bitcoin is profitable, at least for those lucky enough to be on the right side of the volatility, but the real question is if it is useful or even beneficial.

Seems that almost all the interest in crypto is purely speculative and not very beneficial, societally speaking. Hell, the intense speculative nature of crypto makes it less useful as a currency, and has a lot of negative externalities like power and material usage.
One useful thing is that it can be used to purchase items that are illegal in certain areas and therefore hard to get. Whether one considers this beneficial would depend on how they feel about the item in question and the law prohibiting it. A good example would probably be Marijuana as many consider it being illegal to be ridiculous. I have no idea what volume of crypto transactions are for this purpose though.
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Old 15th April 2021, 04:29 PM   #21
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Originally Posted by SuburbanTurkey View Post
Seems that almost all the interest in crypto is purely speculative and not very beneficial, societally speaking. Hell, the intense speculative nature of crypto makes it less useful as a currency, and has a lot of negative externalities like power and material usage.
That's a very bitcoin-centric POV.

The real question is whether a crypto could be developed that overcomes the technical shortcomings of bitcoin and therefore becomes more useful as a currency instead of just an instrument of speculation.
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Old 15th April 2021, 04:40 PM   #22
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Originally Posted by psionl0 View Post
ftfy.
You're not fixing anything. The two are not mutually exclusive. Killing people can be profitable too.
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Old 15th April 2021, 05:02 PM   #23
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Originally Posted by Belz... View Post
You're not fixing anything. The two are not mutually exclusive. Killing people can be profitable too.
"Crazy" is not a part of the business vocabulary. Businesses don't make value judgements. Profits are all.

Anything that is legal and profitable goes. Even if it is illegal but profitable then some businesses will engage in it. (Although, taking out contracts on human lives is an unusual business practice. Bad publicity is bad for profits).
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Old 15th April 2021, 05:13 PM   #24
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Originally Posted by psionl0 View Post
If you are going to make this all about bitcoin then there is no point in having a separate thread.
Obviously I'm not. This is a thread about cryptocurrencies in general and the externalities they create.

Quote:
The energy consumption figures show a need to find some workable consensus validation model and to ditch the POW, POS and other competitive validation schemes. There is definitely a demand for cryptocurrencies.
OK, I would happily agree with you about that. The only question I have is who does that? Who has the power to make a decision like that? Does anyone?

I found an article from 2019 about how Ethereum was supposedly going to cut its energy consumption by 99%, but I don't see that that has actually happened 2 years later. The article was published in January of 2019 and suggested that this would happen before the end of that year. Has it?

Quote:
Buterin plans to finally start undoing his brainchild’s energy waste in 2019. This year Buterin, the Ethereum Foundation he cofounded, and the broader open-source movement advancing the cryptocurrency all plan to field-test a long-promised overhaul of Ethereum’s code. If these developers are right, by the end of 2019 Ethereum’s new code could complete transactions using just 1 percent of the energy consumed today.
Because from what I'm seeing, it hasn't happened yet. And probably some stakeholders who invested a lot of money in GPUs don't want it to happen because it would reduce the value of their investment.
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Old 15th April 2021, 05:34 PM   #25
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Originally Posted by psionl0 View Post
"Crazy" is not a part of the business vocabulary.
Maybe you missed it but I'm not a business, and I made the post. Now, do you have any actual comment to make about what I said, or was that just your reflexive defensive attitude towards cryptos?

Quote:
Businesses don't make value judgements.
Sure they do. Look at Georgia right now.

Quote:
Profits are all.
No they're not. You're describing predatory businesses and publicly-traded corportations, but not all business.

Business is the idea of selling products and services for payment. The two sides of the equation are intimately linked. And since we are talking about humans, a host of other things can come into play.
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Old 15th April 2021, 05:37 PM   #26
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Originally Posted by Puppycow View Post
The only question I have is who does that? Who has the power to make a decision like that? Does anyone?
Ripple and Stellar both use a consensus validation system. Instead of the "winner" getting to add the next block to the chain, all the nodes participate in generating the next block (or "last closed ledger" in their case).

Neither is geared up for crypto-mining ATM and there doesn't seem to be an equitable block reward scheme but there is no reason to believe that nobody will adapt that technology in the future.
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Old 15th April 2021, 05:45 PM   #27
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Originally Posted by Belz... View Post
No they're not. You're describing predatory businesses and publicly-traded corportations, but not all business.
Maybe that's the way it works on Planet X but in the real world (other than some privately owned businesses) nobody looks much above the bottom line.

If you have bought in to a superannuation or managed investment fund then it is a safe bet that the only 3 letters that matter to you are R O I. You don't know (or care) what investments they have made. For all you know, they might even have some shares in a bitcoin mining company (or one that has a subsidiary that mines bitcoins).
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Old 15th April 2021, 06:16 PM   #28
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Originally Posted by psionl0 View Post
Maybe that's the way it works on Planet X but in the real world (other than some privately owned businesses) nobody looks much above the bottom line.
See, this is one of the reasons I don't take you seriously. You just repeated what I said and made it look like you disagreed.

Yes, I know publicly-traded companies only care about profit and that's a problem. Caring about the other side of the equation is important, and unless you think reality is planet X, it's actually been an essential part of business.

Your brand of care-for-nothing greed is a dangerous fiction. But hey, you sidestepped my point about Georgia so I guess it doesn't exist.
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Old 15th April 2021, 06:54 PM   #29
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Originally Posted by psionl0 View Post
If you are going to make this all about bitcoin then there is no point in having a separate thread.

The energy consumption figures show a need to find some workable consensus validation model and to ditch the POW, POS and other competitive validation schemes. There is definitely a demand for cryptocurrencies.
No, that was new information on ethereum.
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Old 15th April 2021, 07:49 PM   #30
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Originally Posted by Belz... View Post
You just repeated what I said and made it look like you disagreed.
Or vice versa.
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Old 15th April 2021, 08:04 PM   #31
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Originally Posted by psionl0 View Post
Ripple and Stellar both use a consensus validation system. Instead of the "winner" getting to add the next block to the chain, all the nodes participate in generating the next block (or "last closed ledger" in their case).

Neither is geared up for crypto-mining ATM and there doesn't seem to be an equitable block reward scheme but there is no reason to believe that nobody will adapt that technology in the future.
That's great, but what I meant is who has the authority to make bitcoin and ethereum change to a similar model that doesn't require huge amounts of electricity to run?
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Old 15th April 2021, 08:09 PM   #32
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Originally Posted by psionl0 View Post
"Crazy" is not a part of the business vocabulary. Businesses don't make value judgements. Profits are all.

Anything that is legal and profitable goes.
I don't actually think most for-profit businesses have that mindset. The company I work for doesn't. They care about their reputation too.
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Old 15th April 2021, 08:31 PM   #33
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Originally Posted by Puppycow View Post
That's great, but what I meant is who has the authority to make bitcoin and ethereum change to a similar model that doesn't require huge amounts of electricity to run?
There is no central authority with bitcoin. Changes to the protocol may be agreed to by the mining community. However you may get a situation where only some of the community agrees to a specific change and others don't. The result is a fork where two versions of the currency run instead of one. In a "hard" fork, the crypto in each fork may not be interchangeable. This was the case with bitcoin and bit cash.

Regardless, changing from a competitive to a consensus based validation model is not even a hard fork. It would be a completely new crypto currency that would have to compete with the existing cryptos. Whether a new entrant could compete successfully would depend on a number of factors. I would suggest that scalability (the ability to increase the transaction rate) and low energy consumption would be two of them.
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Old 16th April 2021, 01:07 PM   #34
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Originally Posted by psionl0 View Post
That's a very bitcoin-centric POV.

The real question is whether a crypto could be developed that overcomes the technical shortcomings of bitcoin and therefore becomes more useful as a currency instead of just an instrument of speculation.
Resolving a few technical shortcomings will not fix a flawed concept.
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Old 16th April 2021, 02:20 PM   #35
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Carbon tax it to death (along with some other stuff, but this seems particularly egregious).
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Old 16th April 2021, 03:06 PM   #36
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Originally Posted by psionl0 View Post
Or vice versa.
That doesn't make any sense. You were responding to what I said.

You're really just reflexively disagreeing with anyone who posts about cryptos, at this point.
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Old Yesterday, 12:17 AM   #37
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Originally Posted by lomiller View Post
Resolving a few technical shortcomings will not fix a flawed concept.
Labeling something "flawed" without the slightest hint of a justification is worthless. If cryptos were a "flawed" concept then they would have died out decades ago.

Ripple is already being used by major banks as a faster and cheaper alternative to using SWIFT for international money transfers. So cryptos definitely have a place if technical shortcomings are overcome.
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Old Yesterday, 12:20 AM   #38
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Originally Posted by Belz... View Post
You're really just reflexively disagreeing with anyone who posts about cryptos, at this point.
You are just reflexively disagreeing with anything I post - on principle.
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Old Yesterday, 04:03 AM   #39
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Originally Posted by psionl0 View Post
You are just reflexively disagreeing with anything I post - on principle.
Again, not making any sense. You were responding to what I said.

I can't preemptively disagree with you. That's what I mean by reflexively. You don't even put any thought into it anymore.
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Old Yesterday, 05:24 AM   #40
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Originally Posted by Belz... View Post
Again, not making any sense. You were responding to what I said.

I can't preemptively disagree with you. That's what I mean by reflexively. You don't even put any thought into it anymore.
Of course you would argue about that - just like you ague about everything I post.

There was nothing wrong with pointing out that bitcoin mining is profitable in spite of the electricity consumption but you are so angry that I was the one to point it out that you haven't stopped attacking me since.
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