Europe advances crypto-coin regulation – without potential ban on Bitcoin Europe's lawmakers this week moved ahead with their proposed cryptocurrency regulations, having ditched a rule that might have banned financial services from dealing in Bitcoin and Ethereum. The European Union is considering ways to regulate digital coins, particularly to stamp out money laundering, and as such in 2020 drew up …
It was a useful term in the 70s when there were a mix of fiat currencies and those backed by gold and a debate over which was a better approach.
But it's not a useful term now when there are no major currencies backed by physical commodities. Now all currencies are fiat (crypto currency included). So using the phrase 'fiat currency' adds no extra value over saying 'currency'.
Therefore, using it suggests you are trying to make yourself sound fancy, while simultaneously not really knowing what you are talking about.
People sometimes imagine that crypto is in some way backed by computing power or electricity. But that's not the case. You can create crypto from electricity, but you can't convert it back the other way.
It is like trying to ban the internet because it takes up 70 percent of phone line bandwidth.
The latest in an infinitely long line of analogies crafted to deliberately miss the point. I've come to the conclusion that Cryptocurrency fans are not trying to fool us, they've fooled themselves. Better than acknowledging that a system designed to require ever increasing amounts of energy just to stay afloat is unsustainable and unethical.
Proof Of Work systems do not expect to become more efficient over time. Any gain in efficiency must be countered with an increase in workload, or the whole thing collapses. It's a perversion of market economics.
You crypto haters will keep peddling this nonsense, won't you? The reality is that the energy used by bitcoin mining is insignificant in the big picture, compared in an apples-to-apples way, bitcoin is more energy-efficient than equivalents, the majority of bitcoin is already mined using renewable energy, and bitcoin is actually helping to drive renewable energy adoption by monetizing excess green energy in places where it wouldn't otherwise be economically viable.
"compared in an apples-to-apples way, bitcoin is more energy-efficient than equivalents"
If you mean compared to other PoW systems, that may well be true: they are all awful, some are more awful than others. Ban them all.
If you mean compared to e.g. a credit card or cash, I cannot fathom what goes on in a mind that could claim something like that. Traditional financial transactions are not only more energetically efficient than PoW systems; they are more efficient by several orders of magnitude. You can literally run a typical shop's yearly transactions with the same energy it takes to make a single bitcoin transaction.
This argument is typically based directly or indirectly on numbers from a 2018 article published in Nature's Climate Change Journal. That article made several errors, including conflating the energy used to produce an entire bitcoin block with the energy used for a single transaction. Since a bitcoin block actually stores thousands of transaction, their numbers are several orders of magnitude too high. This is well-known, but of course that doesn't stop crypto haters from continuing to spew misinformation based on that article.
"bitcoin is actually helping to drive renewable energy adoption"
This entirely misses the purpose of renewable energy. Renewable energy is not good for the environment, it's bad, it still requires resources to make.
It's only good if it displaces fossil fuel energy, which is much worse.
Using entirely renewable energy to make bitcoin is bad because it still has a negative environmental effect and more importantly because it uses energy which could otherwise have been used to displace fossil fuel usage elsewhere.
The whole argument is a bit like you claiming that firing a pistol in to the air is good for safety because it monetises helmet production in areas where it wouldn't otherwise be economically viable.
>The reality is that the energy used by bitcoin mining is insignificant in the big picture
https://ccaf.io/cbeci/index
Pretty similar to a space shuttle launch @ 12GW - or almost exactly 100 CERNs if you look at the annual figure. Not sure that the official unit of energy is on the Reg.
>bitcoin is more energy-efficient than equivalents
Like proof of space based cryptos for instance? No, it's just been a waste fueled by greed, even though it will eventually settle to much lower cost - all that abstract work was fruitless, could have been chasing primes, ET or any number of useful things.
My thoughts exactly. I dislike cryptocurrencies because they seem to be largely used for criminal activities, but I wouldn't ban them on that basis. For decades, we've allowed all kinds of technology that had been largely used for copyright infringement, and that was fine. I'd be okay with banning PoW cryptocurrencies specifically, while leaving other systems alone.
However, PoW systems are just fundamentally flawed. Ian Taylor's analogy doesn't make sense, exactly for the reason you describe: PoW systems are specifically designed to consume resources. If the Internet was explicitly designed to consume excessive bandwidth as its primary goal (rather than as a side effect of inefficient encodings and too many cat videos), damn straight we'd ban it.
I think you'll find that the majority of crime involves traditional currencies. Should we ban those? No.
I get the energy wastage argument against PoW blockchains, but your stated view here is very outdated. (In fact, blockchain generally improves transparency)
For example, the Swiss government has developed an app ( https://profila.com ) to allow users to maintain ownership of their personal data on the Cardano blockchain (not a proof of work network - https://cardano.org/).
"It is like trying to ban the internet because it takes up 70 percent of phone line bandwidth."
The phone line takes a ridiculously small amount of energy compared to the amount of data being transferred. This is a strawman argument without any basis in reality, but I expect no less from someone purporting to defend the best method criminals have to whitewash their ill-gotten gains.
Banning crypto would put paid to many, many pyramid schemes and other scammer attemps to make an easy buck. I'm not saying crypto is only used by criminals, but when criminals have massively adopted something and use it so successfully, there might be a good reason to put a serious crimp on it.
Banning crypto would put paid to many, many pyramid schemes and other scammer attemps to make an easy buck. I'm not saying crypto is only used by criminals, but when criminals have massively adopted something and use it so successfully, there might be a good reason to put a serious crimp on it.
Scams and crime are everywhere, but the there is no evidence that the proportion of crypto activity involving crime is higher than in non-crypto; in fact, it's probably lower.
in fact, it's probably lower.
First, it's an estimation and next, remove all transactions who are purely speculative and the percentage will go much higher.
Cryptocurrencies are made to speculate, for criminal activities, are a waste of energy and participate to the threat against the whole humanity. The sooner they will be ban the better.
That's a piss poor article in Forbes.
The conclusion "probably lower" is based on a comparison of wallets known to be associated with illegal activity (which Chainanalysis put at 0.34% of transaction volume in 2020) vs. an estimate of the total proportion of global GDP "associated with money laundering and illicit activity" (which the UN put at 2-5%)
First, the bar for "known illegal" is much higher than an estimate. The comparison is what proportion of the non-crypto financial market is to "known illegal" recipients. Given that participants in those transactions (ie. the bank) can be prosecuted, I would expect it to be orders of magnitude lower. Know Your Customer regulations are poorly enforced, but they do exist.
Second, they're comparing "illegal activity" with "illegal activity and money laundering": money laundering surely makes the bulk of that category. I have paid a builder in cash; I have not extorted money with ransomware. I look forward to the discussion on the volume of Cryptocurrency transactions "estimated to be associated" with money laundering - I'll wager some of my post-tax earnings it's higher than 2%.
It's statistical illiteracy dressed up as research, so it should come as no surprise the author is someone in the Cryptocurrency industry.
Edit: note the original paper says the 0.34% estimate is expected to rise over time. Their estimate from 2019 doubled as more "known illegals" were identified.
There was an ongoing argument on the W3C advisory committee mailing list on this very topic that lasted about 2 months. It may still be ongoing in fact, and everyone is just pausing to regroup.
Some extremely seasoned and highly respected engineers on both sides, but ultimately the same arguments: "crypto is exciting and destabilising, it lets us build a world without trust or regulation, and do things we can't do any other way, and if you look at it from exactly this angle, it's got no faults" vs "it's 10% new, we can already do all that ot promises, we need regulation and trust and you are refusing to acknowledge the environmental cost"
I'm not sure it convinced me to change my mind, but it did swing me from "mildly negative" to "immensely negative".
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