Tuesday, November 27, 2018

Cyber Monday? Good ...

Cyber currency? Not so much.

I consider cyber currencies, such as bitcoin, to be a solution for which there is no good problem. (We don't need new ways to launder money!) To draw an important distinction, blockchain -- the technology which underpins any cyber currency -- is seriously keen. Blockchain, I firmly believe, can be used in many productive and worthwhile ways (each such application, in one way or another, taking the form of a distributed ledger). Minting faux money isn't one of those socially beneficial uses ....

Fool's gold?
Has yet another bitcoin crash (see, from Bloomberg, "Bitcoin’s Crash Looks Like a Real Currency Crisis") given you pause? If not, ponder a key question raised in the article: In a virtual world without a central bank, who is the buyer of last resort?

Still unconvinced? Then consider -- this time, from The Washington Post -- that "The only currency worse than bitcoin is Venezuela’s." That, Dear Reader, is a record no one should aspire to break ...

"Mining" bitcoin (or any other blockchain-based currency) is -- again, IMO -- one of the more ridiculous possible uses of energy. And we're talking about a lot of energy. As discussed by The Balance in "How Much Power It Takes to Create a Bitcoin." By a conservative estimate:

... the bitcoin network runs at 342,934,450 watts—roughly 343 megawatts. Calculations based on EIA data reveal that the average U.S. household consumes about 1.2 kilowatts of power, meaning that 343 megawatts would be enough to power 285,833 U.S. homes.
All that said? I don't expect bitcoin (or ethereum, litecoin, ripple ...) to go completely away. After all, even after Tulip Mania you can still buy tulip bulbs :-)

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