Quote from: thezerg on July 28, 2015, 03:28:42 AM

Quote from: iCEBREAKER on July 28, 2015, 02:17:11 AM

You also already seem to get the fact that a ~5 cent BTC tx uses electricity equivalent to about 1.5 days worth of typical American home (ie $15-$20; cite: some post on reddit I can no longer find). That's a good starting point.

This is a perfect example of your flawed reasoning. This comment is analogous to claiming that a sailboat is incredibly inefficient because its energy use is equal to the total wind power available in the ocean divided by the number of sailboats.

Instead the volume of wind power (energy spent mining) is present for a reason that is completely orthogonal to sailboats (transactions). It is proportional to the amount of energy being input into the system. In the Bitcoin world, the "energy input" is the conversion of value into bitcoin representation (i.e. long term purchases). When the block subsidy dies down, this energy input will be reflected in coin appreciation. When the block subsidy ultimately approaches a negligible quantity, boats will (finally) have to turn on their motors and pay their way across the bitcoin network.

Additionally, you make the circular fallacy of defining the number of total boats allowed on the ocean, and therefore finding the ocean winds to be inefficient.

Ultimately there will be a fee market. Miners will turn off hashing power until transactions appear that will make mining the block profitable. We don't need to centrally force this to happen. You are falling into the fallacy of thinking that others are forcing a lack of a fee market but in fact you are centrally forcing one to exist. It is technically feasible to have larger blocks, and having them makes each transaction more efficient, so anything less than larger blocks is central planning and reduces efficiency.

And by forcing a fee market you are running the sails and the motors simultaneously, uselessly, and dangerously.

Why is it dangerous?

Money is defined as better by users fundamentally by its transfer efficiency. This was hard to measure with fiat or PM currencies but it is simple with Bitcoin. It is the ratio of the fee to the quantity transmitted. Once the block subsidy diminishes this ratio will be nowhere near zero like it is today. It is ironic that you ignore this because it is what fundamentally gave Bitcoin value in the early days while nobel laureate economists were insisting that Bitcoin would fail because it had "no intrinsic value".

Once the motor's (transaction's) true efficiency is not hidden by the wind (block subsidy), the most efficient (and accessible) cryptocurrency implementation will "win" just like gold "won" over silver. Just like Apple is learning, getting a head start does not matter much when a huge percentage of the world simply cannot afford your product, so MUST choose a competitor.

~~Money~~ currency is defined as better by users fundamentally by its transfer efficiency.

fify. Better: Money is defined as better by users fundamentally by its storage of value efficiency.

Please excuse the digression. Wink

I like the wind of subsidy in early tx's sails analogy. But the recent appearance of "cosmic background spam" makes it outdated.

The problem is that sailboats are expensive to construct and operate, while Bitcoin tx are not.

If we are to think about Bitcoin in the long term, and given Bitcoin's reasonably critical economic mass of ~$5 bil, current temporary block subsidies can be discounted as we consider fundamental questions about how and when to change one of Satoshi's Holy Numbers.