# Cryptocurrency ## Reference - [[201705192214 Crypto Wallet Restoration from Metal Seed]] ## Systemic Issues - [[My first impressions of web3]] - [Bitcoin, Currencies, and Fragility](x-devonthink-item://769C634E-5809-4002-ABCD-5B3577C2AECF) I'm conflicted here only because we personally benefited from investing in [[Ethereum]], Summer 2016-January 2018. For a significant portion of 2017, the bulk of our net worth was in cryptocurrencies. We sold most of our Ethereum assets [[2018-01-01]] ### Waste How much energy does Bitcoin consume and how much does it contribute to carbon emissions? The first is answerable [given the current hashrate](https://digiconomist.net/bitcoin-energy-consumption). To answer the second, we need to know the energy source mix for mining. > [...] Estimates for what percentage of Bitcoin mining uses renewable energy vary widely. In December 2019, [one report](https://coinshares.com/research/bitcoin-mining-network-december-2019) suggested that 73% of Bitcoin’s energy consumption was carbon neutral, largely due to the abundance of hydro power in major mining hubs such as Southwest China and Scandinavia. On the other hand, the CCAF [estimated](https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/3rd-global-cryptoasset-benchmarking-study/) in September 2020 that the figure is closer to 39%. But even if the lower number is correct, that’s still almost [twice as much](https://www.eia.gov/energyexplained/electricity/electricity-in-the-us.php) as the U.S. grid, suggesting that looking at energy consumption alone is hardly a reliable method for determining Bitcoin’s carbon emissions. ([source](https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume)) As of [[2022-05-19]], it's estimated the Bitcoin network consumes more energy per anum than medium sized countries like Poland and Egypt. As of [[2022-09-15]] with [[Ethereum]] successfully migrating to Proof-of-Stake, [energy consumption for that network dropped an estimated 99.988%](https://carbon-ratings.com/eth-report-2022). ### Squatting One of my biggest issues with crypto/blockchain/[[Web3.0]] is this pervasive mentality that squatting has value. >  Unfortunately, there appears to be a worse agency problem: a concentration of insiders hoarding what they think will be the world currency, so others would have to go to them later on for supply. - [[Nassim Taleb]] [Bitcoin, Currencies, and Fragility](x-devonthink-item://769C634E-5809-4002-ABCD-5B3577C2AECF) [Example of this mentality](https://twitter.com/popo/status/1470378483650076679) > That was me with Twitter handles. After SXSW 2007, I came home and registered 1,200 usernames- all the good ones (cities, teams, state acronyms, generics). Twitter slowly stripped them away from me over the years because, they were never mine to begin with. Web3 changes this. ### User Experience It's possible that storage hardware advances and 5G mm wave everywhere will make it possible to put a blockchain verification node in your pocket. But I'm going to be really upset if mobile internet stinks in 5 years because every phone is sucking up 500GB/month in bandwidth to verify transactions. The alternative, current, and most likely future is verification nodes aren't at the edges but centralized. You won't have physical control over them and you'll have to trust Somebody. The UX of direct-usage, no trust blockchain is fundamentally broken. The only way to get people to use it practically is by surrendering trust and re-centralizing. At which point, there are way waaay more efficient ways to do this. I also like being able to call up my CC provider, dispute a charge, and have it taken care of within minutes. And that doesn't require 51% of everyone in the world to agree on a chain split. Or, rather, 51% of the centralized mining pools that control each blockchain. ### Use Cases The current main use case is in financial markets. Although there is some use as a payment system, the lions share of transactions are for trading aka speculation. The market capitalization of Bitcoin and trading volume are still a fraction of traditional markets. As such, the claims that financial institution disruption are imminent is greatly exaggerated. To do so, blockchain markets have to 1) handle [15K transactions per second](https://www.statista.com/statistics/261327/number-of-per-card-credit-card-transactions-worldwide-by-brand-as-of-2011/) (visa+mastercard+amex+discover et al) 2) take less than 10 seconds to settle rather than the 10s of minutes it currently takes 3) still maintain the theoretical* levels of trust the blockchain advertises Even if we take #3 as true (see asterisk) the max efficiency of Block Chain Technology (TM) is several orders of magnitude less than 1 and 2. There is no solution today that actively fulfills 1 and 2 and the proposed ones treat blockchain as an L1 reconciliation layer (their terminology) where ... 🥁 🧻 ... you have to trust 3rd parties to handle the transaction volume. The blockchain ecosystem that exists, not the one that is promised, has 2-3 centralized gatekeepers. Some people might trust the likes of Aave and Open Sea over Wells Fargo, but they are a minority. And as is oft-repeated, crypto has value because people believe it has value. \*See ethereum classic. A centralized core will always act in their own best interests. In order to restore equity and trust after the [DAO](https://en.wikipedia.org/wiki/The_DAO_(organization)) [hack](https://www.gemini.com/cryptopedia/the-dao-hack-makerdao), out-of-chain governance had make things whole. ### [[prophecy]] ![[Revelation 18#^15]] If we believe prophecy, RCC controls the world finances in the end. A decentralized financial system is not going to win out in the long term. ## Log - [[2022-10-11]] mango margin exploit - [coindesk](https://www.coindesk.com/business/2022/10/11/breaking-news-solana-based-decentralized-finance-platform-mango-hit-by-potential-100-million-exploit/) - [patio taking a victory lap on the shenanigans](https://twitter.com/patio11/status/1581468473565143041)