[2018-10-25] Bitcoin (BTC) is 10,000 Times More Efficient Than Banks

[piceto]

Original Post from ethereumworldnews.com

Summary:

● Total energy consumption from banking operations is much larger than Bitcoin.
● CEO of VeriPic, Mr. John M. Kwan compares the environmental impact of the traditional banking system and cryptocurrencies.
● Antminer S9 consumes around $200 million of electricity per year.

More summaries: piceto.com

[stompix]

Lets' start with what is wrong..
The author claims that there are 600k s9 equivalent mining, but the hashrate is hitting 60exa, which comes down to 4 million miners.
Bitcoin deals 200k transactions daily the US banking is managing about 1000 times more customers.

Also the bitcoin network does only transactions not mortgages or credit cards.

People calculate only what miners consume but they forget about cooling, and everything else as they are eager to add the cost of security guards in banks but not in mining farms.
You throw in wages in the banks and other services but you forget how many people are employed in mining farms.
Even if we leave that aside 10000 / 1000 and then again by 8 doesn't sound that impressive anymore

[buwaytress]

Lets' start with what is wrong..
The author claims that there are 600k s9 equivalent mining, but the hashrate is hitting 60exa, which comes down to 4 million miners.
Bitcoin deals 200k transactions daily the US banking is managing about 1000 times more customers.

Also the bitcoin network does only transactions not mortgages or credit cards.

People calculate only what miners consume but they forget about cooling, and everything else as they are eager to add the cost of security guards in banks but not in mining farms.
You throw in wages in the banks and other services but you forget how many people are employed in mining farms.
Even if we leave that aside 10000 / 1000 and then again by 8 doesn't sound that impressive anymore

Yeah, all these comparisons become meaningless without context. And they can quickly become even more meaningless with rhetoric and semantics.

For: financial services, Facilitation of business, economy.
Against: facilitation of crime, inefficient. Huge security costs.

Both can be used for either. Just takes a little creativity. Funny that most people don't want to even examine the silly numbers attached.

[NeuroticFish]

Bitcoin deals 200k transactions daily the US banking is managing about 1000 times more customers.

Also the bitcoin network does only transactions not mortgages or credit cards.

Although your post and its conclusion are overall correct, I am not convinced that the quoted things are okay...

You compared transactions with customers and that sounds like apples vs oranges. And of course, comparing banking customers with active wallets is also not OK.... so let's better not compare them.
Then you talked about credit cards. Well, they are handled by Visa/Mastercard afaik. All the bank has to do is to make the corresponding transactions which, for credit cards can be done at a later point and somehow batched.


Another things are forgotten. While banks have shiny downtown offices which waste a lot of electricity, the miners need to stay efficient and use a bigger % of electricity from renewable sources (hydro, solar and even geothermal) and this also does matter overall.

Imho the power consumption for Bitcoin is a "hater" subject, because it doesn't get all the data into a fair equation. And the comparison with the banks also doesn't get us anywhere useful...

[Kakmakr]

In the end it is not just about electricity consumption, but more about the environmental impact. Just look at the whole process from where raw minerals are mined to create Fiat currencies <Copper/Nickel/Iron for coins and also trees and cotton for paper money> and then the processing and manufacturing of that money and also the transport and air pollution that goes with that. <UK use some kind of plastic for their currency> 

Many supporting services like ATMs and card readers are not even being calculated, when the Banking footprint is calculated, so this whole comparison is unfair towards Bitcoin, if some things are left out on purpose.    

[1Referee]

Imho the power consumption for Bitcoin is a "hater" subject, because it doesn't get all the data into a fair equation. And the comparison with the banks also doesn't get us anywhere useful...

It has been a returning subject in the last couple of years, but only because of how news outlets keep rehashing the same nonsense over and over again.

In the end, most of the users don't give a single damn about how much energy the financial system or Bitcoin consumes, they just want it to work, and it in both cases does.

I would even like to say that more energy consumption leads to cleaner energy in the long run, because it forces all sorts of energy hungry entities to come up with an alternative, and they all succeed to do so. The biggest energy wasters in the world are the people at home, but it doesn't seem to be an interesting enough subject to cover very often. People don't like to be confronted with their own problems. It's easier to point at others. 

[fisheater]

If you compare BTC transaction with visa or mastrercard, it is still not enough, but with lightning network it will all change.

[pixie85]

In the end it is not just about electricity consumption, but more about the environmental impact. Just look at the whole process from where raw minerals are mined to create Fiat currencies <Copper/Nickel/Iron for coins and also trees and cotton for paper money> and then the processing and manufacturing of that money and also the transport and air pollution that goes with that. <UK use some kind of plastic for their currency> 

Many supporting services like ATMs and card readers are not even being calculated, when the Banking footprint is calculated, so this whole comparison is unfair towards Bitcoin, if some things are left out on purpose.    

Most currencies are produced from cotton with additives like plastics and metals. There's almost no environmental impact. If we are to compare the amount of electricity consumed, money printing will have a big edge. When comparing fiat system with Bitcoin it's important to add everything starting from bank server rooms and ending with power needed to light up every single bank. If you do it the power consumption of banks will be much higher.

[hatshepsut93]

In the end it is not just about electricity consumption, but more about the environmental impact. Just look at the whole process from where raw minerals are mined to create Fiat currencies <Copper/Nickel/Iron for coins and also trees and cotton for paper money> and then the processing and manufacturing of that money and also the transport and air pollution that goes with that. <UK use some kind of plastic for their currency> 

Many supporting services like ATMs and card readers are not even being calculated, when the Banking footprint is calculated, so this whole comparison is unfair towards Bitcoin, if some things are left out on purpose.    

Environmental impact of both Bitcoin and fiat currency is really negligible  compared to transportation and industry. People are right to worry about environmental problems, and it's sad that some are totally dismissing them, but there are also those who bring attention to the wrong places, instead of focusing on the biggest problems.

[veleten]

If you compare BTC transaction with visa or mastrercard, it is still not enough, but with lightning network it will all change.

it will change but not drastically
while lightning network will increase the number of transactions per second, it won't get anywhere near
the numbers visa or mastercard manage , plus , as it was mentioned above, banks take care of mortages, loans etc. , not only transactions
bitcoin can't substitute the banking system just now but this is the goal to achieve in the future and LN is just the first step towards it
some interesting read about LN , the author is a sceptic, but it is an interesting read nevertheless:
https://medium.com/@jonaldfyookball/mathematical-proof-that-the-lightning-network-cannot-be-a-decentralized-bitcoin-scaling-solution-1b8147650800

[BitHodler]

it will change but not drastically
while lightning network will increase the number of transactions per second, it won't get anywhere near
the numbers visa or mastercard manage

Not drastically? LN can ultimately handle millions of transactions per second as a globally deployed network. It all comes down to how many nodes there are online, and how many funded channels they have open.

That's the benefit of not having to deal with the main chain. The more LN nodes and funded channels, the more throughput the second layer will have. The only obstacle right now is the routing aspect, but I'm sure it'll be sorted out.

Overall, literally anything is better than Bitcoin's current ~7 TPS throughput. The ultimate goal is to have people leave their channels open and buy their coins through an exchange allowing them to withdraw through LN.

It's going to take a couple of years for sure, but it is likely going to happen.

[Coin-1]

Overall, literally anything is better than Bitcoin's current ~7 TPS throughput. The ultimate goal is to have people leave their channels open and buy their coins through an exchange allowing them to withdraw through LN.

It's going to take a couple of years for sure, but it is likely going to happen.

Undoubtedly, The Lightning Network is a good solution for making millions of transactions, but it is an external technology designed for Bitcoin. Not many people use LN channels yet, but I see how its network is growing day by day.

The author of this article is trying to compare efficiencies of the top rated crypto currency and the traditional banking system. I think it is not correct to state such conclusions, because Visa, Mastercard and other payment systems make much more transactions that transfer fiat currency between customers. If so many people send their funds using the Bitcoin blockchain, transaction fees will soar up drastically.

[BitHodler]

Undoubtedly, The Lightning Network is a good solution for making millions of transactions, but it is an external technology designed for Bitcoin. Not many people use LN channels yet, but I see how its network is growing day by day.

It's not mainstream joe ready yet, which explains why the network as it is right now is small and cumbersome to use due to the lack of reliable clients. Funds are at risk and for that reason I'm happy they don't jump on board yet.

By the time Coinbase and the likes of it start to adopt LN, you can be sure that there will be a massive adoption boost taking place. The interesting part is how the big block camp will react to a fully deployed LN.

They can continue to block SegWit as much as they want, but when they do the same with LN they put themselves in such a losing position, that it will actually starts to hurt their core business.

[rodskee]

I think not only the miner using the power electricity
Fiat are also using power electricity to print the paper money or copper coins
For Automated machine or ATM for fiat banking system are also use of electricity
Fiat money also have an effect for the environmental specially if the create a copper money or coins money
So both currency  are have an bad environmental effect

[stompix]

Bitcoin deals 200k transactions daily the US banking is managing about 1000 times more customers.

Also the bitcoin network does only transactions not mortgages or credit cards.

Although your post and its conclusion are overall correct, I am not convinced that the quoted things are okay...

You compared transactions with customers and that sounds like apples vs oranges. And of course, comparing banking customers with active wallets is also not OK.... so let's better not compare them.
Then you talked about credit cards. Well, they are handled by Visa/Mastercard afaik. All the bank has to do is to make the corresponding transactions which, for credit cards can be done at a later point and somehow batched.

Let's deal with the things till here.
The one comparing oranges with bananas is the author of the article who compares the consumption of bitcoin mining to the impact in GDP of the banking sector (which included Visa/Mastercard/Amex and more).

Now, the 200 mils figure comes from a mistake in my math, and unfortunately, the error was not in favor of the banks, quite contrary.
https://www.federalreserve.gov/newsevents/press/other/2016-payments-study-20161222.pdf

U.S. noncash payments, including debit card, credit card, ACH, and check payments, are
estimated to have totaled over 144 billion

So, it's more like 400  million transactions done by the banking sector rather than 200 millions.

Now, to be fair we should also add in the bitcoin balance the impact in GDP of all the exchanges, with an average fee of 0.5% and a volume of 3 billion, that would lead to another 40 million and with the above correction we already have the baking sector more efficient by a factor of 12.

Another things are forgotten. While banks have shiny downtown offices which waste a lot of electricity, the miners need to stay efficient and use a bigger % of electricity from renewable sources (hydro, solar and even geothermal) and this also does matter overall.

Imho the power consumption for Bitcoin is a "hater" subject, because it doesn't get all the data into a fair equation. And the comparison with the banks also doesn't get us anywhere useful...

So we count banks offices but we don't count the offices of Coinbase, Bitfinex...and many more.
Not to mention the factories of Bitmain or Innosillicon.
Banks are closing their branches and going online, BTC is adding millions after millions of power-hungry miners to the network.

Imho the power consumption for Bitcoin is a "hater" subject, because it doesn't get all the data into a fair equation. And the comparison with the banks also doesn't get us anywhere useful...

I actually see it more like a zealot subject where somebody tries desperately to make bitcoin look like the marvel of God.
Which in its current state it is not...unfortunately.