Monday, May 17, 2021

BTC vs. Electricity

Everyone is worried about how much power BTC uses, so it's safe to conclude the more power it uses, the better. It turns out this is indeed the case.

The more power BTC uses, the more power it is being seen to be worth using. Indicates health.
The contrary is also true: any e-coin which uses less power will be seen as worth less. If the power is capped, anyone with free power will try to counterfeit the coin or use it somewhere else.

The more power BTC uses, the more efficient each token is. It might even have a declining ratio between electrons and physical goods. Stupid example: 10 watts per alpaca sock declines to 9 watts per alpaca sock. At worst the ratio will be constant.

If BTC drives up the price of electricity, it will A) drive innovation in electricity production and B) drive down the price of more durable goods. 

BTC is cryptographically secured against inflation, but if BTC's asset price is very high then it is also financially secured against inflation. The code can be changed, after all. (Doesn't Ethereum's codebase writhe like a worm on cocaine?) The higher BTC's resource price, the more miners will resist any counterfeiting scheme, because the more any counterfeiting scheme will harm them. 

Markets are generally efficient enough. If lots of power is being spent on BTC, that means the most valuable place for the power is in BTC, more or less. The more valuable BTC is, the more total value the world has.

P.S. One real design flaw: BTC doesn't in fact have coins or any form of token. It only approximates. Should have been structured more like NFTs.

The other design flaw is a memory leak. Every time someone loses their wallet key, all that BTC becomes permanently inaccessible. Eventually every BTC will be lost and the system will have to hard fork itself or else lock up.

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