"Inside Risks Risks of Cryptocurrencies" - by Nicholas Weaver

Opening words:

“Cryptocurrencies, although a seemingly interesting idea, are simply not fit for purpose. They do not work as currencies, they are grossly inefficient, and they are not meaningfully distributed in terms of trust.”

Other excerpts: “Peer-to-peer systems, and especially those written in unsafe languages such as C and C++, are particularly vulnerable to worms.”

“A good rule of thumb is that when prices are stable, approximately one-third to one-half of the block reward is sold by miners to pay power bills. This implies that when prices are high, Bitcoin consumes an outrageous amount of power. Any system based on proof-of-work will suffer this fate: If there is profit in mining,
the miners will keep using more and more power until there is no more excess profit available. The only way Bitcoin could reduce its power consumption is through a massive collapse in price.”

I do wonder how much power the Visa/MasterCard/Amex/Discover networks consume. In addition to the data centers for each network which is probably massive, each merchant provides it’s own gateway or subscribes to a gateway provider. I assume these networks are huge too and consume tons of power.

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It’s harder to quantify for visa/mc, etc relative to PoW currencies since they aren’t mining anything. But you could probably find how many transactions per e. g. hour, are processed and multiply that by some constant (like 5W per transaction)…? That’s still naive since there are millions of POS terminals, ATMs, bank computers that are constantly powered waiting for their next transaction… but maybe that can be averaged into that or another constant into that equation since those devices’ power consumption is more or less constant whereas with PoW currencies it is ever increasing until its all mined out 150 years from now.

I definitely would say visa tx are more efficient than PoW (e. g. BTC) transactions though.

PoW is extremely inefficient and hard to scale anyway. You are right, visa/MasterCard networks are cheaper to run from the power point of view.

BUT to be fair to crypto we have to compare their cost, including the salaries of executives + company costs and profits.

Now it may turn out that POW is still more expensive than visa/MasterCard…

BUT I bet Cardano will be much cheaper as it’s power costs will be the same, if not lower, without the huge overhead of corporations.

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To be honest, this paper has only 2 references with contents of 5 pages which makes me fell like unreliable

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