Current litecoin difficulty rate my professor

As with most new symbols, font support is very limited. Typefaces supporting it include Horta. On 18 August , the domain name "bitcoin.

In January , the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block. This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking. The receiver of the first bitcoin transaction was cypherpunk Hal Finney , who created the first reusable proof-of-work system RPOW in In the early days, Nakamoto is estimated to have mined 1 million bitcoins.

So, if I get hit by a bus, it would be clear that the project would go on. Over the history of Bitcoin there have been several spins offs and deliberate hard forks that have lived on as separate blockchains.

These have come to be known as "altcoins", short for alternative coins, since Bitcoin was the first blockchain and these are derivative of it. These spin offs occur so that new ideas can be tested, when the scope of that idea is outside that of Bitcoin, or when the community is split about merging such changes.

Since then there have been numerous forks of Bitcoin. See list of bitcoin forks. The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: The blockchain is a distributed database — to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.

This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight. Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.

Transactions are defined using a Forth -like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments.

In such a case, an additional output is used, returning the change back to the payer. Paying a transaction fee is optional. Because the size of mined blocks is capped by the network, miners choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee.

The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs. In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address.

This computation can be done in a split second. But the reverse computing the private key of a given bitcoin address is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key.

Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction.

The network verifies the signature using the public key. If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; [8] the coins are then unusable, and effectively lost. Mining is a record-keeping service done through the use of computer processing power. To be accepted by the rest of the network, a new block must contain a so-called proof-of-work PoW.

Every 2, blocks approximately 14 days at roughly 10 min per block , the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block.

This payment depends on the amount of work an individual miner contributed to help find that block. The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees.

To claim the reward, a special transaction called a coinbase is included with the processed payments. The bitcoin protocol specifies that the reward for adding a block will be halved every , blocks approximately every four years.

Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins [f] will be reached c. Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation. A wallet stores the information necessary to transact bitcoins.

While wallets are often described as a place to hold [59] or store bitcoins, [60] due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" [60] and allows one to access and spend them. Bitcoin uses public-key cryptography , in which two cryptographic keys, one public and one private, are generated.

There are three modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements. Third-party internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen.

An example of such a security breach occurred with Mt. Physical wallets store offline the credentials necessary to spend bitcoins. Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions. The first wallet program — simply named "Bitcoin" — was released in by Satoshi Nakamoto as open-source code.

While a decentralized system cannot have an "official" implementation, Bitcoin Core is considered by some to be bitcoin's preferred implementation. Bitcoin was designed not to need a central authority [5] and the bitcoin network is considered to be decentralized.

In mining pool Ghash. The pool has voluntarily capped their hashing power at Bitcoin is pseudonymous , meaning that funds are not tied to real-world entities but rather bitcoin addresses.

Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" e. To heighten financial privacy, a new bitcoin address can be generated for each transaction.

Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility. The blocks in the blockchain were originally limited to 32 megabyte in size.

The block size limit of one megabyte was introduced by Satoshi Nakamoto in , as an anti-spam measure. Transactions contain some data which is only used to verify the transaction, and does not otherwise effect the movement of coins. SegWit introduces a new transaction format that moves this data into a new field in a backwards-compatible way.

The segregated data, the so-called witness , is not sent to non-SegWit nodes and therefore does not form part of the blockchain as seen by legacy nodes. This lowers the size of the average transaction in such nodes' view, thereby increasing the block size without incurring the hard fork implied by other proposals for block size increases.

Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency. The question whether bitcoin is a currency or not is still disputed.

According to research produced by Cambridge University , there were between 2. The number of users has grown significantly since , when there were , to 1. In , the number of merchants accepting bitcoin exceeded , Reasons for this fall include high transaction fees due to bitcoin's scalability issues, long transaction times and a rise in value making consumers unwilling to spend it.

Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, and sends the obtained amount to merchant's bank account, charging a fee for the service.

Bitcoins can be bought on digital currency exchanges. According to Tony Gallippi , a co-founder of BitPay , "banks are scared to deal with bitcoin companies, even if they really want to". In a report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers.

Plans were announced to include a bitcoin futures option on the Chicago Mercantile Exchange in Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts. The Winklevoss twins have invested into bitcoins.

Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July and approved by the Jersey Financial Services Commission. Forbes named bitcoin the best investment of The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as bubbles and busts. According to Mark T. Various journalists, [78] [] economists, [] [] and the central bank of Estonia [] have voiced concerns that bitcoin is a Ponzi scheme.

In , Eric Posner , a law professor at the University of Chicago, stated that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion.

Zero Hedge claimed that the same day Dimon made his statement, JP Morgan also purchased a large amount of bitcoins for its clients. You can have cryptodollars in yen and stuff like that. Bitcoin has been labelled a speculative bubble by many including former Fed Chairman Alan Greenspan [] and economist John Quiggin. Lee, in a piece for The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble.

It's a mirage, basically. Because of bitcoin's decentralized nature, nation-states cannot shut down the network or alter its technical rules. While some countries have explicitly allowed its use and trade, others have banned or restricted it. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems. Bitcoin has been criticized for the amounts of electricity consumed by mining.

As of , The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be To lower the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free.

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.

Senate held a hearing on virtual currencies in November Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods. It will cover studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh. Authors are also asked to include a personal bitcoin address in the first page of their papers. The documentary film, The Rise and Rise of Bitcoin late , features interviews with people who use bitcoin, such as a computer programmer and a drug dealer.

In Charles Stross ' science fiction novel, Neptune's Brood , "bitcoin" a modified version is used as the universal interstellar payment system. From Wikipedia, the free encyclopedia. For a broader coverage related to this topic, see Blockchain. For a broader coverage related to this topic, see Cryptocurrency wallet. Legality of bitcoin by country or territory. Cryptography portal Business and economics portal Free and open-source software portal Internet portal Numismatics portal.

The timestamp of the block is This block is unlike all other blocks in that it doesn't have a previous block to reference. The fact is that gold miners are rewarded for producing gold, while bitcoin miners are not rewarded for producing bitcoins; they are rewarded for their record-keeping services.

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Archived from the original on 15 January Retrieved 23 January Archived from the original on 8 September I invest on these platforms.

Bitcoin is a solution looking for a problem that doesn't exist. But hey then again I don't want to buy guns or drugs on the black market either though Have you ever travelled internationally and felt you were getting rorted on the exchange rate?

Have you ever sent money internationally and been horrified with how large a chunk gets taken out by the middlemen? Has anyone, ever, anywhere, had their credit-card number stolen and mis-used on the internet? Bitcoin can help with, or even completely fix, those three problems right there, and there are plenty more things it's good for A very interesting article. I'm not sure what the reasons for some earlier criticisms, these likely have no basis in monetary economics. While I'd heard of 'mining' Bitcoins I wasn't that familiar with how they worked.

So I found this article very illuminating. I engage in volunteer distributed computing projects like BOINC and Folding Home which use a decent amount of energy, but at least produce a useful outcome in terms of extending existing knowledge. Bitcoin, on the other hand, seems redundant, not to mention, disastrous for the environment. Further, Bitcoin is sowing the seeds of its own destruction with people creating money, reducing their purchasing power. Ultimately, the usefulness of a currency as a medium of exchange relies on other people's willingness to accept it.

Hopefully though, for the sake of the environment, this collective delusion ends soon. Your purchasing power is only diminished if the supply of new coins outstrips demand. As Nathan says, there is also a supply limit which is inherent in the bitcoin equation, so, that being the case, given there is a finite number of bitcoins, isn't there more of a risk of the price sky rocketing, than them becoming redundant? Trusting financial transactions to some unfathomable process run by unknown people because "corporations" i.

It makes perfect sense as a money laundering system, which is why ransomware and online drug dealers use it. The entire design of bitcoin is to remove control from any person or group of people. It is a completely fathomable process that is publically defined.

It is a really interesting idea, I suggest you look into it before spreading your uninformed views. Perfectly fathomable, as is regular banking, if you are prepared to put in the time. Unfathomable if you intend to point and click, as again is the regular system. My point is not the differences in fathomability and trustworthiness, but the lack thereof. Both require either an amount of detailed investigation, or an amount of trust. What exactly, other than: Some juvenile excitement in going outside "the system".

You can also be in control of your own coins at all times, and with relatively little effort, can guarantee their safety to a degree that exceeds any banking system currently known. Might not seem like a big deal to you, but ask the greeks what they would prefer after having the government dip its hand into their back pocket and take money directly out of their bank accounts.

OK, I can see the back-pocket advantage. What stops the government simply taxing you in a regular currency, forcing you to sell your bitcoin to pay it? In Greece they went to the bank accounts because people were simply not paying the taxes. I see where you're coming from on the lack of fathomability for the average bloke who's never looked into, or cares how money is created. You're right on the tax thing, governments can take whatever they want, depending on how brutal they are prepared to be.

Credit cards were not made with the world wide web in mind. If you don't feel like paying any of banks fees for their services, you can do it yourself. When you work for your money, you should have the choice that your money goes directly to you, not a third party. The bank didn't do your work, why are they getting your salary? I'm all for banking services if you want them, but you should have the choice.

Interesting you didn't respond to the second comment. Why is Bitcoin the favoured medium of exchange of money launderers and drug dealers? Bitcoin does have legitimate uses but this issue is of concern.

Sure one can use fiat currency for money laundering and drug dealing purposes but no-where near as easily as Bitcoin. If I wanted to use bitcoin to buy drugs or guns on the internet, I would first have to acquire bitcoins. I would have to use my registered bank account, to sign up to an exchange and purchase coins. This transaction of my fiat currency for bitcoins would be recorded on the exchange. Then I would take my bitcoins, which are now associated with my bank account and transfer them to said gun or drug dealer.

I don't think its logical or helpful to demonize an entire technological accomplishment because one aspect of it doesn't exceed the current system, especially when almost every other characteristic is far superior. Did they break up, did other groups get more mining power, or do they still have enough control to theoretically fake any transaction on the blockchain they want? I think that's the fundamental problem with the bitcoin-is-distributed-therefore-no-central-control argument - large companies are much better at acquiring large chunks of computing power than individuals.

If the problem is too many carbon emissions from coal-fired power plants, then isn't the solution to shut down the coal plants and replace them with a carbon neutral alternative like solar, wind or nuclear? Professor John appears not to know what he's writing about. Fiat currency also has no value in an age when nations have no compunction in printing more money to shore up sluggish economies.

Rule number one in economics is the law of supply and demand - the more currency there is in circulation, the less each unit is worth inflation , which means all currency under central bank control is ultimately worthless. As long as the central banks control the money supply, currency is just a goverment's promise to pay. And we all know what government promises are worth. The cost of energy required to produce anything is now highly political, which means it is also being centrally manipulated.

This pretty much makes the point of this OP moot. Rejecting a non-fiat currency like Bitcoin on the basis that it is environmentally unsustainabile is clearly a red herring. The writer would of course know this. The question is, why is the good professor trying to obfuscate? It's easier to understand why the establishment fears Bitcoin and others like it don't forget the others, when one looks at the basis of their expertise and reputations.

The foundations of established economics expertise are built on the concept of 'national' wealth - e. Adam Smith's 'Wealth of Nations'. These foundations more or less crumble if a trading currency is independent of national collateral. If these free market, non-fiat currencies succeed, much of the exonomics of nationhood will become irrelevant, and the concept of 'nationhood' and its accompanying taxation rights will have to change.

Political and geographical borders will have no economic basis any more. No wonder it frightens the establishment. In a perishing world, nationhood is the principal defence against global tyranny. The smart money is on Bitcoin and the others over the long term. The danger is not in the energy cost of production but in the social and political cost of decoupling taxation from trade. It's enough to spook even the most committed puppet-statist.

Gold and silver only have value because they have limited supply and are popularly perceived as valuable. Are not Bitcoin just the new gold and silver? This article is a joke, 0 research was done. In the introduction of 'Bitcoin: A Peer-to-Peer Electronic Cash System' by Satoshi Nakamoto guy who created bitcoin , the rationale for bitcoin is stated as 'an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

He does not see the benefits to bitcoin - a programmable currency that has unlimited potential, if you have listened to Andreas Antonopoulos, or anyone with a working knowledge talk about the possibilities eg. In summation this article reads like it was created by a high school student who has heard a few things about bitcoin, it is ridiculous that the title of professor is next to the authors name because there is nothing scholarly about this article.

Satoshi Nakamoto is a genius! I am positive he has a bank account in a brick and mortar bank with millions and millions of dollars in it thanks to people buying and transacting Bitcoin.

Jane, please do some research on what bitcoin actually is, and how it works before making such assumptions. Satoshi Nakamoto doesn't take any kind of transaction payment; that's not how the network works. As Lachan said above, it's a cryptographic scheme where two people can transfer bitcoin without a trusted third party. Nakamoto would be a 'trusted third party' if he was running transactions. If he made money out of bitcoin, it was entirely due to owning the first several bitcoins back when mining was trivial, then having the value of bitcoin go up when people got in.

He's anonymous, incidentally - nobody actually knows who he is. Your lack of knowledge about Bitcoin is as terrible as your lack of foresight.

Please refrain from writing opinion pieces about topics you have not taken the time to qualify yourself to provide an opinion about. You'd hope a professor would possess more intellectual rigour.

I kept reading expecting to see a punchline that never came. This article has to be a new low for the ABC. Surely someone with some standards should have seen it before publication and cringed and hit the delete key. Heh, really enjoying the bitcoin nuts harping on about fiat currency here. Quiggin is correct; the production of new Bitcoins is an environmental disaster, but as the currency has no long term future it's not likely to be a lasting problem.

Yep, I think all the bitcoin users are whipping themselves into a lather about an article written by someone who is clearly more intelligent. If they think that bitcoin won't go the way of other pseudo currencies they deserve to lose their money or bitcoins. I assume they still use the money the rest of us use. It may go, it may stay. But it will not do either for the reasons presented in the original post.

I believe that is the source of the negative comments. Claiming a new system that is in competition with other existing systems is an "environmental disaster" without also presenting a comparative analysis of the competition and a thorough justification of the underlying assumptions is not an argument.

The author assumes that over time the hardware used will continue to use the same amount of electricity as it does today. This is counter to all IT trends for the last 70 years.

The author implies that the alternative existing systems don't consume any electricity at any time. For some systems such as geothermal the cost over the life of the power plant is actually significantly less.

Politically more difficult, higher initial cost, but cheaper over the lifetime of the power station. A professor should have known better. Mr Quiggin is way off the mark. The Blockchain and it's token the bitcoin is coming, it's unstoppable.

What Mr Quiggin's piece is about is that the financial institutions have recognized its importance as a technology, a killer app, and the banks etc, are desperate to maintain their social and financial relevance and therefore their profitability.

The Blockchain is a Community project, to provide the Market with services that the Market currently doesn't supply. It's relatively 'distributed' and to continue to make a motza of profit the financial sector need to centralize the technology. They may succeed, but it's more likely they won't, as their centralized principle will have a very expensive time to match the hashing power of the distributed bitcoin network. Give your hashing power to the bitcoin Blockchain, screw the banks.

To learn bitcoin and the Blockchain is a useful personal literacy project. It's a kindergarten for learning about encryption and privacy, both skills everyone will need to navigate with over the next decade and onwards. The Blockchain and it's emerging 'ecology' of technologies will replace more than just the "credit " card. Perhaps the coin's limited supply will be its strength and so worth the initial cost of electricity.

Preventing its manipulation and resulting inflationary tendencies may well be a value with the knowledge that it can't be manipulated and rob people of value via the money printing fractional banking system.

I absolutely agree with every single point brought up in this article. When I first heard of the existence of Bitcoin in , I remember trying to think of one single way that such a "currency" could be of any value to humanity in any way.

I'm still yet to come up with or be convinced of a single way. It's a shame that there are so many jokers out there who would prefer to increase their own material wealth by burning precious energy, wasting huge quantities of semi-conducting devices that cold be used for serious computing i. I frankly don't care how much Bitcoin "protects freedom of speech", if you don't feel comfortable with having an online transaction being able to be tracked back to you by the police, perhaps you should reconsider said purchase.

The benefit is that its supply is dictated by an algorithm that cannot be manipulated to reduce its value by a government or central bank. It is also good for making anonymous, instantaneous, cash-like transactions over the internet with low fees. I have found BTC to be a great investment. Have you tried to get into Peer to Peer lending in Australia using Fiat currency?

If you could gain access only available to sophisticated investors at the moment I can easily invest fractions of a cent worth of bitcoin over thousands of loans Yes it can be expensive to mine, so you don't, but regardless it's a tiny fraction of the energy used to manage even our currency let alone every currency in the world. How much energy is used by say Armagaurd to physically transport cash every day?

By bank tellers just going to and from work? By all the ATM's and bank servers? Actually printing our currency? I don't like that it uses so much energy but that's simply the nature of the beast and is essential to it being secure. This article is a waist of time - literally! To state my biases - I think bitcoin is a complete waste of time and would never be bothered with it.

I did whoever do some research before coming to this conclusion and have a sound knowledge of what a bitcoin is and the system that it works within. This article is so full of biases, untruths and misconceptions that it would be easier to write a complete factual article from scratch than it would be to correct the error in this one.

I commend you on your effort so far to understand the bitcoin payment network, it seems you have done some research into it. I think what you are missing though, is that the energy used by the bitcoin network is not 'wasted' or 'useless'.

The energy consumed is the very thing that gives bitcoin security as a currency. Think about Australian paper currency.

But the resulting currency would have no security No, they spend a vast amount of energy and money producing and replacing paper currency, the machines that produce them, the buildings that house them the staff that run them etc. The energy that the bitcoin network consumes enables the creation of something truly worthwhile: It is one that is not restricted to a few banking institutions, but allows anybody on earth with an internet connection to access it.

A really interesting piece John. I can't help but wonder though as at least one person pointed out, what about the coins that have already been mined? Also, once the cost of mining them is more than what they are worth, I understand no new ones will be produced, but wouldn't the older coins still hold some value as a unit of trade, to be dictated by the market pricing?

I'm confused as to why coins already mined would get a zero pricing. That would imply they are worthless - I'd suggest they wouldn't be worthless while people are willing to trade them. Thanks John for an interesting article. I think the fact that costly calculations of no use to anyone, are used in creating bitcoins, may be a bit of a red herring. Is bitcoin any stranger than people accepting the current economic system? I have often thought that accountants would get better results handing out monopoly money i.

How long until this news 'article' is pulled? If only cash were as traceable as Bitcoin, there would be a lot less illegal activity.

Every Bitcoin can be traced; transaction by transaction, back to its discovery, it's called a blockchain. This is what makes it secure and does away with a single 3rd party approver. The other major flaw with this article is it implies that the mining of Bitcoin will go on forever, and ignores all the environmental costs we currently accept in our stride. How much electricity does the current system consume? Once a Bitcoin is mined, that Bitcoin will only ever consume energy if it's traded.

I'd put a Bitcoin or two on the current system being far worse energy consumption wise. I'd also challenge the author to declare they have no conflict of interest in this article All I've heard recently is banks closing ranks around the Bitcoin issue, and now this. I wonder how the weighted average carbon footprint of all of Australia's paper and metal currency compares on a carbon-per-dollar basis to that of bitcoins, especially considering that notes and coins get retired from circulation and replaced periodically.

Whilst the longevity and stability of bitcoins is a valuable discussion to have, linking their viability to their carbon footprint seems a very, very long stretch to me, and the figures quoted for the energy required to mine one don't quite smell right to me either At least if there is an energy cost associated with creating them it does to some degree put a floor under their price though!

I think that the inevitable way forward for currency is the complete removal of physical cash, and I think it is probably only a decade away. Without cash, consumption tax i. I'm sure that there must be significant downsides to going cashless, and I'd be interested to hear what they are, because I cant really see any of significance and it just seems so obvious and inevitable.

I agree with your assessment of the positives. However, here are a few down sides to a cashless society that can be seen by very ordinary person: Errors are onerous to have corrected. It is difficult even now to change providers, with the accompanying need to advise every other body with who one deals; this would become more so if there were no cash system for small and frequent transactions - again, an invitation to defraud those less able to supervise their financial activities.

AND 4 A system where all transactions are mediated through electronic systems is not only an invitation to forgo our privacy, but a guarantee that we do so. Number 4 is the down side that bothers me most. It is not only about our sense of personal autonomy, but also freedom from being pestered by advertisers.

Already I can't buy a book on line without being bombarded by other on-line retailers. I am so tired of this that I no longer use a credit card or any 'loyalty' cards and pay cash when ever possible.

Thanks Connie, you make good points Government payments to the vulnerable are already made electronically - anyone receiving welfare necessarily must have a bank account as far as I understand it.

The problem only exists for the homeless who have fallen outside of the welfare net and rely on begging. This is still clearly a problem, but surely not an insurmountable one. Busking on the other hand would be pretty much dead as a pastime, and that would be a mostly sad thing.

Cash is also vulnerable to theft albeit on a small scale , but more generally with the threat of violence around it. Given that a very significant portion of the economy is already cashless, we would not be introducing new risks we already face them , so much as eliminating existing ones.

As I said in point 2, a significant proportion of our economy is cashless already, so the administrative burden already exists. I would suggest that this administrative burden is inherently scale-able however and in the long run would be more efficient than a mixed currency economy.

I agree that this point about privacy is the most significant and structurally unavoidable problem. Whilst the advertising issue doesn't bother me at all a. You cannot walk m down the street in a city and not be bombarded with advertisements, b. I quite like getting new reading suggestions from my kindle and am happy to ignore the unsuitable ones! The fascinating question and potential positive trad-off here in my opinion is the effect that a cashless society would have on crime.

Crime would, by and large be forced into the crypto currencies, but the entry and exit of AUD from those currencies would still be traceable. Quite a few claims of "lack of research", and "what about cost of paper money", but no one seems to have thought to use Google. Ten seconds yields the answer: An unintended consequence of the mining craze, as with all endeavours in their pioneering phase, has been a boom in energy-efficient, low-cost, complex processors.

Anyway Professor Quiggan, if bitcoin is indeed a fatally flawed currency, a person in your position can rest easy, right? Surely Gresham's Law will eventually win out, no?

I haven't read all the comments so forgive me if I am repeating someone else. Surely the problem here is the burning of fossil fuels for electricity rather than the Bitcoin mining using electricity?

Oops, I just contributed to the end of the world by using electricity to type this comment, eating Perspective would be a nice breath of fresh air. In a word tulips? The only slightly longer version is that bitcoins for all the effort you put into trying to disparage them are inherently as valuable or as worthless as any other fiat currency by agreement between those who exchange it. Trading in them may well in that case take on an aspect of speculative trading in any other commodity.

I would argue that hedge funds raking over derivatives and options are also a damnable waste of resources producing adding nothing worthwhile to wealth creation in any truer sense of the word. Of course that might just be a prejudice of mine that's showing, but isn't this? Those who've the most to fear from crypto currency are probably a combination of the banks and their investors.

We may not like banks but investors include most of us, and all of us who've been sold the superannuation miracle. You may argue in that sense that it can't be allowed to succeed because of some deleterious effects of the stability of other sectors of the market we know and love. I think ultimately though the technology in a good way questions the viability of currency exchange under the current unnecessarily expensive auspices.

There simply is no reason or justification for the fees and charges that are levied on most forms of transaction if you can secure it with crypto technology. I was wondering when someone was going to point these things out. Advances in parallel computing technology change the numbers somewhat, but Professor Quiggin's overall argument still holds.

Actually, bitcoin has a built-in self adjusting difficulty mechanism which aims to keep the creation of bitcoin at a constant rate, currently 25 bitcoins every 10 minutes. Advances in computing won't make any difference, as the difficulty of the computational problem will automatically adjust.

That's just like saying because there is only a limited number of sporting trophies, no-one will use anabolic steroids, HGR, blood transfusions. Of course the individual seeks a competitive advantage even if it doesn't result in a greater number of prizes for the economy as a whole.

Yes, this does drive development of optimised systems even though it won't result in more bitcoins overall. Very surprised to see such a one sided and unsupported article written by an academic. What's your backing and research for this argument? Most articles I've read, growing acceptance of Bitcoin at various stock exchanges and the beginnings of banks to recognise bitcoin services seem to suggest the exact opposite of this. This article is written like 1st year's facebook rant, too emotional to be taken seriously, and so much so that you almost have to suspect the Professor is actually testing a hypothesis for some research.

Probably around testing if the thought on correlation of bitcoin media still has a volatile effect on bitcoin pricing i. Looking forward to reading the results, professor. What a flawed article. Firstly, Once the bitcoin exists it doesn't wear out or be consumed so its not necessary to create more. At the moment its the end of the gold rush.

Once the number of coins stabilizes due to new ones being out of reach the currency will stabilize. Secondly, You mention that it takes 3 tonnes of C02 to produce a bit coin but then said if the price of power doubles the amount of CO2 produced halves. That makes no sense. The amount of energy produced to build the coin is fixed therefore the amount of carbon produced is fixed. The only variable in the equation is the cost of power.

If the price of electricity doubles, then you need to find a way to make a Bitcoin with half the power, in order for it to still be profitable. A by-product would be half the emissions say 1.

I'm going to go out on a limb here and congratulate Professor Quiggin for writing one of the funniest, tongue-in-cheek articles I have ever read. Judging by the number of furious and super-serious replies he's garnered to date I think he may well be in line for a major comedy award complete with a Bitcoin cheque. I thank him for not keeping it until April 1 next year - in a world where conventional business models are breaking down I think it's only appropriate that spoof articles can be traded any day of the year and not have to attract the sorts of penalty rates that keeping them for only that one preordained day in April normally attract.

If I'm right, you must be laughing your nuts off reading what you've generated from the gullible here today. I think this article is a waste of energy. Thousands of computers, reading an article, that the author doesn't even truly understand the concept of bitcoin or alt-coins.

I've seen hydro powered bitcoin operations. So your statement for that is invalid Gold is mostly worthless, as the plating in electronics boils down to pennies these days instead of the dollars 30 years ago.

Ask any person or company that tries to recycle gold from electronics. Most of this article is based on misguided information and a lack of fact. I think the author needs to get a clue, or become more educated in what they are tearing down. I was going to make my Daughter a kite, but after reading the worthy Professors argument about the use of "dirty" power I decided that the kite components, paper, string and plastic struts, would have used much of this dirty power to manufacture, and added to the Bitcoin crisis this was way over the top.

So I burnt it. Whilst Bitcoin has many of the advantages that previous posters have pointed out, I think many are also missing the point of this post: For households to acquire Bitcoin equivalent to their current "cash and near cash" holdings would require electricity production equivalent to several times their current annual household electricity consumption.

Given we still need our fiat cash to pay our taxes etc. That I think is the point of the article. That's not how bitcoin mining works. It's not like it costs x electricity to make a bitcoin and then twice that to make two, as if you were physically digging gold out of the ground. It could easily cost less next month if fewer people were trying at the same time. It costs electricity and computing power to secure the network. Not to mention we don't actually need any more to be created.

The world could get on just fine with the 15 million or so that are already out there. The new ones are just incentive to get people to contribute power to keep the network secure. Bitcoin is far more trackable to authorities than cash has it has a record of past transactions called a block chain that logs and displays every Bitcoin transaction in real time, and makes that data available to anyone.

It is not controlled by any government, though it can be taxed. The free market determines its value and not the committee of a central bank or finance minister. Transactions are almost instantaneous and cost free. Mining will stop because the algorithm is limited to 21 million coins.

Each coin is divisible by 8 decimal places allowing fractional exchange. It can operate concurrently with existing fiat money, real currency gold and silver or other crypto-currencies such as Litecoin. It may be the way of the future, in which banking will be greatly reduced in importance as lending will be peer to peer, all transaction public and coins held in an individuals own crypto currency coin wallet.

A currency revolution not less important than the invention of coinage in ancient times. Or a passing fad. In the meantime no harm in having a few Bitcoins as a hedge. This is an incredibly disingenuous article. The Professor has basically outed himself as a "flat-earther" of the economic world. There wasn't even any attempt to compare the energy use of other currencies versus bitcoin? What about all the mining for hard currencies?

Or the towers and towers of bankers sitting at computers that Bitcoin could completely tear down!? Other currencies are exactly the same, using bank's supercomputers to verify transaction, what's their energy use? Also even the slightest bit of research would have found that bitcoins have become harder to mine deliberately!

Bitcoins have several advantages over fiat currencies - one of the my favorites is that they can't be devalued by central governments! They have inherent scarcity! Just crazy, I'm ashamed that my Universities' name is also attached to this nonsense. Lots of complaints about "no research" on my part, but none of any attempts to do research by the critics.

The Bitcoin network does more than mint money. It processes transactions allowing peers to transact without any censorship. It does this in a secure and immutable way without any central trusted party. This nuance seems to have eluded you. John, a section of your article reads "Switching even a small part of a typical household's financial transactions to Bitcoins must therefore entail a massive increase in electricity use".

This logic is incorrect. The number of transactions in the bitcoin network is not relevant to the amount of power consumed. Miners expend energy by solving blocks, not individual transactions. A block can contain zero or many transactions. A block is mined approximately every 10 minutes regardless of how many transactions are being created. The core software controls this period automatically by altering the difficulty of the cryptographic puzzle. As more miners join the network, the difficulty is increased to keep the block solution period at 10 minutes.

As miners drop off the network, maybe because they are inefficient or have higher energy costs then the difficulty is reduced. It's not just the cost of one physical note, it's the cost of the whole system that secures, transports, regulates and supports that note and its 'value'. Think how much better off the planet would be if all the bankers were out planting trees instead of sitting in air-conditioned skyscrapers, for example. You are right, however, that the computer cycles used in bitcoin mining could be put to better use.

That is a shame, but I think Satoshi did a pretty good job with other aspects of Bitcoin. Because you don't seem to understand that bitcoin is not just the currency, it's the distribution network as well. That said, your point of energy consumption is already well known which is why there are other cryptocurrencies that use proof-of-stake, delegated proof-of-stake, etc. Every bank in the world is researching ways which they can leverage blockchain technology to reduce their costs precisely because the current system is so inefficient.

I can't speak for others, but I never disputed your core claim. Just the background and supporting evidence was anything but. There are many statements in your piece which are misleading at best. When you say this: It may very well be complex, but that calculation confirms all the previous transactions.

It has tremendous value. If you are going to make a connection between this calculation and the electricity consumed to make it work, then it's only fair to compare that against the global financial system's electricity consumption. For the benefit of me and the hundreds of others who don't know what a Bitcoin is, could somebody please explain. Bitcoin is a form of electronic cash. It differs from regular cash in that it can be transmitted across the internet.

There are many types of electronic cash, but bitcoin is the most widely accepted of them. Please note that credit cards, paypal, bank transfers etc. You cannot use them unless you have a bank account. Your bitcoin is like the computer record in your bank that says how much money you have in your account, with the following differences: The computer record is in a public ledger, visible to anyone in the world. This ledger is called "the block chain".

You can receive bitcoins from, or send them to anyone in the world for a very small fee, and your transaction cannot be blocked by corporations or governments. Most shops don't accept bitcoin payments yet - they're mainly useful for online purchases. You keep track of your bitcoins with a program called a wallet, that runs on your computer or phone. Your wallet has a number, which identifies your coins in the public ledger.

Without your wallet, you can't spend your coins, so don't lose it! This sensationalist puff piece has no grounding in reality. The Bitcoin network along with the bitcoin tokens has enormous utility that seems to go right over the author's head. The energy used isn't just for creating new bitcoins. The computations and consequently the energy consumed is what secures the network and gives it trust. This trust is distributed across the network, not relying on any central authority.

This is why bitcoin is the people's money. Bitcoin won't go away and the value won't approach zero as the author seems to hope. Wake up, John Quiggin. The world is changing and guess what, technology matters.

Have you not learned your lesson? The internet isn't just for geeks. So here are some back of the envelope calcs to check the author's numbers. The most efficient bitcoin mining machines have a mining speed rated at 0. This is similar to the author's numbers. It seems pretty emissions intensive - and it will become even more emission-y as the mining rate continues to drop - unless a low-carbon electricity source can be cheaper than coal.

The flaw in the argument is that this is only the cost of creating the coin. Among other things, it also includes the cost of distribution, security and auditing. For the value you have calculated to have meaning you would have to compare it with the cost of either: Or - Mining and refining the materials used, turning those materials into a credit card, assigning and adding value to that credit card, transferring the value from the users bank to a credit card transaction clearing house and from the credit card transaction clearing house to the sellers bank, the systems both IT based and people based used to detect and prevent fraud in all three organisations, The systems used to keep internal and external parties from gaining access to this highly sensitive information, The systems used to monitor the other systems for maintenance purposes.

Once people become a part of these "systems" the cost financially and in CO2 emissions goes up exponentially. Bit coin removes duplication and people from the equation. Yes, you make some good points and of course fiat currency has embedded and ongoing emissions.

Do you have any data to compare? Do the calculations for bitcoin mining actually need to be otherwise purposeless? If these computers were doing something useful as part of mining Then none of this would matter. Or if it has to be otherwise useless, can its creation be limited to electricity markets with proactive carbon prices?

Professor, What is the cost to the environment of inflation and government regulation of fiat currency? Perhaps you should be doing more research into the possible applications for bitcoin.

I was initially sceptical about Bitcoin, that is until I did my own research on it. Bitcoin will be the single most transformative technology the world has seen since the internet, like many emerging technologies it takes time for the infrastructure to be built.

I've become a strong believer and supporter of Bitcoin, it is here to stay, it can't go away and is gaining in popularity and acceptance. Australia's big four banks have attempted to stifle bitcoin in Australia, that alone should be reason to check out for yourself why they are so scared about it and the benefits to you of a decentralised currency.

Also check out what the Winklevoss Twins the guys who started Facebook with Mark Zuckerberg are saying about Bitcoin - In their own words they "eat sleep and breath Bitcoin". It is far more than just a currency. It is the future and it's here to stay. Just a thought here from someone who doesn't know much about Bitcoin: All the Bitcoin supporters in this comment section repeatedly mention Bitcoin creation is limited to 21 million Bitcoins.

What is to stop an interested party from purchasing every single Bitcoin created and refusing to trade them, essentially making Bitcoin redundant?

You will need to have a lot of money. Current market value is over 5 Billion AUD, and this would increase if someone was buying them up. You will have to convince all current owners to sell to you. What's to stop someone buying all the gold in the world?

Really fundamentally the same thing, the only significant difference there is that more people care about gold and the remaining supply of gold on Earth is substantially larger than the remaining supply of bitcoins. Maybe I'm stupid, but I just don't see how this is could possibly result in significant harm to the environment. This article claims that generating four Bitcoins consumes the same amount of energy that the average US household uses.

Taking that on face value, we need to know how many Bitcoins are being generated in order to see exactly how much energy is being wasted. As there are currently somewhere around 53, Bitcoins being mined each year, that's a worldwide total energy equivalent of 13, average US households.

That's a minuscule amount compared to, for example all the energy consumed by the hundreds of millions of US households. The number will halve next year and continue to halve every fourth year. The article also seems to assume that the amount of energy consumed has some connection to the number of transactions made.

Quiggin does not once mention the word "blockchain. Consider this sentence from Quiggin's article: Fortunately, it's unlikely that the digital currency will survive long enough to generate the environmental disaster that would arise if it became a major part of the financial system.

Fortunately, it's unlikely that the blockchain will survive long enough to generate the environmental disaster that would arise if it became a major part of the financial system.

In many cases, arguments for or against "Bitcoin" can be resolved by substituting "blockchain" in the appropriate places. Bitcoins themselves are nothing more than a way to pay anonymous individuals working to maintain a fully distributed, non-centralized network. There is no Bureau to write to, no phone number to call. It was hypothesized by Satoshi that such payment tokens would have fiat value because they would represent the work that was done to produce a valuable product -- the blockchain.

The gold miner Howard in "Treasure of the Sierra Madre" insisted that the value of gold "represents the labor that went into the findin' and the gettin' of it.

And what use is the blockchain? I think primarily it will first be used as a worldwide notary public, first by individuals for their own private records and assurance and possibly as evidence in court. Next, it will be used as a way of absolutely, positively knowing whether or not your database has been hacked into and changed and proving it in public, all for a pittance in cost.

And for that purpose it will be used by millions of individuals and institutions. I suspect that eventually governments will actually require banks to back up their hashed data onto the bitcoin blockchain as an act of public accountability, the way individuals and institutions today have to publish Legal Notices in newspapers. These uses will have a positive cumulative impact on the environment.

It sounds trivial at first, but consider the number of car-trips that will no longer be made to your local Notary Public, and the number of Notary Public ledgers that will no longer be printed. Once the blockchain is legally certified for this purpose and it almost certainly will be you will be able to just do it yourself at home.

As for data backup and security, consider the reduction in fraud, lawsuits, and waste once companies can know for certain that the data.

As regards blockchain, I have a genuinely open mind, and some questions. Can you spell out how you achieve the necessary proof of work for, as you put it, "a pittance"? Are you assuming as I read you that it is the specific Bitcoin blockchain that is going to play this role, or blockchain technology in general?

If Bitcoin, this would seem to imply a massive increase in velocity; my reading suggests this would raise a wide range of problems starting with the size of the blockchain.