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Crypto Confidence podcast

Nov 30, 2018

I just had a chat with a friend, one from the list of Crypto Conversations, that we all have to have with people who don’t understand it.

No, not the “but it isn’t backed by anything” one, or even the “surely it’s for drug dealers and terrorists” one. It was the one I think of affectionately as “number 3”, the one about energy use.

It comes in the top 3 because, depending on which tabloid headline you read, cryptocurrency mining is of course single-handedly responsible for global warming, the melting of the polar ice caps, impeding the search for alien life forms, and even slowing down time itself (well, atomic clocks) through its greedy demands for power.

I came across an article (admittedly from last year) from Alex Hern in the Guardian, which stated the statistic that Bitcoin mining consumes more electricity per year than does the country of Ireland. And I felt that this was a spectacularly meaningless and unhelpful comparison for various reasons (and a statement which has been contested in any case).  It reminded me of those questions on the back of hula hoop packs, asking you to work out how many would reach to the moon or the top of the Eiffel tower…

But I think it came about as a reflection of the general failure to grasp what Bitcoin actually is, and how to compare like-with-like for things which are fundamentally intangible in the first place. And this is not just a problem for journalists.

For example, another report in my newsfeed more recently from Nature has made a different stab at comparing apples to oranges, by stating that “Independent researchers Max Krause and Thabet Tolaymat calculated that it takes about 17 megajoules of computer power to generate US$1 in Bitcoin... By comparison, it takes 5 megajoules to mine US$1 in gold and 7 megajoules to mine an equivalent value of platinum”.

So what do the headlines scream, once this is reported by secondary sources? “Bitcoin costs twice as much energy to mine as platinum or gold!”  Shock, horror, and further proof that Bitcoin is an environmental nightmare.

Crypto Alphabet:

E is for Ethereum

Well for B we defined Bitcoin, so it seems only fair to look at Ethereum for the letter E. Especially as last time we learned about decentralisation

Ethereum runs on its own currency called Ether, abbreviated to ETH, and the currency is often erroneously called Ethereum.  Ether has become the second largest cryptocurrency by marketcap, though it’s value has dropped a lot over the course of 2018 from all-time-highs in December and January.

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