Let's hope it doesn't! Here's a Fermi problem to show how horrifying the prospect of Bitcoin succeeding is:
By this blog post's estimate, Bitcoin currently consumes about 500 MW of power. As others have estimated, Bitcoin processes about 3 transactions per second.
The world currently consumes about 2.38 TW of power.
If Bitcoin were a commonly-used currency -- if, for example, a billion people in the developed world each made an average of one Bitcoin transaction per day -- then Bitcoin would have to run 4,000 times faster than it currently does, consuming 2 TW of power, which is most of the power in the world.
You are incorrect. Bitcoin does not "have to" consume more energy to process more transactions. Energy and tx rate are uncorrelated. And the energy cost per transaction is falling. Again, see section 5 of http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/
Section 5 says "thanks to the transaction rate increasing faster than the network's energy consumption".
Is the transaction rate increasing? Two years ago people said it was 7 transactions per second. Now it's 3 per second. It may be that people were making unchecked exaggerations two years ago. But this doesn't look like any sort of increase. If the transaction rate is "quadrupling every 2 years"... why didn't it quadruple over 2 years?
An article entitled "Bitcoin Mining is Not Wasteful" on a Bitcoin blog kind of tells you what conclusion it's going to come to. For people who aren't personally invested in Bitcoin, of course Bitcoin mining is wasteful. It is literally made of wasted computation. The fact that it benefits an economy of Bitcoin speculators is of no interest.
It never was 7 tps. 7 is the theoretical maximum (assumes the tx had only 1 input.) In practice Bitcoin never achieves this because the average tx has multiple inputs.
"...tells you what conclusion it's going to come to"
You have to examine the presented facts, not the messenger. This blog is mine, and I think I present decent evidence that it's not wasteful. You have to look at the whole picture, ie. the Bitcoin economy lead to $1+ billion invested in 729+ companies, etc... Investing x megawatt in a system that produces investments and jobs is hardly a "waste".
> It never was 7 tps. 7 is the theoretical maximum
Wow, you mean Bitcoin fans were prone to exaggeration and unrealistic claims two years ago? I wonder if they still are.
Speaking of which, this graph you're showing me definitely has not quadrupled over the last two years. What went wrong?
> Investing x megawatt in a system that produces investments and jobs is hardly a "waste".
It is if the jobs never produce any actual value. Moving money around is not a good in itself. In fact a lot of Bitcoin companies have moved money in ways that are distinctly bad. Would you be celebrating MtGox as part of the Bitcoin economy if they still existed?
Of course whoever is currently holding the money is happy with it. Doesn't mean it's not a waste. People have profited from waste for as long as civilization has existed.
"Wow, you mean Bitcoin fans were prone to exaggeration and unrealistic claims two years ago?"
No one ever claimed it actually processed 7 tps.
"Speaking of which, this graph you're showing me definitely has not quadrupled over the last two years."
It quadrupled from 65k in Oct 2014 to 260k today. It's 2 years 5 months. Close enough. "2 years" was an approximation (perhaps I should edit my post to make it clear).
"It is if the jobs never produce any actual value"
Well I think they provide value. But it would be tedious & complex to argue about this on HN by reviewing the list of employees at 729+ companies...
Firstly MW = 10^6 and TW = 10^12 so you're off by 1,000. Secondly, your analysis doesn't factor indirect costs of centralised systems of currency (security features, printing, physical delivery, etc.).
In the first part of your reply, you indicate that you're bad at orders of magnitude, at least when defending Bitcoin.
In the second part of your reply, you do the same thing.
Let's be clear. (500 x 10^6) W x 4000 ~= 2 x 10^12 W. I will now factor in your fantasy that everyone stops using centralized currency: (500 x 10^6) W x (4000 - epsilon) ~= 2 x 10^12 W.
Fermi problems require being confident in how to multiply large numbers, and disregarding non-multiplicative factors that are much smaller.
By this blog post's estimate, Bitcoin currently consumes about 500 MW of power. As others have estimated, Bitcoin processes about 3 transactions per second.
The world currently consumes about 2.38 TW of power.
If Bitcoin were a commonly-used currency -- if, for example, a billion people in the developed world each made an average of one Bitcoin transaction per day -- then Bitcoin would have to run 4,000 times faster than it currently does, consuming 2 TW of power, which is most of the power in the world.