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0 pointsscotty7912y ago0 comments

Computing power is cheap and will be cheaper. People who track forgery, look after money, look after people who look after money and so on are expensive.

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betterunix12y ago· 2 in thread

Consider for a moment the cost of a "51% attack" on Bitcoin. That is basically a lower bound on the cost of running Bitcoin, if you include the value of Bitcoin hardware. Now compare that cost to the amount of money that a bank spends on security, versus the amount of money that same bank processes. The ratio of Bitcoin's total value (basically low billions) to the cost of running Bitcoin (low billions) is much smaller than the scale of a bank's operations (hundreds of billions) versus the amount spent combatting fraud (hundreds of millions).

The only reason nobody notices this cost is that right now, the payoff from mining outweighs that cost. Yet a bank's operations are still vastly more profitable than Bitcoin mining (which is critical in maintain Bitcoin's security), even with the cost of fraud mitigation, and even counting only the cost of electricity required for Bitcoin; were this not true, banks would be running huge Bitcoin mining operations and only dealing in cash when they need to pay their taxes (which they sometimes do).

scotty79OP12y ago

Do you think that only cost of traditional currencies are the resources that banks spend? What about the cost of the government that guarantees that the currency is worth anything? What about law enforcement that prevents money from being printed? What about costs of people that move and guard physical cash? What about the cost of fending of attack on your currency? What are the costs of having multiple currencies and exchanging it? What are the costs of additional risk to the people forced to operate with multimple currencies while doing business? I'm sure there are some costs of having traditional money that you are missing.

betterunix12y ago

I am sure that if you add all the costs you mentioned together, it is still less than the cost of running the Bitcoin network. You need half the computing resources on the planet to be devoted to Bitcoin for it to be secure. We do not devote anything close to that to maintaining or securing paper money, even if you include the entire government (which would not be any smaller in a world of Bitcoin rather than paper money).

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