Over the past couple of years I’ve fallen into a habit of infrequently pointing out the flaws, dangers, and threats to Bitcoin as a viable cryptocurrency. While I find the experiment in alternative currency intriguing, I’m just as intrigued by criticisms made against Bitcoin. Even if Bitcoin ultimately fails, it will provide numerous valuable lessons about peer-based innovation, and the criticisms that were warranted can help us avoid pitfalls in the future.
We won’t know, of course, which criticisms are valid or what will lead to the downfall of Bitcoin until after it happens (my guess is will be due to government regulation). But some criticisms are more interesting than others. Take, for instance, this point that I had never considered before: it takes a lot of energy (and money) to produce a single Bitcoin.
I was aware that the process of Bitcoin mining requires substantial computing power and therefore must use up some amount of electricity. It just never occurred to me, until economist John Quiggin’s recent article, how much energy (and money) were required:
In the early days of Bitcoin, the computations in question could be performed