The anonymous blockchain, the underlying public/private ledger mechanism upon which most cryptocurrencies are based, is kludgy, starkly inefficient, and poorly understood by most people using it.
I *think* I understand how the Blockchain works but there are several practical issues I'm missing.
A large majority of Bitcoin transactions, I assume, don't access the Blockchain directly. One just trades via an exchange or, simpler still, trades an ETF.
If one DOES trade via the Blockchain there is an optional transaction fee that can be specified to incentivize the miner to incorporate your transaction in the next block. How does that work? Does one's software monitor transactions to deduce what transaction fee is expected? Google seems to imply that the usual fee varies widely; Google also offers "Estimated Fee = 13500 Satoshis/kilobyte."
IIUC competing blockchains are created routinely and users "vote with their keyboards" to determine which blockchain will be The Blockchain™.
Is this a frequent nuisance? How long does it take for a consensus blockchain to become apparent?
Bitcoin takes an hour to an hour and a half to execute a transaction.
Google tells me that blocks are minted once every ten minutes on average; presumably this does not include blocks that are eventually rejected.
Is the hour delay spent waiting for the consensus decision to become clear-cut? Or is it that the transaction was ignored for a while because the fee offered was too low?
I often think I must be missing something when so many are driving the price so high. Nah. I think it's just the blind buying from the blind.
A relevant question is: What benefit does BitCoin offer to humanity? IIUC Bitcoin has two big differences from normal (bank ledger) money:
1. You need to trust a bank to keep its ledger secret. And they WON'T keep it secret if subpoenaed by government. The bitcoin ledger OTOH is publicly available but the user IDs need to be deduced. If your Bitcoin account is getting coins from Joe the Junkie and spending it at Gigi's Exotic Massage, the FBI needs only to turn Joe or Gigi to find out who you are.
2. Bank ledger money can be converted into central bank banknotes, the closest thing to precious metal in 21st century finance. Satoshis on the blockchain are worth less than tulips unless the "greater fools" keep buying in.
I have to stop over estimating humans. To be fair, not all are so slow, crypto that is. I know Some execute in two to three seconds.
Just as people without adequate information accept something resembling currency as having value, people without adequate information accept crypto as having value. Lots of people. Intelligent people. So many that an economy has grown around this fictional tale that has borne theoretical value of more than $3 trillion at times.
What if the cost of electricity burned by crypto mining represents the only translatable value of a crypto currency?
So far, that looks like it.
That's the peculiar thing. The high cost of electricity to "mine" bitcoins is a designed-in FEATURE, not a Bug.
I used to think that was shameful but I guess the joules wasted on Bitcoin mining are now a drop in the bucket compared with joules consumed by AI engines. Society needs those engines to make sure Google has misinformation ready for any query, and so that teenagers can remove the clothing from pictures of the girls who kept their clothes on in person.
And when the music stops, who will be left standing? Not the politicians or their circle of friends. Nope. It'll be the same sad bastards who are always left standing, who get the news from the news.
If it's any consolation some future-predicting pundits think that central bank money is also in an unsustainable bubble.
