#9 – Is Bitcoin Dead? The Small, Cold Truth.

Bitcoin. Crypto currencies. You probably know computers are involved with this stuff, and computers use electricity. Did you know that the computing power needed to process a Bitcoin transaction may get so large that the electricity cost could outpace any revenue? Actually, that has already happened in some parts of the world where electricity is not available at low prices. But don’t count Bitcoin out just yet. New computers, based on electrons on an impossibly cold silicon chip, may create a *quantum* leap that could change everything! Also in this episode, we have cause to celebrate this week! Net Neutrality’s defense took a big step forward, thanks to Washington State!

Also, we will talk about to return guests Dr. Dale Meyerrose, Retired Major General, US Air Force, and Will Maxson, an Assistant Director at the FTC.

Thank you, Washington State! Free book!

Washington state is the FIRST STATE to pass a law putting net neutrality back into place, over the rules set by the FCC. I think this is a great, great move! Its rational, its smart, its fair, and its consistent with the purpose behind the internet, which is to let you get to any site you can find.

It may also be illegal, by the way, the FCC’s law actually prohibits states from making their own rules. So this may actually play out in court before Washington State’s laws go into effect on June 6, 2018.

That’s why I feel like celebrating, and am giving away my book for free until March 15.

I could spend five episodes on net neutrality, but here is the bottom line. I do not think the internet is a right. Life, liberty, pursuit of happiness – those are examples human rights. The internet is not on that list. Why? This stuff cost money. A lot of money. If you have ever been in a network data center, with its hundreds of rows of computer equipment staked up in vertical racks, knowing that one of those computer on one rack, just a few inches high, can cost anywhere from a few thousand dollars to over a million dollars, depending on its function – then you would understand the massive cost associated with the operating of the internet. Then there is the, climate control redundant power supply, and an uncountable number of network cables throughout the facility. And when you type www.something.com, your request goes through a few of those facilities before it ends up on the server that runs the web site you want. And, these are government entities or non profits building these centers. These are almost entirely run by for-profit companies.

So, the internet has real costs, and no company would bear these costs unless they were paid. And we DO pay.

When you sign up with an internet service provider, you are paying for the cost of the intent. When your favorite web sites puts computers online to support their web site, they are paying for cost of the internet. When you pay your data plan on your mobile phone, you are paying for the cost of the internet.

So, the internet has real costs, and we pay for the those costs.

What the internet service providers can’t do is pick favorites. It can give more access (or faster access) to one site over another. It can’t be priced like the cable system where you pay for access to bundles of sites, but have to pay more to access to other sites. It cant speed up or slow down the information you are getting based on the website you are getting it from. Once you have paid for access to the internet, my opinion is that you should simply be allowed to go where you want to go, and do what you want to do, as long as you are not committing a crime in doing so (and there are lots of crimes you can commit online, but that is another story.) Just like the telephone.

Here is what the Governor of Washington state said at the signing:

Internet service providers otherwise could limit what websites or apps you would be able to use. They could slow down your use and access unless you use their preferred apps or their chosen services. We are here to say Washingtonians will be protected from throttling, from fast lanes, and they will be protected in preserving an open and accessible internet.

-Washington Gov. Jay Inslee, a Democrat, said at the signing on Monday.

Again, the problem is that the new FCC rules passed last December also pre-empt states from making their own net neutrality laws. So, the State of Washington is challenging the FCC’s power to prevent states from making their own rules.

As of today, there are about 30 states taking some kind of action, or multiple actions, against the FCC’s change to net neutrality. Here is a list of State Initiatives:

Source: https://actionnetwork.org/petitions/these-states-are-fighting-for-net-neutrality-is-yours-one-of-them

News of Bitcoin’s Death is Premature

We have time for one more listener question, and here it is:

Mike from New York asks:

I am an angel investor thinking about investing in a startup with an innovative way to mine bitcoin. I’m not looking for investment advice, but I would like to understand the technology better. I heard that that bitcoin mining is so inefficient that eventually the electric bill will be greater than the income of a miner? Is that possibly true?

(Glad you are not looking for investment advice, we don’t do that – but I can tell you something about the technology)

True, in a *long* time, and if nothing changes.

Hair on fire 1 of 5…Important, but not urgent, especially if you are holding bitcoin or any cryptocurrency.

  • Bitcoin is a ledger (Blockchain) with credits and debits but (importantly) no account balances. Great description of what Bitcoin is, and is not: https://www.myetherwallet.com/
  • Bitcoin requires a math problem to be solved to calculate the sum of credits and the sum of debits
  • The problem started small, it is getting bigger. Really big. Currently about 149 GIGABYTES. https://www.statista.com/statistics/647523/worldwide-bitcoin-blockchain-size/
  • How big? So big that the cost of electricity is the major constraint.
  • TRUE – The rate of growth of the bitcoin Blockchain is faster than the increase in electricity production, so plot that into the future and eventually calculating Bitcoin’s Blockchain will take more electricity than we produce. How long? No one knows exactly because it depends on how many transactions occur on bitcoin, but here is an interesting take on the problem: https://hackernoon.com/if-we-lived-in-a-bitcoin-future-how-big-would-the-blockchain-have-to-be-bd07b282416f
  • But that is if NOTHING CHANGES
  • Will electrical production take a quantum leap forward? I hope so, but I don’t see that on the horizon.
  • COMPUTING POWER may change – quantum computing changes everything!

What is a quantum computer?

A ‘normal’ computer does things one step at a time. For example, counting one billion items has to be done one-at-a-time. Whether it takes that computer one second or one minute to count a billion items is a measure of how fast the computer’s processor can work.

But, in quantum computing, counting a billion items could be ONE step, not a billion steps. So, all of that activity is done simultaneously, and NOT one step at a time!!

But that example would take a quantum computer with billions or even hundreds of billions of it’s smallest component, called a ‘quantum bit’ (or QUBIT), which is basically an electron spinning in a tiny pool at unbelievably cold temperatures.

What is the biggest quantum computer on earth?

Last week = 2 Qubits (not 2 million, or 200)

This week = 5 Qubits

Intel announced this week 5 qubit programmable quantum computer


Going from 5 to tens of billions is daunting and will take a while but…this tech really works!

Great primer on quantum computing:


We can’t predict how much electricity these new quantum computers will need, but we do know that Quantum computing changes makes a remarkable leap forward in how computers work. Will these be a thousand times faster? A billion times faster? Hard to predict.

BOTTOM LINE: Computer processing power, and the electricity to run the computers, is the primary limitation of Bitcoin and other crypto currencies. Computer processing power may be taking an unprecedented step forward, and possibly, the need for electricity will be a fraction of what it was before.

So, quantum computing may allow bitcoin and other cryptocurrenies far, far into the future. That’s why, reports of bitcoin’s eminent death are a bit premature.

Published by

David W. Schropfer

David W. Schropfer is the CEO of SAFE (Smartphone Authentication For Everyone), a cybersecurity company in New York (www.theSafe.io).  Every day, he and his team of professionals keep the people who use The SAFE Button protected from some of the most common traps, hacks and attacks that target computer systems of all sizes. David is the author of the bestselling cybersecurity book, Digital Habits: 5 Simple Tips to Help Keep You and Your Information Safe Online. His previous books, including The Smartphone Wallet and industry whitepapers, predicted some of the biggest trends in the payments, mobile, and security industries.  Since graduating Boston College, David earned an Executive MBA from the University of Miami.