The congressional hearing hilariously titled “America on ‘FIRE’: Will Crypto Frenzy Lead to Financial Independence and Early Retirement?financial ruin or ruin?“It is the gift that keeps giving. NewsBTC already analyzed some aspects of it, but Peter Van Valkenburgh’s testimony deserves an article on its own. The Research Director at Coin Center got several big ideas on the record, and we’d better record and remember them.
The introduction of the previous article still stands:
The US Congressional Oversight and Investigations Subcommittee held a hybrid hearing on Bitcoin and cryptocurrencies. The institution summoned Alexis Goldstein, Director of Financial Policy of the Open Market Institute, Sarah Hammer, Managing Director of the Stevens Center for Innovation in Finance, Peter Van Valkenburgh, Director of Research of the Coin Center, among others.
Related reading | New 2021 FATF Crypto Guidelines Tagged As Warrantless Mass Surveillance
Since we at NewsBTC have already done the work and covered the ridiculous statements of Representative Brad Sherman, it is time to give the microphone to someone more qualified and informed. Let the record reflect that a full video of the entire audience is not available at the time of writing this article. We will base our report on everything we can find on the open Internet.
– Documenting Bitcoin 📄 (@DocumentingBTC) June 30, 2021
What we know about Peter Van Valkenburgh’s testimony
Fortunately for us, Documenting Bitcoin preserved the best of Van Valkenburgh’s presentation. The Research Director of the Coin Center sets it all up by explaining why and how the Bitcoin network is censorship resistant.
“… We have the advantage of knowing everything the peer-to-peer ledger tells us. It is shared and open, it is not a corporate proprietary standard. And the peer-to-peer ledger shows us how much work these miners are doing to make sure that transactions are blocked and not censored by a third party or some government who wants to coerce certain transactions or block certain transactions. It is this vibrant competition between miners that ensures that the miner cannot form a cartel and chooses to systematically exclude certain people from this financial system. “
To complete this idea, let us quote Van Valkenburgh himself “Understand the energy use of Bitcoin” paper.
This competition is healthy because it means that the effort spent protecting the network scales automatically with the value of the transaction data on the blockchain, not with the number of transactions. So the more value there is in the Bitcoin network (because people value it more as reflected in the price), the more resources will be dedicated to its security.
This leads to …
What about the energy use of Bitcoin and the Lightning network?
This man is a House of Representatives veteran. He knew what he was doing. Van Valkenburgh prepared everything and then turns to the meat and potatoes of the testimony. It goes down the throat and flips the establishment’s argument about Bitcoin’s energy consumption. He changed the narrative and focused on the known inefficiencies of the traditional financial sector.
“Regarding energy use, it is worth noting that the traditional financial sector uses approximately five times more energy than Bitcoin. Of course, the traditional financial sector moves more money. But it’s worth noting that Bitcoin’s energy usage doesn’t scale per transaction. Therefore, most of the costs are the fixed cost of setting up a robust open peer-to-peer system. And we have technologies like the Lightning Network that can bundle millions of transactions into that existing system without a significant power surge. So it is possible that we can have an open financial system that is resistant to censorship using a fifth of the energy of the current financial system. “
So yes, the Lightning Network and its wonders are registered in the US House of Representatives registry. And, even though Bitcoin’s goal is not to directly replace the “current financial system,“The record reflects that Bitcoin is more energy efficient, as well as censorship resistant as a bonus. Finally, it is worth noting that “five times more energy than Bitcoin“It is an extremely generous estimate in favor of the traditional sector.
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What does Van Valkenburgh think about regulation?
The good folks at Coindesk got hold of Van Valkenburgh’s prepared testimony. On a recent episode of “The Breakdown” podcast, they cover a completely different area:
There are a couple of key perceptual shifts you’re trying to make, first, around the idea that cryptocurrencies are unregulated, that’s wrong. It is regulated everywhere at the state and federal level. It is simply fragmented. Second, cryptocurrencies are for crime – they’re wrong again, in 2020 only 0.34% of all cryptocurrency transaction volume involved a criminal sender or recipient and remember, those numbers come from Chainalysis, an organization in the that a large number of government agencies spend several million dollars. with each year.
Related reading | Bitcoin Lightning Network Sees a Storm of Activity and Adoption
This ties in very well with what was discussed above, and with this direct quote from Van Valkenburgh:
“For every transaction that we want to block, there is a transaction that we must celebrate because it is unstoppable. Yes, there are criminals who make payments on the Bitcoin network because banks do not bank them. There are also pro-democracy activists and protesters in Belarus and against police violence in Nigeria, who accept donations on the Bitcoin network because local banks don’t bank them. For every decentralized app that tries to scam investors. Another is testing ways to disperse universal basic income, remove corporate control over social media, or remove the risk of hacking inherent in centralized identity solutions. “
Suffice it to say that this man entered the belly of the beast and spoke the truth. The Bitcoin movement will be forever grateful.
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