The public will perceive bitcoin miners as bitcoin validators, and it will prevent the framing effect.
This opinion editorial is by Doc Sharp, a Bitcoin product designer who has been funded by Spiral in order to support various bitcoin FOSS projects.
Anyone who has been in the digital asset space for a while knows that almost all projects, with the exception of bitcoin, are able to create effective public relations to promote their decentralized only-in-name (DINO). project. It's not surprising that the tens and billions of dollars raised over the years had to go somewhere. And it certainly did not go towards building new technology.
The public relations aspect of bitcoin is lacking in one area: the way blocks are validated. This is colloquially known as proof-of-work (PoW), or mining.
First, how does mining work?
Bitcoin miners use PoW (which uses energy) to locate a needle in the haystack. They use the needle to create and add new blocks to Bitcoin's blockchain. The miner is rewarded with newly-minted bitcoin when the new block has been added. This is the best way to reach network consensus and create valid blocks. You can read more about bitcoin mining here.
Bitcoin mining is like looking for a needle in the haystack.
Bitcoin Mining and The Framing Effect
Green narratives are increasingly important in an age where capital is directed by criteria such as environmental, social, and governance (ESG) scores.
This is why the perceived high energy cost of mining bitcoin and the term mining, which are associated with environmental destruction, have become barriers to bitcoin adoption. DINO projects use this red herring to discredit bitcoin and to pump their cash.
Bitcoin mining is relatively low in energy consumption and is mostly green. These realities are often overlooked by people due to cognitive bias called the framing effect.
"The framing effect" is a cognitive bias that allows people to decide whether options have positive or negative connotations.
The term mining has many negative connotations. See image below. Because of the framing effect, there are many digital assets that offer similar solutions to bitcoin. They have a smaller environmental footprint and can be preferred by naive users.
This is what people think about when they hear the word mining.
Although I won't go into details, the "greener" solution of proof-of-stake is not viable and will eventually lead to centralization. It's not surprising that people choose to make decisions based on superficial reasons such as their views about energy.
The prospect theory is a psychological theory that explains why the framing effect exists.
The prospect theory states that people are more affected by the prospect of losing money than they are by the prospect of earning the same.
The gain of PoW (More energy usage, but decentralized) is more than the loss PoS (Lesser energy use but centralized). It's not difficult to see the loss from an environmental perspective.
This is made worse by sensationalist pieces like "Bitcoin uses more electricity than many countries" that claim climate change is a major societal problem. What is the best way to do that? It is important to circulate frequently. This is how the framing effect manifests, as people are only shown one frame (the environment one).
What can we do to get people to see that bitcoin mining doesn't boil the oceans, but is a smart use of energy? We could learn from the DINO handbook and use narratives with less negative connotations to our advantage.
This could be used to mine bitcoins. It's simple.
Let's call Bitcoin miners, Bitcoin validators
The Ethereum 2.0 merger has seen Ethereum move from mining with PoW to validators with PoS. Ethereum 2.0 merge will eliminate mining and miners as we know, with claims of up 99.5% energy savings.
These energy savings come at the expense of decentralization, which is a red herring. Without decentralization, cryptocurrencies are useless. Even if the energy consumption of a centralized public cryptocurrency is small, it's still 100% wasted because the network has failed. This is what Bitcoiners know and why they will never alter the code.
We are back to the framing impact. Due to the marketing efforts of DINOs, validators has a much higher positive connotation than mining. People will see the term with a lower number of negative connotations. People will be able to see the benefit of PoW (More energy consumption, but decentralized) better than the loss from PoS (Less energy usage, but centralized). This is done by using validator, which is a media-friendly term.
DINO has done the hard work by changing the narrative to PoS > POW. We can leverage this effort to our advantage, just as DINO has done it time and again by using the bitcoins name to justify their Rube goldberg machine.
By calling bitcoin miners bitcoin validators, you can stop the framing effect and shift the narrative to PoS POW. The use of the same term for Bitcoin and Ethereum makes it easier to understand the differences. It is also technically more precise and explicit because validators (miners) produce valid blocks.
Here are some mining terms that we need to change.
Bitcoin validator pools = Bitcoin mining pools
Bitcoin miners = Bitcoin validators
Bitcoin mining = Bitcoin validating
Re-framing PoW mining as PoW validating will help bitcoin in the long term. This is because it will prevent the framing effect, which is a cognitive bias that causes people to make decisions based on the connotations of options.
Mining = negative connotations.
Validating = Positive Connotations (thanks Ethereum).
Doc Sharp contributed this guest post. These opinions are not necessarily those of BTC Inc.
Frequently Asked Questions
Should You Invest Gold in Retirement?
This will depend on how much money and whether you were able to invest in gold at the time that you started saving. If you are unsure of which option to invest in, consider both.
Gold is a safe investment and can also offer potential returns. It's a great investment for retirees.
While many investments promise fixed returns, gold is subject to fluctuations. Therefore, its value is subject to change over time.
However, this does not mean that gold should be avoided. Instead, it just means you should factor the fluctuations into your overall portfolio.
Another advantage of gold is its tangible nature. Unlike stocks and bonds, gold is easier to store. It is also easily portable.
You can always access your gold if it is stored in a secure place. You don't have to pay storage fees for physical gold.
Investing in gold can help protect against inflation. It's a great way to hedge against rising prices, as gold prices tend to increase along with other commodities.
It's also a good idea to have a portion your savings invested in something which isn't losing value. Gold usually rises when the stock market falls.
Another advantage to investing in gold is the ability to sell it whenever you wish. Like stocks, you can sell your position anytime you need cash. You don't have to wait for retirement.
If you do decide to invest in gold, make sure to diversify your holdings. Do not put all your eggs in one basket.
Also, don't buy too much at once. Begin by buying a few grams. Then add more as needed.
Don't expect to be rich overnight. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.
Even though gold is not the best investment, it could be an excellent addition to any retirement plan.
What precious metals do you have that you can invest in for your retirement?
It is gold and silver that are the best precious metal investment. Both can be easily bought and sold, and have been around since forever. You should add them to your portfolio if you are looking to diversify.
Gold: This is the oldest form of currency that man has ever known. It is stable and very secure. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver is a popular investment choice. It is an excellent choice for investors who wish to avoid volatility. Silver tends instead to go up than down, which is unlike gold.
Platinium is another precious metal that is becoming increasingly popular. It is very durable and resistant against corrosion, much like silver and gold. It is however more expensive than its counterparts.
Rhodium: Rhodium can be used in catalytic convertors. It is also used for jewelry making. And, it's relatively cheap compared to other types of precious metals.
Palladium: Palladium is similar to platinum, but it's less rare. It's also more affordable. For these reasons, it's become a favorite among investors looking to add precious metals to their portfolios.
Are gold investments a good idea for an IRA?
Any person looking to save money is well-served by gold. It's also a great way to diversify your portfolio. But there is more to gold than meets the eye.
It has been used as a currency throughout history and is still a popular method of payment. It is often called “the most ancient currency in the universe.”
But unlike paper currencies, which governments create, gold is mined out of the earth. It is very valuable, as it is rare and hard to create.
Gold prices fluctuate based on demand and supply. If the economy is strong, people will spend more money which means less people can mine gold. Gold's value rises as a result.
On the flipside, people may save cash rather than spend it when the economy slows. This causes more gold to be produced, which lowers its value.
This is why gold investment makes sense for both individuals and businesses. You will benefit from economic growth if you invest in gold.
You'll also earn interest on your investments, which helps you grow your wealth. If gold's value falls, you don't have to lose any of your investments.
What are the advantages of a gold IRA
The best way to invest money for retirement is by putting it into an Individual Retirement Account (IRA). It's tax-deferred until you withdraw it. You control how much you take each year. There are many types to choose from when it comes to IRAs. Some are better suited for people who want to save for college expenses. Others are intended for investors seeking higher returns. Roth IRAs are a way for individuals to make contributions after the age of 59 1/2, and then pay taxes on any earnings upon retirement. Once they start withdrawing money, however, the earnings aren’t subject to tax again. This type account may make sense if it is your intention to retire early.
The gold IRA allows you to invest in different asset classes, which is similar to other IRAs. Unlike a regular IRA which requires taxes to be paid on gains as you wait to withdraw them, a IRA with gold allows you to invest in multiple asset classes. People who prefer to save their money and invest it instead of spending it are well-suited for gold IRAs.
Another benefit to owning IRA gold is the ability to withdraw automatically. You won't have the hassle of making deposits each month. To avoid missing a payment, direct debits can be set up.
Finally, the gold investment is among the most reliable. It is not tied to any country so its value tends stay steady. Even in times of economic turmoil gold prices tend to remain stable. Gold is a good option for protecting your savings from inflation.
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Gold IRA: Add some sparkle to your retirement nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
The best place online to buy silver and gold
First, understand the basics of gold. Precious metals like gold are similar to platinum. It's rare and often used to make money due its resistance and durability to corrosion. It is difficult to use so people prefer to buy jewelry made from it to gold bars.
Today, there are two types available in gold coins: one is legal tender and the other is bullion. Legal tender coins are minted for circulation in a country and usually include denominations like $1, $5, $10, etc.
Bullion coins should only be used for investment purposes. Inflation can cause their value to increase.
They can't be exchanged in currency exchange systems. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. Each dollar spent earns the buyer 1 gram gold.
The next thing you should know when looking to buy gold is where to do it from. There are many options for buying gold directly from dealers. You can start by visiting your local coin shop. You could also look into eBay or other reputable websites. You may also be interested in buying gold through private sellers online.
Private sellers are individuals that offer gold at wholesale or retail prices. Private sellers will charge you a 10% to 15% commission for every transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. This option is often a great choice for investing gold as it allows you more control over its price.
The other option is to purchase physical gold. It is easier to store physical gold than paper certificates. But, you still have to take care of it. Physical gold must be kept safe in an impassible container, such as a vault.
A bank or pawnshop can help you buy gold. A bank can provide you with a loan to cover the amount you wish to invest in gold. The pawnshop is a small business that allows customers to borrow money to buy items. Banks often charge higher interest rates then pawnshops.
Finally, another way to buy gold is to simply ask someone else to do it! Selling gold can also be done easily. You can contact a company like GoldMoney.com to set up an account and receive payments right away.
By: Doc Sharp
Title: Bitcoin Miners Don’t Exist — But Bitcoin Validators Do
Sourced From: bitcoinmagazine.com/culture/bitcoin-miners-dont-exist-validators-do
Published Date: Sat, 24 Sep 2022 00:05:00 GMT