Five Takeaways From Van Valkenburgh’s Congressional Testimony
Five Gems From Van Valkenburgh’s Testimony At The Congressional Hearing
The “America on ‘FIRE:’ Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?” congressional hearing is the gift that keeps on giving. Some portions of it have previously been discussed on NewsBTC, but Peter Van Valkenburgh’s evidence deserves its own post. Coin Center’s Director of Research has a few key views on the record, which we should note and remember.
The following is a repeat of the introduction from the preceding article:
«The U.S. Congress Oversight and Investigations Subcommittee held a hybrid hearing on Bitcoin and cryptocurrencies. The institution summoned Alexis Goldstein, Director of Financial Policy for the Open Market Institute, Sarah Hammer, Managing Director at the Stevens Center for Innovation in Finance, Peter Van Valkenburgh, Director of Research at Coin Center, and others.»
We at NewsBTC have already done our job and covered Representative Brad Sherman’s ludicrous claims, so it’s time to hand the microphone over to someone more competent and knowledgeable. Let the record reflect that at the time of writing, a full video of the whole hearing was not accessible. Our report will be based on whatever we could locate on the internet.
Peter Van Valkenburgh’s Testimony: What We Know
Fortunately for us, the greatest part of Van Valkenburgh’s lecture was saved in Documenting Bitcoin. The Coin Center’s Director of Research sets the scene by outlining why and how the Bitcoin network is censorship-resistant.
«… we have the advantage of knowing everything that the peer-to-peer ledger tells us. It’s shared and open, it’s not a proprietary standard from a corporation. And the peer-to-peer ledger shows us how much work these miners are performing to make sure that transactions get in blocks and they’re not censored by some third party or some government that wants to coerce certain transactions or block certain transactions. It’s this vibrant competition between miners that guarantees that the miner cannot form a cartel, and choose to systematically exclude certain persons from this financial system.»
Let’s finish this thought with a quotation from Van Valkenburgh’s own study, “Understanding Bitcoin’s Energy Use.”
«As far as energy usage, it’s worth noting that the traditional financial sector uses an estimated five times more energy than Bitcoin. Granted, the traditional financial sector moves more money. But it’s worth noting that Bitcoin’s energy usage doesn’t scale per transaction. So, most of the costs are the fixed cost of setting up an open peer-to-peer system that’s robust. And we have thechnologies like the Lightning Network that can bundle millions of transactions into that existing system without a meaningful increase in energy. So, it’s possible that we can have an open financial system that’s censorship resistant using one fifth of the energy of the current financial system»
What Does Bitcoin’s Energy Consumption Mean For The Lightning Network?
This is a former member of the House of Representatives. He was well aware of what he was doing. Van Valkenburgh sets the stage before getting down to business with the testimony. He goes for the throat and deconstructs the establishment’s argument regarding Bitcoin’s energy use. He changed the narrative by focusing on the traditional banking sector’s well-documented inefficiencies.
So, the Lightning Network and its miracles are documented in the records of the United States House of Representatives. Even while Bitcoin’s goal isn’t to completely replace the “existing financial system,” its track record shows that it is more energy-efficient, as well as censorship-resistant. Finally, it’s worth mentioning that “five times more energy than Bitcoin” is a very generous estimate in the traditional sector’s favor.
What Is Van Valkenburgh’s Take on Regulation?
Van Valkenburgh’s prepared statement was obtained by the nice people at Coindesk. In a recent episode of their podcast “The Breakdown,” they discuss a completely different aspect of it:
«There are a couple of key shifts in perception he tries to make, first, around the idea that crypto isn’t regulated, that’s wrong. It’s regulated all over the place at the state and federal level. It’s just fragmented. Second, crypto is for crime: wrong again, in 2020, only 0.34% of all cryptocurrency transaction volume involved a criminal sender or recipient and remember, those numbers came from Chainalysis, an organization that a huge number of government agencies spend multiple millions of dollars with every year.»
This ties up nicely with the above discussed, and with this direct Van Valkenburgh’s quote:
«For every transaction we want blocked, there’s a transaction that we should celebrate for being unstoppable. Yes, there are criminals making payments on the Bitcoin network because banks won’t bank them. There are also pro-democracy activists and Belarus and anti-police violence protesters in Nigeria, taking donations on the Bitcoin network because local banks won’t bank them. For every decentralized app that’s trying to scam investors. There’s another that’s testing out ways to disperse universal basic income, will remove the corporate control over social networking, or eliminate the hacking risk inherent in centralized identity solutions.»
To say the least, this man walked into the guts of the beast and told it like it was. Bitcoin’s movement will be eternally thankful.