Ask HN: Why is the crypto booming again?
I have no experience in crypto investing, so I don't know how significant this is, but there has been talk of $60,000 in Bitcoin in various major media outlets recently. It seems like the crypto market has a habit of coming in and out of the limelight like this, so why is this boom coming back? Is it simply due to something like ETF approval? If there's a technical reason, let me know.
66 comments
I'd say the biggest reasons recently are:
1) The approval of various ETFs (so demand is heightened). It's much easier to invest in it than in was in the past.
2) Traders expecting the supply to tighten (see bitcoin halving which is due very soon) and the demand there also heightening due to supply constraint expectation.
3) A lot of the uncertainty in terms of exchanges is gone. Coinbase looks like it can stand up to scrutiny and this furthermore boosts demand.
When you have huge demand vs. constrained supply, bubbles form. Of course, are all of the factors I mentioned enough to keep the bubble going for a very long time? Well, that I can't answer. No one knows how long this will last. I can tell you though that this to me looks like it is the next Tulip bubble. I see almost no reason to use bitcoin as a store of wealth. As a decentralized currency it has tremendous value, but treating it as gold I have reservations on since a lot of corrupt gangs and regimes are currently using it as a method of payment and laundering (including North Korea), as well as it being a huge drain on the world's energy supply due to mining energy needs...I don't really see what value it brings to the world at all, so treating it as 'virtual gold' (the way the world has been treating it) makes 0 sense to me, but in general, the world in the short-term sometimes makes very little sense. Over the long term, things tend to clear up. Hopefully that helps.
1) The approval of various ETFs (so demand is heightened). It's much easier to invest in it than in was in the past.
2) Traders expecting the supply to tighten (see bitcoin halving which is due very soon) and the demand there also heightening due to supply constraint expectation.
3) A lot of the uncertainty in terms of exchanges is gone. Coinbase looks like it can stand up to scrutiny and this furthermore boosts demand.
When you have huge demand vs. constrained supply, bubbles form. Of course, are all of the factors I mentioned enough to keep the bubble going for a very long time? Well, that I can't answer. No one knows how long this will last. I can tell you though that this to me looks like it is the next Tulip bubble. I see almost no reason to use bitcoin as a store of wealth. As a decentralized currency it has tremendous value, but treating it as gold I have reservations on since a lot of corrupt gangs and regimes are currently using it as a method of payment and laundering (including North Korea), as well as it being a huge drain on the world's energy supply due to mining energy needs...I don't really see what value it brings to the world at all, so treating it as 'virtual gold' (the way the world has been treating it) makes 0 sense to me, but in general, the world in the short-term sometimes makes very little sense. Over the long term, things tend to clear up. Hopefully that helps.
In fact, it seems that places like North Korea, where there are economic restrictions, are using crypto markets as a way of funding. As you said, they say that it will replace digital gold, or the dollar, but that sounds a bit tasteless to me.
On the other hand, when I keep seeing news about El Salvador getting out of a national financial crisis with bitcoin, or Sam Altman issuing a worldcoin, or what Optimism did with artificial intelligence, I wonder if it's really worthless.
Some say that various tokens will be in the spotlight at Ndivia's upcoming event, but what I'm most interested in is whether this crypto market really helps with AI distributed processing. In fact, when creating an LLM, the biggest concern is how to handle quantised data.
On the other hand, when I keep seeing news about El Salvador getting out of a national financial crisis with bitcoin, or Sam Altman issuing a worldcoin, or what Optimism did with artificial intelligence, I wonder if it's really worthless.
Some say that various tokens will be in the spotlight at Ndivia's upcoming event, but what I'm most interested in is whether this crypto market really helps with AI distributed processing. In fact, when creating an LLM, the biggest concern is how to handle quantised data.
> I keep seeing news about El Salvador getting out of a national financial crisis with bitcoin
First time I see this. Could you share some links?
First time I see this. Could you share some links?
The source cited by the article (https://bitcointreasuries.net/entities/48) is not a government website.
While I believe it's ok for my government to invest public funds in assets with different risk profiles. I would like to see an official website and an audited financial report.
This is not a far-fetched requirement for El Salvador, where a corporation with just $2000 in equity has to submit a yearly audited balance sheet for public record. Or even small town credit unions with assets a fraction of the bitcoin funds have to publish full reports online.
While I believe it's ok for my government to invest public funds in assets with different risk profiles. I would like to see an official website and an audited financial report.
This is not a far-fetched requirement for El Salvador, where a corporation with just $2000 in equity has to submit a yearly audited balance sheet for public record. Or even small town credit unions with assets a fraction of the bitcoin funds have to publish full reports online.
> El Salvador’s Bitcoin Stack Now in Profit by Over $50M
That's less than 8 dollars per capita. Hardly enough to solve a financial crisis.
That's less than 8 dollars per capita. Hardly enough to solve a financial crisis.
El Salvador is not currently on a widespread financial crisis... I mean by Latin American Standards of course. But some things are of concern.
First the country's access to international financing is still limited.
Right now International bondholders are being paid, but two major local debts have been renegotiated.
Last year the national banking association "voluntarily renegotiated" its short term with the government from 1 to 7 years. For context, the banks liquidity requirement has been lowered since 2020 and banks can buy more government issued bonds.
Also last year the ruling party changed the Retirement Fund law. And there have been changes to the individual and collective retirement savings accounts.
One of the changes on the collective accounts was that the old financial instruments that were interest paying were changed for new ones that include a four year 0% interest rate paid back to the account owners.
Information regarding this has been limited to a couple of paragraphs by foreign credit risk rating agencies and a tweet by the Retirement Savings management companies.
There is no publicly available prospectus for that new government debt, and the Retirement Fund statistics and reports haven't been updated for months.
Like if you go to check for a recent report on the regulatory government agency you get literally 404 errors.
First the country's access to international financing is still limited.
Right now International bondholders are being paid, but two major local debts have been renegotiated.
Last year the national banking association "voluntarily renegotiated" its short term with the government from 1 to 7 years. For context, the banks liquidity requirement has been lowered since 2020 and banks can buy more government issued bonds.
Also last year the ruling party changed the Retirement Fund law. And there have been changes to the individual and collective retirement savings accounts.
One of the changes on the collective accounts was that the old financial instruments that were interest paying were changed for new ones that include a four year 0% interest rate paid back to the account owners.
Information regarding this has been limited to a couple of paragraphs by foreign credit risk rating agencies and a tweet by the Retirement Savings management companies.
There is no publicly available prospectus for that new government debt, and the Retirement Fund statistics and reports haven't been updated for months.
Like if you go to check for a recent report on the regulatory government agency you get literally 404 errors.
Adding some detail to your points 1 and 2, the ETFs are currently buying up over 12,000 coins per day and growing. The miners are producing 900 coins per day which will fall to 450 coins per day in 40 days due to the halving.
Demand is outpacing supply by 12 to 1 at the current pace and all signs point to further tightening as demand continues to grow and supply remains programmatically fixed and soon to fall by half.
The world has never before experienced an asset with perfectly inelastic supply and exponentially growing demand.
It is the perfect storm.
Demand is outpacing supply by 12 to 1 at the current pace and all signs point to further tightening as demand continues to grow and supply remains programmatically fixed and soon to fall by half.
The world has never before experienced an asset with perfectly inelastic supply and exponentially growing demand.
It is the perfect storm.
> The world has never before experienced an asset with perfectly inelastic supply and exponentially growing demand.
Fully agree, and a point that most folks who shout "no intrinsic value" on the rooftops, completely fail to understand.
Furthermore, no economic theories exists to this day (that I know of) that can get a handle on this kind of asset class and predict its future behavior and impact on society.
Fully agree, and a point that most folks who shout "no intrinsic value" on the rooftops, completely fail to understand.
Furthermore, no economic theories exists to this day (that I know of) that can get a handle on this kind of asset class and predict its future behavior and impact on society.
ETH is outperforming BTC.
ETH Merged from PoW to PoS in Sept 2022, and decimated the entire GPU mining industry, cutting obscene power usage down to just running some servers. Sure, there is a small amount of shitcoin PoW mining still, but overall it was a massive change across the board.
Combine that with the transactional burn introduced into EIP-1559, supply is going down because the network isn't having to pay as much for security.
Then, we have EigenLayer, which is taking staked ETH and restaking it to provide an additional layer of security to layer 2 networks. Now, you're just locking up even more ETH. 3m ($12b) are locked into that one alone. Vicious cycle.
ETH is about to have a network upgrade, the first since the Merge, that helps lay the groundwork for scaling.
These factors are all contributing to the growth as new money rolls back into DeFi.
https://ultrasound.money/
https://decrypt.co/119687/4-6-billion-ethereum-flames-since-...
ETH Merged from PoW to PoS in Sept 2022, and decimated the entire GPU mining industry, cutting obscene power usage down to just running some servers. Sure, there is a small amount of shitcoin PoW mining still, but overall it was a massive change across the board.
Combine that with the transactional burn introduced into EIP-1559, supply is going down because the network isn't having to pay as much for security.
Then, we have EigenLayer, which is taking staked ETH and restaking it to provide an additional layer of security to layer 2 networks. Now, you're just locking up even more ETH. 3m ($12b) are locked into that one alone. Vicious cycle.
ETH is about to have a network upgrade, the first since the Merge, that helps lay the groundwork for scaling.
These factors are all contributing to the growth as new money rolls back into DeFi.
https://ultrasound.money/
https://decrypt.co/119687/4-6-billion-ethereum-flames-since-...
> but treating it as gold I have reservations on since a lot of corrupt gangs and regimes are currently using it as a method of payment and laundering (including North Korea), as well as it being a huge drain on the world's energy supply due to mining energy needs.
You do realize that being a great store of value is orthogonal to criminals using it or its energy consumption, right? Criminals also use USD bills, far more than they use bitcoin. Are you going to claim that USD is not a great store of value for poor countries then?
You do realize that being a great store of value is orthogonal to criminals using it or its energy consumption, right? Criminals also use USD bills, far more than they use bitcoin. Are you going to claim that USD is not a great store of value for poor countries then?
It always booms because of the Bitcoin halving. People buy Bitcoin because it's going to be rarer and less mineable. Prices go up.
Others buy because the prices are going up. Some genius draws lines on a graph that tells them prices are going to go up even more, and they buy more. Because the Bitcoin halving tends to be over a 4 year cycle, it's very convenient for the line drawers to predict patterns, and it becomes a self fulfilling prophecy.
Others buy because the prices are going up. Some genius draws lines on a graph that tells them prices are going to go up even more, and they buy more. Because the Bitcoin halving tends to be over a 4 year cycle, it's very convenient for the line drawers to predict patterns, and it becomes a self fulfilling prophecy.
That's certainly part of it, but the introduction of Bitcoin ETFs has played a huge role in this run as well.
> On March 5, when Bitcoin reached a new all-time high, the BlackRock ETF (IBIT) saw a record inflow of $788.3 million in a single day. This meant that BlackRock had to buy over 11,000 Bitcoins, which likely brought Bitcoin to its new high.
https://finance.yahoo.com/news/blackrocks-bitcoin-etf-breaks...
> On March 5, when Bitcoin reached a new all-time high, the BlackRock ETF (IBIT) saw a record inflow of $788.3 million in a single day. This meant that BlackRock had to buy over 11,000 Bitcoins, which likely brought Bitcoin to its new high.
https://finance.yahoo.com/news/blackrocks-bitcoin-etf-breaks...
And then you add reputable entities like Blackrock or Fidelity offering Bitcoin ETFs and you further fuel the narrative of it being a great asset class.
Bitcoin ETF.
4 year halvening cycle.
US Feds expected to print dollars this year.
> Feds expected to print dollars this year
This is the answer. There is a spread of expectations around what the Fed will do. I’ve been hawkish, figuring since last year that rates will stay higher, for longer, than the median expectation. Silicon Valley has been dovish. (In my opinion, aspirationally.)
Crypto, for obvious reasons, appeals to those predisposed towards dovishness. (It sounds contradictory. But if you believe the Fed is fucked you’ll always predict imminently-lower rates.)
This is the answer. There is a spread of expectations around what the Fed will do. I’ve been hawkish, figuring since last year that rates will stay higher, for longer, than the median expectation. Silicon Valley has been dovish. (In my opinion, aspirationally.)
Crypto, for obvious reasons, appeals to those predisposed towards dovishness. (It sounds contradictory. But if you believe the Fed is fucked you’ll always predict imminently-lower rates.)
I remember back in 2019, when a former hedgefund manager (friend's dad) asked in disbelief: "So there will NEVER be a supply increase, beyond 21 million BTC?!"
Me: "correct"
Tiger Cub: [begins converting a large single-digit percentage of his assets from Dollarydoos to BTC].
----
Early 2023, I'm asked "so this ChatGPT thing, who else besides NVDA is making all the hardware?"
Me: "awkshually, NVDA nor Apple nor AMD actually make their microchips — it's TSMC, using ASML machines. You should look at MSFT's recent $1,000,000,000 investment into OpenAI, the maker of ChatGPT."
[a few days later, MSFT announces additional $10B over a decade investment]
----
His family chartitable foundation gave away so much money this past year [for tax reasons == profits].
----
My take on bitcoin, having been a fungible user since 2012: it's not that BTC protocols are "so great" (they're not); rather, it's that fiat currency is so terrible... is why I HODL.
Me: "correct"
Tiger Cub: [begins converting a large single-digit percentage of his assets from Dollarydoos to BTC].
----
Early 2023, I'm asked "so this ChatGPT thing, who else besides NVDA is making all the hardware?"
Me: "awkshually, NVDA nor Apple nor AMD actually make their microchips — it's TSMC, using ASML machines. You should look at MSFT's recent $1,000,000,000 investment into OpenAI, the maker of ChatGPT."
[a few days later, MSFT announces additional $10B over a decade investment]
----
His family chartitable foundation gave away so much money this past year [for tax reasons == profits].
----
My take on bitcoin, having been a fungible user since 2012: it's not that BTC protocols are "so great" (they're not); rather, it's that fiat currency is so terrible... is why I HODL.
The same reason stanley cups got super popular for a bit. Herd mentality and lack of regulation.
This is kind of the main use case for crypto. Fear and Greed
This is kind of the main use case for crypto. Fear and Greed
Oddly enough (as someone who feels lukewarm about crypto) isn’t this a really strong case for it sticking around long-term?
Like, “crypto will go away as soon as humanity stops feeling fear or being greedy”?
TBH, if anyone really wants to take the air out of crypto, they need to make an easily accessible, divisible, provable deflationary asset, that doesn’t require a lot of work to find or store (so not real estate, gold, guns, rare LEGO sets, etc.)
Like, “crypto will go away as soon as humanity stops feeling fear or being greedy”?
TBH, if anyone really wants to take the air out of crypto, they need to make an easily accessible, divisible, provable deflationary asset, that doesn’t require a lot of work to find or store (so not real estate, gold, guns, rare LEGO sets, etc.)
> Oddly enough (as someone who feels lukewarm about crypto) isn’t this a really strong case for it sticking around long-term?
No.
Fear and greed have motivated human investors since the dawn of investing, but saying that because this motivation is and likely ever will be omnipresent means that every individual thing this fear and greed have acted on will also be omnipresent is, off (Can I interest you in some Dutch Tunips, only 10k each?)
No.
Fear and greed have motivated human investors since the dawn of investing, but saying that because this motivation is and likely ever will be omnipresent means that every individual thing this fear and greed have acted on will also be omnipresent is, off (Can I interest you in some Dutch Tunips, only 10k each?)
Did the Dutch Tulip craze also go through a graph like bitcoin? Where it dropped as everyone realized the craze and then went back to its highs? Bitcoin behaves more like a currency and less like tulips.
I think the Fed not providing an easy API for a non-dollar token backed by gold is the real thing that keeps crypto around.
I think the Fed not providing an easy API for a non-dollar token backed by gold is the real thing that keeps crypto around.
SPY is far less volatile than BTC and pays dividends.
GLD is an ETF that tracks gold.
BTC is for gambling.
GLD is an ETF that tracks gold.
BTC is for gambling.
Are you seriously still comparing crypto to tulips (sic)?
https://www.smithsonianmag.com/history/there-never-was-real-...
https://www.smithsonianmag.com/history/there-never-was-real-...
What could regulation have done about stanley cups?
It's regarded as an inflation hedge but it seems more accurate to describe it as a measure of liquidity and liquidity expectations in capital markets now. Like a "Risk-on" gauge.
Dedollarization? A fiat currency is only worth sonething if people are willing to accept it for actual stuff. Maybe it is different over there, but looking around an average EU home or business, I do not see much stuff 'made in USA'. And with a credible threat of CBDC's on the horizon, diversifying even a small % of your portfolio in some gold or bitcoin might be an acceptable hedge.
It was mostly due to the market being very low the last year and beginning of the year :
- Interest rates rise cut cash flow to many startups - NFT bubble burst - And mostly: the FTX drama, which froze even more investments in the market
Now it's starting to get back to "normal" (actually a bit more than normal with the Bitcoin spot ETF being approved)
- Interest rates rise cut cash flow to many startups - NFT bubble burst - And mostly: the FTX drama, which froze even more investments in the market
Now it's starting to get back to "normal" (actually a bit more than normal with the Bitcoin spot ETF being approved)
Try asking in a forum that doesn't hate crypto with the fury of 1000 suns, you may get a better answer.
I've always viewed this site as pro-crypto but with a realistic view of the pros and cons.
I don't think HN has a unified view of crypto. Some are as smfz says. Some are pro-crypto, almost to the point of being shills. Some are more thoughtful, as you say.
So if you want to view HN as hating crypto, you can find posts that confirm that. If you want to see it as heavily pro-crypto, you can also find confirmation.
So if you want to view HN as hating crypto, you can find posts that confirm that. If you want to see it as heavily pro-crypto, you can also find confirmation.
And no amount of discussion changes anyone's mind.
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HN is a website full of people who know what crypto is, and therefore know how insanely overvalued it is.
Crypto is like the startup that perpetually just burns cash, but keeps on luring in investors with its shiny tech, huge promises, and ever expanding user base. But people in the know are aware that that tech isn't especially useful.
That being said: I am riding this wave again, as I have ridden two of the past three and might as well harvest while the sun is shining.
Crypto is like the startup that perpetually just burns cash, but keeps on luring in investors with its shiny tech, huge promises, and ever expanding user base. But people in the know are aware that that tech isn't especially useful.
That being said: I am riding this wave again, as I have ridden two of the past three and might as well harvest while the sun is shining.
The crypto critics told you it was going to zero remember?
Where are they now? Dead silent after Ripple won the SEC lawsuit, the ETFs being approved and now BTC reaching $70K
This time without interest rate cuts, FTX, etc. So I say again:
Like it or not, crypto is here to stay.
Where are they now? Dead silent after Ripple won the SEC lawsuit, the ETFs being approved and now BTC reaching $70K
This time without interest rate cuts, FTX, etc. So I say again:
Like it or not, crypto is here to stay.
"crypto" is not a very useful term. There are multiple classes within it, some good some bad.
Bitcoin is one and definitely going to stay around as a store of value (digital gold).
There are legit projects like ETH, USDC or Uniswap which have earned credibility in one way or the other (being open source, regulators allowing them to exist etc). Most of the alpha is going to be in this bucket, as it is still maturing.
And then there is a cesspool of scammers (SBF) and shitcoins. Stay away from those.
Bitcoin is one and definitely going to stay around as a store of value (digital gold).
There are legit projects like ETH, USDC or Uniswap which have earned credibility in one way or the other (being open source, regulators allowing them to exist etc). Most of the alpha is going to be in this bucket, as it is still maturing.
And then there is a cesspool of scammers (SBF) and shitcoins. Stay away from those.
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I got recently granted airdrops for few cryptos due to past contributions to some open source projects (no idea which). It reminded me why cryptocoins won't ever take off.
1. The time to transfer from coin to coin took ages
2. To finish the transfer I would've paid fee (gas) on the target wallet (eth), and the price is ridiculous (around $20)
3. Presumably I would've had to do this again if I wanted to transfer to exchange
4. The UX in general is still bad and you have to become cryptocoin expert to actually do basic things
For your particular case, you're referring to some of the slower blockchians. There are much faster and essentially free blockchains (like Base or Solana) which solve 1-3 on your list. UX still an issue.
They do not really solve the issue because I still need to at some point transfer/convert to the "big guys coin" to actually get the funds to a exchange.
Ethereum and Bitcoin are really the only coins that suffer from congestion from time to time leading to high transaction costs. This is more apparent on Eth where contract interactions can lead to those high +$20 transaction costs, thats when it might be worth it to wait for when the congestion has cleared.
If you can avoid ethereum's main layer altogether it becomes much cheaper transact, most exchanges support the various l2 layers that have been popping up recently.
I do agree that it takes way too much time and effort for anyone not familiar to the crypto scene to figure out all the different chains, their compatibility, bridges, swaps etc. to make cost efficient transactions.
If you can avoid ethereum's main layer altogether it becomes much cheaper transact, most exchanges support the various l2 layers that have been popping up recently.
I do agree that it takes way too much time and effort for anyone not familiar to the crypto scene to figure out all the different chains, their compatibility, bridges, swaps etc. to make cost efficient transactions.
You can withdraw funds out of Base using Coinbase. Takes a few seconds, it is a legit entity approved by the US govt with all the KYC/AML regulations, and is going to cost very less in a few weeks after the Dencun upgrade.
Japan regulates so you can only use few exhanges and withdraw select of cryptocoins
Are gold and crypto correlated? Both seem to be rising on rate cut prospects but not sure how proven the theory is.
No, they aren't. Bitcoin has outperformed gold.
My biased guess: both have inherently little actual value. Some crypto has transactional values, and gold has minor value in production, but those aren't valued in gold speculation prices. They mostly ride on speculation and the fear of a serious economic issue (despite not being a panacea to those situations).
You can say that stocks and bonds don't have value, but the value of publicly traded companies is much more tangible. I can look and see that Apple is generating a profit and at least paying a dividend, and US and municipal bonds are backed by notable entities in our every day lives.
If you think those have no value and we're doomed as a society in the near future, you should be putting your money into food, water, and ammunition instead of gold and crypto.
You can say that stocks and bonds don't have value, but the value of publicly traded companies is much more tangible. I can look and see that Apple is generating a profit and at least paying a dividend, and US and municipal bonds are backed by notable entities in our every day lives.
If you think those have no value and we're doomed as a society in the near future, you should be putting your money into food, water, and ammunition instead of gold and crypto.
> both have inherently little actual value
value is subjective, and most people value gold or bitcoin for their scarcity (an objective truth)
value is subjective, and most people value gold or bitcoin for their scarcity (an objective truth)
They have different fundamental values.
Gold is scarce because it is hard to find, and available in very low concentrations (meaning, you have to process a lot of rock to get to it). There is plenty of it on the planet. It cannot be lost forever, unless we send it off the planet.
"The WGC estimates that there are 54,000 tonnes of “below-ground gold reserves” waiting to be mined. These below-ground reserves account for less than 30 percent of what has already been mined."
Bitcoin will only have 21m total, is easy to find and available in as much quantity as you can afford, which has the value of driving the price upwards. If you lose your private key, it is gone forever, making it even more scarce. Millions have been lost already.
Gold is scarce because it is hard to find, and available in very low concentrations (meaning, you have to process a lot of rock to get to it). There is plenty of it on the planet. It cannot be lost forever, unless we send it off the planet.
"The WGC estimates that there are 54,000 tonnes of “below-ground gold reserves” waiting to be mined. These below-ground reserves account for less than 30 percent of what has already been mined."
Bitcoin will only have 21m total, is easy to find and available in as much quantity as you can afford, which has the value of driving the price upwards. If you lose your private key, it is gone forever, making it even more scarce. Millions have been lost already.
a good case of pump and at some point a dump. The prices are pumped by insiders using pretty heavy leverage to make huge directional bets (just insane from a risk/reward perspective but hey, we're dealing with the most degenerate gamblers here) on the theory that a bunch of "muppets" (Goldman Sachs terminology here) are going to long term bring their savings through ETFs and provide much needed exit liquidity. Fascinating how humans are never changing or learning
Financial sanctions against Russia force Russians into crypto-currency as an alternative. This drives crypto prices up.
Generative AI shitting all over the internet creates a need for "verified" people, information etc.
The Blockchain promises this verification, decentralized.
The Blockchain promises this verification, decentralized.
Can you explain how blockchain is saving us from AI shitting over the internet? I can think of ways how it might have, but I think that horse has long left the stable and while the crypto tools and infrastructure technically predate the LLM stuff they haven't been put to work in any meaningful way.
I think the current boom in bitcoin is rooted in plain greed, as it has been before. And outside of tokens no significant stuff is happening in cryptoland AFAIK.
I think the current boom in bitcoin is rooted in plain greed, as it has been before. And outside of tokens no significant stuff is happening in cryptoland AFAIK.
Satoshi and others spoke about this on the mailing list but one of the original ideas or use cases behind Adam Back's hashcash and other Proof-of-work methods involved or was centered around research to stop the proliferation of automated spam.
> Can you explain how blockchain is saving us from AI shitting over the internet?
One of the original use cases was the defense against Sybil Attacks: https://en.wikipedia.org/wiki/Sybil_attack To make it prohibitively expensive to attack the network.
Also: https://en.wikipedia.org/wiki/Electoral_fraud#Ballot_stuffin... https://en.wikipedia.org/wiki/Sybil_attack#Identity_validati...
> Can you explain how blockchain is saving us from AI shitting over the internet?
One of the original use cases was the defense against Sybil Attacks: https://en.wikipedia.org/wiki/Sybil_attack To make it prohibitively expensive to attack the network.
Also: https://en.wikipedia.org/wiki/Electoral_fraud#Ballot_stuffin... https://en.wikipedia.org/wiki/Sybil_attack#Identity_validati...
Easy example: blockchain can be used to ensure that camera manufacturers implement a way to ensure that a photograph is "real" and not a deepfake/generated AI one. I think some variant of this will happen naturally in the next few years as a way to verify official journalistic images – although I'm not sure it'll be marketed as blockchain.
This of course has nothing to do with random new cryptocoins, that are indeed mostly scams.
This of course has nothing to do with random new cryptocoins, that are indeed mostly scams.
Camera manufactures can come up with a cryptographic watermark for the pictures their camera takes or not, but blockchain really adds nothing to equation.
Would photos signed in that way need to be immutable or could they be changed? (White balance, contrast, saturation, etc.)
If they need to be immutable, isn’t it easier to use ordinary asymmetric cryptography? Given that the Intel Management Engine is still a black box to us, perhaps the private key could be obfuscated well enough in the camera that it cannot be recovered by adversaries.
If the concern is that the private key could be reverse engineered by an adversary, then how does a blockchain-based method circumvent such an attack?
If they need to be immutable, isn’t it easier to use ordinary asymmetric cryptography? Given that the Intel Management Engine is still a black box to us, perhaps the private key could be obfuscated well enough in the camera that it cannot be recovered by adversaries.
If the concern is that the private key could be reverse engineered by an adversary, then how does a blockchain-based method circumvent such an attack?
I am imagining something like this:
- Camera manufacturers all agree to implement blockchain record on photos produced with their devices. This includes smartphones (iPhones, etc.) as well. They publish this to a public blockchain.
- Image editing tools like Photoshop develop a way to maintain the blockchain record of edits made and publish to the same public record. This is not substantially different from the way document verification works already.
- Social media sites use the same record to flag or otherwise mark images that are not verified.
This seems complex, I know, but if the alternative is that anyone, anywhere can create fake images at the push of a button, a verification solution like the one I've proposed will be necessary, whether it utilizes blockchain or not. It may turn out that we just end up trusting corporations to handle this, without requiring any sort of public records like blockchains.
Security issues at the camera level might be a problem, but realistically the vast majority of camera devices (including phones) are made by a handful of companies and I don't foresee this being that much of an issue.
- Camera manufacturers all agree to implement blockchain record on photos produced with their devices. This includes smartphones (iPhones, etc.) as well. They publish this to a public blockchain.
- Image editing tools like Photoshop develop a way to maintain the blockchain record of edits made and publish to the same public record. This is not substantially different from the way document verification works already.
- Social media sites use the same record to flag or otherwise mark images that are not verified.
This seems complex, I know, but if the alternative is that anyone, anywhere can create fake images at the push of a button, a verification solution like the one I've proposed will be necessary, whether it utilizes blockchain or not. It may turn out that we just end up trusting corporations to handle this, without requiring any sort of public records like blockchains.
Security issues at the camera level might be a problem, but realistically the vast majority of camera devices (including phones) are made by a handful of companies and I don't foresee this being that much of an issue.
Much more likely that if camera manufacturers decided to do this, they would each offer a their own proprietary and incompatible image verification scheme, forcing implementations to integrate with many different services. Eventually recognizing the problem, they would form a Trusted Imagery Working Group™ to develop a patent-encumbered chip that would need to be licensed for use (available only to invited member organizations), and present in all devices that will create or validate image signatures. Keys from that chip will eventually be extracted, rendering it useless, but industry will be widely reliant on it, with too much inertia to change.
Very true and likely, but it doesn't change the fact that blockchain would be a potential solution to this problem.
A blockchain can't verify official journalistic images. Someone has to do the verifying, and that person can still lie to the blockchain. It's the same situation as NFTs.
Yes, and that someone would be the collection of camera manufacturers that agree to implement a blockchain record on all photographs and then publish that to a public blockchain.
So then what's the point of the blockchain if you're relying on exclusive attestation by camera manufacturers? They could just use plain old asymmetric encryption to sign the images. Has the bonus of not needing an internet connection.
You would still need a way for image editing programs to allow for edits in a way that doesn't compromise the validation.
Yes, but while a blockchain could be useful there, the very act of editing defeats the point of the signature. Eg editing someone into or out of the photo. Validation by requiring the original unedited image to also be accessible doesn't work either since often the edits have a valid journalistic reason (eg to preserve a victim's anonymity). Allowing exceptions will just result in those exceptions dominating, just like how "anonymous sources tell us" has become a popular way to write clickbaiting hit pieces without having to actually back anything up with evidence.
Personally I really don't buy the idea that we can technologically eliminate something as vague as fake images. The solution is a less gullible public, and an acceptance that the short interval where communication was easy and forgery was comparatively difficult, was an exceptional circumstance. We're just returning back to the norm.
Personally I really don't buy the idea that we can technologically eliminate something as vague as fake images. The solution is a less gullible public, and an acceptance that the short interval where communication was easy and forgery was comparatively difficult, was an exceptional circumstance. We're just returning back to the norm.
I’m guessing they’re taking a hand wavey position that as AI spews forth it degrades provenance as you start to struggle to tell things apart.
Immutable “crypto” ledgers offer the promise of restoring confidence in provenance.
Immutable “crypto” ledgers offer the promise of restoring confidence in provenance.
I understand that blockchain and smart contracts have a role to play. But it's not connected to the token economy of crypto markets like Bitcoin, is it? Twitter, Reddit, etc. are also seeing things like meme-coin and AI distributed processing. Personally, I don't know if it really makes sense (I've been in the AI industry for 3 years now, but I've done enough research with the infrastructure and allocation provided by GCP or Azure, etc.).