The Non-Innovation of Cryptocurrency(stephendiehl.com)
stephendiehl.com
The Non-Innovation of Cryptocurrency
https://www.stephendiehl.com/blog/non-innovation.html
180 comments
This article is borderline fear mongering against cryptocurrency.
His website has several such articles about the crypto space,they sometimes end up on HN. He's quite negative towards crypto.
I wouldn't name it quite, from all contents I have read from him, he is fanatically negative towards crypto.
It clouds his vision and his arguments unfortunately, it happens on both sides of the debate of course. But it would imo be preferable to see more reasonable debate happening.
For sure. Cryptocurrency community has so many fanatics it's not healthy either.
The thing is, some clown shouting diamond hands, HODL, to the moon, won't make it to #10 on HN I guess.
The thing is, some clown shouting diamond hands, HODL, to the moon, won't make it to #10 on HN I guess.
"There are indeed a lot of fools in this world, but to presume an infinite chain of them as the core of an investment thesis is beyond absurd."
It's worked for gold and diamonds for generations. Not to mention pretty much every artwork or other concoction human beings create and then collect.
There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags.
Humans collect and value all sorts of stuff for no good reason. Cryptocurrency is no different.
It becomes even less of an issue when you realise that we all create 'currency' all the time. It's just an embodiment of a promise to do something in the future. Far more of a unit of account than a thing.
The trick is getting other people to accept your currency. Which is a lot easier when you can impose coercive charges on people denominated in that currency - whether that is a tax, or a tithe.
It's worked for gold and diamonds for generations. Not to mention pretty much every artwork or other concoction human beings create and then collect.
There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags.
Humans collect and value all sorts of stuff for no good reason. Cryptocurrency is no different.
It becomes even less of an issue when you realise that we all create 'currency' all the time. It's just an embodiment of a promise to do something in the future. Far more of a unit of account than a thing.
The trick is getting other people to accept your currency. Which is a lot easier when you can impose coercive charges on people denominated in that currency - whether that is a tax, or a tithe.
> It's worked for gold and diamonds for generations.
Gold has literally millennia of tradition. Diamonds have minimal resale value and are not bought as investments.
> Not to mention pretty much every artwork or other concoction human beings create and then collect.
> There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags.
Right, and IMO that kind of collectible is a much better model for thinking about bitcoin et al. than commodities or currencies. Do some people flip them for a profit? Yes. Are they a good investment strategy? Generally no. Look at e.g. stamps, where the whole bottom has just fallen out of the market as the generation that cares about them disappears.
Gold has literally millennia of tradition. Diamonds have minimal resale value and are not bought as investments.
> Not to mention pretty much every artwork or other concoction human beings create and then collect.
> There's not a lot of cash flow from first edition Marvel comics, but there are an awful lot of them stored in plastic bags.
Right, and IMO that kind of collectible is a much better model for thinking about bitcoin et al. than commodities or currencies. Do some people flip them for a profit? Yes. Are they a good investment strategy? Generally no. Look at e.g. stamps, where the whole bottom has just fallen out of the market as the generation that cares about them disappears.
> Diamonds have minimal resale value and are not bought as investments.
Could I please have a quote for some of your minimal-price used diamonds?
Could I please have a quote for some of your minimal-price used diamonds?
I don't own any diamonds. If you're offering to buy used diamonds at something close to the original sale price then I'll remember to send friends your way.
“A diamond engagement ring or other diamond jewelry will have a resale value of between 20 and 60% of the amount it cost when it was new“
- https://www.diamonds.pro/guides/diamond-resale-value/
Lots of similar sources if you google “diamond resale value”. Read up on De Beers and their entire scammy (blood) diamond market manipulation.
- https://www.diamonds.pro/guides/diamond-resale-value/
Lots of similar sources if you google “diamond resale value”. Read up on De Beers and their entire scammy (blood) diamond market manipulation.
Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage.
Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that.
Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?
Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that.
Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?
> Precious metals and gemstones are also physical objects with strong industrial demand, that people hope will survive a civilisatory collapse; blockchain tokens can't even survive a prolonged power outage.
Industrial demand for natural diamonds is approximately nil, synthetic ones are cheaper and have better properties. Industrial demand for gold is larger, but it wouldn’t remain that large in case of societal collapse.
> Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that.
The NFT mania (and CryptoKitties before that) have shown that at least some people are impressed by it and are willing to pay for it. I don’t get it either, but I can’t deny it’s happening.
> Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?
Greece could not devalue the Euro unilaterally. Investors in Argentinian bonds had a different experience.
Industrial demand for natural diamonds is approximately nil, synthetic ones are cheaper and have better properties. Industrial demand for gold is larger, but it wouldn’t remain that large in case of societal collapse.
> Artworks are desirable because they're physical objects with a limited supply that we can use to impress our peers. Memecoin #21983 can't do that.
The NFT mania (and CryptoKitties before that) have shown that at least some people are impressed by it and are willing to pay for it. I don’t get it either, but I can’t deny it’s happening.
> Currencies are also backed by the physical assets of the country/countries issuing them, guaranteeing that you will find a buyer and will get value for it. Worst case, by making the country in question pull a Greece and sell you its lands. Who will give similar guarantees for memecoin #19381?
Greece could not devalue the Euro unilaterally. Investors in Argentinian bonds had a different experience.
There is a lot of that. But my own feeling is that this is mainly a novel form of gambling. Sure there are stories of people risking their entire financial security on these things but I am willing to be the vast majority of people invested are playing with money they can afford to lose.
Vegas is a ridiculous "unsustainable" city built where no city should be and so are cryptocurrencies and all that's built on that.
Vegas is a ridiculous "unsustainable" city built where no city should be and so are cryptocurrencies and all that's built on that.
The real trick is getting people to buy a virtual asset with real money.
Intuitively it seems strange to pay for something virtual with real money, and in fact it is, but apparently many people don't feel the same way.
Intuitively it seems strange to pay for something virtual with real money, and in fact it is, but apparently many people don't feel the same way.
> Ending this scourge on civilization is one of most important political problems facing the international community these days
What is it about this topic that always brings out the most extreme voices on either side? It seems like both proponents and detractors wildly overestimate the technology’s importance.
This particular blog post drops the above quoted bomb right at the start, and then goes on to argue the comparatively irrelevant question of innovation instead. I’d love to read a well argued post about how exactly blockchain destroys civilization (or saves it, for that matter).
What is it about this topic that always brings out the most extreme voices on either side? It seems like both proponents and detractors wildly overestimate the technology’s importance.
This particular blog post drops the above quoted bomb right at the start, and then goes on to argue the comparatively irrelevant question of innovation instead. I’d love to read a well argued post about how exactly blockchain destroys civilization (or saves it, for that matter).
PoW undermines our attempts to fight climate change, there's tons of examples of fossil fuel power plants being used for the sole purpose of running "crypto" "currencies". That is a very direct threat to our survival as a species.
Additionally, unregulated currency in general undermines the international political system itself, by allowing rogue states and terrorist organisations to completely bypass attempts at embargoing them. Or in case of organisations like the CIA, any attempts at governmental oversight – the situation was already bad before bitcoin, it's completely hopeless now.
Additionally, unregulated currency in general undermines the international political system itself, by allowing rogue states and terrorist organisations to completely bypass attempts at embargoing them. Or in case of organisations like the CIA, any attempts at governmental oversight – the situation was already bad before bitcoin, it's completely hopeless now.
>PoW undermines our attempts to fight climate change, there's tons of examples of fossil fuel power plants being used for the sole purpose of running "crypto" "currencies".
No. There's literally one single concrete example of this happening [0] and a lot of moral busybodies wasting time with rounding errors instead of focusing on the big global climate disasters going on right now.
[0] https://www.wsj.com/articles/bitcoin-miners-are-giving-new-l...
No. There's literally one single concrete example of this happening [0] and a lot of moral busybodies wasting time with rounding errors instead of focusing on the big global climate disasters going on right now.
[0] https://www.wsj.com/articles/bitcoin-miners-are-giving-new-l...
PoW is now done more with renewable energy than most of other sectors. Bitcoin is one of the most clean markets out there.
In fact, Bitcoin is way better traceable than remittance systems used by terrorists. They smuggle cash, they use hawala, they use trade-based instruments (over and under invoicing), they use bank accounts on anonymous companies in tax havens. All these things are way more difficult to trace than Bitcoin (or 99% of all cryptocurrencies).
In fact, Bitcoin is way better traceable than remittance systems used by terrorists. They smuggle cash, they use hawala, they use trade-based instruments (over and under invoicing), they use bank accounts on anonymous companies in tax havens. All these things are way more difficult to trace than Bitcoin (or 99% of all cryptocurrencies).
> PoW is now done more with renewable energy than most of other sectors. Bitcoin is one of the most clean markets out there.
A market for scams and scam accessories. If it stopped existing, we could shut down fossil fuel plants and put all those renewables to better use.
A market for scams and scam accessories. If it stopped existing, we could shut down fossil fuel plants and put all those renewables to better use.
Supply, demand. People don't have better use for electricity than miners. If they did, they would buy it out. So your implication is false.
The fact you don't see value in cryptocurrencies doesn't equal for others it's the same.
The fact you don't see value in cryptocurrencies doesn't equal for others it's the same.
It seems to me the technology is one of the contributors/facilitators in both those cases, rather than the cause. Surely the main scourge in your first paragraph are the fossil fuel power plants? Do you think either of these problems would be resolved or even significantly mitigated if cryptocurrencies were banned?
When already decommissioned fossil power plants get reactivated to mine bitcoin, I think it's safe to say that a ban of cryptocurrencies would have a significant impact.
I’m aware of only one case where a fossil fuel power plant partnered up with crypto miners. But I’m not denying PoW’s environmental impact, just its comparative scope and scale. Do you think we should ban other technologies reliant on dirty energy, such as motor vehicles? The Internet?
Presumably you believe the benefits outweigh the drawbacks in those cases. If that’s the case, crypto (PoW, really) would then chiefly be guilty of not being sufficiently beneficial to justify its contribution to climate change?
Presumably you believe the benefits outweigh the drawbacks in those cases. If that’s the case, crypto (PoW, really) would then chiefly be guilty of not being sufficiently beneficial to justify its contribution to climate change?
Yes. At the bare minimum, "crypto" "currencies" must be forced to move to Proof of Stake and stop dragging the entire world down with its madness.
Sadly that won't solve the problem. If 99% of Bitcoin is locked up in sidechains, the free 1% will become the new Bitcoin, so each Bitcoin will be far more expensive. As long as the price of Bitcoin rises faster than the mining rewards reduce, people will keep mining it.
And if you think that people dump a coin just because all the use cases have moved onto new coins, I present for your comment the "Ethereum Classic".
And if you think that people dump a coin just because all the use cases have moved onto new coins, I present for your comment the "Ethereum Classic".
> no purpose other than to enrich the owners of the various casino fiefdoms who issue those tokens
That can be argued for coins with premines (such as all PoS coins), but PoW coins with no premine or instamine or dev tax, where all coins go to miners, offer no financial reward to the coin creators. Such coins are rather rare though. And ones that do not handicap later miners relative to early miners even rarer.
That can be argued for coins with premines (such as all PoS coins), but PoW coins with no premine or instamine or dev tax, where all coins go to miners, offer no financial reward to the coin creators. Such coins are rather rare though. And ones that do not handicap later miners relative to early miners even rarer.
> where all coins go to miners, offer no financial reward to the coin creators. Such coins are rather rare though
Seems like that’s exactly the problem.
Seems like that’s exactly the problem.
Blockchains and crypto tech does seem to provide solutions to many challenging problems: distributed ledgers, immutable and decentralized data, ownerless contracts and program execution, secure and decentralized ownership of a digital asset (eg: owning a domain name), programmable free markets, preventing the double spend problem, etc.
These may not be problems the author is interested in, but it does not mean the technology as a whole achieves nothing.
For what it’s worth: I would welcome more technology and innovations that solves the above problems without the need for casino style speculation and ecologically harmful PoW algorithms.
These may not be problems the author is interested in, but it does not mean the technology as a whole achieves nothing.
For what it’s worth: I would welcome more technology and innovations that solves the above problems without the need for casino style speculation and ecologically harmful PoW algorithms.
I think for me the disconnect is that in developed financial systems most of these points are not a big issue or not even desirable given current regulation and supervision.
Few examples: (i) immutable data can clash with privacy laws, (ii) double spend is generally not a problem in centralized systems, (iii) distributed ledgers means you don't have full control of your books and records, (iv) ownerless contracts cause problems with KYC/CFT/AML/sanctions, (v) there are still courts and government force that can compel people to do things etc. ...
In order to really use these it would need a sizeable shift on how the financial structure looks like. That might happen but a lot of what I see is just a fast run through the best errors in finance over the last hundred years. For example, I see mispriced contracts because people don't understand forwards, free options being giving away etc., stuff that to me (not a lawyer) looks like ignoring securities laws, ...
I am not totally bearish on some of these ideas and technologies, but right now I think they are used and envisioned too narrowly by trying just to replace things that are often poorly understood. Example: I think the idea of making market making directly investable is great (i.e. not just being shares of an investment bank or similar). There are probably real applications outside of crypto (index components vs ETF maybe). Similarly, for DeFi to really "make it", I think it needs to be able to do unsecured lending.
Few examples: (i) immutable data can clash with privacy laws, (ii) double spend is generally not a problem in centralized systems, (iii) distributed ledgers means you don't have full control of your books and records, (iv) ownerless contracts cause problems with KYC/CFT/AML/sanctions, (v) there are still courts and government force that can compel people to do things etc. ...
In order to really use these it would need a sizeable shift on how the financial structure looks like. That might happen but a lot of what I see is just a fast run through the best errors in finance over the last hundred years. For example, I see mispriced contracts because people don't understand forwards, free options being giving away etc., stuff that to me (not a lawyer) looks like ignoring securities laws, ...
I am not totally bearish on some of these ideas and technologies, but right now I think they are used and envisioned too narrowly by trying just to replace things that are often poorly understood. Example: I think the idea of making market making directly investable is great (i.e. not just being shares of an investment bank or similar). There are probably real applications outside of crypto (index components vs ETF maybe). Similarly, for DeFi to really "make it", I think it needs to be able to do unsecured lending.
I think your points prove the motivation lots of cryptocurrency authors have.
They don't want politicians and bankers to set the rules. They want developers to set the rules. So they build systems enabling ideas they stand behind.
Just like with open source. I guess if there were no open source, all operating systems would have backdoors, strong cryptography would be banned, we would have very strict software patents, etc. Everyone would be in a cage built by politicians & closed source devs. As we're now in the financial system.
Cryptocurrencies, in ideal situation, should serve as open source counterpart to closed source world.
They don't want politicians and bankers to set the rules. They want developers to set the rules. So they build systems enabling ideas they stand behind.
Just like with open source. I guess if there were no open source, all operating systems would have backdoors, strong cryptography would be banned, we would have very strict software patents, etc. Everyone would be in a cage built by politicians & closed source devs. As we're now in the financial system.
Cryptocurrencies, in ideal situation, should serve as open source counterpart to closed source world.
Can you name an example of a tangible use-case where a blockchain has been used to create real value, and is competitive against conventional technologies in the same space?
There has been a lot of talk about the potential of blockchain, but so far all I have seen it used for is crime and speculation. Would love to be shown I'm wrong on this.
There has been a lot of talk about the potential of blockchain, but so far all I have seen it used for is crime and speculation. Would love to be shown I'm wrong on this.
I would point to Hicetnunc as one example[1], which provides real value for many artists on the platform.
I’m sure it’s possible to build a similar platform with a central database handling transactions and Stripe payouts, but I’m not sure it would be met with the same enthusiasm (and, despite the possibility of this with past tech, no pre-blockchain digital art marketplace has come close to meeting it in sales).
Due to the decentralization of the art tokens (via the blockchain), the community has been able to grow and evolve in a way that a centralized platform could not. For example: while the site’s contract was paused to repair a bug, artists continued to trade tokens directly peer-to-peer (no platform needed), and even build new sites and platforms that enabled trading & auctioning on the same Hicetnunc-minted tokens.
[1] https://restofworld.org/2021/inside-brazils-diy-nft-art-mark...
I’m sure it’s possible to build a similar platform with a central database handling transactions and Stripe payouts, but I’m not sure it would be met with the same enthusiasm (and, despite the possibility of this with past tech, no pre-blockchain digital art marketplace has come close to meeting it in sales).
Due to the decentralization of the art tokens (via the blockchain), the community has been able to grow and evolve in a way that a centralized platform could not. For example: while the site’s contract was paused to repair a bug, artists continued to trade tokens directly peer-to-peer (no platform needed), and even build new sites and platforms that enabled trading & auctioning on the same Hicetnunc-minted tokens.
[1] https://restofworld.org/2021/inside-brazils-diy-nft-art-mark...
So I would agree that this marketplace is creating profit for artists. Whether there is real value creation happening I would consider debatable. NFT's themselves are a highly speculative asset, and I would not count on this marketplace continuing to grow and thrive a decade from now.
In other words, a lot of people probably made a very good profit operating tulip markets in Holland in the 1600's, but that doesn't mean they were creating value.
In other words, a lot of people probably made a very good profit operating tulip markets in Holland in the 1600's, but that doesn't mean they were creating value.
That’s an interesting argument. What defines “value” in your mind? The platform brings value to artists (financial freedom to create more art), value to collectors (digital ownership over a scarce conceptual artwork), and value to the art world (more digital art being created by a more diverse group of people).
Not all may agree with these values, and perhaps this platform and it’s tokens will not persist after some years, but I’m not sure that means the project does not currently provide value to those participating in it.
Because “NFTs are dead” (according to the media) we have hopefully past the moment of tulip mania. But perhaps it will really take some more months or years for this to truly “die” — during which time the artists have a viable marketplace to distribute their art and earn revenue on it, where no prior option existed for them. Or, perhaps it will not die so quickly, if enough people continue to see value in collecting and supporting digital artists in this way. Time will tell.
Not all may agree with these values, and perhaps this platform and it’s tokens will not persist after some years, but I’m not sure that means the project does not currently provide value to those participating in it.
Because “NFTs are dead” (according to the media) we have hopefully past the moment of tulip mania. But perhaps it will really take some more months or years for this to truly “die” — during which time the artists have a viable marketplace to distribute their art and earn revenue on it, where no prior option existed for them. Or, perhaps it will not die so quickly, if enough people continue to see value in collecting and supporting digital artists in this way. Time will tell.
Value is a tricky thing to define, but I would probably define value in terms of utility: you are able to create value for someone if you allow them to solve a problem or gain satisfaction, using less resources than they otherwise could.
The sticking point for me with your proposed value proposition is here:
> value to collectors (digital ownership over a scarce conceptual artwork)
My question would be: is it really digital ownership that collectors are interested in? Or is it the chance for future profit on the assumption that these NFTs may increase in value.
I suspect in most cases it is the latter, and in this case we don't have value creation, we have speculation. Essentially it's just a bet with a very significant downside risk. Speculation, especially in an atmosphere of irrational exuberance, is much more likely to result in the destruction of value than the creation of it.
The sticking point for me with your proposed value proposition is here:
> value to collectors (digital ownership over a scarce conceptual artwork)
My question would be: is it really digital ownership that collectors are interested in? Or is it the chance for future profit on the assumption that these NFTs may increase in value.
I suspect in most cases it is the latter, and in this case we don't have value creation, we have speculation. Essentially it's just a bet with a very significant downside risk. Speculation, especially in an atmosphere of irrational exuberance, is much more likely to result in the destruction of value than the creation of it.
I think you may be viewing this through the lens of high priced NFTs that are in the millions, and are mostly speculative assets for a crypto trader’s portfolio.
When I buy a digital art token worth 1 XTZ (around 2-3 USD), it is closer to skipping my morning coffee for the chance to support an artist’s latest work, perhaps from an artist that I have been following for years on Twitter or Instagram without giving them any support besides Likes and Retweets (“exposure”). I have no intention of flipping or speculating on the art — but of course if there is demand for that token I may consider trading it, as it would give me even more XTZ funds to continue supporting other artists in this way.
I have not yet re-sold any Tezos NFTs, and I have bought hundreds from many different artists and illustrators. If none of these ever sell, I won’t feel like I have lost anything, because the value I see in this is not in the speculative nature of the asset.
And to your question: yes, many collectors appreciate the digital ownership aspect, and enjoy building out carefully curated galleries and showcases of their owned tokens, much like many traditional art collectors take pride in owning and displaying their collection.
When I buy a digital art token worth 1 XTZ (around 2-3 USD), it is closer to skipping my morning coffee for the chance to support an artist’s latest work, perhaps from an artist that I have been following for years on Twitter or Instagram without giving them any support besides Likes and Retweets (“exposure”). I have no intention of flipping or speculating on the art — but of course if there is demand for that token I may consider trading it, as it would give me even more XTZ funds to continue supporting other artists in this way.
I have not yet re-sold any Tezos NFTs, and I have bought hundreds from many different artists and illustrators. If none of these ever sell, I won’t feel like I have lost anything, because the value I see in this is not in the speculative nature of the asset.
And to your question: yes, many collectors appreciate the digital ownership aspect, and enjoy building out carefully curated galleries and showcases of their owned tokens, much like many traditional art collectors take pride in owning and displaying their collection.
What value does crypto bring to you that a artist running a shopify store does not? It sounds like the NFT is entirely irrelevant in this transaction other than possibly providing a socially acceptable route that is better than a PayPal donate button.
I am an artist running a Shopify store (prints), and also have been selling via NFTs on Tezos and Ethereum for the last few months. If NFT continues to be profitable in the long term (even a fraction of what it is currently), there will be no need for me to continue using Shopify.
Consider the fees alone: I pay monthly fees for Shopify, for art printing and shipping, pens and physical materials, hosting my domain name and studio email, and so on. Not to mention the cost of my time (replying to emails, customer support, editing my store's website, etc).
All of this to enable revenue on my primarily digital art. I do enjoy making physical art prints, but I mostly work with software and code, and the art I make is better experienced digitally. Before NFTs, there was no established mechanism to earn revenue on digital art (primarily because there was no established mechanism to 'own' digital art), so I was forced to adopt physical printing and e-commerce despite it's high costs, annoyances, and generally poor return on investment.
In contrast, I can mint an art token on Hicetnunc for less than 25c USD. These fees do not go to a central platform like Shopify, but to the blockchain that helps maintain the provenance and permanence of the tokens I am distributing.
There are many other benefits of blockchain in this digital art space, I have written about it extensively[1].
[1] - https://mattdesl.substack.com/p/subscapes-part-1-preface
Consider the fees alone: I pay monthly fees for Shopify, for art printing and shipping, pens and physical materials, hosting my domain name and studio email, and so on. Not to mention the cost of my time (replying to emails, customer support, editing my store's website, etc).
All of this to enable revenue on my primarily digital art. I do enjoy making physical art prints, but I mostly work with software and code, and the art I make is better experienced digitally. Before NFTs, there was no established mechanism to earn revenue on digital art (primarily because there was no established mechanism to 'own' digital art), so I was forced to adopt physical printing and e-commerce despite it's high costs, annoyances, and generally poor return on investment.
In contrast, I can mint an art token on Hicetnunc for less than 25c USD. These fees do not go to a central platform like Shopify, but to the blockchain that helps maintain the provenance and permanence of the tokens I am distributing.
There are many other benefits of blockchain in this digital art space, I have written about it extensively[1].
[1] - https://mattdesl.substack.com/p/subscapes-part-1-preface
> and the art I make is better experienced digitally.
That's where it breaks down when buying stuff for me personally. Prints admittedly run into the issue of "walls get full", but I have not figured out a way to regularly enjoy digital art, especially since everything comes in different sizes and scales. Plenty artists I follow (you included ;)) now are on HEN, but that has kept me from getting into any of it, even though I get the limitations of prints.
There have been combinations of screen + digital art "subscription" in the past, which I never liked because of their closed nature, but maybe some amount of standardization/embedded display hints/... towards a more open variant of that will develop.
That's where it breaks down when buying stuff for me personally. Prints admittedly run into the issue of "walls get full", but I have not figured out a way to regularly enjoy digital art, especially since everything comes in different sizes and scales. Plenty artists I follow (you included ;)) now are on HEN, but that has kept me from getting into any of it, even though I get the limitations of prints.
There have been combinations of screen + digital art "subscription" in the past, which I never liked because of their closed nature, but maybe some amount of standardization/embedded display hints/... towards a more open variant of that will develop.
Sorry I meant specifically, you could just sell digital copies of your artwork on shopify, along with a little pdf from you saying "Mattdesl hereby certifies this artwork as edition N of M". What value is the NFT providing? As far as I can tell the only value is that people are willing to trade in NFTs but are less willing ot accept the shopify solution. But they're both equal measures of ownership. Once you've minted your NFT on Hicetnunc you still have to sell it, and that's likely to go via a crypto exchange in exactly the same way that your credit card transaction goes via shopify?
I answered in other threads here, e.g.
https://news.ycombinator.com/item?id=27770605
Largely this question comes back to decentralization, trust, and a novel paradigm of digital ownership that is enabled by elliptic curve cryptography and blockchain tech.
The blockchain acts as a social consensus mechanism - we can all agree that "X public key owns Y unique token" - which is not the case with a centralized database record that can be mutated, or a file that can be easily copied/edited and shared.
https://news.ycombinator.com/item?id=27770605
Largely this question comes back to decentralization, trust, and a novel paradigm of digital ownership that is enabled by elliptic curve cryptography and blockchain tech.
The blockchain acts as a social consensus mechanism - we can all agree that "X public key owns Y unique token" - which is not the case with a centralized database record that can be mutated, or a file that can be easily copied/edited and shared.
> I’m sure it’s possible to build a similar platform with a central database handling transactions and Stripe payouts, but I’m not sure it would be met with the same enthusiasm (and, despite the possibility of this with past tech, no pre-blockchain digital art marketplace has come close to meeting it in sales).
So blockchain itself is completely useless here, and all the value lies in the hype. And once the hype goes away, there's nothing underwriting the value of the system.
So blockchain itself is completely useless here, and all the value lies in the hype. And once the hype goes away, there's nothing underwriting the value of the system.
Similar but not equal.
Part of the enthusiasm around these platforms is in the idea of decentralization of art assets (which cannot be achieved with a central database). See the latter part of the post you replied to.
Part of the enthusiasm around these platforms is in the idea of decentralization of art assets (which cannot be achieved with a central database). See the latter part of the post you replied to.
How decentralized is it truly when it's all depending on the Hicetnunc brand? If you had Hicetnunc-branded certificates of authenticity, you'd have the same "decentralized" trade opportunities, and in both cases the only value these trades have derive from the branding attached to them.
The premise of this space is that the tokens hold value because of who distributed the tokens (the artist), and what they conceptually represent (the artwork), and this value can exist beyond the scope of the website or platform that originally facilitated their distribution.
For example, some artists on Ethereum are deploying their own token contracts[1], without the need for a distribution platform like Hicetnunc, SuperRare, etc. Once minted, these tokens can be traded on a secondary marketplace such as OpenSea (which may not have taken part in the initial distribution). If those secondary markets fail, the source of truth still lies in the blockchain, and the tokens can still be traded via any new marketplaces that emerge, or via smart contract queries through blockchain explorers like Etherscan, or even via one's own command-line (the web merely acts as a thin interface over these distributed endpoints).
I do agree that artists on Tezos are becoming too centralized to Hicetnunc (compared to, say, NFTs on Ethereum, which tend to be very diverse), but I believe this to be a solvable problem[2].
[1] - https://www.deafbeef.com/
[2] - https://twitter.com/mattdesl/status/1412713480893960195
For example, some artists on Ethereum are deploying their own token contracts[1], without the need for a distribution platform like Hicetnunc, SuperRare, etc. Once minted, these tokens can be traded on a secondary marketplace such as OpenSea (which may not have taken part in the initial distribution). If those secondary markets fail, the source of truth still lies in the blockchain, and the tokens can still be traded via any new marketplaces that emerge, or via smart contract queries through blockchain explorers like Etherscan, or even via one's own command-line (the web merely acts as a thin interface over these distributed endpoints).
I do agree that artists on Tezos are becoming too centralized to Hicetnunc (compared to, say, NFTs on Ethereum, which tend to be very diverse), but I believe this to be a solvable problem[2].
[1] - https://www.deafbeef.com/
[2] - https://twitter.com/mattdesl/status/1412713480893960195
> The premise of this space is that the tokens hold value because of who distributed the tokens (the artist), and what they conceptually represent (the artwork), and this value can exist beyond the scope of the website or platform that originally facilitated their distribution.
So what value does a distributed, anonymized ledger add, when the artists are the central authority who determine what is and isn't authentic? In the end, the value comes from the artist saying "I made this, not an impostor", which is the same as any physical artwork in history.
Do people just want to own art without being burdened by the ownership of physical goods? That sounds rather irrational even compared to normal art trades.
So what value does a distributed, anonymized ledger add, when the artists are the central authority who determine what is and isn't authentic? In the end, the value comes from the artist saying "I made this, not an impostor", which is the same as any physical artwork in history.
Do people just want to own art without being burdened by the ownership of physical goods? That sounds rather irrational even compared to normal art trades.
The distributed ledger adds security, longevity, ownership, and provenance: eg. a token is purchased from an artist, and it can be held and traded (ie. "owned") for as many years as the blockchain continues to survive. Unlike the ownership of a file or record in a centralized database, which are mutable and based on a single source of trust, the blockchain acts as a social consensus mechanism, i.e. we can all agree that "wallet X owns digital token Y".
To your second point: much of today's art is not manifested by a single physical artefact. Conceptual art has been around for a long time; ownership of conceptual art is not new[1], but the advent of blockchain gives a new vehicle and distribution mechanism for it, in particular digital and software art.
[1] - https://www.artsy.net/article/artsy-editorial-conceptual-art...
To your second point: much of today's art is not manifested by a single physical artefact. Conceptual art has been around for a long time; ownership of conceptual art is not new[1], but the advent of blockchain gives a new vehicle and distribution mechanism for it, in particular digital and software art.
[1] - https://www.artsy.net/article/artsy-editorial-conceptual-art...
> The distributed ledger adds security, longevity, ownership, and provenance: eg. a token is purchased from an artist, and it can be held and traded (ie. "owned") for as many years as the blockchain continues to survive. Unlike the ownership of a file or record in a centralized database, which are mutable and based on a single source of trust, the blockchain acts as a social consensus mechanism, i.e. we can all agree that "wallet X owns digital token Y."
Is there any advantage over a traditional certificate signed by PKI? I'd say the risk of X.509 PKI in its entirety disappearing is significantly lower than the risk of any individual blockchain startup failing. (How's that for decentralised redundancy!)
> To your second point: much of today's art is not manifested by a single physical artefact. Conceptual art has been around for a long time; ownership of conceptual art is not new[1] but the advent of blockchain gives a new vehicle and distribution mechanism for it, in particular digital and software art.
So we're back to hype for the sake of hype, detached from any technical merit.
Is there any advantage over a traditional certificate signed by PKI? I'd say the risk of X.509 PKI in its entirety disappearing is significantly lower than the risk of any individual blockchain startup failing. (How's that for decentralised redundancy!)
> To your second point: much of today's art is not manifested by a single physical artefact. Conceptual art has been around for a long time; ownership of conceptual art is not new[1] but the advent of blockchain gives a new vehicle and distribution mechanism for it, in particular digital and software art.
So we're back to hype for the sake of hype, detached from any technical merit.
I don't know much about PKI but it seems to rely on certification authorities (i.e. single source of trust) and there does not seem to be a clear mechanism for artists to sign, trade, and 'own' them.
But, if you were to create a PKI-enabled digital art marketplace that is able to meet the same decentralized structure and benefits of NFT technology, without the need for a distributed ledger and tokenization, I'm sure many artists and creators would welcome that.
But, if you were to create a PKI-enabled digital art marketplace that is able to meet the same decentralized structure and benefits of NFT technology, without the need for a distributed ledger and tokenization, I'm sure many artists and creators would welcome that.
Let me give you a real-world example. China has a tight control over not only the currency exchange rate, but also the very action of exchanging or even withdrawing foreign currencies. The current policy is that you can only send/receive $50k USD per year per person regardless of the channels, even if they are completely legitimate via wire transfers. This is obviously not enough for a student who goes to the US for college. And this creates a huge difficulty for the families. Bitcoin is one of the main ways to break this barrier even though it is deemed "illegal" in China. You can say this is a "crime", but the legality is actually a very subjective thing depending how you look at it.
Chinese students have been studying abroad for decades now, in countries all over the world. Are you suggesting all of them use BTC to be able to pay their tuition?
> The current policy is that you can only send/receive $50k USD per year per person regardless of the channels, even if they are completely legitimate via wire transfers.
Chinese law defines what's legitimate in China. By definition such wire transfers aren't completely legitimate. They should be IMO, but they currently aren't.
Chinese law defines what's legitimate in China. By definition such wire transfers aren't completely legitimate. They should be IMO, but they currently aren't.
I'll bite the bullet and assume that you're asking a legitimate question in good faith:
1) Imagine I have 100 USD and 100 EUR and I want to provide liquidity to a USD-EUR pair to get a cut of exchange fees. Which automated market maker do I need to contact in the space of "conventional financial technologies" to do so?
2) Imagine I have 1 BTC and I want to lend it (in a secure way) to get some return (in BTC). Who should I contact in the space of "conventional financial technologies" to do so?
3) Imagine I want to borrow 100 USD using BTC as collateral. Who should I contact in the space of "conventional financial technologies" to do so?
Do you consider any of the previously-mentioned use-cases to constitute crime and/or speculation? If yes, why?
1) Imagine I have 100 USD and 100 EUR and I want to provide liquidity to a USD-EUR pair to get a cut of exchange fees. Which automated market maker do I need to contact in the space of "conventional financial technologies" to do so?
2) Imagine I have 1 BTC and I want to lend it (in a secure way) to get some return (in BTC). Who should I contact in the space of "conventional financial technologies" to do so?
3) Imagine I want to borrow 100 USD using BTC as collateral. Who should I contact in the space of "conventional financial technologies" to do so?
Do you consider any of the previously-mentioned use-cases to constitute crime and/or speculation? If yes, why?
1) Granted, but also EURUSD pricing does not work like any AMM (i.e. not formulaic exchange rates). So right now this does not work from both sides (no place to do and no method to do it). And no, it will not change to formulaic unless you have insane amount so liquidity in (but even then, central banks could just steam roll over you)
2) Lending can be regulated, so might or might not be ok for you to lend - not a lawyer. What about KYC/AML etc.?
3) Aren't there specialized prime brokers that do that? (maybe Genesis?)
2) Lending can be regulated, so might or might not be ok for you to lend - not a lawyer. What about KYC/AML etc.?
3) Aren't there specialized prime brokers that do that? (maybe Genesis?)
> 1) Granted, but also EURUSD pricing does not work like any AMM [...]
Exactly. So, if I want to put liquidity in EURUSD market, I have no choice but to actively manage it, since traditional financial institutions won't do it for me. That was my point... to bring up examples of use-cases that are not covered by traditional financial institutions.
> 2) Lending can be regulated, so might or might not be ok for you to lend - not a lawyer. What about KYC/AML etc.?
Sure, lending is regulated. But then the problem mostly lies with AAVE (for example), not me (they are the one lending my assets, after all, and the ones possibly subjected to KYC laws), I would assume.
My point is... even if you are willing to go through KYC, and have nothing to hide (e.g. you got your crypto-assets, or whatever you want to call them, legitimately, and file your taxes correctly), there simply is no traditional financial institution that has a "BTC savings account", for example.
> 3) Aren't there specialized prime brokers that do that? (maybe Genesis?)
Probably. But then the argument that "there is no actual use-case for blockchain outside of crime and speculation" kinda breaks down. If you consider Genesis to be part of "traditional finance", then it's clear that "traditional finance" sees value in these things (it's not just vapor). If you consider Genesis to not be part of "traditional finance", then you're just confirming what I implied: there isn't anyone in "traditional finance" providing such services.
Exactly. So, if I want to put liquidity in EURUSD market, I have no choice but to actively manage it, since traditional financial institutions won't do it for me. That was my point... to bring up examples of use-cases that are not covered by traditional financial institutions.
> 2) Lending can be regulated, so might or might not be ok for you to lend - not a lawyer. What about KYC/AML etc.?
Sure, lending is regulated. But then the problem mostly lies with AAVE (for example), not me (they are the one lending my assets, after all, and the ones possibly subjected to KYC laws), I would assume.
My point is... even if you are willing to go through KYC, and have nothing to hide (e.g. you got your crypto-assets, or whatever you want to call them, legitimately, and file your taxes correctly), there simply is no traditional financial institution that has a "BTC savings account", for example.
> 3) Aren't there specialized prime brokers that do that? (maybe Genesis?)
Probably. But then the argument that "there is no actual use-case for blockchain outside of crime and speculation" kinda breaks down. If you consider Genesis to be part of "traditional finance", then it's clear that "traditional finance" sees value in these things (it's not just vapor). If you consider Genesis to not be part of "traditional finance", then you're just confirming what I implied: there isn't anyone in "traditional finance" providing such services.
On EURUSD, you could look at currency funds (not strictly the same, but as close as it gets)
Depending on which country you are in, things like bitcoin savings accounts are starting to emerge. Also funds might be able to invest.
And yes, traditional finance is starting to see value in providing services for these things (and has so for a while) - not strictly the same as seeing value in the underlyings, but separate point
Depending on which country you are in, things like bitcoin savings accounts are starting to emerge. Also funds might be able to invest.
And yes, traditional finance is starting to see value in providing services for these things (and has so for a while) - not strictly the same as seeing value in the underlyings, but separate point
Ok. So... if even traditional finance is slowly adopting these things, it kind of becomes hard to hold on to the idea that there aren't actually any use-cases outside of crime and speculation.
EDIT: Just to address your edit...
> On EURUSD, you could look at currency funds (not strictly the same, but as close as it gets)
And will they be willing to talk to a person that only wants to put 100 EUR + 100 USD into it? I seriously doubt it.
EDIT: Just to address your edit...
> On EURUSD, you could look at currency funds (not strictly the same, but as close as it gets)
And will they be willing to talk to a person that only wants to put 100 EUR + 100 USD into it? I seriously doubt it.
> [...]if even traditional finance is slowly adopting these things,[...]
All this means is there is money to be made. It does not mean that any particular use-case exists. So no, this does not make it hard to hold on to the idea above - no use-cases outside of crime and speculation.
If you provide storage for people's stuff and someone wants specialized storage for tulips you probably do not care whether the tulips are worth anything or useful. You rent them the space to store their tulips if you can make money that way.
All this means is there is money to be made. It does not mean that any particular use-case exists. So no, this does not make it hard to hold on to the idea above - no use-cases outside of crime and speculation.
If you provide storage for people's stuff and someone wants specialized storage for tulips you probably do not care whether the tulips are worth anything or useful. You rent them the space to store their tulips if you can make money that way.
And "making money" does not sound like a use-case to you? Ok.
And tulips are not worthless... they just aren't as valuable as people thought they were, during the tulip mania.
And tulips are not worthless... they just aren't as valuable as people thought they were, during the tulip mania.
This making money has nothing to do with any intrinsic use-case or value of Bitcoin. As an intermediary (under which I also comprehend banks in terms of "tulip storage") you always make money whether your client wins, loses or absent-mindedly walks over a monetary cliff.
Making money trading or storing something does not mean that something has a use-case (hence the tulips example). So the fact that people make money off other people who think Bitcoin is the best thing since sliced bread does not mean Bitcoin has any use-case or intrinsic value.
Making money trading or storing something does not mean that something has a use-case (hence the tulips example). So the fact that people make money off other people who think Bitcoin is the best thing since sliced bread does not mean Bitcoin has any use-case or intrinsic value.
Wasn't my claim. And speculation is fine anyway, because it is at the heart of any new business etc.
Yes, I know. But it was the original claim that triggered the current thread.
Either way, thanks for the insight and information you brought to the discussion.
Either way, thanks for the insight and information you brought to the discussion.
Two of your 3 problems solved by Bitcoin only exist because you have Bitcoin.
Yes... and?
Are people that have Bitcoin not allowed to do useful things with what they have? Does it bother you that there are actual legitimate use-cases for these things (as you seemingly admit, by not including my first example in your comment)?
Someone asked for an example, and I provided a few... perhaps you don't see value in the examples I gave, but there are people out there who do.
Are people that have Bitcoin not allowed to do useful things with what they have? Does it bother you that there are actual legitimate use-cases for these things (as you seemingly admit, by not including my first example in your comment)?
Someone asked for an example, and I provided a few... perhaps you don't see value in the examples I gave, but there are people out there who do.
To the question "What problem does Bitcoin solve" the answer "Without Bitcoin I would not be able to transact in Bitcoin" is not valid.
Was that even the question to begin with? Here is the comment I replied to, originally [0]. Try to find the word "Bitcoin" there.
And, again, thanks for continuing to support my point, by failing to address the fact that the first example I gave had nothing to do with BTC.
Have a nice day.
[0] https://news.ycombinator.com/item?id=27769442
And, again, thanks for continuing to support my point, by failing to address the fact that the first example I gave had nothing to do with BTC.
Have a nice day.
[0] https://news.ycombinator.com/item?id=27769442
Yes that was essentially the original question to begin with. You can make a pedantic distinction between "Bitcoin" and "blockchain", but your comments make it clear you are arguing in bad faith here.
I'm arguing in bad faith, according to you, even though I individually and respectfully tried to address every point you asked/made.
Yet, you are the one doing unbased accusations of fraud ("stablecoins are essentially fraud"), and still haven't replied to the question I made 4 or 5 times already: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
I guess my question is inconvenient.
I'm done here, but I do hope you have a nice day. And, don't worry, I won't bite your bait ever again.
Yet, you are the one doing unbased accusations of fraud ("stablecoins are essentially fraud"), and still haven't replied to the question I made 4 or 5 times already: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
I guess my question is inconvenient.
I'm done here, but I do hope you have a nice day. And, don't worry, I won't bite your bait ever again.
> I individually and respectfully tried to address every point you asked/made.
Oh come on, look at your comment above mine in this thread. You're splitting hairs and trying to find minute flaws in the arguments against you instead of actually arguing the points. It certainly makes it look like you cannot defend your actual arguments.
> Yet, you are the one doing unbased accusations of fraud ("stablecoins are essentially fraud")
I never said all stablecoins, but some certainly look like they are.
> I'm done here, but I do hope you have a nice day. And, don't worry, I won't bite your bait ever again.
Oh I'm not worried!
Oh come on, look at your comment above mine in this thread. You're splitting hairs and trying to find minute flaws in the arguments against you instead of actually arguing the points. It certainly makes it look like you cannot defend your actual arguments.
> Yet, you are the one doing unbased accusations of fraud ("stablecoins are essentially fraud")
I never said all stablecoins, but some certainly look like they are.
> I'm done here, but I do hope you have a nice day. And, don't worry, I won't bite your bait ever again.
Oh I'm not worried!
> Oh come on, look at your comment above mine in this thread.
Was that comment addressed at you? Please point out an actual example of me engaging in bad-faith argumentation with you. This is what you said, right? That I was engaging in bad-faith argumentation with you (not a third-party: you).
> You're splitting hairs and trying to find minute flaws in the arguments against you instead of actually arguing the points.
Uh... finding flaws in other people's arguments is how rational people argue. If you have a flaw in your argument, it's not a good argument.
Again, please point out a situation in which I'm needlessly splitting hairs with you and avoiding a question you asked.
> I never said all stablecoins, but some certainly look like they are.
Ah! So now that you figured out how bad your argument is, you decide to move the goalposts. You say "stablecoins are essentially fraud", and I'm supposed to interpret that as "some stablecoins are essentially fraud", rather than "all stablecoins are essentially fraud"? Sigh.
If you're not arguing in bad faith, it sure seems like you're going out of your way to make it seem like you are.
I keep forgetting how I'm not supposed to feed the trolls... ah, well...
Was that comment addressed at you? Please point out an actual example of me engaging in bad-faith argumentation with you. This is what you said, right? That I was engaging in bad-faith argumentation with you (not a third-party: you).
> You're splitting hairs and trying to find minute flaws in the arguments against you instead of actually arguing the points.
Uh... finding flaws in other people's arguments is how rational people argue. If you have a flaw in your argument, it's not a good argument.
Again, please point out a situation in which I'm needlessly splitting hairs with you and avoiding a question you asked.
> I never said all stablecoins, but some certainly look like they are.
Ah! So now that you figured out how bad your argument is, you decide to move the goalposts. You say "stablecoins are essentially fraud", and I'm supposed to interpret that as "some stablecoins are essentially fraud", rather than "all stablecoins are essentially fraud"? Sigh.
If you're not arguing in bad faith, it sure seems like you're going out of your way to make it seem like you are.
I keep forgetting how I'm not supposed to feed the trolls... ah, well...
Lol you got suckered in just like me again. They made it clear that nothing can convince them. It's like trying to convince a Christian to be Muslim. Nothing you say or do can change their view. It's incredibly frustrating because the goal posts keep moving and they will refuse to even say what will convince them - primarily because nothing can convince them. So why bother right...
I would agree that case 1 constitutes a potentially interesting use of block-chain. 2 and 3 assume the value of BTC, which I would not take as a given.
Regarding point 2, what's wrong with assuming that 1 BTC is worth 1 BTC now and forever? If I'm not trading asset A for asset B, then it's hardly "speculation".
If it makes it any better, I can lend BTC and ask to get returns in USDC (which should be worth as much as 1 USD, if you trust Coinbase). Am I still speculating?
Regarding point 3, where is the speculation, exactly? If, at any point, the BTC I left as collateral goes below a certain level of collateralization (let's say 200% of the value of the borrowed asset), I'll just get liquidated: whoever lent me the USD will get their USD back, and I will lose my collateral (or a part of it, at least), if I fail to keep the value of my collateral over the threshold.
I think perhaps we have a very different idea of what "speculation" is supposed to be...
Either way, I guess you accept that there are use-cases that are otherwise not being provided by more traditional tech/institutions. Good.
If it makes it any better, I can lend BTC and ask to get returns in USDC (which should be worth as much as 1 USD, if you trust Coinbase). Am I still speculating?
Regarding point 3, where is the speculation, exactly? If, at any point, the BTC I left as collateral goes below a certain level of collateralization (let's say 200% of the value of the borrowed asset), I'll just get liquidated: whoever lent me the USD will get their USD back, and I will lose my collateral (or a part of it, at least), if I fail to keep the value of my collateral over the threshold.
I think perhaps we have a very different idea of what "speculation" is supposed to be...
Either way, I guess you accept that there are use-cases that are otherwise not being provided by more traditional tech/institutions. Good.
> what's wrong with assuming that 1 BTC is worth 1 BTC now and forever?
Because if 1 BTC = 0 USD, and has no real-world utility outside of speculation, there is no compelling reason to try to acquire more BTC.
Because if 1 BTC = 0 USD, and has no real-world utility outside of speculation, there is no compelling reason to try to acquire more BTC.
> Because if 1 BTC = 0 USD...
A big assumption here. I can also hypothesize that 1 USD = 0 EUR, at some point in the future, and, thus, holding or buying USD is pure speculation and there is no compelling reason to try to acquire more USD.
Under this logic, I shouldn't ever buy or hold anything (forex, stocks, etc.), lest its market value goes to zero.
Also, thanks for ignoring the rest of my point: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
A big assumption here. I can also hypothesize that 1 USD = 0 EUR, at some point in the future, and, thus, holding or buying USD is pure speculation and there is no compelling reason to try to acquire more USD.
Under this logic, I shouldn't ever buy or hold anything (forex, stocks, etc.), lest its market value goes to zero.
Also, thanks for ignoring the rest of my point: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
For 1 USD = 0 EUR to become a reality, we would have to imagine a massive geopolitical shift has taken place.
For 1 BTC = 0 USD, all you need is one government, which has been the victim or ransomware attacks, to regulate BTC out of existence.
For 1 BTC = 0 USD, all you need is one government, which has been the victim or ransomware attacks, to regulate BTC out of existence.
> For 1 USD = 0 EUR to become a reality, we would have to imagine a massive geopolitical shift has taken place.
Which is a possibility (the same way that 1 BTC = 0 USD is also a possibility; just a very unlikely possibility).
> For 1 BTC = 0 USD, all you need is one government, which has been the victim or ransomware attacks, to regulate BTC out of existence.
Unfortunately, reality proves you wrong. Here [0] is an example of one government regulating BTC out of existence (or trying to)... but I'm sure you can find others.
What's the price of BTC today? (hint: not zero)
I think there's not much point in continuing this discussion, since you seem pretty convinced that the ultimate value of BTC is zero (even though you admit that there probably are legitimate use-cases for such things). If you already pre-decided that it is the case (and you are totally within your right to speculate on the value of BTC), nothing I can say will change it.
Also, thanks for ignoring the rest of my point: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
[0] https://www.cnbc.com/2021/03/15/india-plans-cryptocurrency-b...
Which is a possibility (the same way that 1 BTC = 0 USD is also a possibility; just a very unlikely possibility).
> For 1 BTC = 0 USD, all you need is one government, which has been the victim or ransomware attacks, to regulate BTC out of existence.
Unfortunately, reality proves you wrong. Here [0] is an example of one government regulating BTC out of existence (or trying to)... but I'm sure you can find others.
What's the price of BTC today? (hint: not zero)
I think there's not much point in continuing this discussion, since you seem pretty convinced that the ultimate value of BTC is zero (even though you admit that there probably are legitimate use-cases for such things). If you already pre-decided that it is the case (and you are totally within your right to speculate on the value of BTC), nothing I can say will change it.
Also, thanks for ignoring the rest of my point: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
[0] https://www.cnbc.com/2021/03/15/india-plans-cryptocurrency-b...
Since you seem to be arguing in good faith I'll engage; at which point will you accept that the value of BTC is > $0? It's coming up on a decade of showing seemingly limitless upside with the bottom constantly rising. The tulip mania everyone loves to cite lasted about 3 years. This is going on for more than 3x. At what point would you consider you are maybe wrong?
Personally speaking, I was on the other side of this until about 3 years ago. I first learned about crypto in 2011. At one point I realized I was not looking at the facts unfolding right in front of me. I was just telling myself "look everyone are idiots, and everyone is going to crash and burn because of this. This makes no sense." Then I realized smarter and smarter people were getting in and more and more people were getting convinced and either I benefit from this or I become the person on the sidelines left behind.
Personally speaking, I was on the other side of this until about 3 years ago. I first learned about crypto in 2011. At one point I realized I was not looking at the facts unfolding right in front of me. I was just telling myself "look everyone are idiots, and everyone is going to crash and burn because of this. This makes no sense." Then I realized smarter and smarter people were getting in and more and more people were getting convinced and either I benefit from this or I become the person on the sidelines left behind.
There are indeed people willing to trade USD for BTC, so there is a market price for BTC. However, there are three major risks in my opinion which I think could make BTC worthless in the next 10 years:
1) There seems to be very credible evidence that Tether and other stablecoins are essentially fraud, and Tether makes up a massive portion of the BTC market cap
2) Ransomware is becoming increasingly prevalent, and has managed to compromise large institutions - it's not difficult to imagine regulatory action banning cryptocurrency as a result of this
3) Similarly, BTC is viewed by many as an unnecessary driver of fossil fuel consumption. Carbon regulation will necessarily get stronger in the next decades, and BTC may face harsh regulatory challenges because of this
1) There seems to be very credible evidence that Tether and other stablecoins are essentially fraud, and Tether makes up a massive portion of the BTC market cap
2) Ransomware is becoming increasingly prevalent, and has managed to compromise large institutions - it's not difficult to imagine regulatory action banning cryptocurrency as a result of this
3) Similarly, BTC is viewed by many as an unnecessary driver of fossil fuel consumption. Carbon regulation will necessarily get stronger in the next decades, and BTC may face harsh regulatory challenges because of this
1) Seems like a random point to me. I agree with some stablecoins there are fishy things going on, and others not so much. But again I'm failing to see the relevance of this point. Also I'd like to point out, the SEC loves to go after crypto. It's quite clear where they stand. Somehow they are ignoring this "very credible evidence". At what point does this becomes a conspiracy theory? Or is the SEC in cahoots with them? Or do they not care? (can't be this because they demonstrated with XRP they really do care).
2) Yea I see this as a risk. Might reduce the value but tbd on how much. On the flip side you have entire countries trying to adopt it as currency.
3) This current change is much needed IMO for btc to evolve and I'm glad its happening sooner rather than later. BTC mining getting kicked out of China is great. If BTC can't survive without fossil fuel consumption it doesn't deserve to exist. This is forced evolution and I'm pretty optimistic about it.
My initial question still stands. At what point will you think you are wrong with regards to the value? Will you constantly move goal posts, as I did for years, or have a line in the sand after which you will adopt it.
2) Yea I see this as a risk. Might reduce the value but tbd on how much. On the flip side you have entire countries trying to adopt it as currency.
3) This current change is much needed IMO for btc to evolve and I'm glad its happening sooner rather than later. BTC mining getting kicked out of China is great. If BTC can't survive without fossil fuel consumption it doesn't deserve to exist. This is forced evolution and I'm pretty optimistic about it.
My initial question still stands. At what point will you think you are wrong with regards to the value? Will you constantly move goal posts, as I did for years, or have a line in the sand after which you will adopt it.
1) As far as I know there are legal proceedings ongoing agains Tether - I don't think this is a conspiracy theory.
> My initial question still stands. At what point will you think you are wrong with regards to the value? Will you constantly move goal posts, as I did for years, or have a line in the sand after which you will adopt it.
I know this is a common argumentative tactic to attempt to get people to change their mind. I don't know what would change my mind, but we're certainly not there yet as long as the risks which I cited still exist.
> My initial question still stands. At what point will you think you are wrong with regards to the value? Will you constantly move goal posts, as I did for years, or have a line in the sand after which you will adopt it.
I know this is a common argumentative tactic to attempt to get people to change their mind. I don't know what would change my mind, but we're certainly not there yet as long as the risks which I cited still exist.
> As far as I know there are legal proceedings ongoing agains Tether - I don't think this is a conspiracy theory.
Even so, how do you go from "there are legal proceedings against Tether" to "there seems to be very credible evidence that Tether and other stablecoins are essentially fraud"?
Being hyperbolic does not help your argument here... it just makes it seem like you don't know what you are talking about (i.e. you don't know the difference between USDT, USDC and DAI, for example).
> I know this is a common argumentative tactic to attempt to get people to change their mind.
You seem to be under the impression that people are trying to change your mind, rather than simply pointing out the flaws, leaps-of-faith and speculation in your argumentation.
Trust me... you also did not convince anyone that the value of BTC is literally zero (except the ones that were already convinced).
Even so, how do you go from "there are legal proceedings against Tether" to "there seems to be very credible evidence that Tether and other stablecoins are essentially fraud"?
Being hyperbolic does not help your argument here... it just makes it seem like you don't know what you are talking about (i.e. you don't know the difference between USDT, USDC and DAI, for example).
> I know this is a common argumentative tactic to attempt to get people to change their mind.
You seem to be under the impression that people are trying to change your mind, rather than simply pointing out the flaws, leaps-of-faith and speculation in your argumentation.
Trust me... you also did not convince anyone that the value of BTC is literally zero (except the ones that were already convinced).
I am quite confident my arguments are sound. However you are posting from a brand new account, continuously splitting hairs rather than confronting the argument head-on, and generally engaging in bad-faith argumentation tactics.
This might be effective on other forums, but I'm quite confident the HN audience will not be impressed.
This might be effective on other forums, but I'm quite confident the HN audience will not be impressed.
> I am quite confident my arguments are sound.
Ah, yes. Like the argument that "Tether is being investigated for fraud" thus "every stablecoin is essentially fraud". Seems like a water-tight argument you have there.
> However you are posting from a brand new account,
So, instead of addressing my actual arguments, you're concerned about going through my account history? Great. Note that my account is not "brand new", though: I created the account days ago, to participate in discussions that have nothing to do with "blockchain". You can check it out in my history, if you haven't already.
> continuously splitting hairs rather than confronting the argument head-on
Point one one single argument that you have made to me, that I did not respond to head-on. Just one. I'll wait.
In the meantime, while you look for it, and as a proof that you are indeed argumenting in good faith, feel free to respond head-on to the question I already made 5 times: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
Until you do, I'll keep assuming you are discussing in bad faith and refuse to reply to anything else you write.
> and generally engaging in bad-faith argumentation tactics.
There is exactly one such comment from my side (or one that could be seen as bad-faith, if you consider "pedantry" to be a sign of bad-faith), and it was not directed at you, so I'm not seeing where your complaint comes from. I re-iterate: point out a single example of me engaing in bad-faith argumentation with you. A single actual example. And then, maybe, we can continue the conversation. Until then, and as I already said, hope you have a nice day.
Ah, yes. Like the argument that "Tether is being investigated for fraud" thus "every stablecoin is essentially fraud". Seems like a water-tight argument you have there.
> However you are posting from a brand new account,
So, instead of addressing my actual arguments, you're concerned about going through my account history? Great. Note that my account is not "brand new", though: I created the account days ago, to participate in discussions that have nothing to do with "blockchain". You can check it out in my history, if you haven't already.
> continuously splitting hairs rather than confronting the argument head-on
Point one one single argument that you have made to me, that I did not respond to head-on. Just one. I'll wait.
In the meantime, while you look for it, and as a proof that you are indeed argumenting in good faith, feel free to respond head-on to the question I already made 5 times: What if I choose to get my returns in some asset that is pegged to USD (e.g. DAI, USDC), am I still speculating on the value of BTC?
Until you do, I'll keep assuming you are discussing in bad faith and refuse to reply to anything else you write.
> and generally engaging in bad-faith argumentation tactics.
There is exactly one such comment from my side (or one that could be seen as bad-faith, if you consider "pedantry" to be a sign of bad-faith), and it was not directed at you, so I'm not seeing where your complaint comes from. I re-iterate: point out a single example of me engaing in bad-faith argumentation with you. A single actual example. And then, maybe, we can continue the conversation. Until then, and as I already said, hope you have a nice day.
> There is exactly one such comment from my side
So you admit you were arguing in bad faith?
> Point one one single argument that you have made to me, that I did not respond to head-on. Just one. I'll wait.
> point out a single example of me engaing in bad-faith argumentation with you. A single actual example. And then.
Sure, how about this very comment?
> Ah, yes. Like the argument that "Tether is being investigated for fraud" thus "every stablecoin is essentially fraud". Seems like a water-tight argument you have there.
You're misrepresenting my statement in a way to obfuscate the very real fraud accusations against Tether and other stable-coins. I never said all stablecoins are fradulent. Why are you focused on that falsified version of my argument rather than arguing against the fact that Tether is indeed fraudulent?
> maybe, we can continue the conversation
Not interested in continuing it, thank you!
So you admit you were arguing in bad faith?
> Point one one single argument that you have made to me, that I did not respond to head-on. Just one. I'll wait.
> point out a single example of me engaing in bad-faith argumentation with you. A single actual example. And then.
Sure, how about this very comment?
> Ah, yes. Like the argument that "Tether is being investigated for fraud" thus "every stablecoin is essentially fraud". Seems like a water-tight argument you have there.
You're misrepresenting my statement in a way to obfuscate the very real fraud accusations against Tether and other stable-coins. I never said all stablecoins are fradulent. Why are you focused on that falsified version of my argument rather than arguing against the fact that Tether is indeed fraudulent?
> maybe, we can continue the conversation
Not interested in continuing it, thank you!
> I know this is a common argumentative tactic to attempt to get people to change their mind. I don't know what would change my mind, but we're certainly not there yet as long as the risks which I cited still exist.
This is a common tactic to best understand if I am wasting my time. Seems like I am. Hope you have a good rest of the day.
This is a common tactic to best understand if I am wasting my time. Seems like I am. Hope you have a good rest of the day.
[deleted]
That's a convenient way not to engage with the actual arguments - seems like you have been wasting everyone's time. A good day to you as well!
> That's a convenient way not to engage with the actual arguments
What actual "argument" did you put forth? You brought up tether and stablecoins, which is a pretty speculative argument. Nothing concrete is happening. The other two points you mentioned I directly addressed.
> seems like you have been wasting everyone's time. A good day to you as well!
lol. How am I wasting anyone's time? You in a long winded way basically said nothing can convince you. So who's wasting whose time? I literally said BTC doesn't deserve to exist if needs to rely on fossil fuels. That's where my line is. What's yours? Nothing. So yes, I am wasting my time while you are arguing religiously with no way to convince you so you are basically wasting everyone else's time.
Also let's not forget other legendary investors like Stanley Druckenmiller don't think the risks you mentioned are substantial enough to not invest. But I'm sure you understand the risks much better than them.
What actual "argument" did you put forth? You brought up tether and stablecoins, which is a pretty speculative argument. Nothing concrete is happening. The other two points you mentioned I directly addressed.
> seems like you have been wasting everyone's time. A good day to you as well!
lol. How am I wasting anyone's time? You in a long winded way basically said nothing can convince you. So who's wasting whose time? I literally said BTC doesn't deserve to exist if needs to rely on fossil fuels. That's where my line is. What's yours? Nothing. So yes, I am wasting my time while you are arguing religiously with no way to convince you so you are basically wasting everyone else's time.
Also let's not forget other legendary investors like Stanley Druckenmiller don't think the risks you mentioned are substantial enough to not invest. But I'm sure you understand the risks much better than them.
> in my opinion
> I think could
Who is speculating about the value of things here? Wasn't speculation supposed to be bad?
None of the things you mentioned support the hypothesis that the value of BTC is literally zero (not 0.00000000000001 USD, but literally zero).
> 1) There seems to be very credible evidence that Tether and other stablecoins are essentially fraud, and Tether makes up a massive portion of the BTC market cap
I have a hard time even parsing this ("Tether makes up a massive portion of the BTC market cap"), and it sounds more like an appeal to emotion than an actual argument. Please explain in which ways are DAI and USDC "essentially fraud". Perhaps you should contact US authorities, and complain about the fraudulent Coinbase, if you really believe that to be the case (and if you're not just engaging in unfounded speculation).
> I think could
Who is speculating about the value of things here? Wasn't speculation supposed to be bad?
None of the things you mentioned support the hypothesis that the value of BTC is literally zero (not 0.00000000000001 USD, but literally zero).
> 1) There seems to be very credible evidence that Tether and other stablecoins are essentially fraud, and Tether makes up a massive portion of the BTC market cap
I have a hard time even parsing this ("Tether makes up a massive portion of the BTC market cap"), and it sounds more like an appeal to emotion than an actual argument. Please explain in which ways are DAI and USDC "essentially fraud". Perhaps you should contact US authorities, and complain about the fraudulent Coinbase, if you really believe that to be the case (and if you're not just engaging in unfounded speculation).
"This technology is only used by criminals and perverts" is a common refrain that almost always turns out to be wrong. People should relax.
It's an easily falsifiable claim if it is indeed false.
This is obviously false. "only", implying if at least one person used it for a legitimate reason that would make the statement false. There are plenty of legitimate businesses accepting bitcoin so it makes it false.
Yes, that's what I said, it's false. Easily.
> Blockchains and crypto tech does seem to provide solutions to many challenging problems: distributed ledgers, immutable and decentralized data, ownerless contracts and program execution, secure and decentralized ownership of a digital asset (eg: owning a domain name), programmable free markets, preventing the double spend problem, etc.
Emphasis on "seem". These aren't even problems in the practical sense, but rather tools you can use to solve concrete problems. And in many cases, you can use similar tools that don't involve blockchains (merkle trees, FSS+PKI, …).
And it's still not clear whether blockchains can in practice deliver on the promises of decentralization: There's no good solution to problems like 51% attacks, other than rallying behind a central authority like the chain's developers. Why even bother with a blockchain then?
Emphasis on "seem". These aren't even problems in the practical sense, but rather tools you can use to solve concrete problems. And in many cases, you can use similar tools that don't involve blockchains (merkle trees, FSS+PKI, …).
And it's still not clear whether blockchains can in practice deliver on the promises of decentralization: There's no good solution to problems like 51% attacks, other than rallying behind a central authority like the chain's developers. Why even bother with a blockchain then?
This. I've read many accounts of people advocating for use of blockchains in industry or government, which mostly boil down to different entities emitting documents in a verifiable way, e.g. for property ownership. As you've said this can be handled using boring PKIs and the like.
Cynic mode: You can't handle it the boring way because nobody is funding boring solutions. We already know those won't make you a billionaire overnight.
Append-only, log-structured datastores are useful; Merkle trees are useful; bitcoin did not invent these things though it has helped popularise them.
PoW is the one unique innovation that makes bitcoin bitcoin, and I think the last 12 years have shown that its legitimate use cases are niche at best.
PoW is the one unique innovation that makes bitcoin bitcoin, and I think the last 12 years have shown that its legitimate use cases are niche at best.
I would largely agree that the use cases are niche at the moment. For example, enabling ownership of a domain name without requiring the trust of a central party.
It may be worth noting, Ethereum has only been around for 6 years, and prior to it there was not a lot of focus in the blockchain space on ownerless program execution and immutable state (smart contracts).
It may be worth noting, Ethereum has only been around for 6 years, and prior to it there was not a lot of focus in the blockchain space on ownerless program execution and immutable state (smart contracts).
Notice that blockchains have no notion of property rights. As far as the blockchain is concerned whoever controls the asset (i.e. has the password to the wallet) owns it. For example, if the owner loses the password, or has the password stolen, they no longer own the asset. This is a big problem. Imagine that if when someone stole your car they automatically owned it! The lack of property rights is one of the reasons blockchains are not suitable for almost anything.
Have you ever heard that "posession is nine-tenths of the law"? Well... this is a system in which "posession is ten-tenths of the law".
This has obvious disadvantages (as you pointed out), but it also has a clear advantage: it becomes trivial to figure out who effectively owns something within the system (whoever controls/posesses the associated key).
Just because a system doesn't encode/enforce "property laws", doesn't necessarily mean that it is useless. In fact, few systems (if any) formally encode property laws: that is always something imposed from the outside.
If someone steals your crypto keys, you can still use the (normal) court system to get your assets back (assuming you have some way of proving that you own the assets, and you know who stole them from you).
Does the Internet encode/enforce property laws? No. If someone (e.g.) copies your stuff, you're still forced to go to the court system (just like when someone "steals" crypto from you). Does that make the Internet "not suitable for almost anything", just because it doesn't automatically enforce property laws?
This has obvious disadvantages (as you pointed out), but it also has a clear advantage: it becomes trivial to figure out who effectively owns something within the system (whoever controls/posesses the associated key).
Just because a system doesn't encode/enforce "property laws", doesn't necessarily mean that it is useless. In fact, few systems (if any) formally encode property laws: that is always something imposed from the outside.
If someone steals your crypto keys, you can still use the (normal) court system to get your assets back (assuming you have some way of proving that you own the assets, and you know who stole them from you).
Does the Internet encode/enforce property laws? No. If someone (e.g.) copies your stuff, you're still forced to go to the court system (just like when someone "steals" crypto from you). Does that make the Internet "not suitable for almost anything", just because it doesn't automatically enforce property laws?
The internet wasn't invented to keep track of who owns what. It was invented to transmit information and it does an excellent job at that. The blockchain, on the other hand, was invented to keep track of who owns that. That's its only purpose. The fact it doesn't and can't enforce property rights, which, it could be argued, are pretty essential for that purpose, appears to indicate that blockchains do suffer from a fatal design flaw. At least that's the way I see it.
> The blockchain, on the other hand, was invented to keep track of who owns that. That's its only purpose.
Well.. its purpose is to enable transactions between people, and not keep track of legal ownership of things. In fact, these networks usually don't make any claim about who legally owns anything: only about who controls something (i.e. who owns it within the system, not who owns it in the legal sense).
Does physical cash keep track of who actually owns it (and not just "who posesses it")? No. Does that make it useless or fatally flawed for the purpose of "value exchange"? Not really.
If you receive a 10 USD bill from someone as payment, you have to assume that they own that bill (and didn't just steal from anyone else). The bill itself doesn't enforce property law.
Furthermore, if you have lax security and a pickpocket takes your wallet (with 500 USD inside), you also have little recourse or method to enforce your ownership of the stolen cash. In fact, you probably even have less recourse than with things on blockchains: there's no way of tracking where cash goes, after someone steals it from you.
Is the fact that "cash" doesn't encode/enforce your property rights over it a problem that prevents "cash" from being effectively used a medium of value exchange between people? As far as I can tell, no.
Just like with "blockchains", if someone steals your cash, or anything else, you need to go to a court to get things fixed.
I understand your argument and accept that such properties of the system could be seen as "design flaws" (though... how could you even fix such design flaws? "law" is not a formal system). On the other hand, if such properties were "fatal design flaws" (for the purpose of a system of value exchange between economical agents), then plain vanilla cash is just as flawed, if not more (since it does not encode or enforce your property rights, and it's even less traceable than blockchain "assets").
Well.. its purpose is to enable transactions between people, and not keep track of legal ownership of things. In fact, these networks usually don't make any claim about who legally owns anything: only about who controls something (i.e. who owns it within the system, not who owns it in the legal sense).
Does physical cash keep track of who actually owns it (and not just "who posesses it")? No. Does that make it useless or fatally flawed for the purpose of "value exchange"? Not really.
If you receive a 10 USD bill from someone as payment, you have to assume that they own that bill (and didn't just steal from anyone else). The bill itself doesn't enforce property law.
Furthermore, if you have lax security and a pickpocket takes your wallet (with 500 USD inside), you also have little recourse or method to enforce your ownership of the stolen cash. In fact, you probably even have less recourse than with things on blockchains: there's no way of tracking where cash goes, after someone steals it from you.
Is the fact that "cash" doesn't encode/enforce your property rights over it a problem that prevents "cash" from being effectively used a medium of value exchange between people? As far as I can tell, no.
Just like with "blockchains", if someone steals your cash, or anything else, you need to go to a court to get things fixed.
I understand your argument and accept that such properties of the system could be seen as "design flaws" (though... how could you even fix such design flaws? "law" is not a formal system). On the other hand, if such properties were "fatal design flaws" (for the purpose of a system of value exchange between economical agents), then plain vanilla cash is just as flawed, if not more (since it does not encode or enforce your property rights, and it's even less traceable than blockchain "assets").
Property rights are a social construct. They are recognised in a certain social context and enforced by state institutions by use of force. They are separate from the actual objects of ownership. Cash is like any other physical object. If stolen, the owner can demand that the courts act on their behalf and get the stolen cash back. Sure, it may be difficult, in some situations, to prove ownership of the stolen cash or to recover it, and maybe this explains why many people seem to prefer electronic payments over cash. It might indicate that indeed cash is perceived as being less safe.
Now, back to blockchains. Blockchains are very inefficient and expensive to run. This is so, because they have to do a whole lot of extra work in order to avoid relying on a central authority that ultimately has the final say on who owns what. If blockchain users have to go to court to have property rights enforced, that means that the courts do have the final say on who owns what, and so the entire purpose of the blockchain, which was to avoid a central authority, is defeated. Not only that. The other problem is there can be no enforcement without the ability to exert force, and by design a blockchain cannot be changed by use of force, only by "consensus". So the courts would be powerless to enforce anything on a blockchain, even if they wanted. In short, blockchains are designed in a manner that makes them antithetical to property rights. I think most people want property rights and therefore will steer clear of blockchains.
Now, back to blockchains. Blockchains are very inefficient and expensive to run. This is so, because they have to do a whole lot of extra work in order to avoid relying on a central authority that ultimately has the final say on who owns what. If blockchain users have to go to court to have property rights enforced, that means that the courts do have the final say on who owns what, and so the entire purpose of the blockchain, which was to avoid a central authority, is defeated. Not only that. The other problem is there can be no enforcement without the ability to exert force, and by design a blockchain cannot be changed by use of force, only by "consensus". So the courts would be powerless to enforce anything on a blockchain, even if they wanted. In short, blockchains are designed in a manner that makes them antithetical to property rights. I think most people want property rights and therefore will steer clear of blockchains.
> Property rights are a social construct [...]
Right. So expecting a social informal construct to be enforced in an automated way is, to put it mildly, difficult.
> Sure, it may be difficult, in some situations, to prove ownership of the stolen cash or to recover it.
How do you exactly prove ownership of money? It seems a bit more than "difficult" to me.
> maybe this explains why many people seem to prefer electronic payments over cash
And just as many people prefer cash over electronic payments. It still doesn't mean that cash is, in any way, fatally flawed.
> It might indicate that indeed cash is perceived as being less safe.
Well... different people have different opinions and perceptions. Just because most people use electronic payments (let's assume) doesn't mean that cash is useless or fatally flawed as a medium of exchange. And just because most people use cash rather than blockchain thingies also doesn't mean that these are necessarily fatally flawed.
> Now, back to blockchains. Blockchains are very inefficient and expensive to run. This is so, because they have to do a whole lot of extra work in order to avoid relying on a central authority that ultimately has the final say on who owns what.
Sure.
> If blockchain users have to go to court to have property rights enforced,
Of course they have to go to court to see their property rights enforced. Rights/laws are always enforced by humans, not by automated systems.
> that means that the courts do have the final say on who owns what, and so the entire purpose of the blockchain, which was to avoid a central authority, is defeated.
Not really, since courts do not have global jurisdiction. If I steal your crypto-assets and we're both in the same country (and you have some proof of ownership and whatnot), then you can go to a court and get your assets back. If we're not in the same country, you probably won't be able to.
The same way that, if someone steals my money (or any other asset) and flees to another jurisdiction, I probably won't be able to do much.
If entities A and B are in the same jurisdiction, then courts can compel A to give something (that was stolen) back to B; if they are not, probably not.
Either way, even a court can't force a (distributed, non-centralized) blockchain to assign ownership of something to a entity B: it has to first find entity A and compel/force them to deliver the keys that control the assets, through the use of force.
> So the courts would be powerless to enforce anything on a blockchain, even if they wanted.
Even if that was the case (and, as I pointed out, it's not clear that it is the case... a court can always compel a person to give out their keys under the threat of force, as long as that person is within their jurisdiction, regardless of blockchain magic sprinkles), that would make blockchain assets more valuable (since that means they can't be easily seized from you against your will), and not less.
> In short, blockchains are designed in a manner that makes them antithetical to property rights.
[citation needed]
As far as I can tell, nothing in blockchains prevents courts from exerting their power within their jurisdiction. In fact, in some sense, it might make it even easier to do so: remember that transactions are irreversibly recorded (i.e. if the courts needs evidence against you, you would be better off having used cash than any blockchain asset).
> I think most people want property rights and therefore will steer clear of blockchains.
Blockchains don't remove or restrict your property rights; they just don't enforce or explicitly encode it, just like any other formal system or physical asset: you always have to rely on an external non-automated system of courts and law enforcement to ensure that your property rights. Blockchains don't change that, and are not supposed to change that, or to replace courts and law enforcement. So-called "smart contracts" are not actual legal contracts and shouldn't be seen as such. Etc.
TL;DR: It seems to me like you are postulating that blockchains need a feature that no other asset or medium of exchange has (i.e. automated enforcement of property laws, without having a court and a judge involved), otherwise it's not useful. If you apply that same threshold of usefulness to other classes of assets, then most (if not all) assets are useless (since they don't encode and can't enforce your property rights over it).
Right. So expecting a social informal construct to be enforced in an automated way is, to put it mildly, difficult.
> Sure, it may be difficult, in some situations, to prove ownership of the stolen cash or to recover it.
How do you exactly prove ownership of money? It seems a bit more than "difficult" to me.
> maybe this explains why many people seem to prefer electronic payments over cash
And just as many people prefer cash over electronic payments. It still doesn't mean that cash is, in any way, fatally flawed.
> It might indicate that indeed cash is perceived as being less safe.
Well... different people have different opinions and perceptions. Just because most people use electronic payments (let's assume) doesn't mean that cash is useless or fatally flawed as a medium of exchange. And just because most people use cash rather than blockchain thingies also doesn't mean that these are necessarily fatally flawed.
> Now, back to blockchains. Blockchains are very inefficient and expensive to run. This is so, because they have to do a whole lot of extra work in order to avoid relying on a central authority that ultimately has the final say on who owns what.
Sure.
> If blockchain users have to go to court to have property rights enforced,
Of course they have to go to court to see their property rights enforced. Rights/laws are always enforced by humans, not by automated systems.
> that means that the courts do have the final say on who owns what, and so the entire purpose of the blockchain, which was to avoid a central authority, is defeated.
Not really, since courts do not have global jurisdiction. If I steal your crypto-assets and we're both in the same country (and you have some proof of ownership and whatnot), then you can go to a court and get your assets back. If we're not in the same country, you probably won't be able to.
The same way that, if someone steals my money (or any other asset) and flees to another jurisdiction, I probably won't be able to do much.
If entities A and B are in the same jurisdiction, then courts can compel A to give something (that was stolen) back to B; if they are not, probably not.
Either way, even a court can't force a (distributed, non-centralized) blockchain to assign ownership of something to a entity B: it has to first find entity A and compel/force them to deliver the keys that control the assets, through the use of force.
> So the courts would be powerless to enforce anything on a blockchain, even if they wanted.
Even if that was the case (and, as I pointed out, it's not clear that it is the case... a court can always compel a person to give out their keys under the threat of force, as long as that person is within their jurisdiction, regardless of blockchain magic sprinkles), that would make blockchain assets more valuable (since that means they can't be easily seized from you against your will), and not less.
> In short, blockchains are designed in a manner that makes them antithetical to property rights.
[citation needed]
As far as I can tell, nothing in blockchains prevents courts from exerting their power within their jurisdiction. In fact, in some sense, it might make it even easier to do so: remember that transactions are irreversibly recorded (i.e. if the courts needs evidence against you, you would be better off having used cash than any blockchain asset).
> I think most people want property rights and therefore will steer clear of blockchains.
Blockchains don't remove or restrict your property rights; they just don't enforce or explicitly encode it, just like any other formal system or physical asset: you always have to rely on an external non-automated system of courts and law enforcement to ensure that your property rights. Blockchains don't change that, and are not supposed to change that, or to replace courts and law enforcement. So-called "smart contracts" are not actual legal contracts and shouldn't be seen as such. Etc.
TL;DR: It seems to me like you are postulating that blockchains need a feature that no other asset or medium of exchange has (i.e. automated enforcement of property laws, without having a court and a judge involved), otherwise it's not useful. If you apply that same threshold of usefulness to other classes of assets, then most (if not all) assets are useless (since they don't encode and can't enforce your property rights over it).
> And just as many people prefer cash over electronic payments. It still doesn't mean that cash is, in any way, fatally flawed.
I don't think that's true. Someone asking to be paid in cash is inherently suspicious (at a minimum they're probably evading tax, if not an outright scammer).
> Of course they have to go to court to see their property rights enforced. Rights/laws are always enforced by humans, not by automated systems.
Right, which eliminates the big selling point of bitcoin. Code isn't and can't be law, because law enforcement will enforce the actual law rather than the code.
> Even if that was the case (and, as I pointed out, it's not clear that it is the case... a court can always compel a person to give out their keys under the threat of force, as long as that person is within their jurisdiction, regardless of blockchain magic sprinkles), that would make blockchain assets more valuable (since that means they can't be easily seized from you against your will), and not less.
I don't think that's true. If things are difficult to protect from theft then that makes them less valuable, e.g. a second-hand bicycle in a high-crime city is worth less than the same bicycle in a country that has bicycle registration and strong law enforcement. Decent people generally prefer to live under a legal system that returns stolen property to its rightful owners rather than "possession is the whole of the law"; yes, there is a risk that the courts might wrongly decide that my property was stolen from someone else and take it from me and give it to them, but you have to weigh that against the risk of my property actually being stolen by someone else.
I don't think that's true. Someone asking to be paid in cash is inherently suspicious (at a minimum they're probably evading tax, if not an outright scammer).
> Of course they have to go to court to see their property rights enforced. Rights/laws are always enforced by humans, not by automated systems.
Right, which eliminates the big selling point of bitcoin. Code isn't and can't be law, because law enforcement will enforce the actual law rather than the code.
> Even if that was the case (and, as I pointed out, it's not clear that it is the case... a court can always compel a person to give out their keys under the threat of force, as long as that person is within their jurisdiction, regardless of blockchain magic sprinkles), that would make blockchain assets more valuable (since that means they can't be easily seized from you against your will), and not less.
I don't think that's true. If things are difficult to protect from theft then that makes them less valuable, e.g. a second-hand bicycle in a high-crime city is worth less than the same bicycle in a country that has bicycle registration and strong law enforcement. Decent people generally prefer to live under a legal system that returns stolen property to its rightful owners rather than "possession is the whole of the law"; yes, there is a risk that the courts might wrongly decide that my property was stolen from someone else and take it from me and give it to them, but you have to weigh that against the risk of my property actually being stolen by someone else.
> Someone asking to be paid in cash is inherently suspicious (at a minimum they're probably evading tax, if not an outright scammer).
Maybe to you, but not to me. First, not all countries have widespread low-cost electronic payment systems and not all people have access to those (or banking services, in general). Second, I rather pay with cash just for the fact that it saves me on transaction fees. Third, a vendor might not have a working terminal... does that make the vendor a tax evader or a scammer?
I think your comment may apply in some places/cultures, but it certainly doesn't apply to all places/cultures.
I, for one, certainly don't want to live in a world where cash doesn't exist and I'm forced to have every single transaction I do be recorded. Your mileage may vary, but you should accept that there isn't a consensus: different people have different opinions on this.
> Right, which eliminates the big selling point of bitcoin. Code isn't and can't be law, because law enforcement will enforce the actual law rather than the code.
I'm not sure it does. Bitcoin never claimed to want to replace law or law enforcement, or to be immune from the application of law by courts and law enforcement. The proof is in the pudding... people are using/buying it, so there must be some sort of selling point that hasn't been eliminated.
> Decent people generally prefer to live under a legal system that returns stolen property to its rightful owners rather than "possession is the whole of the law"; yes, there is a risk that the courts might wrongly decide that my property was stolen from someone else and take it from me and give it to them, but you have to weigh that against the risk of my property actually being stolen by someone else.
Sure... and I did not say otherwise. My point is that property rights apply equally to blockchain assets as to other assets, and thus can be seized by a court. Are there cases where a court is unable to seize someone's cash or blockchain assets (or any other assets that can be "hidden")? Yes. Does that make property laws not apply? Not really.
Besides, there are (very popular) crypto assets that can be (and have been) centrally and arbitrarily seized, such as USDC. If someone is concerned about the scenarios you describe, then they can use blockchain assets that (e.g.) are 100% within US jurisdiction (assuming you live in the US) and be sure that their local courts can always "do something about it" if shit hits the fan.
Just like with cash, with crypto assets "posession is [also] nine-tenths of the law": by default, we assume that whoever is in control of something is their legitimate owner (and, just like "in real life", with cash, whoever is in the posession of it can use it for transactions). If that is not the case (i.e. if your property rights have been infringed on somehow), then, as always and as with any other asset, you have to go to a court of law to get "things fixed".
TL;DR: My overall point is... when it comes to "property rights", crypto assets and cash are quite similar... they can complicate enforcement, but they don't make the rights themselves void or completely unenforceable.
Maybe to you, but not to me. First, not all countries have widespread low-cost electronic payment systems and not all people have access to those (or banking services, in general). Second, I rather pay with cash just for the fact that it saves me on transaction fees. Third, a vendor might not have a working terminal... does that make the vendor a tax evader or a scammer?
I think your comment may apply in some places/cultures, but it certainly doesn't apply to all places/cultures.
I, for one, certainly don't want to live in a world where cash doesn't exist and I'm forced to have every single transaction I do be recorded. Your mileage may vary, but you should accept that there isn't a consensus: different people have different opinions on this.
> Right, which eliminates the big selling point of bitcoin. Code isn't and can't be law, because law enforcement will enforce the actual law rather than the code.
I'm not sure it does. Bitcoin never claimed to want to replace law or law enforcement, or to be immune from the application of law by courts and law enforcement. The proof is in the pudding... people are using/buying it, so there must be some sort of selling point that hasn't been eliminated.
> Decent people generally prefer to live under a legal system that returns stolen property to its rightful owners rather than "possession is the whole of the law"; yes, there is a risk that the courts might wrongly decide that my property was stolen from someone else and take it from me and give it to them, but you have to weigh that against the risk of my property actually being stolen by someone else.
Sure... and I did not say otherwise. My point is that property rights apply equally to blockchain assets as to other assets, and thus can be seized by a court. Are there cases where a court is unable to seize someone's cash or blockchain assets (or any other assets that can be "hidden")? Yes. Does that make property laws not apply? Not really.
Besides, there are (very popular) crypto assets that can be (and have been) centrally and arbitrarily seized, such as USDC. If someone is concerned about the scenarios you describe, then they can use blockchain assets that (e.g.) are 100% within US jurisdiction (assuming you live in the US) and be sure that their local courts can always "do something about it" if shit hits the fan.
Just like with cash, with crypto assets "posession is [also] nine-tenths of the law": by default, we assume that whoever is in control of something is their legitimate owner (and, just like "in real life", with cash, whoever is in the posession of it can use it for transactions). If that is not the case (i.e. if your property rights have been infringed on somehow), then, as always and as with any other asset, you have to go to a court of law to get "things fixed".
TL;DR: My overall point is... when it comes to "property rights", crypto assets and cash are quite similar... they can complicate enforcement, but they don't make the rights themselves void or completely unenforceable.
> Third, a vendor might not have a working terminal... does that make the vendor a tax evader or a scammer?
Often, yes. Among New York taxis it's notorious - a driver who tells you their card machine isn't working is probably scamming you in other ways, and will probably decide it actually is working if you tell them you have no cash on you. More generally I've had more than one vendor tell me "oh, in that case I have to include the tax" if I ask to pay by card.
> you should accept that there isn't a consensus: different people have different opinions on this.
Different people have different opinions, but the trend is pretty consistent IMO. E.g. bearer bonds are almost completely unknown these days.
> Bitcoin never claimed to want to replace law or law enforcement, or to be immune from the application of law by courts and law enforcement.
Bitcoin itself may not have claimed that (the white paper talks about making transactions irreversible explicitly to avoid the need to mediate disputes, but I guess that's not strictly the same thing), but certainly many Bitcoin advocates did.
> people are using/buying it, so there must be some sort of selling point that hasn't been eliminated.
It's good for buying drugs online, it's good for ransomware, it's ok for speculation. I don't see anything that's a net positive for society being done with it.
> Sure... and I did not say otherwise. My point is that property rights apply equally to blockchain assets as to other assets, and thus can be seized by a court. Are there cases where a court is unable to seize someone's cash or blockchain assets (or any other assets that can be "hidden")? Yes. Does that make property laws not apply? Not really.
I think it's fair to say that property rights apply more weakly to assets that are harder for courts to return to their rightful owner. And yes, I agree that that amounts to saying that property rights for cash are weaker than property rights for property that has a stronger system of ownership records (though those of bitcoin are probably even weaker than those of cash, since courts are even less effective at returning stolen bitcoin than stolen cash in practice).
Often, yes. Among New York taxis it's notorious - a driver who tells you their card machine isn't working is probably scamming you in other ways, and will probably decide it actually is working if you tell them you have no cash on you. More generally I've had more than one vendor tell me "oh, in that case I have to include the tax" if I ask to pay by card.
> you should accept that there isn't a consensus: different people have different opinions on this.
Different people have different opinions, but the trend is pretty consistent IMO. E.g. bearer bonds are almost completely unknown these days.
> Bitcoin never claimed to want to replace law or law enforcement, or to be immune from the application of law by courts and law enforcement.
Bitcoin itself may not have claimed that (the white paper talks about making transactions irreversible explicitly to avoid the need to mediate disputes, but I guess that's not strictly the same thing), but certainly many Bitcoin advocates did.
> people are using/buying it, so there must be some sort of selling point that hasn't been eliminated.
It's good for buying drugs online, it's good for ransomware, it's ok for speculation. I don't see anything that's a net positive for society being done with it.
> Sure... and I did not say otherwise. My point is that property rights apply equally to blockchain assets as to other assets, and thus can be seized by a court. Are there cases where a court is unable to seize someone's cash or blockchain assets (or any other assets that can be "hidden")? Yes. Does that make property laws not apply? Not really.
I think it's fair to say that property rights apply more weakly to assets that are harder for courts to return to their rightful owner. And yes, I agree that that amounts to saying that property rights for cash are weaker than property rights for property that has a stronger system of ownership records (though those of bitcoin are probably even weaker than those of cash, since courts are even less effective at returning stolen bitcoin than stolen cash in practice).
The issue isn't that blockchains lack an automated enforcement of property rights, but that property rights are not enforceable at all (either by an automated system or by courts of justice). Why? Because in order to enforce property rights it is necessary that some authority have the power to seize assets from one person and hand them to another person. Blockchains are designed specifically to prevent that.
Cash doesn't have this problem, because it's a physical object and physical objects can be seized. You seem to be making the point that because sometimes cash is stolen and courts aren't unable to recover it this means that somehow property rights don't apply to cash?
Cash doesn't have this problem, because it's a physical object and physical objects can be seized. You seem to be making the point that because sometimes cash is stolen and courts aren't unable to recover it this means that somehow property rights don't apply to cash?
My point is that property laws apply equally to cash and to (so called) blockchain assets (and to many other types of assets): if you are within the court's jurisdiction, it can always compel you to give them whatever asset you supposedly stole from someone. If the thief somehow makes that impossible (e.g. hid the money, or hid the key that controls your blockchain assets), then the judge will make the thief's ass rot in jail.
If you are not within the court's jurisdiction, then it is powerless, yes. But that applies equally to cash, blockchain assets or any asset, really.
> The issue isn't that blockchains lack an automated enforcement of property rights, but that property rights are not enforceable at all (either by an automated system or by courts of justice). Why? Because in order to enforce property rights it is necessary that some authority have the power to seize assets from one person and hand them to another person. Blockchains are designed specifically to prevent that.
Blockchains are not designed specifically for that, it's just part of the feature set (if they are decentralized): things cannot be arbitrarily seized. It's a feature, not a bug. The court can seize the assets, but they have to get to the person that has the assets in their posession (through a key), just like for any other asset (i.e. they have to find the asset/key first, or the person that knows where the asset is).
Also, note that blockchains can't prevent a court from jailing you until you "cough up" the assets you stole, if you are within the court's jurisdiction, just like it works for any other asset.
> Cash doesn't have this problem, because it's a physical object and physical objects can be seized.
Yes, and physical objects can also be hidden. How do you seize the thief's loot, then, if it's hidden? Well.. you put him in jail until he coughs up where he hid the loot. Same with crypto assets: "until you cough up the key, you'll be in jail, and your own assets will be liquidated to cover your theft". Simple. How does a blockchain prevent that?
> You seem to be making the point that because sometimes cash is stolen and courts aren't unable to recover it this means that somehow property rights don't apply to cash?
You seem to be making the point that, because sometimes it might be difficult for a court to recover "crypto assets" from a thief, somehow property rights stop existing and don't apply to such assets, and courts become powerless (because "blockchain magic sprinkles"?). Many "crypto people" would like that to be true, but it really isn't.
Blockchains may complicate the work of courts and law enforcement (the same way that the use of cash in drug transactions complicates the work of courts and law enforcement), but that's not the same as saying that "property rights/laws" don't apply to "blockchain assets" (or cash).
EDIT: And, furthermore, because the fact that "blockchain transactions" are permanently recorded and readily available, unlike "cash transactions", it might even be easier to prove the theft in court. How would you prove to a court that the money that is in someone's posession has been pickpocketed from you? Seems more complicated to me, when there probably isn't going to be any register of it (assuming there's no CCTV around).
EDIT2: Also, note that some blockchain assets can be (and have been) centrally and arbitrarily seized by (e.g.) US courts, if they want, as long as the entity that controls the token is within US jurisdiction. Here's an example of Coinbase/Centre, which is within US jurisdiction, blacklisting (i.e. seizing, effectively) 100 000 USDC (i.e. ~100 000 USD) from a thief/hacker, due to a court order or some collaboration with law enforcement: https://cryptobriefing.com/100000-usdc-blacklisted-highlight...
If you are not within the court's jurisdiction, then it is powerless, yes. But that applies equally to cash, blockchain assets or any asset, really.
> The issue isn't that blockchains lack an automated enforcement of property rights, but that property rights are not enforceable at all (either by an automated system or by courts of justice). Why? Because in order to enforce property rights it is necessary that some authority have the power to seize assets from one person and hand them to another person. Blockchains are designed specifically to prevent that.
Blockchains are not designed specifically for that, it's just part of the feature set (if they are decentralized): things cannot be arbitrarily seized. It's a feature, not a bug. The court can seize the assets, but they have to get to the person that has the assets in their posession (through a key), just like for any other asset (i.e. they have to find the asset/key first, or the person that knows where the asset is).
Also, note that blockchains can't prevent a court from jailing you until you "cough up" the assets you stole, if you are within the court's jurisdiction, just like it works for any other asset.
> Cash doesn't have this problem, because it's a physical object and physical objects can be seized.
Yes, and physical objects can also be hidden. How do you seize the thief's loot, then, if it's hidden? Well.. you put him in jail until he coughs up where he hid the loot. Same with crypto assets: "until you cough up the key, you'll be in jail, and your own assets will be liquidated to cover your theft". Simple. How does a blockchain prevent that?
> You seem to be making the point that because sometimes cash is stolen and courts aren't unable to recover it this means that somehow property rights don't apply to cash?
You seem to be making the point that, because sometimes it might be difficult for a court to recover "crypto assets" from a thief, somehow property rights stop existing and don't apply to such assets, and courts become powerless (because "blockchain magic sprinkles"?). Many "crypto people" would like that to be true, but it really isn't.
Blockchains may complicate the work of courts and law enforcement (the same way that the use of cash in drug transactions complicates the work of courts and law enforcement), but that's not the same as saying that "property rights/laws" don't apply to "blockchain assets" (or cash).
EDIT: And, furthermore, because the fact that "blockchain transactions" are permanently recorded and readily available, unlike "cash transactions", it might even be easier to prove the theft in court. How would you prove to a court that the money that is in someone's posession has been pickpocketed from you? Seems more complicated to me, when there probably isn't going to be any register of it (assuming there's no CCTV around).
EDIT2: Also, note that some blockchain assets can be (and have been) centrally and arbitrarily seized by (e.g.) US courts, if they want, as long as the entity that controls the token is within US jurisdiction. Here's an example of Coinbase/Centre, which is within US jurisdiction, blacklisting (i.e. seizing, effectively) 100 000 USDC (i.e. ~100 000 USD) from a thief/hacker, due to a court order or some collaboration with law enforcement: https://cryptobriefing.com/100000-usdc-blacklisted-highlight...
If it's true that blockchain assets can be seized by courts, it should be pretty easy to find hundreds of cases of such seizures. We have plenty of documented cases of pickpockets that have been arrested and charged with theft, something that should be very rare because according to you it's nearly impossible to prove that a pickpocket has stolen cash or other random items from a member of the public. And yet how many documented cases do we have of courts having seized blockchain assets? Very, very few. The only one that you mention is not even a seizure, is it? Not to mention USDC is not a normal blockchain asset, being centrally issued, and therefore controlled by a single entity.
> eg: owning a domain name
I just want to comment on the only tangible use case you mention.
What happens the day a rogue actor gets ahold of .gov, NSA/CIA/DHS, or Google's/Microsoft's domain and sends it to /dev/null?
The "no central authority" point of Blockchains is too risky.
Ps, saying that Blockchains solve the double spend problem is like saying the iPhone solves the "running-out-of-battery" problem; it comes with a charger. Nowhere else do we have the double spend problem, simply because we have a CA.
I just want to comment on the only tangible use case you mention.
What happens the day a rogue actor gets ahold of .gov, NSA/CIA/DHS, or Google's/Microsoft's domain and sends it to /dev/null?
The "no central authority" point of Blockchains is too risky.
Ps, saying that Blockchains solve the double spend problem is like saying the iPhone solves the "running-out-of-battery" problem; it comes with a charger. Nowhere else do we have the double spend problem, simply because we have a CA.
I think it would be fun for someone to write a short story / novel around a rogue AI emerging within the ecosystem created by "ownerless contracts and program execution" and "programmable free markets".
Imagine a programmer creating a genetic algorithm for crypto-trading. They enable to code to purchase new VMs to execute itself when it has a positive balance (on a cloud service that allows crypto / ownerless payments). The successful variants propagate to new VMs, the unsuccessful ones die off.
The code pays a certain percentage out to the creator's wallet.
Imagine a programmer creating a genetic algorithm for crypto-trading. They enable to code to purchase new VMs to execute itself when it has a positive balance (on a cloud service that allows crypto / ownerless payments). The successful variants propagate to new VMs, the unsuccessful ones die off.
The code pays a certain percentage out to the creator's wallet.
> Blockchains and crypto tech does seem to provide solutions to many challenging problems: distributed ledgers, immutable and decentralized data, ownerless contracts and program execution, secure and decentralized ownership of a digital asset
None of these are real problems. Each and every one was invented as a problem as a post hoc rationalisation for Blockchain technologies.
None of these are real problems. Each and every one was invented as a problem as a post hoc rationalisation for Blockchain technologies.
The same could be said for many problems in computer science and on the web: these were not problems humans were trying to solve before computers.
Blockchains give us new paradigms (such as ownerless & distributed program execution) that most of us weren’t thinking about before it was achievable.
Blockchains give us new paradigms (such as ownerless & distributed program execution) that most of us weren’t thinking about before it was achievable.
Many of mans greatest inventions have started like this. Just because we are not aware of a problem today, does not mean it is not there, will not come, or that it can be solved efficiently in other ways.
Blockchain is quite old at this point by technology standards, no? In 2017 there was a ton of attention and funding going into the space - it's not as if there hasn't been the opportunity to do something interesting with blockchain.
The fine article and your comment both say crypto is 'old' tech. TFA points to iPhone's 2007 release date as if no one (even apple themselves had tried to crack the personal digital assistant before). Which is a laughable omission of history. The first PDA landed in the 80s. Apple started development in 87 on the newton and didn't have a product til 93. The iphone stands on the ashes of 2 decades of product and engineering iterations. The AI winter lasted from 80s until the 2010s. Technology takes time and innovation is a discrete not continuous function. If we all gave up after 10 years we would be sitting in caves and probably not even planting seeds.
TFA is full of blustery arguments to say that crypto is a worthless dead end and should be banned deserves more reasoned arguments. Toning down the emotional levels might be a good first step.
TFA is full of blustery arguments to say that crypto is a worthless dead end and should be banned deserves more reasoned arguments. Toning down the emotional levels might be a good first step.
I don't think you should conflate my comment with the TFA article. I didn't write it, and I have no interest in defending it's points.
But I don't totally understand your comparison of early PDA's to the current state of cryptocurrency. Palm pilots were a successful product in their day. Blackberries were hugely successful. It's not as if the iPhone was the first example of value being created in this space.
As far as blockchain, from what I can tell, the only value its creating so far is for drug dealers, those executing ransomware attacks, and people running cryptocurrency exchanges.
I'm not ruling out the idea that someone will find an interesting use-case for cryptocurrency in the future. But what seems a bit strange to me is that cryptocurrency advocates seem to want us all to give a ton of attention and investment towards this space which so far has produced nothing of value. It seems to me that the rational standpoint will be to ignore it until someone can actually demonstrate the "potential" which has been promised for so many years now.
But I don't totally understand your comparison of early PDA's to the current state of cryptocurrency. Palm pilots were a successful product in their day. Blackberries were hugely successful. It's not as if the iPhone was the first example of value being created in this space.
As far as blockchain, from what I can tell, the only value its creating so far is for drug dealers, those executing ransomware attacks, and people running cryptocurrency exchanges.
I'm not ruling out the idea that someone will find an interesting use-case for cryptocurrency in the future. But what seems a bit strange to me is that cryptocurrency advocates seem to want us all to give a ton of attention and investment towards this space which so far has produced nothing of value. It seems to me that the rational standpoint will be to ignore it until someone can actually demonstrate the "potential" which has been promised for so many years now.
Can you name such a technology that existed for well over a decade before any real use cases were found?
LASER, back when it was still written in all caps. It was called "the most useless invention of the century" for a while, and it took close to a decade to figure a use for it.
But I think the whole discussion is missing the point. Blockchain is mostly not trying to be a solution to engineering problems, but societal, "how do we do X without a trustworthy party involved". We already know how to do any given X with someone trustworthy involved.
And, fundamentally, that's how society works, no matter how much anarchists wish it didn't. It's almost always possible to agree to some party to be in charge, making blockchain mostly pointless, no matter how much money is poured in the technical details.
But I think the whole discussion is missing the point. Blockchain is mostly not trying to be a solution to engineering problems, but societal, "how do we do X without a trustworthy party involved". We already know how to do any given X with someone trustworthy involved.
And, fundamentally, that's how society works, no matter how much anarchists wish it didn't. It's almost always possible to agree to some party to be in charge, making blockchain mostly pointless, no matter how much money is poured in the technical details.
But this is a totally abstract argument. Can you point to a tangible example of blockchain being used to solve a real societal problem, in a way which is competitive with other, more conventional solutions?
I can't. That's why I'm saying it's the real problem, not the engineering side.
The "Git" application is a blockchain for decentralized management of the Linux kernel source code.
The "Bitcoin" application is a tool useful for buying and selling recreational drugs without exposure to the physical risk posed by cash transactions. Edit: That is, the physical/financial risk posed to you by the other party or third-party robbers. Legal risk is probably also reduced: law-enforcement deanonymization attacks seem much less frequent than busting people with drugs on the street.
Blockchain-based markets in general enable transactions without revealing personally identifying information to the counterparty or platform while circumventing regulatory restrictions on conventional transactions.
The "Bitcoin" application is a tool useful for buying and selling recreational drugs without exposure to the physical risk posed by cash transactions. Edit: That is, the physical/financial risk posed to you by the other party or third-party robbers. Legal risk is probably also reduced: law-enforcement deanonymization attacks seem much less frequent than busting people with drugs on the street.
Blockchain-based markets in general enable transactions without revealing personally identifying information to the counterparty or platform while circumventing regulatory restrictions on conventional transactions.
Git is not a blockchain, there's no distributed consensus algorithm. The consensus on what's the main branch and what's the authoritative history lies with Linus Torvalds.
> The "Bitcoin" application is a tool useful for buying and selling recreational drugs without exposure to the physical risk posed by cash transactions.
It hasn't been since at least 2018; authorities regularly seize millions worth of bitcoins together with drug dealers, and have been openly bragging about their de-anonymization successes as early as 2019.
> The "Bitcoin" application is a tool useful for buying and selling recreational drugs without exposure to the physical risk posed by cash transactions.
It hasn't been since at least 2018; authorities regularly seize millions worth of bitcoins together with drug dealers, and have been openly bragging about their de-anonymization successes as early as 2019.
[deleted]
clarified above, I mean interparty violence, not legal threat
> what's the authoritative history lies with Linus Torvalds.
I agree with your point about distributed consensus in general, but there isn't really a single authoritative history of linux, there are tons of important forks simultaneously maintained.
As for deanonymization, that doesn't seem to be very common. Compare to the rate at which people get busted by street cops for buying drugs.
> what's the authoritative history lies with Linus Torvalds.
I agree with your point about distributed consensus in general, but there isn't really a single authoritative history of linux, there are tons of important forks simultaneously maintained.
As for deanonymization, that doesn't seem to be very common. Compare to the rate at which people get busted by street cops for buying drugs.
> I agree with your point about distributed consensus in general, but there isn't really a single authoritative history of linux, there are tons of important forks simultaneously maintained.
What does that have to do with blockchain? Is bittorrent to you "blockchain for downloads" just because it's decentralized and has hashes?
What does that have to do with blockchain? Is bittorrent to you "blockchain for downloads" just because it's decentralized and has hashes?
I've changed my mind after reading https://en.wikipedia.org/wiki/Blockchain#Structure
[deleted]
Git isn't a blockchain.
> The blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008
> Git was created by Linus Torvalds in 2005 for development of the Linux kernel
They use similar data structures, but blockchain is more than a Merkel tree, it also includes a consensus algorithm.
> Git was created by Linus Torvalds in 2005 for development of the Linux kernel
They use similar data structures, but blockchain is more than a Merkel tree, it also includes a consensus algorithm.
[deleted]
> Ending this scourge on civilization is one of most important political problems facing the international community these days, and marks a new era of global cooperation on financial regulation that now necessarily transcends borders and nations.
A very neutral, objective viewpoint.
> However bitcoin is a technology which did not arise out of an engineering effort directed towards a specific problem or market inefficiency, but instead out of a anarchist political narrative that views democratic control of the money supply and law enforcement as the problem.
A completely false claim.
> It is an attempted financial coup by the anarcho-capitalist wing of Silicon Valley to set themselves up as central bankers but without any accountability or democratic oversight.
Another completely false claim.
> Any non-zero valuation for bitcoin depends on it either yielding some positive cashflows—which is impossible—or depends on an infinite chain of economically irrational actors who will all continue pour money into the scheme ad infinitum irregardless of fundamentals.
This one is also objectively false.
This article is... not good. There exist some decent criticisms of cryptocurrencies. This article doesn't seem to contain any, and is just the biased ranting of someone who doesn't understand them very well.
I flagged it.
A very neutral, objective viewpoint.
> However bitcoin is a technology which did not arise out of an engineering effort directed towards a specific problem or market inefficiency, but instead out of a anarchist political narrative that views democratic control of the money supply and law enforcement as the problem.
A completely false claim.
> It is an attempted financial coup by the anarcho-capitalist wing of Silicon Valley to set themselves up as central bankers but without any accountability or democratic oversight.
Another completely false claim.
> Any non-zero valuation for bitcoin depends on it either yielding some positive cashflows—which is impossible—or depends on an infinite chain of economically irrational actors who will all continue pour money into the scheme ad infinitum irregardless of fundamentals.
This one is also objectively false.
This article is... not good. There exist some decent criticisms of cryptocurrencies. This article doesn't seem to contain any, and is just the biased ranting of someone who doesn't understand them very well.
I flagged it.
Maybe you can explain more, and not just say “objectively false”?
>> However bitcoin is a technology which did not arise out of an engineering effort directed towards a specific problem or market inefficiency, but instead out of a anarchist political narrative that views democratic control of the money supply and law enforcement as the problem.
>A completely false claim.
my admittedly not in depth understanding of the history is that it should be written as:
Bitcoin as a technology arose out of an engineering effort directed towards solving what its anarchist political creators saw as the problems of democratic control of the money supply and law enforcement.
I mean I would say it is false that it did not arise out of an engineering effort to solve a problem, just not a problem that most would agree is much of a problem.
>A completely false claim.
my admittedly not in depth understanding of the history is that it should be written as:
Bitcoin as a technology arose out of an engineering effort directed towards solving what its anarchist political creators saw as the problems of democratic control of the money supply and law enforcement.
I mean I would say it is false that it did not arise out of an engineering effort to solve a problem, just not a problem that most would agree is much of a problem.
There is no available information about bitcoin's creator(s) or their political viewpoints.
I agree, it's flame bait that adds nothing new to the discussion and the discussion here will become what can be summed up as "no it doesn't.. oh yes it does.. oh no it doesn't.."
> circumventing the rule of law
I'll risk some karma here (I don't place a high value on it!)
A major use of cryptocurrencies is for drug-dealing. That is trade, and trade is normally considered to be a good thing, economically.
The "rule of law" makes possible the (non-violent) enforcement of contracts, so it facilitates trade. But it's prefectly possible to trade without relying on access to courts; in many places, the courts are corrupt, or the system is so slow as to be useless. But trade goes on.
I'm stuck to think of any other way in which the "rule of law" confers economic value, and the war against drugs clearly reduces economic output.
I'm not taking a position on whether the drugs trade is more or less reprehensible than (e.g.) the trade in fossil fuels. But it happens, and it's been happening ever since Prohibition and Reefer Madness; apparently "rule of law" doesn't rule very effectively.
I'll risk some karma here (I don't place a high value on it!)
A major use of cryptocurrencies is for drug-dealing. That is trade, and trade is normally considered to be a good thing, economically.
The "rule of law" makes possible the (non-violent) enforcement of contracts, so it facilitates trade. But it's prefectly possible to trade without relying on access to courts; in many places, the courts are corrupt, or the system is so slow as to be useless. But trade goes on.
I'm stuck to think of any other way in which the "rule of law" confers economic value, and the war against drugs clearly reduces economic output.
I'm not taking a position on whether the drugs trade is more or less reprehensible than (e.g.) the trade in fossil fuels. But it happens, and it's been happening ever since Prohibition and Reefer Madness; apparently "rule of law" doesn't rule very effectively.
> The notion that these technologies can transform financial services in any way is laughable, because there is no mechanism or specific problem they aim to address that is not currently better done with a simpler solution.
Well, he hasn't obviously tried to send money from Europe to Latin America.
On $2000 transaction. $25-40 bank transfer (takes up to 5 days). $80 Payoneer (can be fast, but can also take 2 days) $1 Bitcoin (4 hours)
Well, he hasn't obviously tried to send money from Europe to Latin America.
On $2000 transaction. $25-40 bank transfer (takes up to 5 days). $80 Payoneer (can be fast, but can also take 2 days) $1 Bitcoin (4 hours)
Just looked it up for Western Union: To transfer 2000€ from Germany to a Chilean bank account, you pay a fee of 0.90€. The currency exchange spread adds 13.32€ to the costs. Transfer time is between 0-4 work days.
If you want to have cash in hand within minutes, they offer that too, albeit with a hefty surcharge.
With Bitcoin, you have to pay an on-ramp and an off-ramp because EUR->Bitcoin->CLP, which will be hard to get done cheaper than the WU currency exchange spread (introductory offers don't count, so keep your anecdote). Given current Bitcoin volatility you need to do the currency exchange quickly or you may have a hodl moment and have to wait for Bitcoin to regain its value.
I really fail to see where the great savings from carrying out such a transaction via Bitcoin are supposed to come from, in particular when take into account the number of intermediaries I have to interact with and trust and the technical complexity involved in handling Bitcoin. People are always willing to pay a small fee for comfort and security.
If you want to have cash in hand within minutes, they offer that too, albeit with a hefty surcharge.
With Bitcoin, you have to pay an on-ramp and an off-ramp because EUR->Bitcoin->CLP, which will be hard to get done cheaper than the WU currency exchange spread (introductory offers don't count, so keep your anecdote). Given current Bitcoin volatility you need to do the currency exchange quickly or you may have a hodl moment and have to wait for Bitcoin to regain its value.
I really fail to see where the great savings from carrying out such a transaction via Bitcoin are supposed to come from, in particular when take into account the number of intermediaries I have to interact with and trust and the technical complexity involved in handling Bitcoin. People are always willing to pay a small fee for comfort and security.
Western Union doesn't have business accounts in most of countries. Normal transaction doesn't allow Business -> Business payments. They cannot send money to Iran (where we also have partners).
But you are right. Their fees are way cheaper than bank & Payoneer.
Ad on-ramp&off-ramp - sure. This is a temporary situation in which it adds some expense. Hopefully, people will have a chance to have cards refilled directly with cryptocurrencies worldwide (they already exist for major countries).
But you are right. Their fees are way cheaper than bank & Payoneer.
Ad on-ramp&off-ramp - sure. This is a temporary situation in which it adds some expense. Hopefully, people will have a chance to have cards refilled directly with cryptocurrencies worldwide (they already exist for major countries).
How much to get your $2000 in and out of a bitcoin wallet/exchange?
It depends on exchange. Each has different fees.
Also, as Bitcoin is deflationary, in those 5 years, I usually got more than $2000.
But this is I guess just temporary. And if Bitcoin will grow, it will stabilize (probably) and interfacing with the world will get cheaper (both exchange to fiat or buying directly for cryptocurrencies or cryptocurrency-backed payment card).
Also, as Bitcoin is deflationary, in those 5 years, I usually got more than $2000.
But this is I guess just temporary. And if Bitcoin will grow, it will stabilize (probably) and interfacing with the world will get cheaper (both exchange to fiat or buying directly for cryptocurrencies or cryptocurrency-backed payment card).
some exchanges offer credit cards which means you can use the amount directly.
I understand having a negative opinion of crypto but this comes off as nearly totalitarian and tyrannical. The norm for liberal democracies is to regulate moderately and find compromise, not wholesale push a single interested party’s will.
> scourge on civilization international community a fight for the cause of democratic norms rules-based international order consistent pushback “innovation” mistaken beliefs and not supported by any evidence quirky ideas chattering class “the potential for innovation” amorphous and hand-wavy rhetorical gestures a anarchist political narrative Private entities now wish to disrupt the global international order attempted financial coup anarcho-capitalist wing of Silicon Valley something so unregulated and volatile ideological purpose crypto acolytes cling to this narrative misplaced faith magical thinking and unspecified means or empty appeals failed narrative seemingly plausible zero evidence token schemes failed narrative highly irrational infinite chain of economically irrational actors greater pools of fools into the scheme Ponzi scheme laughable absurd to think systemic misunderstanding absurdly small original sin bluster amazing solution for nothing non-existent problems they don’t understand extremely byzantine Rube Goldberg-esque slot machines casino fiefdoms money laundering, ransomware criminality dark money veneer of gambling false claims zero evidence environmental devastation increasingly frothy ecosystem of scams to defraud the public
> These days I spend a great deal of my time writing about and helping inform public policy on the global cryptocurrency crackdown. Ending this scourge on civilization is one of most important political problems facing the international community these days, and marks a new era of global cooperation on financial regulation that now necessarily transcends borders and nations. The fight against cryptocurrency and ransomware is now a fight for the cause of democratic norms and the continuation of the rules-based international order.
I have never met this person, but I am certain I would not enjoy a conversation with them.
I have never met this person, but I am certain I would not enjoy a conversation with them.
> However bitcoin is a technology which did not arise out of an engineering effort directed towards a specific problem or market inefficiency, but instead out of a anarchist political narrative that views democratic control of the money supply and law enforcement as the problem.
omg this is painful. democratic control of money supply? no market inefficiencies? does author live in a separate reality?
bitcoin is the biggest invention in financial world since sliced bread - dematerialized, decentralized, censorship resistant, scarce, non-debaseable, with clear issuance schedule, asset and transaction platform with incentive structure that ensures security and functioning for hundred years.
omg this is painful. democratic control of money supply? no market inefficiencies? does author live in a separate reality?
bitcoin is the biggest invention in financial world since sliced bread - dematerialized, decentralized, censorship resistant, scarce, non-debaseable, with clear issuance schedule, asset and transaction platform with incentive structure that ensures security and functioning for hundred years.
I agree that Bitcoin probably has had about as much impact on the financial system as sliced bread.
It’s ok, people like you wondered why would anybody need to speak into a tube with a wire instead of meeting in person, why would anybody send a radio broadcast to nobody in particular, why would anybody send email when post and fax are ubiquitous.
Some just need time to process the upside of new tech.
But please, write down your thoughts and re-read them every couple years.
Some just need time to process the upside of new tech.
But please, write down your thoughts and re-read them every couple years.
All of the technologies you mentioned gained wide adoption much faster than blockchain has.
> why would anybody need to speak into a tube with a wire instead of meeting in person
I am fairly sure the value proposition of instantaneous vocal communication at a distance was extremely obvious even before the telephone existed.
> why would anybody need to speak into a tube with a wire instead of meeting in person
I am fairly sure the value proposition of instantaneous vocal communication at a distance was extremely obvious even before the telephone existed.
> technologies you mentioned gained wide adoption much faster than blockchain has
They really didn’t, do some research.
> value proposition of instantaneous vocal communication at a distance was extremely obvious even before the telephone existed
And value proposition of being in full control of your financial assets and ability to transfer them anywhere around the world without intermediaries is not extremely obvious?
Give it time, you’ll get it.
They really didn’t, do some research.
> value proposition of instantaneous vocal communication at a distance was extremely obvious even before the telephone existed
And value proposition of being in full control of your financial assets and ability to transfer them anywhere around the world without intermediaries is not extremely obvious?
Give it time, you’ll get it.
> bitcoin is the biggest invention in financial world since sliced bread
Puzzling. Is sliced bread a financial invention? The sliced bread thing has always puzzled me every time I've come across it. Is it saying that there's no real added value, or that the added value in convenience is really big?
Puzzling. Is sliced bread a financial invention? The sliced bread thing has always puzzled me every time I've come across it. Is it saying that there's no real added value, or that the added value in convenience is really big?
But people who use an expression don't always know what it means. Thus googling for it does not tell you whether they really understand what they are saying.
There is innovation in the crypto space but it's not being talked about or covered in mainstream media. Not yet at least.
Just because the author has fallen victim to the media oligopoly and is thus unable to see any innovation past all the flashy CNN, Facebook and Cointelegraph interfaces, doesn't mean there is no innovation occuring.
I'm involved in an innovative project right now which is creating real world economic value. It's small but we've already proved the concept and are profitable. The blockchain adds undeniable value to our use case.
When people finally find out about all the innovation that has been going on outside of their awarenesses, it's going to be a shock and they will regret it.
Just because the author has fallen victim to the media oligopoly and is thus unable to see any innovation past all the flashy CNN, Facebook and Cointelegraph interfaces, doesn't mean there is no innovation occuring.
I'm involved in an innovative project right now which is creating real world economic value. It's small but we've already proved the concept and are profitable. The blockchain adds undeniable value to our use case.
When people finally find out about all the innovation that has been going on outside of their awarenesses, it's going to be a shock and they will regret it.
I've been involved in "Crypto" since before Bitcoin (yup), and I never cease to be surprised at the innovation-blindness here on HN!
Even clearly obvious disruptions that are already affecting the financial industry (such as DeFi exchanges, etc.), and which signal even greater disruptions to come, are blithely discarded as irrelevant.
The abusive treatment of free citizens by the banking system is going to end. "The banks" haven't yet really declared war on Crypto, perhaps because they still feel unassailable in their super-national castles, well beyond the reach of any national law or moral principle.
This naiveté will be their downfall, I hope.
Even clearly obvious disruptions that are already affecting the financial industry (such as DeFi exchanges, etc.), and which signal even greater disruptions to come, are blithely discarded as irrelevant.
The abusive treatment of free citizens by the banking system is going to end. "The banks" haven't yet really declared war on Crypto, perhaps because they still feel unassailable in their super-national castles, well beyond the reach of any national law or moral principle.
This naiveté will be their downfall, I hope.
Are you sure about that?
How did you arrive at the conclusion that it is undeniably a value-add?
How did you arrive at the conclusion that it is undeniably a value-add?
We came up with a way to allow investors to independently verify how much profit a business makes with certainty without having to trust company directors or accountants.
Clearly this is a value-add for new/small companies which don't yet have a reputation as it reduces risk for the investor. It's also a value-add for investors of big companies as it prevents them from being mislead about quarterly profits.
In our specific case, we applied it to a real estate rental business. We use the token as the primary store of value for the profits of the underlying economic activity. We have a holding company but the share was made worthless as part of the company's memorandum of incorporation. This can be achieved with a couple of simple clauses.
The token is a much more transparent and more reliable financial instrument to represent ownership of some economic activity than the share.
Being able to then trade it on decentralized exchanges is another advantage but more of a convenience at this stage.
The next phase for the community will be to build search engines which can crawl blockchains and decentralized exchanges to find tokenized businesses.
Clearly this is a value-add for new/small companies which don't yet have a reputation as it reduces risk for the investor. It's also a value-add for investors of big companies as it prevents them from being mislead about quarterly profits.
In our specific case, we applied it to a real estate rental business. We use the token as the primary store of value for the profits of the underlying economic activity. We have a holding company but the share was made worthless as part of the company's memorandum of incorporation. This can be achieved with a couple of simple clauses.
The token is a much more transparent and more reliable financial instrument to represent ownership of some economic activity than the share.
Being able to then trade it on decentralized exchanges is another advantage but more of a convenience at this stage.
The next phase for the community will be to build search engines which can crawl blockchains and decentralized exchanges to find tokenized businesses.
> We use the token as the primary store of value for the profits of the underlying economic activity.
Wonderful, so when the proprietor starts embezzling from the real-world operations, I’m sure you have that sorted out. Just sprinkle some blockchain on it.
Your comment seems well meaning, but you do not seem to understand the real issues with due diligence. Source: ran US equity book for large hedge fund
Wonderful, so when the proprietor starts embezzling from the real-world operations, I’m sure you have that sorted out. Just sprinkle some blockchain on it.
Your comment seems well meaning, but you do not seem to understand the real issues with due diligence. Source: ran US equity book for large hedge fund
There is no single operator. The company is decentralised with each director having the same vote. Even if an insider started embezzling funds, we would be able to see it based on the absense of proof of profit on the blockchain.
Since each person can verify the profits on-chain independently, it would raise raise flags if the amount if profits did not correspond to the expected amount of profits based on the assets which the business claims to have. All assets are disclosed publicly.
Since each person can verify the profits on-chain independently, it would raise raise flags if the amount if profits did not correspond to the expected amount of profits based on the assets which the business claims to have. All assets are disclosed publicly.
I understand how you think the world works. I’m saying that it doesn’t work that way.
You can verify what you _think_ the profits are. What I’m saying is that you’re verifying something that isn’t relevant.
Do you think there aren’t sophisticated accounting systems, auditors, banking checks, etc to accomplish what you describe? And yet people will always find a way with enough incentive.
You can verify what you _think_ the profits are. What I’m saying is that you’re verifying something that isn’t relevant.
Do you think there aren’t sophisticated accounting systems, auditors, banking checks, etc to accomplish what you describe? And yet people will always find a way with enough incentive.
The buybacks can only be done with real money. This is not an opinion, it's a hard fact since buybacks are done on the open market. Sure, the directors who handle finance could fake profit by taking on debt and using it to buyback the token to drive up the price artificially... But there is no incentive for someone to commit such crime since the buybacks benefit the whole community and not specifically the attacker. Also, the community can see if a director is selling their tokens (since it's all on the blockchain and the director's wallet is known).
A director could potentially do something elaborate like buy a lot of tokens at a low price anonymously, then take a bank loan and use it to pump up the price through fake buybacks then dump for a higher price some years later hoping that they don't get caught by their bank in the meantime for misusing the credit... But then why would they use our blockchain and jeopardize the value of their own large director's stake (from their main wallet) with such scheme? Why not use a random token not affiliated with them and which has lower volume where this scheme would have more effect on price and where the attacker has nothing at stake?
No matter which way you look at it, this is a huge transparency improvement over shares.
A director could potentially do something elaborate like buy a lot of tokens at a low price anonymously, then take a bank loan and use it to pump up the price through fake buybacks then dump for a higher price some years later hoping that they don't get caught by their bank in the meantime for misusing the credit... But then why would they use our blockchain and jeopardize the value of their own large director's stake (from their main wallet) with such scheme? Why not use a random token not affiliated with them and which has lower volume where this scheme would have more effect on price and where the attacker has nothing at stake?
No matter which way you look at it, this is a huge transparency improvement over shares.
Can you elaborate? I doubt your claim because "how much profit" a business makes is tied to the legal/financial system(s) the business operates in. To me it looks like we have the "object level vs. meta level" fallacy that is so typical for crypto enthusiasts: in the end, what governs our society is not crypto tech (object level), but meta level institutions. And even if these institutions were to agree that, for example, a smart contract is a legal contract, they could still reverse this decisions and hence move the agreement back to the meta level.
Here is an article about our use case:
https://jonathangrosdubois.medium.com/how-leasehold-achieves...
https://jonathangrosdubois.medium.com/how-leasehold-achieves...
Maybe I get this wrong, but doesn't this rely very classically on aligned interests and various parts keeping the other parts in check? No blockchain or tokens required...
I did not see anything how profit is verified. Could always use expenses to funnel money out, opex and capex are mixed creatively etc.
I did not see anything how profit is verified. Could always use expenses to funnel money out, opex and capex are mixed creatively etc.
It costs real money to buy back tokens from the market and to burn them on the blockchain because they are provably scarce. Because new tokens cannot be created, burning them on the blockchain permanently reduces the remaining circulating supply of tokens so the value of remaining tokens goes up (supply versus demand).
Someone could potentially funnel money out from the stream of profits but anyone could independently check expected earnings (looking at the assets in the portfolio) against the on-chain buyback amount. At least, it significantly limits how much money can be funnelled out.
On the other hand, with a regular company, the directors can make up any numbers on the books and funnel out all of the profits and could keep this going for years undetected. That is far worse.
Altogether, it's not 100% trustless but it's orders of magnitude more transparent than a share-based system. As a small business with directors located in different parts of the world (some of which only met over video chat), this model was essential for us to get over the trust hurdle. Now that we can see tokens being bought and burned, it is building trust within the community. Many community members have already sold some tokens back and seen them burned. Some small investors already made a profit over their initial investment and still have half of their tokens left.
That said, it's not going to be ideal until we we multiple real estate companies (run by different people) hooked into the LSH blockchain. The more companies there are, the less trust there is.
Someone could potentially funnel money out from the stream of profits but anyone could independently check expected earnings (looking at the assets in the portfolio) against the on-chain buyback amount. At least, it significantly limits how much money can be funnelled out.
On the other hand, with a regular company, the directors can make up any numbers on the books and funnel out all of the profits and could keep this going for years undetected. That is far worse.
Altogether, it's not 100% trustless but it's orders of magnitude more transparent than a share-based system. As a small business with directors located in different parts of the world (some of which only met over video chat), this model was essential for us to get over the trust hurdle. Now that we can see tokens being bought and burned, it is building trust within the community. Many community members have already sold some tokens back and seen them burned. Some small investors already made a profit over their initial investment and still have half of their tokens left.
That said, it's not going to be ideal until we we multiple real estate companies (run by different people) hooked into the LSH blockchain. The more companies there are, the less trust there is.
> but anyone could independently check expected earnings
How? In order to know the earnings of the company I basically need to audit everything. I need to know all the lease agreements, I need to know all the costs etc.
How do I know that the company has made less money this year because we just got unlucky with low occupancy or expensive repair bills, or if one of the people running the company is funneling money via some subcontractor?
How? In order to know the earnings of the company I basically need to audit everything. I need to know all the lease agreements, I need to know all the costs etc.
How do I know that the company has made less money this year because we just got unlucky with low occupancy or expensive repair bills, or if one of the people running the company is funneling money via some subcontractor?
Fair enough. For me this is a much better "pitch" than the "absolute certainty" above.
The way I understand it, you help align incentives better and improve financial oversight while your tool of choice is some blockchain structure (others might work, too). And it seems to me that is mainly directed at smaller businesses with limited auditing requirements and in distributed settings.
The way I understand it, you help align incentives better and improve financial oversight while your tool of choice is some blockchain structure (others might work, too). And it seems to me that is mainly directed at smaller businesses with limited auditing requirements and in distributed settings.
Thank you. I took a quick look, and the article at least mentions something along the lines of my "object level vs. meta level" concerns :-)
Nothing of what you say suggests that you have "come up with a way to allow investors to independently verify how much profit a business makes with absolute certainty without having to trust company directors or accountants".
Imagine if there was a tamper-proof ledger of who owns what shares of what companies in such a way that no new shares could be issued and existing shareholders could not be diluted in any way. Tamper-proof in this case means that even the company directors themselves could not modify it, even if all of them wanted to.
Now imagine if all share buybacks (which were purchased by the company on the open market in exchange for real money and then permanently taken out of circulation) where recorded on this ledger in such a way that it could not possibly have been faked (can be independently verified using cryptography).
If you see the value in this hypothetical scenario above, then you see the value of our use case.
Now imagine if all share buybacks (which were purchased by the company on the open market in exchange for real money and then permanently taken out of circulation) where recorded on this ledger in such a way that it could not possibly have been faked (can be independently verified using cryptography).
If you see the value in this hypothetical scenario above, then you see the value of our use case.
This only keeps track of the shares that that the company has issued, it doesn't tell us anything about the profit that the company is making.
> When people finally find out about all the innovation that has been going on outside of their awarenesses
Do you have some examples of what you mean? Maybe it would be interesting to get into that
Do you have some examples of what you mean? Maybe it would be interesting to get into that
Yes but we know that technology can improve over time. Given the amount of capital being poured into cryptocurrency, it is reasonable to expect that cryptocurrency technology could get better at achieving its stated goals. It could get dramatically better. The technology is based on cryptography and open source code, trying to ban it would be like trying to ban drugs or guns (good luck).