Open source, public and permissionless infrastructure for the web. Very different than Venmo which is owned by PayPal and limited to USA, and not programmable, no interop.
about the OP’s thread: centralized services like PayPal, Venmo and Stripe can close your account. Nobody can close your private key, even if you are on a L2 for fast payments you can use the escape hatch to withdraw without possibility of censorship.
Venmo[1] does not have reversibility. Cash does not have reversibility.
If users really wanted credit card functionality at the expense of its costs, you could build that as a layer on top, without forcing everybody in the system to use it.
And consider, most disputes is not just about the quality of a product. That is handled with regular refunds. Credit card disputes are a lot of times because of fraud or card skimming, which is very often because the system is not very secure to begin with. Secure cryptography can remove a lot of this type of fraud.
Yes, if the application and its users demand it. Reversibility is possible in peer-to-peer and decentralized payment systems. But not every app needs reversibility and the centralized intermediaries that come with that.
There are many users who just want to hold crypto and perform basic lending and exchanges, and would be willing to spend fractionally more in gas fees to achieve this with higher security guarantees.
Everybody at Barber CEX got a surprise head shaving the other week, meanwhile Barber DEX is still cutting people's hair normally even though it is more expensive and harder to find.
DeFi never claims to provide the exact same fiat and off-chain services as CeFi and CEX. It has specific goals, like replacing custody with non-custody, or replacing a centralized exchange with an automated market maker that no single party can control.
This has different risks and trade-offs, obviously, but users who opted for Uniswap instead of FTX as their crypto exchange are probably pretty happy with their decision.
The goals of DeFi and web3 is to create structures that do not rely on centralized service providers, and are able to resist control of single bad actors and provide certain clear and transparent security guarantees. In that they have so far succeeded.
I wouldn’t call it victory yet. We still have years of figuring out which blockchain, DEX and DeFi models work and which will fail, most of this new tech is only a couple years into development. But the long term 10+ year vision seems clearer.
Isn’t that the point? The protocols are built to resist changes by single entities and continue working as expected, handling user deposits non custodially, regardless of market activity. HN can declare a dozen crypto deaths with each new CEX and Uniswap will just keep filling orders for whoever is sending value through it.
The irony of this post criticizing DeFi and blockchain in the wake of FTX is that those decentralized applications are working just fine in this downturn. Aave and Uniswap aren’t failing, they are thriving.
> So are blockchains. However, blockchains are much harder to secure, since they need to preserve the order of the ledger (for Bitcoin that's a total-order; there are some chains which only require partial-order). That forces all transactions to jump through hoops, like proof-of-X; even if they're not under attack.
This hardness is what makes them tamper proof, and more resistant to sybil and eclipse attacks than a DHT.
> why impose a log (and hence a total-order of events)?
To quote my linked post:
>> Vitalik, or maybe a charitable non profit organization, signs two PDFs: one says "our new public key is X" and the other says "our new public key is Y." Both of these documents verify correctly, but how do you know which is the latest? One approach is to use Twitter as your append-only timestamped ledger, and broadcast a link to the latest file on IPFS. Another is to build a new centralized service and promise it is secure and will not get hacked or mutated. Another is to rely on a public distributed ledger that is verifiably secure and strongly resistant to modification.
> That's a heck of a hypothetical; and it's solvable without baking order-dependence into everything, e.g. we can embed the hash of one document inside another document; or we can provide hashes-of-hashes (Merkle trees), etc.
Key rotation, financial statements, exchange of assets, loans and borrowing, social messaging interactions, many things in our world are order and time dependent.
Using hashes-of-hashes as you suggest does create an order, but without the distributed consensus mechanism. If there is a fork split, like two key rotation documents both signed by vitalik.eth pointing to two different new addresses and creating two independent chain of hashes, how does the system know which new chain is correct?
To solve this you might store the chain of messages in an append only ledger, like posting on centralized Twittter, or posting on a decentralized blockchain. This is where the original conversation started from: what if instead of having a single centralized and mutable ledger to store these signed messages like keybase.io, you build on top of a decentralized and immutable ledger. Private versus public infra.
If you look at crypto's daily price action, the majority of it is attributable to trading and speculation. I think this is pretty common knowledge.
If you feel stocks and equities is gambling, then you might also feel that this sector of crypto is gambling.
But there are other sectors of crypto that don't register on this price graph, maybe because price is not the only metric of their success, or because their volume is lower. Smart contracts, non custodial wallets, ENS, trustless payments, DEXes like Uniswap, are all interesting and valid use cases of crypto and blockchain tech.
One failure of FTX and BlockFi is that users had no way to ensure that the centralized custodian was not running off with their on-chain deposits by directing them into unsound deposits. Vitalik is suggesting a cryptographic mechanism here that would provide better transparency as to on-chain activity of a CEX.
Day traders want to trade, no matter how much you try to tell them their trades are fictional or "have no use cases."
Partly UX, partly marketing, partly L1 fees and speed. Partly that a lot of people don’t know what Uniswap is. It gets a passing mention in the news if lucky, or more likely no mention, even though it’s the second largest crypto exchange on some days. Most crypto CEX investors are either unaware or too lazy to care.
A lot of crypto people do use Uniswap. The tone of Vitalik’s post is: what if we took some of the non custodial, on-chain, cryptographic proof things that work well in a DEX, and inject them into more CEXes so that even lazy users end up with better security guarantees.
This math is not for end users of an exchange, it’s for developers and researchers building new exchanges. The UX does not need to feel that different than any regular app.
A lot of people like trading, just look at Robinhood. It would be good if an app like Robinhood existed that ensured cryptographic guardrails to prevent the platform owners from lying about their solvency.
Vitalik isn’t running any DEXes, he is not in a position where he can steal or move user funds locked into a DeFi contract. He could suggest a change that might do something malicious at protocol level, but the rest of the developer community would reject it.
about the OP’s thread: centralized services like PayPal, Venmo and Stripe can close your account. Nobody can close your private key, even if you are on a L2 for fast payments you can use the escape hatch to withdraw without possibility of censorship.