The Handwavy Technobabble Nothingburger of Crypto(stephendiehl.com)
stephendiehl.com
The Handwavy Technobabble Nothingburger of Crypto
https://www.stephendiehl.com/blog/nothing-burger.html
703 comments
I was just thinking the same thing. I was looking into [Gemini Dollar](https://www.gemini.com/dollar) yesterday. It's a stable coin that gives the patina of being FDIC secured. Their website says, "Gemini is a U.S. company regulated by the New York Department of Financial Services. GUSD reserves are eligible for FDIC insurance up to $250,000 per user while custodied with State Street Bank and Trust.¹" Furthermore, Gemini offers 8% interest deposits of their Gemini Dollar. This sounds like a safe bet to an unassuming person. Easy 8% returns with no risk since your initial deposit is FDIC insured, so it's just like any other savings account. BUT ITS NOT. The fine print reads, "FDIC insurance applies only to the USD reserve funds. GUSD exist as ERC-20 tokens on the Ethereum blockchain; tokens are under the user’s self-custody, and are not insured through Gemini."
And this is coming from a reputable backer, relative to other stable coins. Then you have Tether which is a ponzi scheme tire fire years in the making and done almost entirely in the open with no consequences. Given that stablecoins like these are used to underpin a lot of the crypto markets, if one of these were to falter I don't see how it couldn't trigger knock on effects bringing down the others and the entire crypto market with it.
And this is coming from a reputable backer, relative to other stable coins. Then you have Tether which is a ponzi scheme tire fire years in the making and done almost entirely in the open with no consequences. Given that stablecoins like these are used to underpin a lot of the crypto markets, if one of these were to falter I don't see how it couldn't trigger knock on effects bringing down the others and the entire crypto market with it.
Guess I've gotten better-than-average at reading fine print, since the word ‘eligible’ is immediately suspect to me.
> That means that if banks (which are businesses) are not good at doing business, the government is essentially forced to treat them as dollar-equivalents by making them whol
The federal government also charges the banks for that insurance. It usually is not a loss for the government.
The federal government also charges the banks for that insurance. It usually is not a loss for the government.
The federal government prints dollars. It is never going to take a loss doing that.
The federal government does all kinds of things it can take a loss on, and it does in fact take losses.
The federal reserve prints dollars and buys government bonds.
The federal reserve prints dollars and buys government bonds.
It can be seen as a loss in an accounting sense, but it's not a loss in the sense it would be for you, me, or, say, Apple, because the federal government is the score keeper of the dollar.
I like to think of the "losses" which arise from propping up companies (if any, as pointed out it's not necessarily a loss) as subsidies of undesirable behaviour. In other words, they're a very bad thing, just for a different reason.
I like to think of the "losses" which arise from propping up companies (if any, as pointed out it's not necessarily a loss) as subsidies of undesirable behaviour. In other words, they're a very bad thing, just for a different reason.
People talk about things like Bitcoin as a threat to sovereign currencies, and they are, as competitors, of sorts
No, they're competitors for the stores of sovereign wealth that are the backing of sovereign currencies.
No, they're competitors for the stores of sovereign wealth that are the backing of sovereign currencies.
How so? Bitcoin is not a store of value, and sovereign currencies (I think I know what that means) are not backed by stores of wealth.
Inflationary vs deflationary instruments. Sovereign currencies are typically inflationary because central banks print them to a greater or lesser degree, National Assets like gold or land reserves are typically deflationary. Bitcoin is more the latter.
Why are "National Assets" (and what s the definition of that) deflationary?
Inflation/deflation is in my experience measured as money V. assets. Assets on their own are neither. Have I got that wrong?
Inflation/deflation is in my experience measured as money V. assets. Assets on their own are neither. Have I got that wrong?
No, I think you're right in a technical sense. My point was that, maybe because the relevant timelines are longer for nation-states than households, their easily liquifiable assets tend to rise in value over time. A country might have gold reserves, which reduces the risk of lending to it and lets them borrow at a better interest rate. The gold reserve isn't money, the government sells bonds for money, but it can be converted to money fairly quickly.
Bitcoin, similarly, is more of an asset with a fixed supply that can be quickly converted to money. Calling it 'deflationary' is probably some imprecise labeling on my part.
Bitcoin, similarly, is more of an asset with a fixed supply that can be quickly converted to money. Calling it 'deflationary' is probably some imprecise labeling on my part.
Stuff like gold or bitcoin if used as currency can be deflationary as in be worth more over time against good and services.
Fiat money deflates too.
If it has a steady supply and things are getting easier to produce, yes. Typically a larger amount is minted each year so that its value relative to goods and services decreases in a predictable fashion.
> Stablecoins piggyback on the legal aspects of dollars, and as long as you treat them as dollar-denominated assets, you're fine. The second you treat them as dollar-equivalents, you run the risk of a change in the value of that asset being something that the government is forced into supporting.
Why is that scenario worse than now? Why is bank the preferred medium to support when they default?
Why is that scenario worse than now? Why is bank the preferred medium to support when they default?
It's getting worse because they are becoming more mainstream. The kind of scenario where the government might have to bail out is US Bank lends billions to something like Coinbase which holds lots of Tethers. Then Tether goes to zero, Coinbase bust, US Bank needs bailout. We're not there yet and it's best avoided.
Wait, you can't legally buy stocks with cash? Why not?
KYC laws aimed at anti-money laundering; any large movement of money has to be between trusted parties. Which means a verification process that is more thorough the more money you move around.
Right, but that just means some paperwork gets filed when you attempt to do large transactions with cash, not that it's literally illegal to do those transactions. I don't understand why the toplevel comment says it's illegal to buy stocks. It seems like it would be merely very difficult, not illegal. I think your biggest problem would be finding a broker that would accept a pile of cash to buy you stocks with, rather than the fact that the transaction needs to be reported to the government.
You are correct; buying a stock with cash is impractical but not illegal or impossible.
You cannot transact with an exchange, you cannot transact with a broker or a broker/dealer, using cash -- your cash must be deposited somewhere in order for it to be used.
You can do a private sale of stock where you give someone cash and they transfer stock that they own to your name, either through a broker or by signing the transfer form on the back of an actual stock certificate. To actually claim ownership of the stock (to receive proxy and dividends) you must transact with a broker dealer or the issuing agent, which will almost certainly mean that you have to deal with AML and KYC regulations.
You cannot transact with an exchange, you cannot transact with a broker or a broker/dealer, using cash -- your cash must be deposited somewhere in order for it to be used.
You can do a private sale of stock where you give someone cash and they transfer stock that they own to your name, either through a broker or by signing the transfer form on the back of an actual stock certificate. To actually claim ownership of the stock (to receive proxy and dividends) you must transact with a broker dealer or the issuing agent, which will almost certainly mean that you have to deal with AML and KYC regulations.
They're saying it's illegal because a random person can't just walk into a bank with a proverbial suitcase full of cash, and deposit it, and use that money to buy stocks. It's quite possible, and certain people do it regularly, but these aren't hypothetical people with no background. These are people known to the bank, its manager, have a thoroughly checked back story, and a reason for doing this, likely as the owner of a mostly cash business. It's not a one time "oh I just got lucky at Vegas, don't mind me" story.
That's not what "illegal" means.
I can buy stocks from you, with cash. It's cumbersome as hell. No one does it to my knowledge. From a practical perspective you basically cannot buy stocks with cash.
Stablecoins are dangerous because they have the potential to change the current selection effects on the elite. For one thing, stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al --- normally this is supposed to result in their friends have a larger fraction of money than they previously had. You start with 1 dollar, David at Goldman Sachs starts with 1 dollar, you each have 50% of the wealth in the "nation." David and his friends start printing themselves money, soon they have 99 dollars and you have 1, and you can't compete because they'll lock you up with violence for being a "counterfeiter." That's how inflation works.
When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair.
This obviously curtails the ability of the ruling class to reproduce itself. More than that, if the pool of people getting billions through stablecoins is more random than the pool of people who got rich on the dollar, then the ruling class will change to be more representative of the population as a whole.
This could cause massive cultural changes, consequently.
When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair.
This obviously curtails the ability of the ruling class to reproduce itself. More than that, if the pool of people getting billions through stablecoins is more random than the pool of people who got rich on the dollar, then the ruling class will change to be more representative of the population as a whole.
This could cause massive cultural changes, consequently.
> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately,
Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. (Stablecoins denominated in a different currency would gain nominal value in the printed currency, the same way direct holdings in the alternative currency would.)
So, no, to the extent easy money policy makes people rich fairly directly, holders of stablecoins denominated in the currency would not be among the beneficiaries.
Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. (Stablecoins denominated in a different currency would gain nominal value in the printed currency, the same way direct holdings in the alternative currency would.)
So, no, to the extent easy money policy makes people rich fairly directly, holders of stablecoins denominated in the currency would not be among the beneficiaries.
>Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it.
What's the case for this statement? In general, I don't expect to commodities to change value just because some currency was redistributed.
What's the case for this statement? In general, I don't expect to commodities to change value just because some currency was redistributed.
Printing currency makes that currency (and consequently, anything pegged to it) lose value compared to not doing so, because increasing supply decreases market clearing value.
Stablecoin is not a commodity, it is literally a token pegged to the value of a given fiat (such as dollar) or a basket of several fist currencies.
The case for it is the denominator increasing.
The commodity in this case is just a proxy for USD or other currency.
Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money, stablecoins don't subvert any party's ability to print money if they are pegged to that money. If you can print USD, and I have a stablecoin pegged to $1 USD, you can just print $1 USD and buy my stablecoin on the open market.
>Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money
You didn't read my comment correctly.
You didn't read my comment correctly.
I was referring to this part:
> stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al
> stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al
But you said “their friends to print money” not “print money for their friends”.
Ok, fair, the part that I excerpted did confuse the two, but OP goes on to say:
> David at Goldman Sachs starts with 1 dollar, you each have 50% of the wealth in the "nation." David and his friends start printing themselves money
“David at Goldman Sachs” presumably refers to David Solomon, CEO of GS, and in this part of the post he and his friends are the ones printing the money.
> David at Goldman Sachs starts with 1 dollar, you each have 50% of the wealth in the "nation." David and his friends start printing themselves money
“David at Goldman Sachs” presumably refers to David Solomon, CEO of GS, and in this part of the post he and his friends are the ones printing the money.
True. It was definitely not a wildly coherent post.
What is the mechanism that ensures bitcoin inflates proportionally to the dollar?
(not an economist)
If most bitcoins are bought with USD, all else remaining equal, wouldn't this automatically happen?
I'm not an economist either... but the buying power of your bitcoin goes down if people demand more of it for a given product. If USD prices rise, the bitcoin price will rise too, meaning your bitcoin wealth is affected by inflation, and you're not protected from the Fed printing money.
You assume there is a correlation between USD and BTC. Another way to see this is this:
If USD prices rise, the price of BTC will also rise, as BTC is another product you can buy with your USD. Meaning your bitcoin wealth is not affected by USD inflation.
If USD prices rise, the price of BTC will also rise, as BTC is another product you can buy with your USD. Meaning your bitcoin wealth is not affected by USD inflation.
But the price of bitcoin is unrelated, it seems, to any real world thing.
Pure speculation.
Pure speculation.
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Perhaps inflation in the price of electricity, denominated in USD?
But when people say inflation in the context of cryptocurrency they usually mean "deflation".
But when people say inflation in the context of cryptocurrency they usually mean "deflation".
> That's how inflation works.
May I recommend https://www.lynalden.com/quantitative-easing-mmt-inflation/
May I recommend https://www.lynalden.com/quantitative-easing-mmt-inflation/
> When there's stablecoin, you just put your dollar in bitcoin before they print the money, the dollar inflates, bitcoin goes up proportionately, you spend the bitcoin and things remain fair.
Alright, exactly where do stablecoins come into play in this scenario?
Alright, exactly where do stablecoins come into play in this scenario?
> When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair.
This makes absolutely no sense whatsoever.
This makes absolutely no sense whatsoever.
> stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al
... and now the owners of the stablecoin can print money and give it to friends of the stablecoin.
I don't see how stablecoins are any better than the Federal Reserve. If anything they are strictly worse. The owners of the stablecoin are semi-anonymous and have no governing body. I get that "no governing body" might be a good thing in some people's minds, and I think the OP highlights exactly who those people are.
... and now the owners of the stablecoin can print money and give it to friends of the stablecoin.
I don't see how stablecoins are any better than the Federal Reserve. If anything they are strictly worse. The owners of the stablecoin are semi-anonymous and have no governing body. I get that "no governing body" might be a good thing in some people's minds, and I think the OP highlights exactly who those people are.
It seems like there's another side to this story you're not mentioning... I think I read about it in history of the 19th and 20th centuries?
1837 - https://en.m.wikipedia.org/wiki/Panic_of_1837
1873 - https://en.m.wikipedia.org/wiki/Long_Depression
1910 - https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911
1929 - https://en.m.wikipedia.org/wiki/Great_Depression
Monetary consistency sounds good, until it doesn't.
1873 - https://en.m.wikipedia.org/wiki/Long_Depression
1910 - https://en.m.wikipedia.org/wiki/Panic_of_1910%E2%80%931911
1929 - https://en.m.wikipedia.org/wiki/Great_Depression
Monetary consistency sounds good, until it doesn't.
I wonder how much of the Crypto hype is because the US banking system still lives in the 1980s or thereabouts.
If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
I think that's certainly a part of it, but it's not the whole story, and I suspect it's perhaps responsible for 1/3 of the story.
A bigger motivation, and perhaps the most quixotic one, is financial security.
No, I don't mean that cryptocurrencies haven't been highly unstable in value.
But the more that the cabal chooses to truly enter the 21st century, the greater the danger of that technology being used as a means of coercion. This has already been seen in the porn industry (both amateur and commercial) and, say what you want about the possible ethical issues with it, but people have the right to produce pornography in the United States and also participate in the same economic system as everyone else. The danger of companies like Visa and Paypal exercising political control over their customers for other reasons is non-zero, and I would even predict that the danger is at least moderate.
Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men. If that wasn't the case, there wouldn't be a big push to create the Lightning network.
The other part of the desire for crypto, from my perspective, is a desire to be a part of a new frontier. We had the personal computing revolution, the internet, the web, web 2.0... and for those who missed out on those or merely miss them, crypto fills that void and provides a new realm of possibilities to explore.
A bigger motivation, and perhaps the most quixotic one, is financial security.
No, I don't mean that cryptocurrencies haven't been highly unstable in value.
But the more that the cabal chooses to truly enter the 21st century, the greater the danger of that technology being used as a means of coercion. This has already been seen in the porn industry (both amateur and commercial) and, say what you want about the possible ethical issues with it, but people have the right to produce pornography in the United States and also participate in the same economic system as everyone else. The danger of companies like Visa and Paypal exercising political control over their customers for other reasons is non-zero, and I would even predict that the danger is at least moderate.
Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men. If that wasn't the case, there wouldn't be a big push to create the Lightning network.
The other part of the desire for crypto, from my perspective, is a desire to be a part of a new frontier. We had the personal computing revolution, the internet, the web, web 2.0... and for those who missed out on those or merely miss them, crypto fills that void and provides a new realm of possibilities to explore.
> Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men.
Correct me if I'm wrong, but doesn't the whole blockchain thing depend on an uncountable number of middlemen to verify transactions? They just don't have to trust them. Not to mention they have to count on a market existing for the coins to give them value.
Correct me if I'm wrong, but doesn't the whole blockchain thing depend on an uncountable number of middlemen to verify transactions? They just don't have to trust them. Not to mention they have to count on a market existing for the coins to give them value.
Cryptocurrency involves numerous middle men, all of which charge very high fees. Miners, exchanges, smart contracts, they're all middlemen and they all charge fees.
It's not that crypto enthusiasts don't like middle men, it's that they want to be the middle men.
It's not that crypto enthusiasts don't like middle men, it's that they want to be the middle men.
Rather than the argument of having middle men vs not having middle men, I’d say that the transparency, accessibility, and hard-set consensus rules are what make something like the Bitcoin blockchain useful. It also allows privacy by means of the ability to generate key pairs and addresses easily and at-will. This combo of features mean that even with middlemen, there are certain rules that cannot be broken without the participation and knowledge of those who use the system.
With banks, money can be secretly and arbitrarily transferred by individuals of power and in some cases even gate-kept from the initial depositors. With crypto I never have to worry about my money being falsely spent under the cryptographic security guarantees of something like Bitcoin. Even with > 51% attacks it would be practically impossible to rewrite significant portions of history and are mostly limited to reorganizing and deleting recent transactions.
With banks, money can be secretly and arbitrarily transferred by individuals of power and in some cases even gate-kept from the initial depositors. With crypto I never have to worry about my money being falsely spent under the cryptographic security guarantees of something like Bitcoin. Even with > 51% attacks it would be practically impossible to rewrite significant portions of history and are mostly limited to reorganizing and deleting recent transactions.
I guess the distinction would probably be commoditized middle-men.
Read, as distinct from our current champion middle-men, chosen by favor, regulation, and access to capital.
Read, as distinct from our current champion middle-men, chosen by favor, regulation, and access to capital.
Explained simply, while there are indeed users acting as the middle man verifying transactions, you don't have to worry about trusting them because the system is built in a way where you know exactly what they're going to do.
To add to this idea of mining, theres a more grandiose theory that smart contracts are the additive tool that we can use to build all sorts of incentives in our society for people to collaborate effectively. You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need. This allows them to mine out the value and build a better and more trust-less community at large. It's like a bug bounty but for problems in society.
To add to this idea of mining, theres a more grandiose theory that smart contracts are the additive tool that we can use to build all sorts of incentives in our society for people to collaborate effectively. You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need. This allows them to mine out the value and build a better and more trust-less community at large. It's like a bug bounty but for problems in society.
> You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need.
Wouldn't it be just as possible then to incentivise them to build things to the detriment of society (but that are to my benefit, of course)? We do that today with regular old money and regular old contracts.
Wouldn't it be just as possible then to incentivise them to build things to the detriment of society (but that are to my benefit, of course)? We do that today with regular old money and regular old contracts.
We do that today because we are incentivized to acquire monopolies. Or in other words housing and other generalized assets that use a typical ownership model. If individuals can't "own" property, but instead "possess" property via a self assessed real time tax, you eliminate that gluttonous incentives that all humans have for accumulation.
With collective possession you can increase users stake in making sure that negative incentives don't exist. It's all in the game theory of realigning incentives, but before you do that you have to break down how the current system we live in at its foundational root is flawed.
My theory is that we don't understand the economic systems of the crypto economy because they aren't rooted in the same type of economics that exists in our current system. They are completely different incentive systems and are not correlated at all. We just confuse Capitalist values with crypto-economic values, thus leading to entire new schools of thought in how we organize ourselves manage systems.
With collective possession you can increase users stake in making sure that negative incentives don't exist. It's all in the game theory of realigning incentives, but before you do that you have to break down how the current system we live in at its foundational root is flawed.
My theory is that we don't understand the economic systems of the crypto economy because they aren't rooted in the same type of economics that exists in our current system. They are completely different incentive systems and are not correlated at all. We just confuse Capitalist values with crypto-economic values, thus leading to entire new schools of thought in how we organize ourselves manage systems.
This is a genuinely important point - there’s a strain of Puritanism baked into American (& more broadly western) culture that’s getting exported and enforced via our corporate dominance. Apple doesn’t allow porn on the App Store, Tumblr killed porn because of advertiser squeamishness, Onlyfans nearly killed itself because of bank pressure. Say what you will about porn, but 30 years ago gay rights would’ve fallen afoul of the same corporate conservatism - I’m broadly liberal and generally don’t believe a corporation lacks social responsibility, but I’m extremely uncomfortable with the degree to which our cultural values are encoded in especially our financial system.
So the US has an antiquated payments system vis-a-vis Europe, but crypto solves none of those problems. I don't see it. I see FOMO, groupthink and greed.
Cryptocurrency actually does solve that if you kinda ignore the scalability limitations of blockchain.
Of course, the minute you add another transaction layer or exchanges or other third parties, then that wipes out most of that advantage and generally the more it facilitates cheap and fast transactions the more power is given to the third party and/or more fee is taken.
I’m still a fan of first layer transactions and just making the blockchain much faster using brute force increases in block frequency and block size. Might be able to keep transaction fees low enough to be a useful alternative. But as long as more people are interested in cryptocurrency (and related tech) as a Ponzi get rich quick scheme than as a practical way to facilitate transactions, I don’t see it making a significant dent in the regular financial system.
Of course, the minute you add another transaction layer or exchanges or other third parties, then that wipes out most of that advantage and generally the more it facilitates cheap and fast transactions the more power is given to the third party and/or more fee is taken.
I’m still a fan of first layer transactions and just making the blockchain much faster using brute force increases in block frequency and block size. Might be able to keep transaction fees low enough to be a useful alternative. But as long as more people are interested in cryptocurrency (and related tech) as a Ponzi get rich quick scheme than as a practical way to facilitate transactions, I don’t see it making a significant dent in the regular financial system.
You fail to see people who lost trust in their governments and organizations? You don't see how people are unhappy with getting their savings diluted by unlimited money printing?
> You don't see how people are unhappy with getting their savings diluted by unlimited money printing?
Money printing dilutes wealth if you hold it in cash, but every other asset appreciates. Moreover if you have more debt than wealth, money printing reduces that burden.
How many people actually have more wealth than debt but keep it largely in cash? I never understood who exactly has this problem.
Money printing dilutes wealth if you hold it in cash, but every other asset appreciates. Moreover if you have more debt than wealth, money printing reduces that burden.
How many people actually have more wealth than debt but keep it largely in cash? I never understood who exactly has this problem.
The vast majority of humanity has no access to credit besides borrowing cash from Uncle Pedro, no access to any other financial instruments besides cash and keeps their savings under their mattress or in a shoe box. You don't understand who has this problem because you don't know anyone who has this problem, but outside of our comfy western countries most people have this problem.
> outside of our comfy western countries most people have this problem.
Can you cite some evidence that there are people keeping long-term savings* in cash and has adequate internet access and computing resources to participate in cryptocurrencies? I'm still not buying this.
* (I believe people do hold short-term savings in cash, but those are not the type of savings that money-printing erodes significantly.)
Can you cite some evidence that there are people keeping long-term savings* in cash and has adequate internet access and computing resources to participate in cryptocurrencies? I'm still not buying this.
* (I believe people do hold short-term savings in cash, but those are not the type of savings that money-printing erodes significantly.)
What is crypto if not money printing? While any one chain may be limited in issue, you can always just fork it or create a new currency or token. People are printing tokens at a phenomenal rate. And unbacked or badly backed "stablecoins" are money printing of real-looking but unstable currency.
What gives a chain value is the network effects which are notoriously hard to establish. So yes, you can fork it, but can you get people to actually use it? Really doubt it.
BCH allegedly has a billion dollars of daily transactions and is worth about 1% of officially-forked bitcoin: https://coinmarketcap.com/currencies/bitcoin-cash/
Up to a point, more money printing is good for me: dollars become devalued, my employer has to pay me more of them to keep up with the cost of living, but my mortgage is still valued in 2009 dollars. I can pay it off faster, or just have more purchasing power left over every month after paying it on schedule.
If you have assets and debt (and a job that will actually pay well, keep up with inflation), money printing is awesome for you!
If you're in the majority of people who don't have those things, life just gets harder and wealth gap keeps getting larger and larger.
If you're in the majority of people who don't have those things, life just gets harder and wealth gap keeps getting larger and larger.
> If you're in the majority of people who don't have those things ...
Home ownership in the US is around 65% [0], so the majority do have an asset and mortgage. There are also some people who choose not to own a house but have other types of assets. Things really aren't as dire as you seem to think.
And for those people who actually are harmed by inflation, I think the consensus is that they would be harmed by the other option--deflation--even more, mostly because the disincentive to invest leads to fewer employment opportunities. The Great Depression, a deflationary environment, was not good times.
[0] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
Home ownership in the US is around 65% [0], so the majority do have an asset and mortgage. There are also some people who choose not to own a house but have other types of assets. Things really aren't as dire as you seem to think.
And for those people who actually are harmed by inflation, I think the consensus is that they would be harmed by the other option--deflation--even more, mostly because the disincentive to invest leads to fewer employment opportunities. The Great Depression, a deflationary environment, was not good times.
[0] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
From your Wikipedia article: “ The name "home-ownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the home-ownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home.”
According to the US Census in 2020, 139.68 million homes in the US with a 64% owner-occupied rate means 89.395 million homes are owner occupied. Let’s say 85% of those are dual-owned (by couples) which I could not get a solid statistic on but several policy websites seem to cite, and we will assume the other 15% are single owners. Then about 165 million people either own or partially own the house they live in, or roughly 50% of the population.
That is the slimmest of majorities, far less than the 65% implies.
[0] https://www.census.gov/quickfacts/fact/table/US/PST045219
According to the US Census in 2020, 139.68 million homes in the US with a 64% owner-occupied rate means 89.395 million homes are owner occupied. Let’s say 85% of those are dual-owned (by couples) which I could not get a solid statistic on but several policy websites seem to cite, and we will assume the other 15% are single owners. Then about 165 million people either own or partially own the house they live in, or roughly 50% of the population.
That is the slimmest of majorities, far less than the 65% implies.
[0] https://www.census.gov/quickfacts/fact/table/US/PST045219
Majority of Americans live paycheck to paycheck, if that's not dire, I don't know what is.
It seems like the people most upset by money printing learned to be upset by money printing from crypto propaganda.
Propaganda? Does it matter where they learned it as long as it's true and factual?
How is it true and factual? The inflation rate is set, it is high now and will be lower in the future to account for that. If you are planning to keep millions/billions sitting around in cash for a decade, instead of investing into assets where it works for you and everyone else, you are the reason we have the inflation rate and deserve to lose out to inflation.
A set yearly inflation rate incentivizes actual investment instead of currency speculation. Basically the system we have now exists to prevent what crypto enthusiasts are trying to push on us: a return to a super volatile currency that when it crashed wasn’t able to be fixed by just printing more money temporarily.
When you hear about things as complex as Monetary Policy, it is best to assume that lots of people have thought about why it is the way it is and why that’s preferable. The “gold standard” and the hoarding of wealth allowed things like feudalism to exist where lords just sat on their land and gold and were richer every year.
Yeah you can pull the “the rich get richer today too” card but so do poor people if they invest in assets, and the difference is that every wealthy person has almost all of their wealth invested in the US economy in order to beat the risk free and inflation rate.
I really, really am sick of the bullshit around the big L Libertarian party (and the crypto enthusiasts who identify with them.) Spreading lies about the evil fed and the evil inflation rate, both of which are a huge improvement over the constant depressions we had prior to this century.
It took thousands of years for people to develop the sophisticated monetary policy we currently have that allows our economy to be extremely stable and continuously grow, generations of very bright people, and anarcho-capitalists want to throw that away to go back to “basics.” At the very least you could do all those people, and the citizens of the world, the courtesy of understanding why were all in favor of yearly inflation (even if we bitch about prices going up.)
A set yearly inflation rate incentivizes actual investment instead of currency speculation. Basically the system we have now exists to prevent what crypto enthusiasts are trying to push on us: a return to a super volatile currency that when it crashed wasn’t able to be fixed by just printing more money temporarily.
When you hear about things as complex as Monetary Policy, it is best to assume that lots of people have thought about why it is the way it is and why that’s preferable. The “gold standard” and the hoarding of wealth allowed things like feudalism to exist where lords just sat on their land and gold and were richer every year.
Yeah you can pull the “the rich get richer today too” card but so do poor people if they invest in assets, and the difference is that every wealthy person has almost all of their wealth invested in the US economy in order to beat the risk free and inflation rate.
I really, really am sick of the bullshit around the big L Libertarian party (and the crypto enthusiasts who identify with them.) Spreading lies about the evil fed and the evil inflation rate, both of which are a huge improvement over the constant depressions we had prior to this century.
It took thousands of years for people to develop the sophisticated monetary policy we currently have that allows our economy to be extremely stable and continuously grow, generations of very bright people, and anarcho-capitalists want to throw that away to go back to “basics.” At the very least you could do all those people, and the citizens of the world, the courtesy of understanding why were all in favor of yearly inflation (even if we bitch about prices going up.)
Can we start by talking about how modern money works in a more factually accurate way. In particular, can we stop talking about "printing money"? Printing money has no impact on the value of money. I think most people in a forum like this understand that but when we talk that way I worry that someone, somewhere doesn't understand.
Money is created when it is borrowed from a bank or banking institution. Even that is an oversimplification but it is still much more accurate than saying money is created by "printing" it because it isn't. One of the really key things to understand is that the money supply is created by government but it is also created by businesses and individuals.
I don't have a dog in this fight, but it always drives me crazy when people talk about economics in a sloppy way.
Money is created when it is borrowed from a bank or banking institution. Even that is an oversimplification but it is still much more accurate than saying money is created by "printing" it because it isn't. One of the really key things to understand is that the money supply is created by government but it is also created by businesses and individuals.
I don't have a dog in this fight, but it always drives me crazy when people talk about economics in a sloppy way.
Sure, but central banks do influence how much banks can borrow, and hence how fast the currency supply grows. Even someone whose understanding of monetary policy is limited to "The Fed has a big meeting each year to decide what the inflation rate will be" can understand why a deflating currency would be really bad.
Right, but it's not. The idea that inflation "dilutes" wealth and is therefore bad for rich people is not true.
It would be if rich people held all their money in cash like Smaug in his mountain, but anyone familiar with the current monetary system would know that people invest in assets to prevent losing out to inflation and this is what we’re going for with a steady inflation rate. Keeps the economy pumping and in times when we hit a recession (not depressions, since we don’t really have those anymore thanks to our modern monetary policy) those same rich people want to get their freed up assets into the economy as quickly as possible.
Correct. Inflation is when the dollar gets weaker for the masses because the elite are printing themselves dollars. Deflation is when the dollar gets stronger for the masses because the elite's proportion of the national currency is decreasing. We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Stronger/weaker refer to the value of a dollar compared to other currencies; inflation/deflation refer to the value of a dollar compared to goods and services. Neither is related to the "elite's proportion of the national currency". Again, I can only suggest reading some articles about this stuff.
> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.
The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.
> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.
The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.
Go talk to some Turkisch people and ask how they feel about the Lira.
Crypto is used as a commodity and for scams, very rarely as a currency. Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.
You're right that our existing digital payment systems are far better than crypto for most transactions, and that crypto (and cold hard cash) dominate black market transactions, but there's a really interesting class of transactions that don't fall into either of these groups: stuff that's technically legal, but sketchy enough that no big corporations want to touch them.
Crypto is increasingly being used as a digital payment workaround for areas that Visa and MasterCard try to avoid, like pornography and donations to controversial organizations. It's probably just a sliver of overall crypto transactions, but this is very much the use case that justifies the bitcoin-as-a-currency model.
Pornography is to Bitcoin as "Linux ISOs" are to BitTorrent.
Crypto is increasingly being used as a digital payment workaround for areas that Visa and MasterCard try to avoid, like pornography and donations to controversial organizations. It's probably just a sliver of overall crypto transactions, but this is very much the use case that justifies the bitcoin-as-a-currency model.
Pornography is to Bitcoin as "Linux ISOs" are to BitTorrent.
> Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.
This is partially true, but I think a bad blanket statement.
Bitcoin has outperformed all other asset classes over the last decade.
You can get crypto credit cards that remove all complexity you aren't forced to deal with anyway. And even if that wasn't the case. Banking is hard, too, so that's a moot argument.
Ethereum and others are moving away from proof-of-work.
Upgrades like taproot and zkrollups improve privacy and can be used today.
This is partially true, but I think a bad blanket statement.
Bitcoin has outperformed all other asset classes over the last decade.
You can get crypto credit cards that remove all complexity you aren't forced to deal with anyway. And even if that wasn't the case. Banking is hard, too, so that's a moot argument.
Ethereum and others are moving away from proof-of-work.
Upgrades like taproot and zkrollups improve privacy and can be used today.
[deleted]
I don't think you are up to date.
There are "cash" crypto's out there such as Nano, with sub second transactions, 0 fees, and can run the network on the power of a single windmill.
Transferring SPL USDC is easier, faster, less wasteful, and less expensive than transferring dollars in a bank account.
> Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking
Literally none of this is true except maybe "riskier".
Literally none of this is true except maybe "riskier".
Yes of course they'd be excited about it. It's gambling, and people really like gambling.
To be blunt, they fucking love it. Like they’ll build an entire city in the middle of an uninhabitable desert just to do it. They’ll give up their kids future for it. People making $7.25 an hour will spend hundreds of dollars a week on scratch off lottery tickets in order to participate in it.
An endless demand for new ways to gamble is the least fucking confusing cultural development to ever happen.
Put people in a prison and they’ll do it with cigarettes. Give a bunch of construction workers a lunch break and they’ll bet on which pigeon is gonna to take off first. Hand a group of people a round ball or a deck of cards and they’ll figure out how to do it.
Beanie babies, little ceramic figures, baseball cards, coins. The desire for people to speculate on synthetically created scarcity is boundless, spanning generations.
Speculation is common to every culture in every era of human history. It's an amazing use case for a new technology with billions and billions of dollars in pent-up demand.
Crypto (and NFT's) are a gambling fad. People will keep doing it until it’s banned, matures, or gets replaced by the next gambling craze.
To be blunt, they fucking love it. Like they’ll build an entire city in the middle of an uninhabitable desert just to do it. They’ll give up their kids future for it. People making $7.25 an hour will spend hundreds of dollars a week on scratch off lottery tickets in order to participate in it.
An endless demand for new ways to gamble is the least fucking confusing cultural development to ever happen.
Put people in a prison and they’ll do it with cigarettes. Give a bunch of construction workers a lunch break and they’ll bet on which pigeon is gonna to take off first. Hand a group of people a round ball or a deck of cards and they’ll figure out how to do it.
Beanie babies, little ceramic figures, baseball cards, coins. The desire for people to speculate on synthetically created scarcity is boundless, spanning generations.
Speculation is common to every culture in every era of human history. It's an amazing use case for a new technology with billions and billions of dollars in pent-up demand.
Crypto (and NFT's) are a gambling fad. People will keep doing it until it’s banned, matures, or gets replaced by the next gambling craze.
I’m unsure what you mean by “no chargebacks” - chargebacks are provide the consumer recourse in the event of a dispute.
Yeah, that whole no chargebacks concept as a “feature” of cryptocurrency has always been a head scratcher to me. I mean, yes, businesses may like that, but crooks like that even more, and it’s almost purely a negative to the vast majority of people, i.e. consumers.
And it’s a core motivation for cryptocurrency, in the original Satoshi paper.
And it’s a core motivation for cryptocurrency, in the original Satoshi paper.
The idea was it would make transacting cheaper. Not sure that worked in practice.
It's beneficial for consumers because businesses can charge less for their products since they're don't have to account for as much shrinkage. I know at least one business that charges substantially less for crypto transactions because of this.
I feel this is an overly optimistic view. There's not many situations in the last 50 years where "businesses being able to charge less" have led to them actually charging less. It reeks of Telcos telling congress how much new laws will drop their prices, then they fire half their employees and raise prices anyways.
This is a microcosm of most of my issues with crypto discussions. In a (quite naive) vacuum, the arguments sound great. If you wanted to run Earth 2.0 with crypto, have at it. It doesn't fit in alongside the existing systems and, by the time it becomes "the main system", you can be certain that those in power have modified it to have the same issues as the original system we all hated.
This is a microcosm of most of my issues with crypto discussions. In a (quite naive) vacuum, the arguments sound great. If you wanted to run Earth 2.0 with crypto, have at it. It doesn't fit in alongside the existing systems and, by the time it becomes "the main system", you can be certain that those in power have modified it to have the same issues as the original system we all hated.
Then you would expect people in the EU to not be interested in crypto, yet it's the opposite. You can pull up search volume for "Bitcoin" across the world (using Google Trends), many European nations are at the top.
As a matter of fact, their search volume is higher than US.
As a matter of fact, their search volume is higher than US.
The difference is that those people can honestly see and use crypto as speculative assets, which is fine (if we ignore externalities for a second), not making up use cases.
I often wonder how large a portion of all crypto holders are just FOMO-ing into a speculative asset because the number keeps going up, with no loyalty to the concept of cryptocurrency or its use cases.
Once you accept that the future is unknown, you'll see that every asset is a speculative asset, no?
For the longest time, real estate was assumed to be 100% safe until 2008, etc.
For the longest time, real estate was assumed to be 100% safe until 2008, etc.
Yes but real assets have a lower chance of their value completely evaporating in an instant.
You can also use some of them, like live in a house asset.
You can also use some of them, like live in a house asset.
The difference between investment and speculation is pretty established, isn't it? For example https://www.investopedia.com/ask/answers/09/difference-betwe...
Just because the future is uncertain doesn't mean you can't do research to make a reasonable forecast. Typically speculation is specifically buying/selling without any reasoning other than 'I think someone will pay higher for this in the future'.
Many assets don't even have to appreciate. A car is an asset if I have paid it off. I don't expect someone to pay me more than I paid for it unless it is a collectible or I live in the year 2021.
On your last sentence, I don't know who thought real estate was 100%, because nothing is 100% safe as a store of value, but I guess they paid for it in the end.
Many assets don't even have to appreciate. A car is an asset if I have paid it off. I don't expect someone to pay me more than I paid for it unless it is a collectible or I live in the year 2021.
On your last sentence, I don't know who thought real estate was 100%, because nothing is 100% safe as a store of value, but I guess they paid for it in the end.
Then I can say that I've done my research and I think it's reasonable that USD won't remain global reserve currency forever and that it's replacement won't be a governmental currency, but a decentralized one and Bitcoin would be the only reasonable candidate.
Does this mean that I'm not speculating all of a sudden because I've done research and came up with a reasonable forecast?
Does this mean that I'm not speculating all of a sudden because I've done research and came up with a reasonable forecast?
Yes, I would say you are not speculating because speculating is simply buying/selling and hoping to profit.
Whether or not your forecast is reasonable or even useful is not within my sphere of knowledge. I can also almost certainly say that the USD wont be the global reserve currency forever, but making decisions based on a forever timeline poses a wide range of risks.
Whether or not your forecast is reasonable or even useful is not within my sphere of knowledge. I can also almost certainly say that the USD wont be the global reserve currency forever, but making decisions based on a forever timeline poses a wide range of risks.
People won't invest in a reserve currency, they will use it for trade. Anything people are buying and holding is by definition not a reserve currency. You are describing "treasure".
I mean people buy USD through forex markets all the time, the same way that people buy Bitcoin through crypto exchanges. Also, it won't become reserve currency overnight, it's a gradual process and until it happens it acts as a store of value with a huge upside.
> easy electronic transfers within 5 seconds for no charge
This is certainly not the case everywhere in the EU. In Germany for example it usually takes days. Not sure about other countries.
This is certainly not the case everywhere in the EU. In Germany for example it usually takes days. Not sure about other countries.
In Germany there's SOFORT, it takes litterally the time to click through the interface to transfer money.
I can get money from Germany to Colombia in under a minute via n26 and transferwise. Maybe we're not talking about the same country.
I can get money from Germany to Colombia in under a minute via n26 and transferwise. Maybe we're not talking about the same country.
Well sure, I can send money around using third-party services, but the official banking system is not that fast.
Also amounts > 20000 in a weekend? How much fees do you pay on that?
I've actually never woken up on a Saturday morning and thought shit, I could really use 20000 EUR right now, so I couldn't tell you what the limits are. I've never hit them.
Fees however, are around 1EUR
Fees however, are around 1EUR
Maybe on a Friday evening?
Anyway, still seems inferior to nano.
Anyway, still seems inferior to nano.
By law it must take at most a single day intra-country, and instant wire transfers are pretty common (though sometimes not free).
Most Bitcoin transactions have a quite high transaction cost, and I would argue that chargebacks are an important consumer protection.
Tx cost on BTC main layer has been ~7ct for months, what are you talking about?
Only if you do your transaction on the blockchain. Most are done internally. It's like your bank is not sending someone with a suitcase full of money just because you pay your phone bill.
It's strange to me how the only two options are "pay obscene transaction fees" or "just keep your crypto in a centralized exchange and hope they don't go MtGox". Is it impossible to achieve the stated benefit of being able to make quick and easy transactions and being decentralized?
I spent some time researching the best low transaction fee easily accessible crypto for making a sort of crypto Patreon, but the vast vast majority of all crypto information available was folks speculating what was going to go "up", nobody seems interested in what is actually a decent form of money (cheap&easy to exchange, cheap&easy to transfer, and stable).
I suppose it makes some sense from a game theoretic standpoint. If we consider the decision making entities in the game to be the massive crypto exchanges and miners, the best way they make money is by transaction fees and exchange fees, so they aren't likely to come up with a great micro-transaction and micro-exchange fee system. Oh well.
I spent some time researching the best low transaction fee easily accessible crypto for making a sort of crypto Patreon, but the vast vast majority of all crypto information available was folks speculating what was going to go "up", nobody seems interested in what is actually a decent form of money (cheap&easy to exchange, cheap&easy to transfer, and stable).
I suppose it makes some sense from a game theoretic standpoint. If we consider the decision making entities in the game to be the massive crypto exchanges and miners, the best way they make money is by transaction fees and exchange fees, so they aren't likely to come up with a great micro-transaction and micro-exchange fee system. Oh well.
> Is it impossible to achieve the stated benefit of being able to make quick and easy transactions and being decentralized?
Yes. A transaction is a network-scale operation. It needs to be broadcast and confirmed by at least half the network. Otherwise it wouldn't be decentralized.
As that network increases in size, the resources required for that operation increase proportionally.
"Decentralization" is a bad meme that seems to work at small scales but its adherents refuse to zoom out and accept how technically ridiculous it is at current scales (millions/billions of people).
Yes. A transaction is a network-scale operation. It needs to be broadcast and confirmed by at least half the network. Otherwise it wouldn't be decentralized.
As that network increases in size, the resources required for that operation increase proportionally.
"Decentralization" is a bad meme that seems to work at small scales but its adherents refuse to zoom out and accept how technically ridiculous it is at current scales (millions/billions of people).
Why should a transaction need to be a network scale operation in a decentralized scheme? The ultimate decentralized payment mechanism is bartering, in which the transaction only includes the people making the transaction.
Now, I don’t know how to translate that to the digital world, but there’s no clear reason why a decentralized network must inform the entire network of everything that happens in it.
Now, I don’t know how to translate that to the digital world, but there’s no clear reason why a decentralized network must inform the entire network of everything that happens in it.
In this context we're referring specifically to decentralized finance, currency, etc.
Sure, but still I can transact using currency in the real world without (directly) involving a central authority, announcing my transaction to the whole world, or paying any fees. I cannot do that in the digital world.
Here are some projects working towards addressing the issues of blockchain scalability:
- Lightning network on bitcoin. Super cheap and fast transactions, makes micropayments a reality (this is what Twitter is using)
- Layer 2 solutions on Ethereum. There are two optimistic rollups currently on main net (Arbitrum and Optimism). Reddit has recently committed to building on Arbitrum. There are also ZK rollups (starkware, zksync) coming in the next year or so.
- Less decentralized layer 1 chains like Solana, Avalanche, BSC, Fantom
It's unfortunate that people looking to enter the space have a hard time finding real and relevant info. Not sure what the solution is for fixing the information problem, but there are lots of people building real tech in the space
- Lightning network on bitcoin. Super cheap and fast transactions, makes micropayments a reality (this is what Twitter is using)
- Layer 2 solutions on Ethereum. There are two optimistic rollups currently on main net (Arbitrum and Optimism). Reddit has recently committed to building on Arbitrum. There are also ZK rollups (starkware, zksync) coming in the next year or so.
- Less decentralized layer 1 chains like Solana, Avalanche, BSC, Fantom
It's unfortunate that people looking to enter the space have a hard time finding real and relevant info. Not sure what the solution is for fixing the information problem, but there are lots of people building real tech in the space
As I understand it these layer 2 solutions typically require a resolution transaction in order to actually extract value, which has similar costs to a normal on-chain transaction. In the ideal world folks would be able to use the existing infrastructure of established Bitcoin atms to make transactions with low fees, but that doesn’t seem like it will happen any time soon.
Things like the Twitter solution aren’t great, Twitter owns all the currency and is kind enough to let you have some sometimes. If I were to make my app I wouldn’t want ownership of any of the currency, too much liability.
I’m not very interested in the promises of bleeding edge crypto startups, in my experience they almost never pan out, and certainly aren’t accessible to the masses.
Things like the Twitter solution aren’t great, Twitter owns all the currency and is kind enough to let you have some sometimes. If I were to make my app I wouldn’t want ownership of any of the currency, too much liability.
I’m not very interested in the promises of bleeding edge crypto startups, in my experience they almost never pan out, and certainly aren’t accessible to the masses.
Not sure what you mean about layer 2 solutions being similar in cost to layer 1 transactions. See here: https://l2fees.info. Arbitrum and Optimism are both running in "safe mode" so their tx cost will continue to go down.
I agree that the twitter solution isn't great. Just pointing out that Lightning network is a tech that can be used for cheap transactions.
100% agree that none of these solutions are accessible to the masses. Tons of UX issues, most people don't want to self custody, layer 2s can require bridging, etc. But, I don't think it's terribly hard to see how these issues will be addressed and they are actively being worked on
I agree that the twitter solution isn't great. Just pointing out that Lightning network is a tech that can be used for cheap transactions.
100% agree that none of these solutions are accessible to the masses. Tons of UX issues, most people don't want to self custody, layer 2s can require bridging, etc. But, I don't think it's terribly hard to see how these issues will be addressed and they are actively being worked on
So I may be wrong here but my understanding is that you can’t go directly from fiat to L2 transacting. My goal is to minimize the loss from patron’s bank account to creator’s bank account, and every extra step along the way is a couple percent out of the creator’s bank account and into exchanges/miners’.
Edit: put more simply, a hundred people each want to give $5 to a single person. What path do they follow to ensure that the person can get as close to $500 in their bank account as soon as possible. Bonus question: what is the relation between how much they can get into their bank account and how long they wait?
Edit: put more simply, a hundred people each want to give $5 to a single person. What path do they follow to ensure that the person can get as close to $500 in their bank account as soon as possible. Bonus question: what is the relation between how much they can get into their bank account and how long they wait?
Ah I gotcha, yea that is mostly true at the moment. I'm pretty sure the only way to go directly from fiat to L2 is through Binance which can transfer to Arbitrum (someone correct me if I'm wrong). All the major centralized exchanges are working on this, so I expect to see more support for direct to layer 2 transfers soon.
Not sure about the amount of time between exchange and bank account, I think that is going to depend on each exchange.
Not sure about the amount of time between exchange and bank account, I think that is going to depend on each exchange.
So it's just a different institution doing transactions internally with extra steps.
Not exactly, the "extra steps" are necessary to create separability so that the user can have their choice of institution to deal with.
> Most are done internally
You mean with one centralized authority you have to trust?
You mean with one centralized authority you have to trust?
The technology doesn't really matter that much. If the US banking system wants to compete, it could try paying yield on savings. That's one weird trick that has made banking attractive for well over 1,000 years. A banking system that does not pay yields to savers is just a glorified collection of ledgers.
A crypto system that pays yields on monopoly money is just a glorified collection of ledgers moving fake money around, no?
What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.
What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.
There are hundreds of fake monies used all over the world, including many countries with dual currency systems in which they use one fake money internally and one fake money externally. Bitcoin and frankly many other random altcoins are more credible than many of those hundreds of moneys.
The history of banking is replete with unsustainable arrangements involving the quest for yields deriving from speculative assets. Banking systems are continually expanding, exploding, and then expanding again. If we want to make the normal banking system competitive, it has to pay yields even though doing so means risk. The crypto explosion is best understood as a technologically enabled resumption of the usual cycle of banking despite the industrial west's attempt to suspend that cycle through extraordinary regulatory action.
The history of banking is replete with unsustainable arrangements involving the quest for yields deriving from speculative assets. Banking systems are continually expanding, exploding, and then expanding again. If we want to make the normal banking system competitive, it has to pay yields even though doing so means risk. The crypto explosion is best understood as a technologically enabled resumption of the usual cycle of banking despite the industrial west's attempt to suspend that cycle through extraordinary regulatory action.
The reason yields are low has nothing to do with the denomination of the currency but with the macro economy. Like gravity you can't fight it.
I doubt it, that's what Venmo, PayPal, Cash app, and a thousand other services solve. Crypto isn't nearly as convenient as any of those.
The problem with bank accounts is the banks. The promise of crypto is that you don't need to trust any institution, such as a bank, to keep track of your money.
Now you need to trust developers who wrote the client code, trust large mining(/staking whatever) pools not to collude and 51% you, and uhhhh trust yourself to not lose the fucking keys, or to be an expert in all the various "protection" schemes like multi-signature wallets (until they explode because there's a bug in them)… You also have to 100% trust yourself to not get scammed — there's no chargeback if you do.
Regarding not losing the keys (ie. responsibility for your own security), this was my #1 grounds for skepticism in crypto when I first entered the space. I could predict that without some compromise on this, most people would not use crypto. However, social recovery is already one potential solution for that, so don’t discount that surprising ideas can come up (https://cryptonews.com/news/social-recovery-wallet-is-better...)
Which could be compelling if you lived in a society where the banks were extremely unstable, but looks terrible if you live in one with regulation, deposit insurance and and other account protections.
How much of the world have you described?
Bitcoin is better in those unstable currency countries. The market will decide (has decided in some cases). So maybe inexorably bitcoin will be the reserve currency for a large portion of the planet. And at some point there will be a tipping point where it's going to be attractive enough to all other central banks.
It turns an everyday person worldwide into equals with central banks. That's pretty radical.
Bitcoin is better in those unstable currency countries. The market will decide (has decided in some cases). So maybe inexorably bitcoin will be the reserve currency for a large portion of the planet. And at some point there will be a tipping point where it's going to be attractive enough to all other central banks.
It turns an everyday person worldwide into equals with central banks. That's pretty radical.
Banks are the government's instrument of total surveillance and enforcement in the financial sector.
You weren't here in 2008?
I was (if 'here' is the US), and I didn't lose money in my bank accounts?
It was a very close call, all because the banks were so reckless. Are you sure next time they will have enough money to bail them out again?
Of course, "too big to fail" - some of them almost certainly should have, though I would have expected the FDIC to work as intended then (instead of using public funds to prop up the banks themselves, it could have covered our deposits).
The promise of crypto(currency) is that you buy some and then you get rich.
I'm not even trying to be super-negative here - after all, if it does become a lasting store of value, accepted as money in the long term, then early adopters will be holding something valuable. It could happen. But right now the hype is self-perpetuating.
I'm not even trying to be super-negative here - after all, if it does become a lasting store of value, accepted as money in the long term, then early adopters will be holding something valuable. It could happen. But right now the hype is self-perpetuating.
> If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
As someone born in the EU (now living in South-East Asia) I am still excited about Bitcoin. Because I feel it's the only safe haven for my honestly earned money out of reach of governments and banks. I feel Bitcoin is a too important technology to fail, especially as the world will slowly move towards Central Bank Digital Currencies that will have the same problems as fiat right now.
I view inflation as something bad for society (a hidden tax and form of theft) and CBDCs will be inflationary currencies. I also don't like that governments and central banks will get even more control over people's lives once physical currencies are gone. If you behave bad through the eyes of governments or banks (e.g. using too much electricity, eat too much meat, work as a prostitute, etc...) they might be able to take restrict your earning potential or spending. That is not a world that I'd like to live in.
As someone born in the EU (now living in South-East Asia) I am still excited about Bitcoin. Because I feel it's the only safe haven for my honestly earned money out of reach of governments and banks. I feel Bitcoin is a too important technology to fail, especially as the world will slowly move towards Central Bank Digital Currencies that will have the same problems as fiat right now.
I view inflation as something bad for society (a hidden tax and form of theft) and CBDCs will be inflationary currencies. I also don't like that governments and central banks will get even more control over people's lives once physical currencies are gone. If you behave bad through the eyes of governments or banks (e.g. using too much electricity, eat too much meat, work as a prostitute, etc...) they might be able to take restrict your earning potential or spending. That is not a world that I'd like to live in.
Why do you consider it a safe haven for your money when the volatility is so high?
> Why do you consider it a safe haven for your money when the volatility is so high?
Because I believe in the long term Bitcoin will always go up, as it has done in the past. Especially if central banks keep printing money at high volume, which -at this point- seems unavoidable for the Fed & ECB.
I don't care too much for short term volatility. And as Bitcoin adoption grows, volatility should reduce anyways.
Because I believe in the long term Bitcoin will always go up, as it has done in the past. Especially if central banks keep printing money at high volume, which -at this point- seems unavoidable for the Fed & ECB.
I don't care too much for short term volatility. And as Bitcoin adoption grows, volatility should reduce anyways.
"Modern" banking systems still suck if you want to move large amounts of money, move money globally, move money without asking for regulatory permission and waiting for regulatory delays, avoid having your assets temporarily seized because the comptroller makes a paperwork error, etc. etc.
Quite a bit of it also comes from the fact that people are tired from the fed printing money at will, devaluing people's hard work they put in for years to save some money.
Secondly, people in the EU are also excited about bitcoin regardless of the fact that they have what you mentioned.
Secondly, people in the EU are also excited about bitcoin regardless of the fact that they have what you mentioned.
> easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU
Um, no. I'm not used to that. My latest online German-bank-to-German-bank giro transfer took the usual two-to-three business days.
Um, no. I'm not used to that. My latest online German-bank-to-German-bank giro transfer took the usual two-to-three business days.
Not much. The hype is mostly gambling, ponzi schemes and the like.
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If PayPal would have realized the vision of Elon Musk, there would be no banks anymore. In that scenario, it would be really hard for crypto to emerge.
But right now, that market is fully open.
But right now, that market is fully open.
Most people on HN are rational people who look at the world in a rational way. Bitcoin and friends are not operating in a rational market, therefore we don't understand them, and most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing.
But, and this is a key point, that doesn't make us right and them wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?
But, and this is a key point, that doesn't make us right and them wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?
HN’s attitude is very surprising to me. I would think that they could get very excited about flash loans, decentralized exchanges (automated market makers), daos, and other concrete innovations coming out of crypto asset projects.
I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. I think that because I’ve had the feeling many times.
They may not realize these are early days. The average person saw the bubbles in tech company stocks and even to this day I find myself having to argue with people who think that tech is in a bubble despite the fact that these companies are now some of the biggest, most profitable, and most powerful in the world.
Everyone on HN is asleep and a company offering a product called SushiSwap is a multi billion dollar unicorn. I think 99% of crypto projects are scams, but they are also exploratory. Even if they crash now, these decentralized apps are significantly more solid than pets.com ever was. Does HN really think that just evaporates?
I would ask anyone on HN who is doubtful to do this - go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested.
The situation on HN really feels to me like one of “live long enough, see yourself become the villain.” They are playing the role of the old men in suits in the 90’s sitting around a table in New York and looking at those internet hippies in California saying “we build real things, not these internet funny money companies”.
And what happened? It’s like Zuckerberg said to the suits in the Social Network - “I could buy Mt. Auburn Street, take the Phoenix Club, and turn it into my ping-pong room.”
I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. I think that because I’ve had the feeling many times.
They may not realize these are early days. The average person saw the bubbles in tech company stocks and even to this day I find myself having to argue with people who think that tech is in a bubble despite the fact that these companies are now some of the biggest, most profitable, and most powerful in the world.
Everyone on HN is asleep and a company offering a product called SushiSwap is a multi billion dollar unicorn. I think 99% of crypto projects are scams, but they are also exploratory. Even if they crash now, these decentralized apps are significantly more solid than pets.com ever was. Does HN really think that just evaporates?
I would ask anyone on HN who is doubtful to do this - go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested.
The situation on HN really feels to me like one of “live long enough, see yourself become the villain.” They are playing the role of the old men in suits in the 90’s sitting around a table in New York and looking at those internet hippies in California saying “we build real things, not these internet funny money companies”.
And what happened? It’s like Zuckerberg said to the suits in the Social Network - “I could buy Mt. Auburn Street, take the Phoenix Club, and turn it into my ping-pong room.”
I was excited 4 years ago when I first discovered these crypto concepts. As time has gone on and I've learned more about them, they are less interesting and come with a ton of baggage. There are interesting things like formal verification, but I expect that these types of things will be taken without the blockchain.
You shouldn't dismiss HN attitudes as jealousy or asleep, that is derogatory.
You shouldn't dismiss HN attitudes as jealousy or asleep, that is derogatory.
Yeah the language is a bit strong. I’m serious about the jealousy though - perhaps it’s just me. But when I see someone making a boatload on Tesla and I’m sitting there thinking it’s ridiculous, where does that really come from? All I know is I probably wouldn’t care either way if I’d owned some…and since my experiences with day trading and algorithmic trading, I’m convinced 90% of finance is emotional. It clouds the mind and corrupts usually rational people.
You are sitting there thinking it's ridiculous on Tesla. Are you thinking it's ridiculous on Google? Or Apple?
Don't give yourself a hard time :) I think the Tesla stock price is ridiculous. It's not a jealousy thing. I don't think Google or Apple share prices are ridiculous, and more people made more money out of those two.
If someone makes money in a ridiculous way, it's ok to think it's ridiculous.
Don't give yourself a hard time :) I think the Tesla stock price is ridiculous. It's not a jealousy thing. I don't think Google or Apple share prices are ridiculous, and more people made more money out of those two.
If someone makes money in a ridiculous way, it's ok to think it's ridiculous.
True. The point I was making was one about emotion in finance - when I’m making money it’s easier to ignore rational doubts, and when I’m missing out it’s easier to focus on the negatives because a little voice in the back of my head wants it to fail.
You want it to fail or you want to be right? Nothing wrong with wanting to be right. If Tesla stays at a crazy high valuation for the long term, then several mental models I use and find valuable fall to pieces. That would be very annoying for me on several dimensions because it's likely they wouldn't be replaced with useful mental models. They'd be replaced with "ITS ALL JUST CHAOS".
Markets look to the future. The Tesla valuation makes sense if they are going to do a trillion of business at some future point.
Everyone thinking about the Tesla valuation is aware markets look to the future :)
Even then - your statement is simplistic - the future cashflows are discounted back to today. As an example, if their revenue is $1 trillion (assume no inflation for simplicity) in 50 years, and we assume 10% net income margin (probably in the ballpark of reasonable) they make $100 bill which is discounted 50 years to today at maybe 8% (?), that year's earnings is worth around $2 billion today.
You may reasonably counter that they will grow much faster than that - and this is where people (like me) question it. The total industry is ~$3 trillion or so, globally. 85 million units. Telsa will hit maybe 900k units this year. So its a tough sell that they'll get to 25-30 mill units anytime soon (from a demand or supply side).
Don't get me wrong - Tesla is brilliant, Elon is brilliant. It doesn't mean the company is worth infinity. There is some concrete number which makes sense... and to many folks, 1 trillion is an order of magnitude too high.
Even then - your statement is simplistic - the future cashflows are discounted back to today. As an example, if their revenue is $1 trillion (assume no inflation for simplicity) in 50 years, and we assume 10% net income margin (probably in the ballpark of reasonable) they make $100 bill which is discounted 50 years to today at maybe 8% (?), that year's earnings is worth around $2 billion today.
You may reasonably counter that they will grow much faster than that - and this is where people (like me) question it. The total industry is ~$3 trillion or so, globally. 85 million units. Telsa will hit maybe 900k units this year. So its a tough sell that they'll get to 25-30 mill units anytime soon (from a demand or supply side).
Don't get me wrong - Tesla is brilliant, Elon is brilliant. It doesn't mean the company is worth infinity. There is some concrete number which makes sense... and to many folks, 1 trillion is an order of magnitude too high.
Yeah but re mental models you combine that with "...Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business..."
Sure. But old Ben Graham also said that in the long-run the market is a weighing machine. Note above I said "long term". If Tesla stays long term at current prices or above, I've completely misunderstood several things in a pretty fundamental way. As an example - gold has stayed at prices which don't make much sense to me for a very long time. So my mental model for that market is "it's crazy town, stay away". That's not a very useful model. I hope I don't arrive at the same place on what is a pretty simple company - they sell cars.
The market assumes that Tesla will be much more than selling cars. The scope is more "anything electricity or climate change related" (i.e. very broad) combined with a focus on vertical integration in each business unit.
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The biggest attitude problem in crypto is to respond to technical questions and challenges with personal attacks.
Such a turn off both technically and socially. I find it more toxic and tribal than politics at this point.
Such a turn off both technically and socially. I find it more toxic and tribal than politics at this point.
I read the O'Reilly book. I (superficially) grasp the crypto and the distributed database concepts.
What doesn't make sense is how the rest of the system turns into real transactions.
PREDICTION: in another decade, this shall have arrived or been proven a fad.
What doesn't make sense is how the rest of the system turns into real transactions.
PREDICTION: in another decade, this shall have arrived or been proven a fad.
>go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested.
I feel like the coolness of Uniswap requires putting the cart before the horse. If I'm not convinced of the real utility of these tokens, why would I be impressed with the ability to move them around in various clever ways? I need to see a valuable external use case before I can see the value in what Uniswap enables.
I feel like the coolness of Uniswap requires putting the cart before the horse. If I'm not convinced of the real utility of these tokens, why would I be impressed with the ability to move them around in various clever ways? I need to see a valuable external use case before I can see the value in what Uniswap enables.
I guess to me it’s more about progression. From Bitcoin, to Ethereum, to Uniswap, there is a strong development of the early ideas and technology. This doesn’t seem like it will just stop to me. It indicates a very bright future in my opinion. Also, although I get disillusioned, I personally have come to appreciate more that the value being produced is financial. There is clearly massive pent up demand for financial games. On Wall Street there is a huge market for firms that proudly do not pay attention at all to the underlying assets they trade in a “fundamentals” sense, and just play games with mathematical and technological advantage. From what I can tell massive segments of finance are just money games. This is a form of that, which is a real and tremendous market. A natural progression that people who say “high frequency trading provides no value” or “banks shouldn’t be allowed to deal in derivatives” will hate.
You should hear the kind of stuff people are coming up with…what if I could sell a token, and the interest generated from staking it gets repackaged into an options contract on another chain that then gets its value automatically updated every time someone sells and…
It seems nonsensical, until you go learn what all these quants are getting paid millions per year to do for hedge funds and you think to yourself “oh, it’s a similar thing. There is demand for this.”
You should hear the kind of stuff people are coming up with…what if I could sell a token, and the interest generated from staking it gets repackaged into an options contract on another chain that then gets its value automatically updated every time someone sells and…
It seems nonsensical, until you go learn what all these quants are getting paid millions per year to do for hedge funds and you think to yourself “oh, it’s a similar thing. There is demand for this.”
I mean, if someone showed by some great new innovation to let HFT shops move faster, I'd also be a bit nonplussed. If the answer is just "well, this is no more useless other frivolous* money games", then I'm not really convinced.
*frivolous in the sense of real utility. Obviously they make boatloads of money.
*frivolous in the sense of real utility. Obviously they make boatloads of money.
Sure. I guess what I’ve come to accept more is that what people on Wall Street do is real. Games are real. I don’t personally buy into the “new world currency”, “real world use case, I’m gonna own my house on a blockchain” lines of thinking. The use case is still being fleshed out but in my opinion it’s much more likely to produce lots of Citadels than lots of Amazons or Googles if that makes sense. Whereas I think that HN believes it will just go away because it’s all a scam.
> From Bitcoin, to Ethereum, to Uniswap, there is a strong development of the early ideas and technology.
To do what useful thing, that isn't crime?
> From what I can tell massive segments of finance are just money games. This is a form of that, which is a real and tremendous market.
For what, except speculation and crime? What application? It's been twelve years. Crypto is almost as old as the smartphone.
> A natural progression that people who say “high frequency trading provides no value” or “banks shouldn’t be allowed to deal in derivatives” will hate.
Derivatives have obvious economic value. I can go into a room and write an economic model for them and it will agree with everyone else's because there's an objective theory that can be applied to get answers (and I have successfully done this in the past).
Any economic model for the value of cryptocurrency gives it a zero value.
More, crypto people don't have any competing valuation model or theory or explanation or anything. The values for all these coins simply come from nowhere.
> It seems nonsensical, until you go learn what all these quants are getting paid millions per year to do for hedge funds and you think to yourself “oh, it’s a similar thing. There is demand for this.”
You are wrong. I did this for a living for years.
All you are doing is adding the present value of future cash flows together to get the value. The tricky part is dealing with volatility, for which there's an "arbitrage-free" (no magic cash) model called Black-Scholes - and then there are a zillion details.
But cryptocurrencies _have no cash flows._ No cryptocoin produces or destroys fiat currency. The _only_ way you make $1 out of your crypto is if some Greater Fool buys your cryptocoin for more than you paid for it.
Eventually, there won't be a Greater Fool, then everyone will be left with a crappy and expensive payment system with huge transaction costs and nothing else. Everyone will rush for the doors, but there's no liquidation value and no fundamental value and no market makers.
To do what useful thing, that isn't crime?
> From what I can tell massive segments of finance are just money games. This is a form of that, which is a real and tremendous market.
For what, except speculation and crime? What application? It's been twelve years. Crypto is almost as old as the smartphone.
> A natural progression that people who say “high frequency trading provides no value” or “banks shouldn’t be allowed to deal in derivatives” will hate.
Derivatives have obvious economic value. I can go into a room and write an economic model for them and it will agree with everyone else's because there's an objective theory that can be applied to get answers (and I have successfully done this in the past).
Any economic model for the value of cryptocurrency gives it a zero value.
More, crypto people don't have any competing valuation model or theory or explanation or anything. The values for all these coins simply come from nowhere.
> It seems nonsensical, until you go learn what all these quants are getting paid millions per year to do for hedge funds and you think to yourself “oh, it’s a similar thing. There is demand for this.”
You are wrong. I did this for a living for years.
All you are doing is adding the present value of future cash flows together to get the value. The tricky part is dealing with volatility, for which there's an "arbitrage-free" (no magic cash) model called Black-Scholes - and then there are a zillion details.
But cryptocurrencies _have no cash flows._ No cryptocoin produces or destroys fiat currency. The _only_ way you make $1 out of your crypto is if some Greater Fool buys your cryptocoin for more than you paid for it.
Eventually, there won't be a Greater Fool, then everyone will be left with a crappy and expensive payment system with huge transaction costs and nothing else. Everyone will rush for the doors, but there's no liquidation value and no fundamental value and no market makers.
I could replace your use of “cryptocurrency” here with “Pokémon cards” and nothing would change. Yet you don’t seem concerned with the buying, selling, trading, owning of Pokémon cards with regard to their utility. You are not the arbiter of utility. Nobody is. If you have no utility for digital cash, great. That doesn’t mean others don’t. You don’t have to play Pokémon if you don’t want to.
Cryptocurrencies, unlike trading cards, have large negative externalities. They are causing component shortages, driving up GPU prices, enabling new scams and ransomware, wasting electricity, accelerating climate change.
It might be justifiable if cryptocurrencies were providing real economic value, but if we're drawing analogies to Pokemon cards, then they are net-negative value to humanity and we should hope for them to fail as soon as possible.
It might be justifiable if cryptocurrencies were providing real economic value, but if we're drawing analogies to Pokemon cards, then they are net-negative value to humanity and we should hope for them to fail as soon as possible.
What are the negative externalities of central banking and dollar hegemony? I'd argue the externalities of dollar dominance are orders of magnitude greater for enabling crime (and legal antisocial behavior), wasting natural resources and accelerating climate change.
GPU prices is totally fair though.
GPU prices is totally fair though.
The automated market maker design of Uniswap is useful even for non-blockchain based scripts to e.g. trade stocks digitally.
It's just a simple way of creating an orderbook and liquidity. So you don't need to be convinced of the real utilities of tokens to appreciate the brilliance of the design.
It's just a simple way of creating an orderbook and liquidity. So you don't need to be convinced of the real utilities of tokens to appreciate the brilliance of the design.
Sure, but it's being presented as a reason to be excited about crypto, so any non-crypto applications aren't really relevant here.
Sounds like you're being deliberately picky to get your point across that crypto is shit.
Being insulting shows you don't actually have an argument.
We know "trading stocks" is a valuable service. We're looking for a valuable service that requires crypto.
We know "trading stocks" is a valuable service. We're looking for a valuable service that requires crypto.
While extremely interesting and even innovative, of those innovations are only useful in the hermetic world of their own blockchain, due to the oracle problem. The idea of real-world DeFi is purely hypothetical, at this point.
Yeah to be honest with you, I don’t believe much at all in this talk about “real world” integrations. If you’re interested please check out a couple other comments I made on this thread that touch on that. My opinions are developing as I go.
Read through your other comments, and I don't think that there being a market for money games is sufficient to keep the crypto train going, if it can't find its way into the underpinnings of the real economy. People play money games with things that are indispensable, like the stock market. Failing that, I'm skeptical that people will find crypto interesting after it finds its top. It may just find itself as a perpetually fringe and somewhat seedy sector, like MLM -- a place where fortunes are made off the backs of folks who are betting their meager savings on a chance at better prospects.
I get that and think it’s possible for sure.
> automated market makers
Are you claiming that this is an innovation associated with crypto? Can you elaborate or clarify, as the case may be?
Are you claiming that this is an innovation associated with crypto? Can you elaborate or clarify, as the case may be?
The decentralized exchanges are essentially just automated market makers, but in a different sense than existing automated market makers like Citadel. The contract deals more with balancing pools than a traditional market maker who just forwards orders to an exchange or matches it themselves.
Apologies for the delayed response. What you're describing is not novel to crypto. Citadel is a wholesaler, but plenty of other participants quote firm bid/offer prices on real exchanges (where the wholesaler sends their exhaust). In the US equity space there is RegNMS that seeks to model the marketplace as a single entity, so it's a bad example; but there are plenty of other examples of non-fungible products that trade more similarly to the crypto markets. For example, there are gold markets across the world with slightly different quality standards, units of measurement, delivery standards (or cash settlement rules), expiration dates, etc.
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> I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink.
If crypto and defi live up to their promise, no one is going to "miss the boat". People at large will start getting paid in cryptocurrencies and they will start using them in transactions. If there are only a limited number of boats for this thing, that means it's a bubble and it's going to pop.
Personally, I struggle to see any real uses for cryptocurrency that are not at odds with it being deflationary. So, paradoxically, for as long as it keeps going up, I don't trust it will hold its value. Once the curve flattens and adoption picks up, then sure, I'll consider it, but at that point it doesn't matter if you get in early or not.
If crypto and defi live up to their promise, no one is going to "miss the boat". People at large will start getting paid in cryptocurrencies and they will start using them in transactions. If there are only a limited number of boats for this thing, that means it's a bubble and it's going to pop.
Personally, I struggle to see any real uses for cryptocurrency that are not at odds with it being deflationary. So, paradoxically, for as long as it keeps going up, I don't trust it will hold its value. Once the curve flattens and adoption picks up, then sure, I'll consider it, but at that point it doesn't matter if you get in early or not.
I commented this further down and am interested in your thoughts. One thing I’ve come to appreciate more when we talk about the “real value” being produced is that these are essentially just money games. Lots of established Wall Street firms play money games for a (very, very good) living.
I’ve come to accept more that what people on Wall Street do is real. Games are real. I don’t personally buy into the “new world currency”, “real world use case, I’m gonna own my house on a blockchain” lines of thinking. The use case is still being fleshed out but in my opinion it’s much more likely to produce lots of Citadels than lots of Amazons or Googles if that makes sense. Whereas I think that HN believes it will just go away because it’s all a scam.
For better or worse, there is huge pent up demand for money games. The average person doesn’t know it yet, but they want to own a swap on an option to buy a percent of the interest of a bond deal that they can then stake for percent ownership in an nft. It sounds insane to you and me right now. But I think they’re going to evolve to the use case of crypto, not the other way around.
I’ve come to accept more that what people on Wall Street do is real. Games are real. I don’t personally buy into the “new world currency”, “real world use case, I’m gonna own my house on a blockchain” lines of thinking. The use case is still being fleshed out but in my opinion it’s much more likely to produce lots of Citadels than lots of Amazons or Googles if that makes sense. Whereas I think that HN believes it will just go away because it’s all a scam.
For better or worse, there is huge pent up demand for money games. The average person doesn’t know it yet, but they want to own a swap on an option to buy a percent of the interest of a bond deal that they can then stake for percent ownership in an nft. It sounds insane to you and me right now. But I think they’re going to evolve to the use case of crypto, not the other way around.
I guess I can understand the idea of blockchains as a better way to play financial games. That's a valid use for which there is demand. Another use I can understand is hedging against political instability. Neither personally appeal to me, but I get it.
Still, it seems to me that an awful lot of people are playing this game with scant knowledge of the rules or of what's involved, which is a bit like investing in Tesla without understanding what a car is. I also feel that a lot of the "value" that has been built up is predicated on the idea that Bitcoin (and/or other coins) will indeed become the new world currency. I have seen a few people saying this very thing (or close to it) in this post's comments.
That's not to say they are wrong. However, if the outcome of defi is limited to playing financial games, there is a point where people will lose confidence in this "new world currency" forecast and the price of BTC will see a severe correction.
And that's one thing that I find bothersome in this whole craze: the fact that many ideas in the crypto space have legitimate value does not imply that it is profitable to invest in any existing technology. The future CAN be defi at the same time that Bitcoin might crash to zero, if it happens to be the wrong horse. Worse yet, existing entrenched interests in cryto have a vested interest in making sure that the only technologies that succeed are those they have a stake in, so if Bitcoin succeeds, that may very well be at the expense of vastly superior technology. I think there is a very real risk that the success of Bitcoin will either prevent or significantly delay the emergence of good, efficient blockchain technology.
Still, it seems to me that an awful lot of people are playing this game with scant knowledge of the rules or of what's involved, which is a bit like investing in Tesla without understanding what a car is. I also feel that a lot of the "value" that has been built up is predicated on the idea that Bitcoin (and/or other coins) will indeed become the new world currency. I have seen a few people saying this very thing (or close to it) in this post's comments.
That's not to say they are wrong. However, if the outcome of defi is limited to playing financial games, there is a point where people will lose confidence in this "new world currency" forecast and the price of BTC will see a severe correction.
And that's one thing that I find bothersome in this whole craze: the fact that many ideas in the crypto space have legitimate value does not imply that it is profitable to invest in any existing technology. The future CAN be defi at the same time that Bitcoin might crash to zero, if it happens to be the wrong horse. Worse yet, existing entrenched interests in cryto have a vested interest in making sure that the only technologies that succeed are those they have a stake in, so if Bitcoin succeeds, that may very well be at the expense of vastly superior technology. I think there is a very real risk that the success of Bitcoin will either prevent or significantly delay the emergence of good, efficient blockchain technology.
One of the most realistic takes in this thread, thanks for sharing. I strongly agree. I am severely disillusioned about the early promises of crypto that I espoused. I have settled more on your view, but I think we will cull out the garbage pets.com equivalents and in 10 more years we will see serious companies that are publicly listed developing large scale financial games. Whether they have any connection at all to existing tech (99% of which I think are not just bad but actively toxic scams) is tenuous at best.
There’s astroturfing on HN, like every other open social media platform. The tilted dissonance around crypto, whether it’s the counterintuitive market behavior or climate change advocacy, is one of lacking curiosity, a hallmark of innovative cultures.
Funny how crypto people thinking insulting everyone else will change our minds!
"It has to be your lack of curiosity" (because there's no otherwise explaining your bad judgement).
"It has to be your lack of curiosity" (because there's no otherwise explaining your bad judgement).
How exactly is it bad judgement? I’d argue that working at google or investing and making money at google signifies equally bad judgement then, seeing as how it is a company that is eroding freedoms, regularly caught breaking laws, and rife with unethical business practices all in the name of innovation and technology. And yet nobody is decrying the evils of selling their stock in google to make some $.
It's like talking to an old person about computer games. They literally see 0 value and don't get why we are all excited about it. Most feel it's a net negative on society.
And yes, that's also a market that dwarfs all of its neighbors.
And yes, that's also a market that dwarfs all of its neighbors.
"You're old and foolish" is also not an argument in favor of cryptocurrencies.
You don't get it do you? There is no point in giving arguments to people who don't understand.
All this HN discussions have proven that already, no? Do you really think at this point you or me are going to change someones opinion with arguments?
All this HN discussions have proven that already, no? Do you really think at this point you or me are going to change someones opinion with arguments?
That is not a logical argument.
No crypto booster has an answer to: It is not useful
Or It is a huge waste of energy
Or All the technology involved has better counterparts
I do not think I will change your mind, but others are reading this
No crypto booster has an answer to: It is not useful
Or It is a huge waste of energy
Or All the technology involved has better counterparts
I do not think I will change your mind, but others are reading this
All your questions have been answered plenty of times. The fact that the same stuff keeps being repeated says enough about the discussion.
Cross-posted: Transferring SPL USDC is easier, faster, less wasteful, and less expensive than transferring dollars in a bank account.
I am not asleep, but I'm definitely tired.
It would be an extraordinary event in human history if jealousy didn't play at least some role here.
But I think more than that it's become an identity thing. A social signal. So it's not really worth arguing about. Share you own thoughts and move on, don't get invested in debating it here. Elsewhere, perhaps, but not here.
I do want to add that while I don't completely agree with all your comments in this thread, I do appreciate seeing someone express an opinion on the topic that isn't a copy/paste of countless others before it.
But I think more than that it's become an identity thing. A social signal. So it's not really worth arguing about. Share you own thoughts and move on, don't get invested in debating it here. Elsewhere, perhaps, but not here.
I do want to add that while I don't completely agree with all your comments in this thread, I do appreciate seeing someone express an opinion on the topic that isn't a copy/paste of countless others before it.
I have exactly the same observation and personal experience, and commented the same thing a while back on another crypto-hatred thread here on HN.
Below commenters are just switching the tables around, not seeing absolute radical cynicism towards crypto/blockchain on HN.
Below commenters are just switching the tables around, not seeing absolute radical cynicism towards crypto/blockchain on HN.
I suspect that much of HN, either directly or via their backers/employers, also comes out of the angel-investment scene and has emotional ties to the more conventional funding mechanisms that were themselves disruptive to traditional finance. "You can't make someone understand something when their income depends on not understanding it" and all that.
I do not have a dog in this fight.
I do have an extensive economics education, and deep and wide IT experience.
I do not understand how crypto is any use for anything that is not illegal and/or immoral.
My conclusion is that it is largely for illegal transactions and scams.
I do have an extensive economics education, and deep and wide IT experience.
I do not understand how crypto is any use for anything that is not illegal and/or immoral.
My conclusion is that it is largely for illegal transactions and scams.
What’s your opinion of uniswap, flash loans, and daos? These are the strongest use cases I know of. Would you mind taking a look at some of my other comments in this thread related to money games in traditional finance and let me know your take?
What is your response to the idea that it can automate the role of a trusted third party in commerce, thereby removing much of the opportunity for abuse of this role?
Trust really matters in commerce. Doing away with trust is bad. If we do not trust each other there is no technology on Dog's Green Earth that can save us.
Can you be trusted? Ask yourself.
Can you be trusted? Ask yourself.
>Can you be trusted? Ask yourself.
Talk about a con man's answer. I get multiple calls a week by people claiming to be my credit card provider, the tax arm of my country's civil service, or the president of the company I work for. Of course some people can't be trusted. Relying on universal trust is a recipe for universal corruption, and your answer to someone pointing that out is to try and turn the problem with trust on them specifically?
At least come up with some better lies, this is just insulting everyone's intelligence.
Talk about a con man's answer. I get multiple calls a week by people claiming to be my credit card provider, the tax arm of my country's civil service, or the president of the company I work for. Of course some people can't be trusted. Relying on universal trust is a recipe for universal corruption, and your answer to someone pointing that out is to try and turn the problem with trust on them specifically?
At least come up with some better lies, this is just insulting everyone's intelligence.
So you think we can do without trust?
Can it be replaced by technology?
The pertinent question is still: Can you be trusted? Your answer to those first two questions answers the third
Can it be replaced by technology?
The pertinent question is still: Can you be trusted? Your answer to those first two questions answers the third
Trust in my family? of course I need that.
Trust in my civil service? Depends on incentives. I'm lucky to live in a country where they're mostly aligned with the needs of the public, but even so there's a 'drift' in incentives that requires constant correction.
Trust in central banks and elected politicians? Absolutely not, what an absurd proposition. How have groups like that ever earned my trust? Why should I give it unearned? And if the answer is 'If you don't trust them they won't trust you', I already know these groups don't trust me. Nothing I do will change that.
Universal trust might be possible in a zero-privacy, one-social-credit-score-from-cradle-to-grave kind of society where I can know strangers with the same kind of detail I know family members. If that's what you're arguing for good on ya for standing apart from the herd. Personally I'm not for that future because I believe zero-privacy leads to a cultural conservatism that would prevent a lot of the interesting innovations we'd get in a some-privacy society.
But universal trust with privacy? Just trusting strangers because we 'have to'? That reliably becomes a kleptocracy. Why should anyone who advocates for a kleptocracy be trusted?
Trust in my civil service? Depends on incentives. I'm lucky to live in a country where they're mostly aligned with the needs of the public, but even so there's a 'drift' in incentives that requires constant correction.
Trust in central banks and elected politicians? Absolutely not, what an absurd proposition. How have groups like that ever earned my trust? Why should I give it unearned? And if the answer is 'If you don't trust them they won't trust you', I already know these groups don't trust me. Nothing I do will change that.
Universal trust might be possible in a zero-privacy, one-social-credit-score-from-cradle-to-grave kind of society where I can know strangers with the same kind of detail I know family members. If that's what you're arguing for good on ya for standing apart from the herd. Personally I'm not for that future because I believe zero-privacy leads to a cultural conservatism that would prevent a lot of the interesting innovations we'd get in a some-privacy society.
But universal trust with privacy? Just trusting strangers because we 'have to'? That reliably becomes a kleptocracy. Why should anyone who advocates for a kleptocracy be trusted?
I mean trust strangers
Without being able to rust the people around you life is untenable. Levels of trust in a society are highly correlated with all sorts of measures of well being (which way causality runs I do not know)
Getting back on topic to crypto currencies: Money builds on this. Money is a web of trust. That is the point, and that is why backed currencies (gold, silver, whatever) are pointless. The point is trust. So it is running against the grain to try to replace trust with technology. With money we are trusting each other and the system. If you are in Zimbabwe, say, or Venezuela, perhaps, where the system is devoid of trust money has little value.
Without being able to rust the people around you life is untenable. Levels of trust in a society are highly correlated with all sorts of measures of well being (which way causality runs I do not know)
Getting back on topic to crypto currencies: Money builds on this. Money is a web of trust. That is the point, and that is why backed currencies (gold, silver, whatever) are pointless. The point is trust. So it is running against the grain to try to replace trust with technology. With money we are trusting each other and the system. If you are in Zimbabwe, say, or Venezuela, perhaps, where the system is devoid of trust money has little value.
The anti-crypto case is not that it's "worse" than some other speculative investment asset (gold, comic books, etc), it's that crypto is a speculative asset, as opposed to the things it's sometimes claimed to be (e.g. currency, a new way to do finance, etc).
This is something I’m stumped myself about. HN etc says crypto has no value and I wonder about other things in conventional finance that are of speculative value :
Gold - Sure it’s a good store of value as a metal but so is bitcoin. If Gold can be valuable because lots of people value it as a store of value so can Bitcoin. In fact bitcoin is arguably better than Gold.
The total wealth of the world is 1000 trillion. Bitcoin is easily worth 0.1 - 0.5 % of that because of its permissionless advantage. Bitcoin has a non zero floor price. I think anyone would agree with this.
This is unlike say NFTs which are not likely worth anything with a potential floor of 0.
Loss making stocks like Snapchat - A company that said in its IPO filing that we may never be profitable and is still struggling with profitability is worth 100B.
If conventional finance is 50 % a Casino based on social factors why can’t there be one more ? Are the purveyors of the current system afraid that they’ll lose their cut ?
What is the right mental model here ?
Gold - Sure it’s a good store of value as a metal but so is bitcoin. If Gold can be valuable because lots of people value it as a store of value so can Bitcoin. In fact bitcoin is arguably better than Gold.
The total wealth of the world is 1000 trillion. Bitcoin is easily worth 0.1 - 0.5 % of that because of its permissionless advantage. Bitcoin has a non zero floor price. I think anyone would agree with this.
This is unlike say NFTs which are not likely worth anything with a potential floor of 0.
Loss making stocks like Snapchat - A company that said in its IPO filing that we may never be profitable and is still struggling with profitability is worth 100B.
If conventional finance is 50 % a Casino based on social factors why can’t there be one more ? Are the purveyors of the current system afraid that they’ll lose their cut ?
What is the right mental model here ?
> Bitcoin has a non zero floor price. I think anyone would agree with this.
I don't. I don't think it's literally zero - even if it drops to $.01 some people will still buy it on the theory that it might go up to $.02. But all of its value is speculative, I don't think it has any intrinsic value (which is equivalent to saying I don't think participating in the crypto economy, smart contracts and all that, has value). And the reasons are as explained in the article - beyond avoiding regulators, it doesn't allow us to do much that we couldn't do before, and what it allows us to do isn't all that valuable.
Even if I knew with absolute certainty that I would never be able to sell it for a profit, I might still buy gold, e.g. to make conductive wire. That's the intrinsic value. What's the equivalent for BTC? How many bitcoins would you buy if you knew that you would not be able to sell them for a profit?
I don't. I don't think it's literally zero - even if it drops to $.01 some people will still buy it on the theory that it might go up to $.02. But all of its value is speculative, I don't think it has any intrinsic value (which is equivalent to saying I don't think participating in the crypto economy, smart contracts and all that, has value). And the reasons are as explained in the article - beyond avoiding regulators, it doesn't allow us to do much that we couldn't do before, and what it allows us to do isn't all that valuable.
Even if I knew with absolute certainty that I would never be able to sell it for a profit, I might still buy gold, e.g. to make conductive wire. That's the intrinsic value. What's the equivalent for BTC? How many bitcoins would you buy if you knew that you would not be able to sell them for a profit?
Why does gold have a non zero floor price and not Bitcoin ? Is it merely because Gold has industrial uses ? That floor would be far lower than Golds current price.
Gold has important uses in industry
Gold has important uses in jewellery
Gold has a natural scarcity, is easy to store, hard to steal. Crypto has no natural scarcity (other than a reluctance to waste energy), is very hard to store and relatedly is very easy to steal.
Gold has important uses in jewellery
Gold has a natural scarcity, is easy to store, hard to steal. Crypto has no natural scarcity (other than a reluctance to waste energy), is very hard to store and relatedly is very easy to steal.
Yes. Gold has both speculative value (you can sell it for more than you bought it for) and intrinsic value (you can use it for stuff). A bitcoin has speculative value only, as far as I can tell. Whether the same is true of crypto generally (including defi and daos and so forth) is open for discussion and one of the things being argued over in this thread.
One huge difference between Bitcoin and gold is that gold can be possessed purely on one's own. Bitcoin requires the continuous expenditure of energy to maintain the record of ownership.
> energy to maintain the record of ownership.
That is entirely incorrect.
Energy is expended to allow transfer of ownership, not to maintain the record.
If all miners save one dude with a laptop stopped to mine transactions tomorrow, you still wouldn't be able to spend Bitcoins for which you don't own the private key.
That is entirely incorrect.
Energy is expended to allow transfer of ownership, not to maintain the record.
If all miners save one dude with a laptop stopped to mine transactions tomorrow, you still wouldn't be able to spend Bitcoins for which you don't own the private key.
I agree with your technical clarification, but there would be no point in owning a balance if the ability for someone to receive it in a transaction without fear of double spend disappeared. Therefore, I stand by my statement. Bitcoin has no value without continuous expenditure of energy.
If we run out of energy aren’t there bigger things to worry about ?
All monetized assets like USD or gold are "speculative". I speculate that my dollar probably won't lose more than 10-20% of its value in the next year.
Anything that hasn't happened yet is "speculative" I guess, but in this context speculative means you bought it because you think you can sell it for more tomorrow, as opposed to buying it for its intrinsic value.
Right, like USD, except replace "for more" with "not too much less".
Ah, I think I see the misunderstanding now. I argued that cryptocurrency is only speculative, and hence unlike a currency which has other uses. I did not argue the inverse (that currency only has other uses, and is not speculative).
The value of the dollar has a floor in that the US government requires that you remit your taxes in dollars. Sure, the US could cease to exist, but that is far less likely than any scenario where bitcoin goes to zero.
The demand introduced by US tax obligations is a vanishingly small fraction of USD demand.
> Bitcoin and friends are not operating in a rational market
Have you considered the possibility that your personal model (which you presumably describe as rational) is just insufficiently complete to accurately model bitcoin? I think bitcoin is perfectly rational. A lot of people confuse things like impredicativity (e.g. in the pricing of monetized goods) with irrationality, but this is just a limitation of their mental model.
Have you considered the possibility that your personal model (which you presumably describe as rational) is just insufficiently complete to accurately model bitcoin? I think bitcoin is perfectly rational. A lot of people confuse things like impredicativity (e.g. in the pricing of monetized goods) with irrationality, but this is just a limitation of their mental model.
The issue is not whether a person can make money in a Ponzi scheme. We know it is possible. The issue is, is it a good idea?
It's really more of MLM than Ponzi at this point.
Buying low and selling high is not a ponzi scheme.
The losers in a Ponzi scheme buy high and sell low. What did the winners do?
So real-estate, stocks and gold are all ponzi schemes?
All of those have value even if you wouldn't be allowed to sell them. Stocks pay dividends, people use gold as jewellery, and you can live in real estate. Speculating on assets with real world value is different from speculating on assets nobody would care about unless they could sell it.
The whole point of these scams is to convince people to buy assets that nobody wants, but you convince them that some other guy really wants it a lot and will pay more for it in the future. And of course if he could convince some new guy of the same thing he can even sell it at a profit, but since there ultimately is nobody who wants this asset the chain has to break sooner or later.
The whole point of these scams is to convince people to buy assets that nobody wants, but you convince them that some other guy really wants it a lot and will pay more for it in the future. And of course if he could convince some new guy of the same thing he can even sell it at a profit, but since there ultimately is nobody who wants this asset the chain has to break sooner or later.
So please tell me when that chain is going to break. Next year? Next decade? In 50 years? Is it still going to break within our lifetimes?
[deleted]
Go look up the definition and history of Ponzi schemes.
Very interesting, and real estate and stocks, whilst subject to bubbles, are not Ponzi schemes.
Very interesting, and real estate and stocks, whilst subject to bubbles, are not Ponzi schemes.
[deleted]
Your infer a lot from a little.
Seems to be your definition of a ponzi scheme. At least on wikipedia they don't agree with that definition.
And how is fiat not a Ponzi scheme?
And how IS fiat a Ponzi scheme? You don't buy into the US dollar expecting your "share" of dollars to go up. You just use it to pay for stuff.
In most modern economies fiat is backed by the 'full faith and credit' of the issuing government, which requires more young people paying into the pension system than retirees drawing from it. That's as clear an example of a Ponzi scheme as can be imagined, albeit moving on a slower timeframe than we usually think of such things working.
Fiat is backed by the insistence of the issuing government that you pay your taxes in that denomination. It has very little to do with pension systems, except to the extent that the government runs those also denominated in dollars.
But the US could end social security tomorrow and as long as it still required taxes and tariffs in the form of dollars, the dollar would still have value.
But the US could end social security tomorrow and as long as it still required taxes and tariffs in the form of dollars, the dollar would still have value.
Zimbabwe required taxes and tariffs in the form of Zimbabwean dollars... You need a little more than just taxes and tariffs for a fiat currency to have value... You need a hard money that is not going to be devalued also. This is where all fiat falls short and has done since the demise of the gold standard.
Ok, but Zimbabwean dollar is not a Ponzi scheme either… the claim is about Ponzi scheme, not other things.
It's the best example of a fiat Ponzi scheme. Keep printing money to keep the guys near the printer (at the top of the pyramid) flush.
USD and other fiats are doing the same. Just at a much slower rate.
Edit:
It's basically just the Cantillion Effect[1] by another name.
[1] https://www.adamsmith.org/blog/the-cantillion-effect
USD and other fiats are doing the same. Just at a much slower rate.
Edit:
It's basically just the Cantillion Effect[1] by another name.
[1] https://www.adamsmith.org/blog/the-cantillion-effect
With a well managed fiat, money supply growth tracks the growth of economic activity. In a Ponzi scheme... It is otherwise.
No expectation of future returns. People who hold cash expect to lose money.
We are perfectly capable to decide what is better because it isn't magic.
For every gain, somebody literally has to lose. All crypto money is just other people's money.
The people who win are vocal. The people who lose, stay silent, often in shame
And even if you disagree, those gains are not worth the destruction of our planet.
For every gain, somebody literally has to lose. All crypto money is just other people's money.
The people who win are vocal. The people who lose, stay silent, often in shame
And even if you disagree, those gains are not worth the destruction of our planet.
To play devil's advocate, the fact that it's someone's money and people are losing it doesn't automatically mean better or worse. For example, Netflix bankrupted Blockbuster and people lost money but it is clearly "better". I guess we're just still waiting for a popular use case, outside of crime, speculation and money transfers to places with no infrastructure.
You cant compare two companies providing service to millions of people worldwide with a completely dead transaction !! Yes there are winner and losers in useful business, but when someone times the btc market better than someone else, what has the universe naturally selected ?
A better degenerate gambler ?
A better degenerate gambler ?
Come on, be better than this.
This isn't about companies being made obsolete, this is about regular people losing a lot of money because they didn't understand the risks. They trusted some acquaintance or some family member and now they are ffed.
This isn't about companies being made obsolete, this is about regular people losing a lot of money because they didn't understand the risks. They trusted some acquaintance or some family member and now they are ffed.
The people losing money to bitcoin are bagholders in inferior monetized assets like USD, real estate, etc.
It's still a net gain for society though - introducing good hard money is extremely positive-sum.
It's still a net gain for society though - introducing good hard money is extremely positive-sum.
If a particularly powerful solar flare knocks out the internet for a couple of weeks my real estate investment will still keep me housed. Your bitcoin asset will do... what? Even USD (at least in physical form) is more useful in a crisis. I can put it in my pocket and trade it with the guy down the street for food/water (under the assumption that the government won't collapse). The amount of high-tech, fragile infrastructure bitcoin needs to function correctly is astounding. The entire idea of bitcoin being superior to traditional currencies depends on the idea that nothing really bad will ever happen again.
> If a particularly powerful solar flare knocks out the internet for a couple of weeks
You'd have more serious problems than cash liquidity.
> USD (at least in physical form) is more useful
Which is what, like a low single digit percent of USD? Most people I know don't even have a couple days' worth of paper USD.
> fragile infrastructure
Internet isn't fragile at all. It's extremely robust, especially for relatively low-bandwidth applications like bitcoin. It's certainly more robust than the card payment networks most people rely on.
> bitcoin being superior to traditional currencies depends on the idea that nothing really bad will ever happen again
Anything "really bad" enough to nuke bitcoin will probably also kill you and almost certainly tank the value of USD paper.
You'd have more serious problems than cash liquidity.
> USD (at least in physical form) is more useful
Which is what, like a low single digit percent of USD? Most people I know don't even have a couple days' worth of paper USD.
> fragile infrastructure
Internet isn't fragile at all. It's extremely robust, especially for relatively low-bandwidth applications like bitcoin. It's certainly more robust than the card payment networks most people rely on.
> bitcoin being superior to traditional currencies depends on the idea that nothing really bad will ever happen again
Anything "really bad" enough to nuke bitcoin will probably also kill you and almost certainly tank the value of USD paper.
koonsolo(1)
Rational/irrational is a vacuous distinction. Everyone has their own perspective on time and value.
This doesn't address any of the OP's arguments, however.
This doesn't address any of the OP's arguments, however.
If you misquote just a little, their argument can be just as useless at supporting any shitty or illegal industry.
> But, and this is a key point, that doesn't make us right and [the people who scam old ladies by extremely pushy sales tactics for vacuum cleaners] wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?
> But, and this is a key point, that doesn't make us right and [the people who scam old ladies by extremely pushy sales tactics for vacuum cleaners] wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?
Bitcoin is smart engineered gold. It's perfectly rational compared to the endless printing in fiat. Most engineers just accept keynesian economics because that's what they were taught.
They have a narrow world view beyond their tech expertise. I saw somebody criticize BTC because they couldn't imagine using so much energy "just to secure money". I was like what you just took for granted is perhaps society's most important need and unsolved problem.
They have a narrow world view beyond their tech expertise. I saw somebody criticize BTC because they couldn't imagine using so much energy "just to secure money". I was like what you just took for granted is perhaps society's most important need and unsolved problem.
The endless printing is more necessary than the strict stock control fot a currency. You cannot avoid people starving unless you do it, and you cannot live in peace unless you avoid people starving and getting desperate.
You do know there was no printing in the middle age. Good old days these all were.
You do know there was no printing in the middle age. Good old days these all were.
>You do know there was no printing in the middle age. Good old days these all were.
Oh come now, there was plenty of printing in the latter days of Rome or Wiemar Germany and people managed to starve just fine despite it. Inflation correlates with optimistic times because it implies a debt taken on today will be easier to pay off with money earned tomorrow. That doesn't mean printing money reliably makes people optimistic.
Oh come now, there was plenty of printing in the latter days of Rome or Wiemar Germany and people managed to starve just fine despite it. Inflation correlates with optimistic times because it implies a debt taken on today will be easier to pay off with money earned tomorrow. That doesn't mean printing money reliably makes people optimistic.
I see the world transitioning to a USD central bank digital coin for currency and Bitcoin as the store of value in the future
There will likely be many national currencies, the Digital Yuan comes to mind as a major contender. A global currency increase the risk to larger scale domino effect in the economy.
global economy is much like communicating vessels, large scale domino effect is also possible, having a global currency such as bitcoin disconnected from nation events, is no more riskier than without it.
see China's Evergrande crisis as an example.
see China's Evergrande crisis as an example.
Why? What problems would Bitcoin solve?
It can barely keep up with the very few transactions now. Its transaction costs are sky high
It can barely keep up with the very few transactions now. Its transaction costs are sky high
"Smart engineered gold" is an oxymoron. Gold is a terrible platform for economic activity, because it is expensive to create and difficult to move/transact with.
Just because it was the best financial technology hundreds of years ago does not make gold, artificial or not, the best financial technology for today.
"Faster horses"...
Just because it was the best financial technology hundreds of years ago does not make gold, artificial or not, the best financial technology for today.
"Faster horses"...
It's all the good of gold with none of the bad
Crypto adds it’s own bad parts.
The market aside from crypto is not rational.
The market we have today would be completely unimaginable to "traditional" market participants 12 years ago, 24 years ago and so on.
The myth of a rational market is a powerful one.
https://en.wikipedia.org/wiki/Irrational_exuberance
https://en.wikipedia.org/wiki/Greenspan_put
https://www.ft.com/content/9f7f32af-a71a-4892-b331-324aa14ff...
The market we have today would be completely unimaginable to "traditional" market participants 12 years ago, 24 years ago and so on.
The myth of a rational market is a powerful one.
https://en.wikipedia.org/wiki/Irrational_exuberance
https://en.wikipedia.org/wiki/Greenspan_put
https://www.ft.com/content/9f7f32af-a71a-4892-b331-324aa14ff...
Taxpayers, law abiders, hell even environment conscious is who we are to say our way is better.
Are you implying that no rational person should ever buy Bitcoin? That seems a bit far-fetched, no?
At this point, considering that it's stronger than ever and it's pretty clear it's not going away, I would expect a rational person to allocate even a small percentage to it for diversification, in case they happen to be wrong on their conclusions or understanding of Bitcoin.
At this point, considering that it's stronger than ever and it's pretty clear it's not going away, I would expect a rational person to allocate even a small percentage to it for diversification, in case they happen to be wrong on their conclusions or understanding of Bitcoin.
Couldn't you make the same argument for pets.com stock in early 2000? "Diversification" is a conveniently vague reason to invest in something when there are no "fundamentals" that can be evaluated. At the very least pets.com had some assets that could be sold off after the company went under. Bitcoin can't even claim to have that.
If this was 2013, I would agree with you, because the risk of it being worth nothing was much larger, but today the Bitcoin blockchain moves thousands of bitcoin per day (worth billions of dollars in value) and it's network effects are stronger than ever before and you can see usage go high through on-chain metrics (like # wallets, transfers) and increase in lightning network usage (1ml.com).
So I would say, investing in Bitcoin in 2013 probably has the same risk as investing in pets.com, but today, it would be like investing in Amazon a couple years after the dot com bubble when the trajectory is clearer. Just my 2 cents.
So I would say, investing in Bitcoin in 2013 probably has the same risk as investing in pets.com, but today, it would be like investing in Amazon a couple years after the dot com bubble when the trajectory is clearer. Just my 2 cents.
I think this is actually an argument for investing in crypto.com, other exchange companies, or some of the huge bitcoin mining operations. These are the entities creating value by keeping the bitcoin network running and moving $millions worth of bitcoin around between wallets. Owning bitcoin itself does not grant you any equity in these profit-making entities that actually make bitcoin work.
That's one way of looking at it, but most stocks don't pay dividends, so that "equity" is also not that tangible either, unless you're like a majority shareholder that you can change company direction. When you buy a stock, that money doesn't go to the company, it goes to previous investor, unless the company issues more stock (usually the opposite happens).
Also, Bitcoin's success doesn't mean those companies will succeed because it's decentralized and there's thousands of companies across the world and competition is very stiff. But those companies can't succeed without Bitcoin.
Also, Bitcoin's success doesn't mean those companies will succeed because it's decentralized and there's thousands of companies across the world and competition is very stiff. But those companies can't succeed without Bitcoin.
A stock literally represents a unit of ownership of the underlying company. No, it's not tangible in the "I can touch it" sense - unless you get a LOT of it as you said, but it's backed by hundreds of years of contract law precedent. When I own stock I get quarterly reports on the performance of the company - revenue, profit, etc. - these allow me to evaluate whether I think the company is doing well or poorly and gauge if I want to continue to invest.
Whether the stock pays dividends or not isn't really relevant to my argument. My point is that the price of Bitcoin is completely divorced from any sense of economic "value". There are no earnings to forecast, no revenues to examine. The only way to determine if bitcoin is going to go up or down is gauging sentiment (i.e. groupthink) or just faith. Even sports betting provides more information for decision making like past performance of the athletes.
Whether the stock pays dividends or not isn't really relevant to my argument. My point is that the price of Bitcoin is completely divorced from any sense of economic "value". There are no earnings to forecast, no revenues to examine. The only way to determine if bitcoin is going to go up or down is gauging sentiment (i.e. groupthink) or just faith. Even sports betting provides more information for decision making like past performance of the athletes.
When you buy bitcoin you are _investing_ in the possibility that the bitcoin will be part of the economic network.
The earlier you invest the better the returns. As time passes and bitcoin grabs hold a position the S curve of possible returns will be less. Same as investing in stocks.
The value is brought by being early adopter. Historically bitcoin is gaining adoption, but one would argue we're still early.
Paradoxically if you think that bitcoin is useless, it's early, if you think it's a sure thing, it's late.
That has nothing to do with bitcoin though, it's universally true for any type of risk investment.
The earlier you invest the better the returns. As time passes and bitcoin grabs hold a position the S curve of possible returns will be less. Same as investing in stocks.
The value is brought by being early adopter. Historically bitcoin is gaining adoption, but one would argue we're still early.
Paradoxically if you think that bitcoin is useless, it's early, if you think it's a sure thing, it's late.
That has nothing to do with bitcoin though, it's universally true for any type of risk investment.
"Investing" in a possibility that something might happen that is completely outside the control of the entity I'm investing in sounds like plain old gambling. Not that you can't do that with stocks also (see penny stocks, for example). It's like saying I'm "investing" in the ball landing on "00" when I put my chips on the table.
I guess I'm too old and curmudgeony to do that.
I guess I'm too old and curmudgeony to do that.
You can evaluate Bitcoin by how many users it has, how many transactions it facilitates, what kind of new concepts it enables, the usefulness of un-censorability, how many countries are adopting it (or likely to adopt it), etc.
If you're going to use athletes past performance for betting, you can always use Bitcoin's past performance of 300% YoY appreciation for forecasting it's price too, but we both know that's useless.
If you're going to use athletes past performance for betting, you can always use Bitcoin's past performance of 300% YoY appreciation for forecasting it's price too, but we both know that's useless.
> how many users it has, how many transactions it facilitates, ... how many countries are adopting it (or likely to adopt it)
By these metrics, isn't fiat currency vastly more valuable? Yet even when a new fiat currency is created, you don't get a rush to "invest" in it.
> what kind of new concepts it enables, the usefulness of un-censorability
These are extremely squishy and any measure of value here is extremely subjective. Plus the latter property is not yet proven. Bitcoin, in particular, makes it very easy to trace the source/destination of a transaction. The same anti-money-laundering KYC practices that allow taking down drug dealers[1] could be used to censor someone from receiving donations/payments.
[1] https://www.theverge.com/2018/6/27/17509444/dark-web-drug-ma...
By these metrics, isn't fiat currency vastly more valuable? Yet even when a new fiat currency is created, you don't get a rush to "invest" in it.
> what kind of new concepts it enables, the usefulness of un-censorability
These are extremely squishy and any measure of value here is extremely subjective. Plus the latter property is not yet proven. Bitcoin, in particular, makes it very easy to trace the source/destination of a transaction. The same anti-money-laundering KYC practices that allow taking down drug dealers[1] could be used to censor someone from receiving donations/payments.
[1] https://www.theverge.com/2018/6/27/17509444/dark-web-drug-ma...
Don't mine gold during the gold rush, sell pick axes.
There are rational reasons for buying Bitcoin - most of them revolve around money laundering, drug trades, and ransomware.
This is the reason we should enforce "know your customer" laws on Bitcoin such that we have government ID for everyone for every transaction that hits the chain.
This is the reason we should enforce "know your customer" laws on Bitcoin such that we have government ID for everyone for every transaction that hits the chain.
> most of them revolve around money laundering, drug trades, and ransomware.
You need a citation for that, because according to experts “In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%,” reported Chainalysis [1].
For many, it's a hedge against inflation, for others it's the next potential global reserve currency, for some it's just a savings mechanism. There are more rational reasons than just crime that you're ignoring.
1: https://www.thomsonreuters.com/en-us/posts/investigation-fra...
You need a citation for that, because according to experts “In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%,” reported Chainalysis [1].
For many, it's a hedge against inflation, for others it's the next potential global reserve currency, for some it's just a savings mechanism. There are more rational reasons than just crime that you're ignoring.
1: https://www.thomsonreuters.com/en-us/posts/investigation-fra...
> In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%,
Is the takeaway that the crypto bubble stands for 99.76% of the activity?
Is the takeaway that the crypto bubble stands for 99.76% of the activity?
Tell that to the people in Turkey who had there currency fall 10% against the dollar just this week. Tell that to Argentinians, or Nigerians, or Afghanistan.
You might be surprised by the places where crypto has the most penetration. https://bitcoinist.com/cryptocurrency-adoption-highest-5-cou...
You might be surprised by the places where crypto has the most penetration. https://bitcoinist.com/cryptocurrency-adoption-highest-5-cou...
> but it is for sure possible to make money in it.
If it's a bubble, what that means is that almost everyone is going to lose money on it.
> It's just a different kind of market,
Would you say that magic is a different kind of science? I'd say that magic is simply false to the fact. I think it can convince people to do things, but it has no objective reality beyond that.
And cryptocurrencies have the same relationship to economics that magic has to science.
If it's a bubble, what that means is that almost everyone is going to lose money on it.
> It's just a different kind of market,
Would you say that magic is a different kind of science? I'd say that magic is simply false to the fact. I think it can convince people to do things, but it has no objective reality beyond that.
And cryptocurrencies have the same relationship to economics that magic has to science.
> most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing
I think those are the makings of an effective bond investor. But as far as stocks, or stonks, go you're pretty correct here.
I think those are the makings of an effective bond investor. But as far as stocks, or stonks, go you're pretty correct here.
It is perfectly possible to be right for the wrong reasons. Unfortunately that can eventually catch up with you.
It's easy to complain and dismiss, but bitcoin literally made me rich
Yes, rationality is better than irrationality.
Sorry, but please speak for yourself.
Plenty of people here see the potential that cryptocurrencies and blockchains can offer.
Let's find out where it takes us, but at this point, we're winning :D.
Plenty of people here see the potential that cryptocurrencies and blockchains can offer.
Let's find out where it takes us, but at this point, we're winning :D.
This particular source is extremely low quality and is motivated by the author's undisclosed competing product. I would like to see higher quality sources on the front page of hacker news one day.
> the author's undisclosed competing product
Which is: http://adjoint.io
"Adjoint digitises cash and settlement processes for multinational corporates."
Which is: http://adjoint.io
"Adjoint digitises cash and settlement processes for multinational corporates."
Interesting! What advantage does Adjoint have over all the cryptocurrencies in existence can it handle payments without your bank declining your payment or chargebacks?
I think the main advantage is that it's owned by this one guy.
There seems to be three guys (at least) and it doesn't look like it competes with crypto as much as it is a product for financial firms.
I always assumed his anti-crypto writing was related to being in the Haskell community and a lot of Haskell community really going all-in for crypto at some point several years ago. I think because the problems were interesting and the type of hard that Haskell people like.
It's news to me he has other reasons to dislike crypto. I didn't know about adjoint, but that is very curious. I wonder which came first, the distaste or the financial company.
I suspect his opinion would be the same regardless of adjoint.
It's news to me he has other reasons to dislike crypto. I didn't know about adjoint, but that is very curious. I wonder which came first, the distaste or the financial company.
I suspect his opinion would be the same regardless of adjoint.
It is a business-to-business product that doesn't seem to have anything to do with crypto.
It's not like crypto is a thread for this business.
It's not like crypto is a thread for this business.
It's even funnier than that – back in 2019, Adjoint was bragging about "delivering blockchain technology built specifically for the needs of the financial industry" [1]
No idea if they pivoted away from blockchain or just stopped saying it on their website, but it makes me take this with several grains of salt.
[1] https://web.archive.org/web/20190502154457/https://www.adjoi...
No idea if they pivoted away from blockchain or just stopped saying it on their website, but it makes me take this with several grains of salt.
[1] https://web.archive.org/web/20190502154457/https://www.adjoi...
He wrote an article a while back insulting the morals of a few colleagues in the Haskell world. When I went to share it with said colleagues I realised he had an account on our internal slack. He had previously worked there on said technologies that he was then slandering, something he hadn't made public.
Can you point out what is low quality about it? Right now it seems that you are just making that claim because you disagree with the thesis of the article.
e.g. https://www.txstate.edu/philosophy/resources/fallacy-definit...
e.g. https://www.txstate.edu/philosophy/resources/fallacy-definit...
Using the phrase "woo woo" along with various strawmen & many omissions of why crypto is being adopted was the extent of his criticism, hence low quality. He does not understand crypto & is trying to sell his competing product.
If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
> If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
Is that why crypto is being adopted? Are you serious?
I bet nearly no one who buys crypto even knows what fiat money is nor have they have a clue as to the ideas of the Austrian school of economists. We live in an age of memes and discords.
Crypto and NFTs are primarily being adopted because they are speculative vehicles that generally go up and to the right. It is quite simple.
Is that why crypto is being adopted? Are you serious?
I bet nearly no one who buys crypto even knows what fiat money is nor have they have a clue as to the ideas of the Austrian school of economists. We live in an age of memes and discords.
Crypto and NFTs are primarily being adopted because they are speculative vehicles that generally go up and to the right. It is quite simple.
> I bet nearly no one who buys crypto even knows what fiat money is
You're uninformed.
GS, BofA, Barclays, Citi, CS, DB, JPM, MS, UBS, WF and countless funds.
The current hype cycle would be nothing without the institutional support.
But even before institutional investors started jumping in, traders and other employees of the above institutions have long been a key part of crypto markets.
You're uninformed.
GS, BofA, Barclays, Citi, CS, DB, JPM, MS, UBS, WF and countless funds.
The current hype cycle would be nothing without the institutional support.
But even before institutional investors started jumping in, traders and other employees of the above institutions have long been a key part of crypto markets.
These are investors and traders who want a return on their capital, they are seeking alpha by any means that makes sense: https://en.wikipedia.org/wiki/Alpha_(finance)
Again, they do not care about fiat or the Austrian school of economics. Of course they know what those things are but they do not care about them at all.
Again, they do not care about fiat or the Austrian school of economics. Of course they know what those things are but they do not care about them at all.
> He does not understand crypto & is trying to sell his competing product.
This is the repeated refrain of crypto believers. "You just don't get it." And yet when I ask someone to explain it to me (not the technology, the economics) I get hand-waving, self-contradicting promises (e.g. universal identity + resistance to censorship), and appeals to greed ("you must like being poor").
When faced with this, I'm often reminded of Richard Feynman's oft-cited belief that "if you can't explain it to an undergrad student, you don't really understand it". So my conclusion is that either nobody understands cryptocurrency economics and thus no one has been able to sufficiently explain it or the explanations I've heard are complete and accurate - i.e. I do understand it, and it's an emperor with no clothes.
This is the repeated refrain of crypto believers. "You just don't get it." And yet when I ask someone to explain it to me (not the technology, the economics) I get hand-waving, self-contradicting promises (e.g. universal identity + resistance to censorship), and appeals to greed ("you must like being poor").
When faced with this, I'm often reminded of Richard Feynman's oft-cited belief that "if you can't explain it to an undergrad student, you don't really understand it". So my conclusion is that either nobody understands cryptocurrency economics and thus no one has been able to sufficiently explain it or the explanations I've heard are complete and accurate - i.e. I do understand it, and it's an emperor with no clothes.
The resource / explanation that really sold me on crypto was this specific podcast episode: Welcome to Bankless 2021 edition. I'm curious to know what you think after listening to it.
https://open.spotify.com/episode/1SI7tFrzOXyeQ8NLVFgIRU?si=o...
https://open.spotify.com/episode/1SI7tFrzOXyeQ8NLVFgIRU?si=o...
what's wrong with "woo woo"? If they said "smoke and mirrors" or "hocus pocus" would you take the author more seriously?
I agree. Just the fact that he lumps Doge and Bitcoin together into "meme coins" tells me he has no idea what he's talking about or that he has an ulterior motive.
Whatever you think about those two coins, they are not really similar, especially given that some nations have made Bitcoin legal tender at this point.
Whatever you think about those two coins, they are not really similar, especially given that some nations have made Bitcoin legal tender at this point.
[deleted]
I'm very much looking forward to seeing the way cryptocurrency revolutionizes the world in the next 20-50 years, but even I don't see any difference between Dogecoin and Bitcoin other than Doge having a dog on it.
Yes, it's pretty unorthodox to consider Bitcoin a memecoin, but it is fundamentally nearly identical to doge, but with even less energy efficiency.
The fact that it's a more established asset class with wider adoption does make it more useful to most people, but this isn't due to anything intrinsic to bitcoin or dogecoin
Yes, it's pretty unorthodox to consider Bitcoin a memecoin, but it is fundamentally nearly identical to doge, but with even less energy efficiency.
The fact that it's a more established asset class with wider adoption does make it more useful to most people, but this isn't due to anything intrinsic to bitcoin or dogecoin
It's the same code but doge has inflation?
Fair point, doge supply will increase indefinitely, while bitcoin will increase towards an upper bound.
> motivated by the author's undisclosed competing product
Thank you for this, I have been wondering why Diehl has been spewing so much hate and disinformation about cryptos.
The least he could have done if he had even a shred of intellectual honesty would have been to disclose it indeed.
[EDIT]: It's even sadder when you go check the site.
The look is exactly that of a scamcoin site, all the way to the animated triangulation and the (two suits and a tech guy) pictures.
Thank you for this, I have been wondering why Diehl has been spewing so much hate and disinformation about cryptos.
The least he could have done if he had even a shred of intellectual honesty would have been to disclose it indeed.
[EDIT]: It's even sadder when you go check the site.
The look is exactly that of a scamcoin site, all the way to the animated triangulation and the (two suits and a tech guy) pictures.
Thank you for sharing in detail why you think the article is so low quality.
What can be stated without evidence, can be dismissed without evidence.
No problem. Let's have a look at a high-qualify evidence-backed paragraph of the fine article:
> A stablecoin bank would be subject to exactly the same FinCEN and OFAC money movement restrictions and compliance checks as banks; so know your customer gating, counter-terrorism financing, sanctions enforcement, and anti-money laundering enforcement. And these compliance requirements are the almost always the bottleneck consumers may encounter when doing cross-border transactions, and it’s not a technology issue.
I'm not sure what the fine author means by "A stablecoin bank," and he doesn't really tell us, but it seems like he means a stablecoin issuer who processes creations and redemptions, but doesn't control the use of stablecoins otherwise. In this case, an example of "a completely legal and above-board stablecoin (which doesn’t exist today)" might be GUSD. I'm also not sure why he thinks DAI is illegal, because again he just throws out a bunch of claims without substantiating them.
Anyway, he was actually talking about how stablecoins don't provide any benefit for international settlements. For whatever reason, I have bank accounts in the US and Japan, and I often have to move funds to Japan to pay bills. This takes about a week and costs about 50 basis points. The fine author would like us to know that the 1-week delay and 50 basis point charge are required by law. While this is not my area of expertise, my impression is that none of the regulations mentioned by the author require this process to take 1 week and cost 50 basis points when I am remitting funds *to myself*. I am under the impression, which may be wrong, that I am not breaking the law if I pay for goods in SPL USDC instead of waiting a week to move dollars from FTX to account at Shinsei bank via my US bank and Transferwise at the cost of taking a phone call at 2am and paying 50 basis points plus 20 dollars.
> Nothing about stablecoins is either necessary nor desirable, and any alleged improvement these systems may offer at the moment are purely illusory and derived only from the unstable situation that they temporarily inhabit a yet-unregulated shadow banking system that is either non-compliant or entirely scofflawing.
This seems like an unsubstantiated claim that it's a crime to pay for goods and services using SPL USDC in every country. I don't think that's true, but maybe if the fine author could elaborate I could learn more here.
> A regulated stablecoin bank is just a bank, but with a core ledger built on a terribly inefficient and bizarre piece of software not built for that purpose. All this while guzzling entire nation states worth of energy for no reason. Using inefficient blockchain as core banking software makes old legacy core banking solutions like Jack Henry look like a Ferrari by comparison. Our European allies all built extremely reliable real time payments like SEPA that work marvelously and they didn’t need any stablecoins.
The fine author seems unaware that there are currently deployed blockchains that can process the transaction volume of Visa and use less energy than Visa. That's discouraging, given that the fine author has chosen to write in such an authoritative tone about these technologies.
SEPA might be fine if you live in Europe and everyone you ever need to pay or accept payments from lives in Europe and has never lived anywhere else. It just doesn't do much for me personally when I have to move money from the US to Japan to pay living expenses, my lawyer is in Dubai and wants to get paid in Switzerland, and my developer in Japan wants to get paid in Hong Kong. So I just keep paying like $60 and taking phone calls at 2am to send wire transfers to my lawyer and dreaming of the day I can pay less than a penny and not take any phone calls at 2am if my lawyer adopts existing technology. The fine author would like me to know that this isn't actually a problem and I'm just delusional. That's not particularly helpful.
For the rest of the things the fine author has ever written, see here: https://en.wikipedia.org/wiki/Brandolini%27s_law
> A stablecoin bank would be subject to exactly the same FinCEN and OFAC money movement restrictions and compliance checks as banks; so know your customer gating, counter-terrorism financing, sanctions enforcement, and anti-money laundering enforcement. And these compliance requirements are the almost always the bottleneck consumers may encounter when doing cross-border transactions, and it’s not a technology issue.
I'm not sure what the fine author means by "A stablecoin bank," and he doesn't really tell us, but it seems like he means a stablecoin issuer who processes creations and redemptions, but doesn't control the use of stablecoins otherwise. In this case, an example of "a completely legal and above-board stablecoin (which doesn’t exist today)" might be GUSD. I'm also not sure why he thinks DAI is illegal, because again he just throws out a bunch of claims without substantiating them.
Anyway, he was actually talking about how stablecoins don't provide any benefit for international settlements. For whatever reason, I have bank accounts in the US and Japan, and I often have to move funds to Japan to pay bills. This takes about a week and costs about 50 basis points. The fine author would like us to know that the 1-week delay and 50 basis point charge are required by law. While this is not my area of expertise, my impression is that none of the regulations mentioned by the author require this process to take 1 week and cost 50 basis points when I am remitting funds *to myself*. I am under the impression, which may be wrong, that I am not breaking the law if I pay for goods in SPL USDC instead of waiting a week to move dollars from FTX to account at Shinsei bank via my US bank and Transferwise at the cost of taking a phone call at 2am and paying 50 basis points plus 20 dollars.
> Nothing about stablecoins is either necessary nor desirable, and any alleged improvement these systems may offer at the moment are purely illusory and derived only from the unstable situation that they temporarily inhabit a yet-unregulated shadow banking system that is either non-compliant or entirely scofflawing.
This seems like an unsubstantiated claim that it's a crime to pay for goods and services using SPL USDC in every country. I don't think that's true, but maybe if the fine author could elaborate I could learn more here.
> A regulated stablecoin bank is just a bank, but with a core ledger built on a terribly inefficient and bizarre piece of software not built for that purpose. All this while guzzling entire nation states worth of energy for no reason. Using inefficient blockchain as core banking software makes old legacy core banking solutions like Jack Henry look like a Ferrari by comparison. Our European allies all built extremely reliable real time payments like SEPA that work marvelously and they didn’t need any stablecoins.
The fine author seems unaware that there are currently deployed blockchains that can process the transaction volume of Visa and use less energy than Visa. That's discouraging, given that the fine author has chosen to write in such an authoritative tone about these technologies.
SEPA might be fine if you live in Europe and everyone you ever need to pay or accept payments from lives in Europe and has never lived anywhere else. It just doesn't do much for me personally when I have to move money from the US to Japan to pay living expenses, my lawyer is in Dubai and wants to get paid in Switzerland, and my developer in Japan wants to get paid in Hong Kong. So I just keep paying like $60 and taking phone calls at 2am to send wire transfers to my lawyer and dreaming of the day I can pay less than a penny and not take any phone calls at 2am if my lawyer adopts existing technology. The fine author would like me to know that this isn't actually a problem and I'm just delusional. That's not particularly helpful.
For the rest of the things the fine author has ever written, see here: https://en.wikipedia.org/wiki/Brandolini%27s_law
[deleted]
explains why that particular person's entire personality seemed to be based around anti-cryptocurrency sentiment.
Not being pegged to a centralized, state-controlled currency is a dealbreaker for me. It's still in infancy and it's true that 99% of the projects are get-rich-quick schemes with no intrinsic value. Though, I think the author lives in a country with a trustworthy government because that's not the case for many people including me. In the last two days my country's currency has shaken much more than crypto and I don't trust a single word my government says. In this case, crypto really shines. In addition, as more services get integrated into crypto ecosystem and as get-rich bubbles wear off, combined with solutions to scalability and speed problems, many will see much more value in crypto.
12 years is nothing when reinventing fundamental workings of economics is at stake. Give it more time.
12 years is nothing when reinventing fundamental workings of economics is at stake. Give it more time.
Not being pegged to a state-controlled currency means your devalued currency competes with stronger ones, at least on the fictitious transitional period, you're sure you want that ?
Assuming a stateless money, when/if someone then steals your crypto coin, which gov't backed law/judicial system are you gonna turn to ?
Assuming a stateless money, when/if someone then steals your crypto coin, which gov't backed law/judicial system are you gonna turn to ?
> Assuming a stateless money, when/if someone then steals your crypto coin, which gov't backed law/judicial system are you gonna turn to ?
In many regimes where you can't trust the government, it's not really relevant what kind of currency is stolen, the police are probably not the people you'll go to for restitution.
There's an argument to be made that some cryptocurrencies (privacy-coins specifically) may also give you more protection from your finances being seized by a corrupt government, though you're generally SoL in such situations regardless of how you keep your money.
In many regimes where you can't trust the government, it's not really relevant what kind of currency is stolen, the police are probably not the people you'll go to for restitution.
There's an argument to be made that some cryptocurrencies (privacy-coins specifically) may also give you more protection from your finances being seized by a corrupt government, though you're generally SoL in such situations regardless of how you keep your money.
if you aren’t wealthy you are effectively priced out of the US law/judicial system anyway.
If I took $5,000, maybe even $10,000 from you right now there would be almost nothing you could do because the legal efforts to pursue me for that amount would likely equal or surpass that.
If I took $5,000, maybe even $10,000 from you right now there would be almost nothing you could do because the legal efforts to pursue me for that amount would likely equal or surpass that.
That's... unsettling.
10 years ago I had my bank account wiped/stolen in Brazil (!!!):
- went to the police, then to the bank (same day)
couple days later: all the money was back in my account.
10 years ago I had my bank account wiped/stolen in Brazil (!!!):
- went to the police, then to the bank (same day)
couple days later: all the money was back in my account.
The probability of government controlling/seizing my money or fixing foreign currency rates (effectively limiting my income severely) is more than someone compromising my crypto wallets. I don't do anything illegal, I just live in a country with an extremely corrupted government and economy.
I think you misread their comment. They said that not being pegged to state-controlled currency is a dealbreaker, whereas you seem to be thinking they said it was something they wanted.
> I think the author lives in a country with a trustworthy government because that's not the case for many people including me.
Well, given OP distrusts his government...
Well, given OP distrusts his government...
Right. His government is presumably not the same thing as a government that has had stable currency management for over a century.
> Not being pegged to a centralized, state-controlled currency is a dealbreaker for me
Pretty sure you mean the opposite
Pretty sure you mean the opposite
I don’t think so. I think they were saying there’s a benefit to being able to transact using a concurrency of a trusted govt when you’re own govt is not trusted.
He probably did, but there's wisdom in his typo.
I'm a little surprised that the author is missing the critical innovation of crypto which is digital trust and observability. Sure it is easy to make an argument that one cryptocurrency or another is a bubble, but don't underestimate the importance of being able to distribute work and verify trust at scale.
Just look at how git has transformed software development by mapping code to a hash. Or how DNS + SSL has transformed how people trust and transact online. Is the scalable future one where people and organizations trust their data to the cloud or other 3rd parties with no way to verify integrity?
Do people think that the future of human agreements is signatures on little pieces of paper managed by courts and lawyers? Personally I think it will be digital. Given it is digital, do you think there will be some "centralized database" run by government or a commercial entity that can be trusted as single point of failure? Personally I sure hope that there is some way to distribute and verify data integrity even if it isn't full blown proof of work. I'd sure prefer something more like git where I can see if two branches are the same even from different sources.
Just look at how git has transformed software development by mapping code to a hash. Or how DNS + SSL has transformed how people trust and transact online. Is the scalable future one where people and organizations trust their data to the cloud or other 3rd parties with no way to verify integrity?
Do people think that the future of human agreements is signatures on little pieces of paper managed by courts and lawyers? Personally I think it will be digital. Given it is digital, do you think there will be some "centralized database" run by government or a commercial entity that can be trusted as single point of failure? Personally I sure hope that there is some way to distribute and verify data integrity even if it isn't full blown proof of work. I'd sure prefer something more like git where I can see if two branches are the same even from different sources.
You're exactly right.
Reading this article and the other HN comments, it makes me think our community is aging and becoming stuck in old ways of thinking.
It's surprising and disappointing to see it happen to this group, but I guess it's inevitable.
Reading this article and the other HN comments, it makes me think our community is aging and becoming stuck in old ways of thinking.
It's surprising and disappointing to see it happen to this group, but I guess it's inevitable.
That sounds like regular old cryptography, which I don't think anyone would argue isn't important. It's a very different discussion than "crypto" a.k.a cryptocurrencies.
Author is making an argument against any blockchain or distributed ledger. To quote from article. "Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
I'd like to see people look past the noise of cryptocurrencies to see how important digital trust and new applications of cryptography will be as we try to scale the ability of humans to work together effectively at scale.
I'd like to see people look past the noise of cryptocurrencies to see how important digital trust and new applications of cryptography will be as we try to scale the ability of humans to work together effectively at scale.
So, can you name one single successful application of blockchain in the real world? Apart from crime.
I believe this is exactly the point of the author - there's lots of handwavy bubblebabble about this technology, but we're now well into the second decade of blockchain/distributed ledgers, and yet to see one single non-criminal real world application.
I believe this is exactly the point of the author - there's lots of handwavy bubblebabble about this technology, but we're now well into the second decade of blockchain/distributed ledgers, and yet to see one single non-criminal real world application.
I'd argue that git is a distributed blockchain that has been pretty impactful, it just doesn't use proof of work for validation.
If it needs to be a company Ripple uses blockchain to help companies move currency safely around the globe. (https://ripple.com/)
If it needs to be a company Ripple uses blockchain to help companies move currency safely around the globe. (https://ripple.com/)
It's hard to believe $2.6T worth of crypto is all for criminal applications. Maybe you've overlooked something.
From just before the dot-com bubble burst to when it had fully deflated, the tech stocks had lost some $5T of stock market valuation - in 2002 dollars. So no, it's completely feasible that there is $2.6T of hot air speculative investment in cryptos. In fact, considering how divorced from practical and technical reality all of the proposed crypto schemes so far have been, that sounds like a low estimate.
There is some value in providing shadow banking to the global criminal underworld, but I don't think it will be the next technological revolution.
There is some value in providing shadow banking to the global criminal underworld, but I don't think it will be the next technological revolution.
Which is dumb because he works on a digital coin on a distributed ledger
Thats all true but still there is the hard to deny fact that a federated trust based system is more efficient.
See tls in web. With all the flaws it works remarkably well.
If you're going to use a different currency, why not just use USD or EUR?
"If they don't have bread, let them eat cake."
Edit: I think in the kind of countries that GP mentions, access to stable foreign currencies will be very restricted, especially during times where the country's native currency is in crisis.
Edit: I think in the kind of countries that GP mentions, access to stable foreign currencies will be very restricted, especially during times where the country's native currency is in crisis.
Because the government is corrupted in my country and at any time they can seize my money or fix currency rates. Crypto, even in its fluctating nature, is safer than either my country's currency or keeping USD/EUR etc in a bank here (and I don't have any other option).
I think the biggest lesson here is that people really, really love unregulated gambling. The same way they love doing drugs, making narcotics an extremely profitable business.
If we don’t legalize the things our population deeply desire, the criminal elements are more than happy to step up and provide said services.
If we don’t legalize the things our population deeply desire, the criminal elements are more than happy to step up and provide said services.
The authors example use cases about a database doing everything except crime summarizes it well. One persons crime is another persons freedom. If you rephrased it as saying, the only thing blockchains provide that a database doesn't is freedom, I think the resounding response would be: Yes.
What I think anti-crypto people object to is the freedom of others, because it represents a limit and undermines the necessary absolute and total Hobbesian sovereignty and dominion of the systems that provide them with their own status, which is based on something other than consent and desire, and when I read these objections, most of what I interpret is that implicit humiliation.
Gambling provides opportunity for people to live independent of being subordinate to an employer, as if your employees suddenly don't have to work for you, it's hard to build and scale social stability and wealth. I sympathize with the morality of reducing gambling as being appropriate for over a thousand years ago, but today? You also can't use shame to control people who can afford to walk away.
The current financial system is designed by-and-for creditors as a means of leverage over debtors, and crypto is explicitly not. The only problems of gambling are really problems with debts, and better laws limiting the power of creditors would solve that. The interests behind the criticisms are clear, but to me dressing them up and carting them around as moral is a bit much.
What I think anti-crypto people object to is the freedom of others, because it represents a limit and undermines the necessary absolute and total Hobbesian sovereignty and dominion of the systems that provide them with their own status, which is based on something other than consent and desire, and when I read these objections, most of what I interpret is that implicit humiliation.
Gambling provides opportunity for people to live independent of being subordinate to an employer, as if your employees suddenly don't have to work for you, it's hard to build and scale social stability and wealth. I sympathize with the morality of reducing gambling as being appropriate for over a thousand years ago, but today? You also can't use shame to control people who can afford to walk away.
The current financial system is designed by-and-for creditors as a means of leverage over debtors, and crypto is explicitly not. The only problems of gambling are really problems with debts, and better laws limiting the power of creditors would solve that. The interests behind the criticisms are clear, but to me dressing them up and carting them around as moral is a bit much.
The very same people complain about Nanny State when they’re stopped from getting scammed, and scream for justice and legal action once they manage to get scammed after all.
See also: people getting absolutely furious when the bank stops them from wiring money to Nigerian scammers for their million-dollar lottery win - and then demanding the same bank reverses the transactions after the jig is up.
They want to freely gamble with cryptos now that everything is going to the moon, but are going to be demanding answers once the bubble pops and the casino takes their life savings
See also: people getting absolutely furious when the bank stops them from wiring money to Nigerian scammers for their million-dollar lottery win - and then demanding the same bank reverses the transactions after the jig is up.
They want to freely gamble with cryptos now that everything is going to the moon, but are going to be demanding answers once the bubble pops and the casino takes their life savings
That sensibility is captured well by Jenny Holzer's statement, "Protect me from what I want", which neglects responsibility and puts it on other people whether they want it or not. It's a human personality anti-pattern we generally just tolerate.
Cryptocurrencies represent a respite from the logic of that idea and allow for mutual tolerance, presumably as an alternative to organizing and fighting.
It's not so much a nanny state as a mad aunt in the attic state. (e.g. MMT) Nanny state is an oddly gendered trope, but it's meant to represent not just oversight, but Animus. My argument is essentially that most anti-crypto articles I've read are an expression of ideas that originate from a neurotic animus and an affected condescention that the rest of us just don't buy.
Cryptocurrencies represent a respite from the logic of that idea and allow for mutual tolerance, presumably as an alternative to organizing and fighting.
It's not so much a nanny state as a mad aunt in the attic state. (e.g. MMT) Nanny state is an oddly gendered trope, but it's meant to represent not just oversight, but Animus. My argument is essentially that most anti-crypto articles I've read are an expression of ideas that originate from a neurotic animus and an affected condescention that the rest of us just don't buy.
The problem of gambling is ruin maybe
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
After all as we all know: If you've got nothing to hide, you've got nothing to fear.
And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.
After all as we all know: If you've got nothing to hide, you've got nothing to fear.
And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.
Yeah, this is what I don't understand from the naysayers. Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable.
The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.
The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.
But that ledger isn't accurate. It's just distributed and difficult to change.
I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.
The wallet they were in at the time was emptied and no longer exists.
I still receive the relevant court documents as the case continues still.
As far as the ledger is concerned - they are no longer mine.
---
So question to you: How do you reconcile the theft of my property with the ledger at this point?
It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.
So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).
So now what?
Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.
The wallet they were in at the time was emptied and no longer exists.
I still receive the relevant court documents as the case continues still.
As far as the ledger is concerned - they are no longer mine.
---
So question to you: How do you reconcile the theft of my property with the ledger at this point?
It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.
So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).
So now what?
Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
“I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).”
Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.
You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.
Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.
You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.
But the alternative here is that you have to place all your trust in an unknown and untrusted 3rd party to ever actually make an exchange.
Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)
So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.
Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)
So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.
After enough confirmations a transaction is final and I can trust that the transaction is final and my account balance on the ledger is correct.
Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.
If consumer protections are your concern these laws exist in many countries regardless of the payment medium.
Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.
If consumer protections are your concern these laws exist in many countries regardless of the payment medium.
But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!
Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.
Now what? How do we proceed in a meaningful manner?
How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?
If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.
If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.
What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).
How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.
Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.
Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.
Now what? How do we proceed in a meaningful manner?
How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?
If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.
If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.
What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).
How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.
Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.
"But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!"
Correct. Who said it was?
"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"
We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.
Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.
If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".
Correct. Who said it was?
"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"
We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.
Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.
If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".
> The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here).
Let me ask you to follow up, given what you've said:
> If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats.
Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point.
Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here).
Let me ask you to follow up, given what you've said:
> If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats.
Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point.
"Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point."
In the example you gave whether we chose to transact in cash, wire-transfer or bitcoin the result would be the same. I would have to rely on layers, civil or criminal courts, police, insurance companies, debt collectors, thugs or myself to physically retrieve the funds (or equivalent) if possible. If that was not possible some form of fair physical or financial punishment would be dealt to you or not. Honestly for that amount of Bitcoin I wouldn't be bothered and wouldn't follow it up. I would just never do business with you again and from that point forward never relinquish physical custody of goods for sale prior to receiving payment.
"Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here)."
Trusted third parties will always be an issue where there is no trust between the buyer and seller. Sure multisig helps but the difference is Bitcoin gives us power to choose who we involve in the transaction. I and the other party I am transacting with combined are not forced to involve any one individual, company or nation state in the transaction if we do not wish them to be part of it.
I think you are conflating trust in the Bitcoin network with trust in the humans transacting over the network. Regardless of the medium of exchange in order for transactions to occur we as humans need some level of trust in the party we are transacting with, trust in the network we are using to perform the transaction and trust that other humans are going to continue to value the medium being exchanged. Not everyone's level of trust in these aspects are going to be the same and people are going to value some aspects more than others.
Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation. It's already beginning to look like that with most individuals storing their Bitcoin on exchanges. Private wallets will be banned, transacting with non KYCd entities will become impossible using regulated custodians and any Bitcoin received from (or linked to) non KYCd addresses will be automatically seized by the government. At that point the supply can be artificially inflated. The number of Bitcoins in your account doesn't actually have to reflect the amount of bitcoin the custodian holds for you. The surveillance apparatus will become hyper focused on the Bitcoin network and everyone interacting with it. Like Ross Ulbricht you may be able to resist seizure of your Bitcoin but it will just result in a lengthy prison sentence. It may not stay like this forever though.
So do you want a postcard? :)
In the example you gave whether we chose to transact in cash, wire-transfer or bitcoin the result would be the same. I would have to rely on layers, civil or criminal courts, police, insurance companies, debt collectors, thugs or myself to physically retrieve the funds (or equivalent) if possible. If that was not possible some form of fair physical or financial punishment would be dealt to you or not. Honestly for that amount of Bitcoin I wouldn't be bothered and wouldn't follow it up. I would just never do business with you again and from that point forward never relinquish physical custody of goods for sale prior to receiving payment.
"Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here)."
Trusted third parties will always be an issue where there is no trust between the buyer and seller. Sure multisig helps but the difference is Bitcoin gives us power to choose who we involve in the transaction. I and the other party I am transacting with combined are not forced to involve any one individual, company or nation state in the transaction if we do not wish them to be part of it.
I think you are conflating trust in the Bitcoin network with trust in the humans transacting over the network. Regardless of the medium of exchange in order for transactions to occur we as humans need some level of trust in the party we are transacting with, trust in the network we are using to perform the transaction and trust that other humans are going to continue to value the medium being exchanged. Not everyone's level of trust in these aspects are going to be the same and people are going to value some aspects more than others.
Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation. It's already beginning to look like that with most individuals storing their Bitcoin on exchanges. Private wallets will be banned, transacting with non KYCd entities will become impossible using regulated custodians and any Bitcoin received from (or linked to) non KYCd addresses will be automatically seized by the government. At that point the supply can be artificially inflated. The number of Bitcoins in your account doesn't actually have to reflect the amount of bitcoin the custodian holds for you. The surveillance apparatus will become hyper focused on the Bitcoin network and everyone interacting with it. Like Ross Ulbricht you may be able to resist seizure of your Bitcoin but it will just result in a lengthy prison sentence. It may not stay like this forever though.
So do you want a postcard? :)
> Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation.
Ok - I think we're pretty closely aligned here.
I'm further along that trajectory than you, mainly because I think this isn't really an optional outcome that might be avoided, but rather the only functional end state of a currency: The currency is only as good as the government that mediates its exchange.
If mediating that exchange incurs costs, then the government will take steps to either stop mediating those exchanges (ex: China - where all crypto exchanges are illegal by default, so the legal system can no longer be used to offset the cost of those exchanges at cost to itself) or it will bring that currency under control so that it can make those costs predictable and acceptable (ex: The US - where crypto is getting "all the bad bits" added back through legislation)
Which means the original intent of crypto only works in this honeymoon period (which I actually think ended not too long after the silk road went down) where it happens to get treated as an asset by a government that hasn't yet found out that they're essentially mediating exchanges in a foreign currency for free (not something most governments want to do).
Ok - I think we're pretty closely aligned here.
I'm further along that trajectory than you, mainly because I think this isn't really an optional outcome that might be avoided, but rather the only functional end state of a currency: The currency is only as good as the government that mediates its exchange.
If mediating that exchange incurs costs, then the government will take steps to either stop mediating those exchanges (ex: China - where all crypto exchanges are illegal by default, so the legal system can no longer be used to offset the cost of those exchanges at cost to itself) or it will bring that currency under control so that it can make those costs predictable and acceptable (ex: The US - where crypto is getting "all the bad bits" added back through legislation)
Which means the original intent of crypto only works in this honeymoon period (which I actually think ended not too long after the silk road went down) where it happens to get treated as an asset by a government that hasn't yet found out that they're essentially mediating exchanges in a foreign currency for free (not something most governments want to do).
"The currency is only as good as the government that mediates its exchange."
That's an interesting way to conceptualise it but I see it from a different broader perspective: A government is only as strong as its ability to issue/acquire meaningful amounts of a valued currency.
Anything that negatively affects these activities will be killed or subjugated to contribute towards them. Bitcoin in its intended form is detrimental to both of these activities so it will be sabotaged by governments one way or another until it is not.
Bitcoin has unique properties that drive it's adoption but all these properties can be diminished or undermined by laws.
"Which means the original intent of crypto only works in this honeymoon period"
If Bitcoin had managed to gain widespread adoption and a large enough percentage of its users held their private keys then it would have been too difficult and unfavourable for governments to start attacking it.
The unsolved technical issues hindered adoption so Bitcoin has been relegated to a volatile store of value giving government the time to realise the threat and act accordingly. Regardless of how unreasonable, harsh or onerous a set of laws are they can be effectively implemented if the portion and power of people they affect is small enough.
That's an interesting way to conceptualise it but I see it from a different broader perspective: A government is only as strong as its ability to issue/acquire meaningful amounts of a valued currency.
Anything that negatively affects these activities will be killed or subjugated to contribute towards them. Bitcoin in its intended form is detrimental to both of these activities so it will be sabotaged by governments one way or another until it is not.
Bitcoin has unique properties that drive it's adoption but all these properties can be diminished or undermined by laws.
"Which means the original intent of crypto only works in this honeymoon period"
If Bitcoin had managed to gain widespread adoption and a large enough percentage of its users held their private keys then it would have been too difficult and unfavourable for governments to start attacking it.
The unsolved technical issues hindered adoption so Bitcoin has been relegated to a volatile store of value giving government the time to realise the threat and act accordingly. Regardless of how unreasonable, harsh or onerous a set of laws are they can be effectively implemented if the portion and power of people they affect is small enough.
You're overlooking defi, this is the thing being revolutionized right now; you can make all the transactions you can afford to pay transaction fees for, trade hundreds of assets, swap tokenized USD for tokenized EUR, all without an intermediary.
To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.
To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.
Afaik markets use multisig now, so the facilitator never has access to the funds unilaterally.
Not your keys not your coins. Unless you trust some central authority to take care of you, which you should by now understand that doesn't always work, and when it doesn't work, it's usually a spectacular failure.
So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.
So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.
So we both agree - the ledger is "accurate" only in the sense that the ledger matches... (drumroll) the ledger.
Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).
So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.
Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).
So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.
the dispute concern is long solved. it happens every day with cash, but also with other form of payments. freight shows interesting practices. and, escrow is still an option.
Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.
Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.
> Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange.
Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.
I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)
Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.
I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)
> Not your keys not your coins.
so the same thing as "code is law", which is a fundamentally bad idea.
so the same thing as "code is law", which is a fundamentally bad idea.
No idea is perfect. I find that one preferable over the other popular alternatives where a few people's whim are the law.
Note: code is law doesn't imply it can't evolve, adapt, improves. the idea of code is law is the same as being against retro active legislation.
>Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks
In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks
> Sorry for your loss btw, that really sucks
You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug
Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.
You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug
Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.
You know they recovered 150000 Bitcoin from a cold wallet and are going to repay holders?
You should be getting some of them back soon then right?
Not your private keys, not your coins. You CHOSE to gamble with your property when you gave it to someone else. Whether you understood this before you lost your property or not, is irrelevant. I've not lost any of my coin UTXOs associated with my own private keys. Unregulated, foreign Magic The Gathering trading card exchange use was never a wise choice from the day Jed McCaleb started that garbage database.
I see your perspective. There's another perspective from which you could look at the details of your situation.
You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.
Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.
Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.
You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.
Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.
Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.
Ok - so follow along with me here:
I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)
What recourse do I have that does not require trusting a third party?
I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)
I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.
I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)
What recourse do I have that does not require trusting a third party?
I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)
I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.
1) generate a private key,
2) move it to the private key.
When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.
2) move it to the private key.
When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.
Move what to the private key? How do I get those coins in the first place?
Move the bitcoin to your brigade key.
However you can.
Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.
However you can.
Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.
Ok, so we're in a spot where trust is literally required - but the ledger cannot be updated to reflect when that trust was broken or misplaced (at least not without falling back to an external power - namely: government).
So again - the entire value of the medium is predicated on having a legal system you can use to resolve these disputes.
Following - that legal system requires all sorts of control to actually resolve those disputes: Many of the things bitcoin advocates actively rail against are just methods of reconciliation (Funds freezing, reversed transactions, 3rd party control of assets, etc).
So either
1. The legal system will stop supporting exchanges of that medium (see: China)
or
2. The legal system will add back all those controls (see: Legislation in the US)
Basically - My entire point is that bitcoin only has value if current governments support its exchange, and they WONT do that if it's a negative to them (and it is, unless they can tax and control it).
So again - the entire value of the medium is predicated on having a legal system you can use to resolve these disputes.
Following - that legal system requires all sorts of control to actually resolve those disputes: Many of the things bitcoin advocates actively rail against are just methods of reconciliation (Funds freezing, reversed transactions, 3rd party control of assets, etc).
So either
1. The legal system will stop supporting exchanges of that medium (see: China)
or
2. The legal system will add back all those controls (see: Legislation in the US)
Basically - My entire point is that bitcoin only has value if current governments support its exchange, and they WONT do that if it's a negative to them (and it is, unless they can tax and control it).
They want you to go back to frontier days before specialization in the economy, you are supposed to hoard your wealth yourself and protect your family with a gun
This exactly! (not to mention only ever making exchanges in person, because remote exchanges require trust)
Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.
Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.
Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.
Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.
You could have reduced the risk substantially by transferring off their wallet to yours right after purchase. You still could have purchased your weed too.
There was no holding. It wasn't an asset I was interested in holding, it was a medium of exchange to purchase a good I couldn't otherwise get.
The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.
I got unlucky the last time through and hit it right when the service went down.
Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).
The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.
I got unlucky the last time through and hit it right when the service went down.
Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).
> How do you reconcile the theft of my property with the ledger at this point?
Authorities must find whoever received those bitcoins and make them transfer the funds back to you.
Authorities must find whoever received those bitcoins and make them transfer the funds back to you.
You know, there is a reason why crypto people chant "Not your keys, not your coins".
Sure, but value without an enforcement mechanism is not very useful.
People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).
So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.
Then you run off with my initial 50%.
Now what?
----
Every solution I've seen is riddled with pitfalls and gotchas
- Use escrow? Wait - now we're just trusting a central authority again.
- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.
- Sue over the theft? Now the central authority is just the government again, and we're back at square one!
You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.
People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).
So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.
Then you run off with my initial 50%.
Now what?
----
Every solution I've seen is riddled with pitfalls and gotchas
- Use escrow? Wait - now we're just trusting a central authority again.
- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.
- Sue over the theft? Now the central authority is just the government again, and we're back at square one!
You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.
You're conflating two issues with each other. One is having a decentralized currency with a fixed monetary policy. Another issue is the counterparty risk.
Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.
Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.
Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.
Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.
See, I think you're disconnecting two issues which are inherently related.
Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.
If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?
Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.
If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?
The reason I am disconnecting those issues is that Bitcoin was never designed to solve the type of fraud you're talking about. There is no proposed mechanism to solve it, because it's outside of it's scope.
It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.
Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.
It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.
Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.
But now we're back to a spot where bitcoin doesn't work as a fungible good without an appeal to an outside authority of some sort. Whether that's escrow/insurance/legal contract/etc.
We started with:
"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."
Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.
So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)
Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.
Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).
We started with:
"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."
Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.
So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)
Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.
Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).
The ledger gives you a guarantee that only you can spend the BTC that you have access to. Nobody can "freeze" your UTXO or forbid you from accepting transactions.
Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.
The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D
Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.
The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D
> The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
But this is true of all assets!
Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.
And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.
The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.
Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.
Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!
But this is true of all assets!
Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.
And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.
The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.
Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.
Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!
> seizing your savings
If I'm understanding this thread, you're saying that bit coin is simultaneously designed to allow for this kind of seizure and not.
Swap the mtGox hacker with the government.
It's useful keeping the two problems connected though, since both are features of competing payment methods
If I'm understanding this thread, you're saying that bit coin is simultaneously designed to allow for this kind of seizure and not.
Swap the mtGox hacker with the government.
It's useful keeping the two problems connected though, since both are features of competing payment methods
Not sure why you're being downvoted for providing a good answer here. When you use Bitcoin, or cash it is solely your responsibility to protect that counterparty risk via your own means. Without a contract and receipt, the same would happen to your cash if you walked into a business and the owner decided to keep a small sum of your money with no record of transaction. If you gave a shop owner or autobody mechanic $50-500 cash with no receipt he could very easily just keep your cash. You have no recourse. Call the police? Doesn't matter in real life because you have no receipt or contract. It's your word against his. Since I see that you've just replied and still want "recourse" if someone steals your money I'll just clearly spell that out for you. You cause the level of recourse of your stolen money that you require. Whether via violence or a counter-theft and damage to the thief equaling what was stolen from you. It's left up to you with Bitcoin. If you can't stand the heat, get out of the kitchen. We don't want government intervention.
Except you just wrote a long comment telling me that I should be using government intervention if I want to actually trade bitcoins for goods or services.
You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).
You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).
> the ability to trust that the ledger is accurate seems extremely valuable
Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?
I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).
Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?
I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).
One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
> One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
Sure, but (like it or not) that's covered under the umbrella of "crime".
Sure, but (like it or not) that's covered under the umbrella of "crime".
In that case, I think the point is that some "crime" is ethically justified and worth supporting technologically. The OP's statement implies that all crime is bad.
Sure. But it is worth asking if this particular channel of support is worth enabling all the other forms of criminality that use cryptocurrencies.
Yep, but all that means is that "crime" is a meaningless distinction itself.
> One IMO realistic use-case is providing a wealth preservation
Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any
On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices
On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway
Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any
On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices
On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway
True but opening foreign bank accounts is difficult and like western countries physical cash can be legally seized by authorities even if it was acquired legally.
Cryptocurrencies can also be legally seized. Anything can be.
This is only if the end user allows seizure. If I have only a 12-word seed in my memory and not a single private key written down anywhere in my house and no bitcoin wallet installed on any computer, you have absolutely no way of confiscating anything. It's something that a lot of outsiders do not even realize. Bitcoin is actually entirely un-confiscatable. If someone commits private keys to memory or entirely encrypts and off-sites private keys, exactly how can the money be confiscated? It cannot be confiscated. Any human in the world can move freely about the globe at this point in time with billions of asset value solely residing inside their brain. Import that memory into any mobile or desktop client wallet anywhere in the world, or recite the key secretly to someone else they trust anywhere in the world.
True. But cryptocurrency gives people the option to resist seizure and suffer the consequences.
People living under a corrupt government and experiencing hyperinflation are no safer or necessarily better off with cryptocurrency. Conducting cryptocurrency transactions requires a non-trivial amount of infrastructure. Even "offline" transactions with a Rube Goldbergian number of mesh network components needs all those components to work.
A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.
Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.
A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.
Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.
> ...(besides crime)
First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.
First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.
That is a straw man. This is not my definition of crime, I was thinking things like money laundering, tax evasion, ransomware payments, and blackmarket purchases.
I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.
Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.
I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.
Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.
A straw man? I just wanted a definition of "crime".
"Blackmarket purchases" has the same problem "crime" does, it's self supporting.
"Blackmarket purchases" has the same problem "crime" does, it's self supporting.
Banks can give your money away without your knowledge. Happens all the time, and people have little recourse. Worse yet, it's seen as the victim's responsibility and not the bank's.
A blockchain doesn’t provide trust, though. A person who doesn’t understand technology doesn’t trust a distributed ledger, but they do trust their centralised bank because it’s regulated.
It provides "distributed trust", in the sense that you know no single person or group is in control and you trust the distributed consensus, in terms of ledger state and algorithm accuracy.
I'm not fully up to speed but are modern blockchains still susceptible to a 51% attack?
Current PoW chains, yes. Some other consensus schemes have higher threshold requirements to pull off a similar sort of attack, in particular you can look at Casper FFG and other byzantine fault tolerant PoS schemes.
There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.
There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.
Maybe no single entity is literally in full control but large mining pools and the developers of the software both have extreme influence over the chain.
I would question how much of the layperson's trust is due to bank regulation and how much is due to familiarity.
Probably nearly 100% due to regulation.
There are plenty of non-tech people with investments in crypto that would disagree with you. Also, some exchanges are FDIC insured.
They do though. A very small percentage of current holders of crypto have an understanding of the technology.
Trust will (continue to) come with time.
Trust will (continue to) come with time.
You sound privileged enough to have access to a reliable and trustworthy bank. Many, many people aren't as lucky.
So this person lives in a place they can't trust banks...
But they have access to computers, internet, enough money to pay the tx fees of cryptocurrencies... amazing
But they have access to computers, internet, enough money to pay the tx fees of cryptocurrencies... amazing
Less snark would be preferred to elicit a response, but yes- there are more cheap computers than people in the world, and smart phones are near ubiquitous even in very poor places. You simply don't have the life experiences to make this criticism. i.e. PRIVILEGE
Don't forget enough tech expertise to be able to use any of this crap in any "decentralized" way (if they all just use coinbase, where is that decentralization?)
The article discusses pseudo-money, not generic decentralized databases. The main point is that even if a blockchain distributed database technically "works" it is highly inadequate for many practical money-like applications, particularly because trust has to include the real world.
In some context I would agree, there is theoretical value to a decentralized trustless ledger[0]. What I can't agree with, however, is that entries in a decentralized trustless ledger are inherently valuable as cryptocurrency proponents would like us to believe. The entries in the ledger have no inherent meaning, they're just a number associated with another number and the only reason anyone equates that with a monetary value is that, for the moment, they can find someone else[1] to give them money to shuffle those numbers around. I think that, at best, one could say that BTC is backed by hype and speculation. I am not convinced that is a useful basis for a currency[2].
This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.
NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].
[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.
[1] read: greater fool.
[2] Leaving aside all the energy wasted on PoW.
[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.
This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.
NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].
[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.
[1] read: greater fool.
[2] Leaving aside all the energy wasted on PoW.
[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.
Money in your bank account is just a number in a database somewhere.
You must have missed a significant portion of my post if you do not see why I do not believe those are equivalent.
I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.
I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.
It turns out in history lots of people committed crimes where the evil party was not the criminal, but the state deeming their actions criminal.
Is trust in bank records generally low? Especially in moderately modernized countries?
That argument doesn't work with currency, because money requires trust by definition (as opposed to immediate barter), and, as a backup -- enforcement.
In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.
If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?
In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.
If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?
The same can be said about NFTs: you must verify their authenticity off-chain, you must trust that off-chain authority, or sue people off-chain if they infringe on your off-chain property rights...
I'll give you a bad review in a venue where your reputation is more valuable than the trade or I wouldn't trade with you to begin with. Or I would insist on an escrowed bond.
There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.
Big sticks just aren't a very efficient solution.
There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.
Big sticks just aren't a very efficient solution.
That only strengthens the article's author's point. Cyber currency just serves as a vessel for a fringe political group's beliefs, which, however strong, are not popular.
Is the author's point that the political views in question are not popular? I thought he was attempting to make the point that the economic system personified in the execution of those political beliefs is not efficient.
Which if the last decade plus of cryptocurrency has taught us anything, we ought to be able to thoroughly discard by this point in time.
I am aware that the political orthodoxy of the time is popular and the view that it should be discarded is unpopular, aside from observing that this would be true of basically any time and place, I have no further comment on that. My point is that the alternative simply flat out works better. I have zero care or interest in what is popular.
Which if the last decade plus of cryptocurrency has taught us anything, we ought to be able to thoroughly discard by this point in time.
I am aware that the political orthodoxy of the time is popular and the view that it should be discarded is unpopular, aside from observing that this would be true of basically any time and place, I have no further comment on that. My point is that the alternative simply flat out works better. I have zero care or interest in what is popular.
This is why I always have thought that election voting would be a perfect use case for a blockchain.
Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.
Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.
Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?
Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.
Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.
Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?
First of all, what you're talking about more resembles a Merkle Tree rather than a blockchain, because the "chaining" property is really useless in this scenario. Each election can publish the Merkle Tree of its results and you can be sure that your vote was properly registered. Or frankly, just publish the list of one-way hashes and their vote, and you can dispense with all the Merkle-ing.
But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.
But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.
A Sybil attack in this case is just a reveal (once again) of the oracle problem - a blockchain doesn’t provide proof that you are you. Therefore, it cannot provide proof that you cast only one (or no) vote.
Verifying your identity is outside the blockchain. Thus it can provide no value for voting.
Verifying your identity is outside the blockchain. Thus it can provide no value for voting.
As to your first point, I'm not familiar with Merkle Tree's, so I'll learn about that before I respond. Thank you for the insight.
To the second point--I would imagine you would vote in the same way we do today for MVP, in-person / mailing, etc. So the main function would be to verify that your vote was properly recorded and counted.
To the second point--I would imagine you would vote in the same way we do today for MVP, in-person / mailing, etc. So the main function would be to verify that your vote was properly recorded and counted.
Voting is intentionally designed for it to be impossible to verify what your final vote is so that it's impossible for someone to use that to hold you to a particular vote. A classic example being a household all being forced to vote one way by the head of that household. With no verification possible you can freely vote without influence from others who would use that verification for their own ends.
This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.
This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.
This is interesting and something I hadn't thought of. Thank you.
https://www.youtube.com/watch?v=w3_0x6oaDmI elaborates on that point, and has some other useful points against electronic voting
> This is also why taking a picture of your ballot will nullify it
In what jurisdiction is this the case? I have never heard of it.
In what jurisdiction is this the case? I have never heard of it.
> This is why I always have thought that election voting would be a perfect use case for a blockchain.
You mean, other than trusting elected representatives to oversee the election you'd rather trust miners?
You mean, other than trusting elected representatives to oversee the election you'd rather trust miners?
Of all the things you could do with a blockchain, it's probably the worst.
The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.
Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.
Relevant XKCD: https://xkcd.com/2030/
The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.
Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.
Relevant XKCD: https://xkcd.com/2030/
You telling me everyone understands computerized voting machines? Because I don't think there's that much of a gap between people who know about those vs people who know about block chains
No, those are a bad idea as well.
You also need a way to use your key to show a false result, or someone can use rubber-hose cryptanalysis to see your vote.
Is rubber-hose cryptanalysis the concept of extracting info by torture? I guess... I mean, if you're willing to beat someone to get their SSN, you could probably do a lot more harm already just using that info to apply for CCs and loans in their name.
Maybe I'm mistaken or confused here, but in that specific case you could just give any random 9-digit sequence and it would suffice? A non-SSN voter ID would work just as well for a key.
Are people threatening others based on their votes these days?
EDIT: /u/ninjanomnom brought up a good point regarding heads-of-households, which I hadn't thought of before. I suppose some sort of method would be necessary to obfuscate your vote in some situations.
Maybe I'm mistaken or confused here, but in that specific case you could just give any random 9-digit sequence and it would suffice? A non-SSN voter ID would work just as well for a key.
Are people threatening others based on their votes these days?
EDIT: /u/ninjanomnom brought up a good point regarding heads-of-households, which I hadn't thought of before. I suppose some sort of method would be necessary to obfuscate your vote in some situations.
Right so the problem is that you want to be able to verify your vote, but you don't want anyone else to be able to verify your vote. Your SSN is semi-public and lots of people likely already know it (e.g. employer, who is also a prime candidate to try to buy/coerce your vote). But even with a private key, you have to assume you can be coerced into giving it up.
So any system that allows you to verify a vote needs to come not only with a way for you to validate it, but also with deniability built in. Because if it's not then you can a) sell your vote or b) be intimidated into showing how you voted (which may result in a firing/beating if you did it wrong).
There are, I think, one or two ways to achieve this, but it's a non-trivial problem.
So any system that allows you to verify a vote needs to come not only with a way for you to validate it, but also with deniability built in. Because if it's not then you can a) sell your vote or b) be intimidated into showing how you voted (which may result in a firing/beating if you did it wrong).
There are, I think, one or two ways to achieve this, but it's a non-trivial problem.
There are a number of attempts to accomplish this goal by using homomorphic encryption, without needing blockchain. For example, https://en.wikipedia.org/wiki/Helios_Voting
Exactly -- "except crime".
Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.
Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.
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I think a lot of discussions around the utility of blockchains misses (or just ignores) a really subtle but important point: smart contract networks (like Ethereum) could be thought of like public utilities that are implemented via markets. And I think that perspective can unlock a lot of innovation.
If I want to launch a startup, I have to cover hosting costs, manage infrastructure (terraform, AWS/DigitalOcean, Docker, DNS, etc) and handle lots of other complexity that is incidental to what I'm actually trying to build. It really helps to have VC money to ease that pain - but VC money is a dangerous train to get on.
But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute. I don't need to cover hosting costs or much infrastructure beyond some web interface (which I could just put on Netlify). That simplicity reduces the need for funding.
Any data or infrastructure that I put in place is - by default - still available if my startup fails, so users who put their content into the system can still get access to it even if I can't afford to pay the bills anymore.
And of course, other startups could immediately build on top of whatever I've created.
Honestly, using blockchains for money - while essential for some of this - is not the most interesting application.
If I want to launch a startup, I have to cover hosting costs, manage infrastructure (terraform, AWS/DigitalOcean, Docker, DNS, etc) and handle lots of other complexity that is incidental to what I'm actually trying to build. It really helps to have VC money to ease that pain - but VC money is a dangerous train to get on.
But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute. I don't need to cover hosting costs or much infrastructure beyond some web interface (which I could just put on Netlify). That simplicity reduces the need for funding.
Any data or infrastructure that I put in place is - by default - still available if my startup fails, so users who put their content into the system can still get access to it even if I can't afford to pay the bills anymore.
And of course, other startups could immediately build on top of whatever I've created.
Honestly, using blockchains for money - while essential for some of this - is not the most interesting application.
> But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute. I don't need to cover hosting costs or much infrastructure beyond some web interface (which I could just put on Netlify).
So you're already using Netlify, why not take the extra step and make your entire app open source and serverless? That solves the "If my startup fails" case, and the hosting costs issue which you'd be incurring either way.
So you're already using Netlify, why not take the extra step and make your entire app open source and serverless? That solves the "If my startup fails" case, and the hosting costs issue which you'd be incurring either way.
> But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute
Do you mean that you would build your app so that it entirely runs on the Ethereum network, basically using Ethereum like a cloud provider? This sounds like just a more expensive, difficult, and resource intensive way of running a lambda function...
Do you mean that you would build your app so that it entirely runs on the Ethereum network, basically using Ethereum like a cloud provider? This sounds like just a more expensive, difficult, and resource intensive way of running a lambda function...
> This sounds like just a more expensive, difficult, and resource intensive way of running a lambda function...
It definitely would be for some applications - but probably not all. It's all about engineering trade-offs.
There's a possibility that tools with different trade-offs will make new niches feasible.
It definitely would be for some applications - but probably not all. It's all about engineering trade-offs.
There's a possibility that tools with different trade-offs will make new niches feasible.
I thought the article did a fairly good job pointing out:
- The only applications anyone is implementing on progcoins are exchanges and/or gambling. So far, dApps are a circular argument.
- Smart contracts aren't so smart. They are ticking time bombs waiting to get exploited DAO-style.
That doesn't leave a whole lot of room for utility.
- The only applications anyone is implementing on progcoins are exchanges and/or gambling. So far, dApps are a circular argument.
- Smart contracts aren't so smart. They are ticking time bombs waiting to get exploited DAO-style.
That doesn't leave a whole lot of room for utility.
> - The only applications anyone is implementing on progcoins are exchanges and/or gambling. So far, dApps are a circular argument.
There's an argument that that's okay for now - the finance applications are effectively capitalizing infrastructure construction, which will make future applications easier to build, more scalable, etc. The amount of $ in these applications incentivizes bad actors to help expose the failure modes of the infrastructure - which again would be nice to know and document before it becomes widely useful.
^ that's a prediction - I'll be the first to admit that this crypto stuff may go nowhere. But it might go to some interesting places.
There's an argument that that's okay for now - the finance applications are effectively capitalizing infrastructure construction, which will make future applications easier to build, more scalable, etc. The amount of $ in these applications incentivizes bad actors to help expose the failure modes of the infrastructure - which again would be nice to know and document before it becomes widely useful.
^ that's a prediction - I'll be the first to admit that this crypto stuff may go nowhere. But it might go to some interesting places.
Stephen is mostly likely right that the decentralized nature of Crypto is not really a benefit. That said digital cash and tokens and NFTs do have value and I expect them to get even more popular.
I am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution.
Napter's P2P infrastructure (and later Gnutelle and Bittorrent) allowed it to operate in a legal gray zone or at least have deniability. But Napster's lasting innovation wasn't P2P, it was showing how popular digital music was when it was being fought by the powers that be (and Bittorrent showed how popular digital films would be.)
BitTorrent is still around, primarily for pirating content. It is no where near as popular as the legal means of accessing and distributing digital music and video though -- Netflix, Apple Music, Spotify, Disney+ have grabbed the main innovation and separated it from the decentralized P2P infrastructure that first enabled it.
I think crypto is likely going in that direction. People want digital cash. People want NFTs. But they do not need this wasteful decentralized infrastructure and the complete anonymity that it is designed around.
That said, I think the criminal needs will keep decentralized crypto around forever, even after it is likely banned in most places, just like BitTorrent continues today.
Crypto servers a great purpose just like Napster/Gnutella and Bitorrent did -- it is forcing us to modernize our traditional banking infrastructure to compete with these wildcat currencies.
Digital cash versions of each major currency will exist, be formally blessed by the powers that be, they will probably have at least semi-centralized infrastructure, KYC and rollback capabilities and near 0 gas fees. KYC and rollback capabilities are key for reducing crime.
I am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution.
Napter's P2P infrastructure (and later Gnutelle and Bittorrent) allowed it to operate in a legal gray zone or at least have deniability. But Napster's lasting innovation wasn't P2P, it was showing how popular digital music was when it was being fought by the powers that be (and Bittorrent showed how popular digital films would be.)
BitTorrent is still around, primarily for pirating content. It is no where near as popular as the legal means of accessing and distributing digital music and video though -- Netflix, Apple Music, Spotify, Disney+ have grabbed the main innovation and separated it from the decentralized P2P infrastructure that first enabled it.
I think crypto is likely going in that direction. People want digital cash. People want NFTs. But they do not need this wasteful decentralized infrastructure and the complete anonymity that it is designed around.
That said, I think the criminal needs will keep decentralized crypto around forever, even after it is likely banned in most places, just like BitTorrent continues today.
Crypto servers a great purpose just like Napster/Gnutella and Bitorrent did -- it is forcing us to modernize our traditional banking infrastructure to compete with these wildcat currencies.
Digital cash versions of each major currency will exist, be formally blessed by the powers that be, they will probably have at least semi-centralized infrastructure, KYC and rollback capabilities and near 0 gas fees. KYC and rollback capabilities are key for reducing crime.
> That said digital cash and tokens and NFTs do have value and I expect them to get even more popular.
Literally all my cash is already digital.
Literally all my cash is already digital.
That is impossible: the numbers on your bankaccount are multiplied, thanks to fractional reserve. The cash in your hand is not. Maybe not a big deal now, but at some point it might be. And then it's "surprise! The numbers on your account != cash in your hand"
But we have insurance on deposits in the US/Canada. Also DAO are trying to replicate fraction reserve lending.
So basically we have protections against this problem in the traditional system and the crypto system is trying to replicate fractional reserves.
Tether also is engaging in massive fractional reserve lending. Apparently only 3% of Tethers are backed by cash holdings: https://news.ycombinator.com/item?id=27151370
So basically we have protections against this problem in the traditional system and the crypto system is trying to replicate fractional reserves.
Tether also is engaging in massive fractional reserve lending. Apparently only 3% of Tethers are backed by cash holdings: https://news.ycombinator.com/item?id=27151370
> the crypto system is trying to replicate fractional reserves.
That is not a fair statement and you know it. Only a fraction of cryptos maybe. Most do not.
That is not a fair statement and you know it. Only a fraction of cryptos maybe. Most do not.
You are referring to Google Pay/Apple Pay/VISA. This is correct and it is mostly what people use these days.
But it isn't on a block chain and it isn't extensible. With our current digital cash I can not create NFTs and trade then around. It also doesn't allow for arbitrarily large transfers. It doesn't replace ACH or Interac. There are no public ledgers.
I think that digital cash with the features I described above will come into existence, as parallel structures to the existing ones, but probably will see significantly more adoption.
Right now we are seeing fracturing of the cash system with PayPal, Stripe, Venmo, etc. I think there could easily be a consolidation period around block chain official state currencies at some point.
But it isn't on a block chain and it isn't extensible. With our current digital cash I can not create NFTs and trade then around. It also doesn't allow for arbitrarily large transfers. It doesn't replace ACH or Interac. There are no public ledgers.
I think that digital cash with the features I described above will come into existence, as parallel structures to the existing ones, but probably will see significantly more adoption.
Right now we are seeing fracturing of the cash system with PayPal, Stripe, Venmo, etc. I think there could easily be a consolidation period around block chain official state currencies at some point.
> But it isn't on a block chain and it isn't extensible.
It is very extensible. My bank has an API.
> With our current digital cash I can not create NFTs and trade then around.
I'd call that a feature rather than a bug. I am absolutely able to buy and sell items traceably with other people though. For example I recently bought a house. The transfer was facilitated by my solicitor and recorded in a central government registry.
> It also doesn't allow for arbitrarily large transfers.
Transactions of many millions of dollars are routinely made using existing digital banking technology. My personal account has a 10k/day cap due to money laundering rules but that seems fairly sensible. I can call them up and have it raised for one offs.
It is very extensible. My bank has an API.
> With our current digital cash I can not create NFTs and trade then around.
I'd call that a feature rather than a bug. I am absolutely able to buy and sell items traceably with other people though. For example I recently bought a house. The transfer was facilitated by my solicitor and recorded in a central government registry.
> It also doesn't allow for arbitrarily large transfers.
Transactions of many millions of dollars are routinely made using existing digital banking technology. My personal account has a 10k/day cap due to money laundering rules but that seems fairly sensible. I can call them up and have it raised for one offs.
Why does digital cash need to be on a blockchain?
Bittorrent and Napster took advantage of post-scarcity space created by the information age and made distribution of non-scarce resources easier. NFTs, at best, do the opposite by intentionally trying to force scarcity back into a post-scarcity system. For this reason, I do not believe they have value or much of a future.
I think that the main problem with this logic is that Bittorrent is a tech designed to illegally distribute a consumer good, ie a movie. Once the movie has made it's final stop, your eyeballs, that's it. It's been consumed.
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
> am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution
Torrents still account for a massive share of internet traffic. Furthermore, I think it's reductive to just consider it a tool for piracy. Blizzard uses (used?) BitTorrent in their game launcher to alleviate server costs. Not to mention that a lot of bittorrent traffic lives in the fuzzy area of sharing lost media and abandonware. Gabe Newell famously referred to piracy as a service problem, and the success of services like Spotify, Steam and Netflix undoubtedly prove that to some extent. Like yes, the easiest way to dive into the Disney back catalog is through Disney+, but there's also Disney content which, for various reasons, you can't access through the service but still has historical value.
Torrents still account for a massive share of internet traffic. Furthermore, I think it's reductive to just consider it a tool for piracy. Blizzard uses (used?) BitTorrent in their game launcher to alleviate server costs. Not to mention that a lot of bittorrent traffic lives in the fuzzy area of sharing lost media and abandonware. Gabe Newell famously referred to piracy as a service problem, and the success of services like Spotify, Steam and Netflix undoubtedly prove that to some extent. Like yes, the easiest way to dive into the Disney back catalog is through Disney+, but there's also Disney content which, for various reasons, you can't access through the service but still has historical value.
I think that the main problem with this logic is that Bittorrent is a tech designed to illegally distribute a consumer good, ie a movie. Once the movie has made it's final stop, your eyeballs, that's it. It's been consumed.
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.
I suppose much like with BitTorrent, the criminal needs will be both good and bad; allows routing around unjust laws (of which there are many), as well as routing around just laws (of which there are many).
I suppose much like with BitTorrent, the criminal needs will be both good and bad; allows routing around unjust laws (of which there are many), as well as routing around just laws (of which there are many).
> Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.
I agree. There are regular +100M bitcoin transfers happening between pseudonymity accounts, which could easily be money laundering / tax avoidance by billionaires: https://twitter.com/whale_alert
I think in the fully legal system, all accounts would likely be tied to real identities.
I agree. There are regular +100M bitcoin transfers happening between pseudonymity accounts, which could easily be money laundering / tax avoidance by billionaires: https://twitter.com/whale_alert
I think in the fully legal system, all accounts would likely be tied to real identities.
Dogecoin started out as an explicitly value-free "let's play with this without risk or seriousness" fork of Bitcoin. The speed with which the scams took it over was instructive and I think indicative of everything that's played out since then... In that sense, Dogecoin was a rousing, complete, wonderful success.
I remember reports telling Dogecoin was one of the safest cryptos to invest in, as it doesn't promise anything, accepts itself existing only for a meme, and all the reports were underlying its honesty, telling "it is what it is". Then it skyrocketed and became a purely speculative one, of course it's not Dogecoin's fault but more like Elon's.
When it comes to crypto I am completely uninformed. In my uninformed opinion, I think there is probably something of value in crypto and the blockchain but I can't see it under the intense amount of bullshit the crypto community comes up with and I am not willing to dig through that mountain.
I'm in a similar boat. I could see ... something of value coming out of all this, perhaps something unexpected. But I certainly don't want to get involved with all the grifters, scammers, hucksters, confidence men, cryptobros and their various and sundry schemes. Knowing that I don't know much about the details of it... I think of "if you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you" and know that I'd be the sucker, so the winning move is not to play.
As many in the community joke, "don't buy [currency] unless you have a use-case". If your "use-case" includes gambling at the casino and not simple transactions, it is indeed better not to play.
I felt exactly the same, until I did some research and realized it's bullshit all the way.
As someone who is interested in this space, you have a proper way of looking at it. Most tokens are just scams outright, or if not scams, have communities which are totally unwilling to solve the technological problems inherent of their coins (see Bitcoin's high fees, limited block size, lack of privacy). One example of a decent currency which runs counter to this trend is privacy-focused Monero, though the developers/community don't bother to market it in the same manner as many other coins, to a point that on of the main criticisms of it is its comparable lack of volatility, amusingly enough.
tl;dr There are quite a few innovations that have been made by various actors in the cryptographic currency space, most of which are entirely drowned out by a torrent of mind-numbing get-rich-quick scams and stubborn, close-minded speculators.
tl;dr There are quite a few innovations that have been made by various actors in the cryptographic currency space, most of which are entirely drowned out by a torrent of mind-numbing get-rich-quick scams and stubborn, close-minded speculators.
Exactly the same as dot-com bubble where bs companies with just a domain name were the hot thing, if you just looked at that and wrote off tech, you would have made the wrong decision. Being on HN probably means you're technical enough to sort through the noise and find the actual value for yourself until the market does it for you.
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
So you're saying there IS a use case :)
So you're saying there IS a use case :)
And that use case is HUGE. Cryptos are really enabling unprecedented efficiency in a wide variety of crime
Imagine when ransoms had to be paid in suitcases full of dollar bills with non-sequential serial numbers. Bitcoin has made it all so much easier.
If all transaction can be tracked, what prevents the [FBI\et al] from simply following the bitcoin trail until someone cashes out?
The fungibility of cash is what makes it hard, although likely law enforcement will be able to trace many of these.
For example, you take your ill-gotten gains and just randomly send $1 to a million different addresses, some owned by you, some owned by random people or exchanges or whatever. Nobody's going to say no to free money, so the trail goes cold.
Or you use an offshore exchange that doesn't really practice strong KYC, and exchange the ill-gotten gains for a different cryptocurrency and now without the private ledger of the exchange, the trail is cold.
At one point "mixing services" were the talk of the town, but at this point it's clear that you can get 99% of the benefits of mixing without having to go through an explicit service.
For example, you take your ill-gotten gains and just randomly send $1 to a million different addresses, some owned by you, some owned by random people or exchanges or whatever. Nobody's going to say no to free money, so the trail goes cold.
Or you use an offshore exchange that doesn't really practice strong KYC, and exchange the ill-gotten gains for a different cryptocurrency and now without the private ledger of the exchange, the trail is cold.
At one point "mixing services" were the talk of the town, but at this point it's clear that you can get 99% of the benefits of mixing without having to go through an explicit service.
For example, you take your ill-gotten gains and just randomly send $1 to a
million different addresses, some owned by you, some owned by random people or
exchanges or whatever. Nobody's going to say no to free money, so the trail
goes cold.
For Ethereum, there's Tornado Cash[1] and other projects based on zk-SNARK[2] or similar tech. I'm not sure if there's a fully decentralized equivalent for Bitcoin.
[1] https://tornado.cash/
[2] Why and How zk-SNARK Works: https://arxiv.org/abs/1906.07221
[1] https://tornado.cash/
[2] Why and How zk-SNARK Works: https://arxiv.org/abs/1906.07221
They cash out in Russia is one thing that happens.
Actually I think he is wrong about that, crime can be done better on a centralized infrastructure. See all crime before cryptocurrencies were a thing.
For some reason all ransoms are requested in cryptocurrencies as of late. There must be a reason, hmm...
" as mainstream adoption of cryptocurrency has grown, the percentage of transactions used to promote or conceal crime has also decreased."
- FinCEN Chief Digital Currency Advisor, Michele Korver
https://www.coindesk.com/policy/2021/07/06/fincen-hires-doj-...
- FinCEN Chief Digital Currency Advisor, Michele Korver
https://www.coindesk.com/policy/2021/07/06/fincen-hires-doj-...
"As deaths due to covid increased, the percentage of deaths due to car crashes has decreased"
I somehow think that doesn't mean we made any progress in car/traffic safety. And should not be used as an argument to dismiss/minimize the impact of traffic fatalities.
I somehow think that doesn't mean we made any progress in car/traffic safety. And should not be used as an argument to dismiss/minimize the impact of traffic fatalities.
That is entirely consistent with a few possible (and I would say likely) explanations that include cryptocurrency being beneficial for crime. I'll cover one below.
If crime accounts for some small percentage of financial transactions (we'll say 1% to make it easy, even if that's very unlikely), and those transactions migrate to cryptocurrency first, then what you'll see is a very high percentage of crime in cryptocurrencies, that then drops as the much larger normal transaction flow shifts, even the total amount of crime transactions might be stable or even increasing (as we're talking about percentages of a whole, normal transaction traffic and would have to be shifting very slowly and crime increasing extremely fast for us to see anything else).
If crime accounts for some small percentage of financial transactions (we'll say 1% to make it easy, even if that's very unlikely), and those transactions migrate to cryptocurrency first, then what you'll see is a very high percentage of crime in cryptocurrencies, that then drops as the much larger normal transaction flow shifts, even the total amount of crime transactions might be stable or even increasing (as we're talking about percentages of a whole, normal transaction traffic and would have to be shifting very slowly and crime increasing extremely fast for us to see anything else).
Keyword there is percentage.
That still doesn't make it a good thing.
From the article:
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
Governments, world-wide, may end up emulating China, which is planning to outlaw other crypto-currencies while providing its own. The information gathered by a national government monopolizing crypto-currency is simply too appealing to those that would like to deter crime, stop tax-avoidance, or even understand in real-time what is going on in their economies. After China, I believe that other nations are likely to do the same thing and outlaw or heavily regulate crypto.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
Governments, world-wide, may end up emulating China, which is planning to outlaw other crypto-currencies while providing its own. The information gathered by a national government monopolizing crypto-currency is simply too appealing to those that would like to deter crime, stop tax-avoidance, or even understand in real-time what is going on in their economies. After China, I believe that other nations are likely to do the same thing and outlaw or heavily regulate crypto.
They will just try to turn crypto into the existing banking network by forcing citizen coin holders onto the exchanges, banning transactions from non custodial addresses and continuing to control the on-ramps and off-ramps. This way they can monitor transaction and if they don’t like something or are suspicious they can just seize the funds once they hit an on-ramp/off-ramp.
A CBDC will be introduced and all other USD stable coins will be banned and consider counterfeit currency. The US CBDC will replace stable coins and allow the US to continue exporting its currency abolishing other currencies in the process while gathering intelligence.
A CBDC will be introduced and all other USD stable coins will be banned and consider counterfeit currency. The US CBDC will replace stable coins and allow the US to continue exporting its currency abolishing other currencies in the process while gathering intelligence.
This.
https://en.wikipedia.org/wiki/Executive_Order_6102
Remember, the use of encryption above a certain keyspace is still considered exporting arms, and subject to ITAR.
They will let more suffer from the bubble to allow swift legal reform.
https://en.wikipedia.org/wiki/Executive_Order_6102
Remember, the use of encryption above a certain keyspace is still considered exporting arms, and subject to ITAR.
They will let more suffer from the bubble to allow swift legal reform.
Maybe the bubble will be popped deliberately like it was back in 2017.[0]
[0] https://www.coindesk.com/markets/2019/10/22/trump-administra...
[0] https://www.coindesk.com/markets/2019/10/22/trump-administra...
The author of this article makes specious claims that can each be refuted.
>Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
That's simply not true. First he doesn't define "better" which is incredibly important when making such a claim. I would agree that centralized databases can do things "more quickly" and "with less overhead" but you'd lose the most important quality of what make cryptocurrencies important: "without permission, consent, or control of anyone else."
Centralized systems can make changes to your data without your knowledge or consent. They can freeze/edit/delete your records without your say. Decentralized systems that use blockchains are immune to this, and for people who prioritize privacy or use of a system without consent from some over-arching 3rd party, they would definitely say blockchain-based systems are "better"
>crypto assets have no claim to be currencies because their deflationary properties and volatility don’t fulfill the theoretical or even practical function of money
This is untrue. There are government-issued currencies that are far more volatile than cryptocurrencies are. There are 3 functions of money: store of value, unit of account, and medium of exchange. Cryptocurrencies like Bitcoin fulfill all 3.
>They aren’t commodities because they have no non-circular economic use case.
Again untrue. ENS and Handshake allow registration of domains without a centralized DNS registrar. Helium tokens allow access to a global decentralized sensor/relay network without relying on centralized telecoms. ETH and AKT allow you to code and deploy a program that does not rely on any centralized servers in two different formats. Sentinel (DVPN) lets you pay for and access a decentralized VPN without relying on a centralized party. Each of these projects - and many many others - have economic use cases that are not circular.
The author has twisted facts to conform to his own predetermined reality.
>Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
That's simply not true. First he doesn't define "better" which is incredibly important when making such a claim. I would agree that centralized databases can do things "more quickly" and "with less overhead" but you'd lose the most important quality of what make cryptocurrencies important: "without permission, consent, or control of anyone else."
Centralized systems can make changes to your data without your knowledge or consent. They can freeze/edit/delete your records without your say. Decentralized systems that use blockchains are immune to this, and for people who prioritize privacy or use of a system without consent from some over-arching 3rd party, they would definitely say blockchain-based systems are "better"
>crypto assets have no claim to be currencies because their deflationary properties and volatility don’t fulfill the theoretical or even practical function of money
This is untrue. There are government-issued currencies that are far more volatile than cryptocurrencies are. There are 3 functions of money: store of value, unit of account, and medium of exchange. Cryptocurrencies like Bitcoin fulfill all 3.
>They aren’t commodities because they have no non-circular economic use case.
Again untrue. ENS and Handshake allow registration of domains without a centralized DNS registrar. Helium tokens allow access to a global decentralized sensor/relay network without relying on centralized telecoms. ETH and AKT allow you to code and deploy a program that does not rely on any centralized servers in two different formats. Sentinel (DVPN) lets you pay for and access a decentralized VPN without relying on a centralized party. Each of these projects - and many many others - have economic use cases that are not circular.
The author has twisted facts to conform to his own predetermined reality.
I'm not that au fait with the other cases you mention, but Helium is a straight up scam. No-one uses it for anything at all, even in markets where they have full coverage. This is because, in the real world, companies need security. They will pay a little bit extra so that:
A: The network works everywhere, and doesn't suddenly develop dead spots because Jason went scuba diving for a week and turned off his node and
B: There is someone on the end of the phone they can call when things go wrong.
No-one beyond those trying to make money of their tokens cares about Helium at all, easily provable by looking at their data record. "Oh....but LIME scooters!" No, they ripped off Lime's logo and are BSing that Lime uses their network. Lime doesn't. Lime uses a non-blockchain network called Twillio, because they are a real business in the real world need the things I mentioned above. https://customers.twilio.com/2050/lime/
Helium's only business, like every blockchain business that I have ever seen, is scamming people to buy tokens and selling them hardware. Oh, and lying.
No-one beyond those trying to make money of their tokens cares about Helium at all, easily provable by looking at their data record. "Oh....but LIME scooters!" No, they ripped off Lime's logo and are BSing that Lime uses their network. Lime doesn't. Lime uses a non-blockchain network called Twillio, because they are a real business in the real world need the things I mentioned above. https://customers.twilio.com/2050/lime/
Helium's only business, like every blockchain business that I have ever seen, is scamming people to buy tokens and selling them hardware. Oh, and lying.
Crypto can be forked without my consent too.
> There are 3 functions of money: store of value, unit of account, and medium of exchange. Cryptocurrencies like Bitcoin fulfill all 3.
Bitcoin fails miserably at all three. Come on. Bitcoin can do a measly three transactions per second for exorbitant fees, it is massively unstable and unsuitable as a store of value.
Bitcoin fails miserably at all three. Come on. Bitcoin can do a measly three transactions per second for exorbitant fees, it is massively unstable and unsuitable as a store of value.
> There is a somewhat coherent proposition that crypto assets are effectively unregistered securities contracts, basically like stock in an empty company that doesn’t do anything except promote the sale of its own stock.
I sometimes think that when anthropologists from the future look back at today, the primary lessons they'll draw from us won't have to do with our technological cleverness, but rather our financial imagination. Greed is at work in the world, and it is a strong force of propulsion in terms of how the world we are living in is changing. Perhaps dramatically more so than technology, in a given period of time.
The willingness to speculate in a manner that is completely unhinged from reality: that is the dark heart of cryptocurrencies. It is rent-seeking behavior taken to its brutally logical conclusion. And it is not unique to crypto. Look at people's behavior in the stock market, or the housing market. It isn't that these assets are actually appreciating that much in the real world, so much as investors are simply trying to find a place to put their money and get a return.
In that sense, the speculative utility that <meme stonks/Vancouver condos/cryptocoins> provide, as a store of financial value, has become orthogonal to reality. In some markets, I'd argue that we're even seeing a weird parasitic effect, where the host is kept alive simply to serve as a form of blue sky contract by the force of our collective willingness to play Russian Roulette speculative games with each other. GameStop is a good example.
I sometimes think that when anthropologists from the future look back at today, the primary lessons they'll draw from us won't have to do with our technological cleverness, but rather our financial imagination. Greed is at work in the world, and it is a strong force of propulsion in terms of how the world we are living in is changing. Perhaps dramatically more so than technology, in a given period of time.
The willingness to speculate in a manner that is completely unhinged from reality: that is the dark heart of cryptocurrencies. It is rent-seeking behavior taken to its brutally logical conclusion. And it is not unique to crypto. Look at people's behavior in the stock market, or the housing market. It isn't that these assets are actually appreciating that much in the real world, so much as investors are simply trying to find a place to put their money and get a return.
In that sense, the speculative utility that <meme stonks/Vancouver condos/cryptocoins> provide, as a store of financial value, has become orthogonal to reality. In some markets, I'd argue that we're even seeing a weird parasitic effect, where the host is kept alive simply to serve as a form of blue sky contract by the force of our collective willingness to play Russian Roulette speculative games with each other. GameStop is a good example.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
In a weird way, this quote is a good explanation of why cryptos exist: they give the possibility of creating systems evading state controls.
Crime is a relative thing: moving money outside of certain countries is prohibited, in others it's owning property for certain category of people.
In a weird way, this quote is a good explanation of why cryptos exist: they give the possibility of creating systems evading state controls.
Crime is a relative thing: moving money outside of certain countries is prohibited, in others it's owning property for certain category of people.
The definition of crime is not only a relative thing, but also a moving target which is quite unpredictable and has a lot of long tail events.
They're really hammering away at the narrative these days. Every one of these articles i see reference one another. If this issue is so contentious as they claim every time, why is it that they can only seem to find a handful of people to reference each other? Seems like a group of people that for whatever assortment of reasons (probably their stated ones) don't like cryptocurrency and are crafting and hammering away at a narrative.
I don't disagree with a lot of what's said in the article. But there's a lot that is ignored, and a lot that isn't put into context. Yes, this entire system is designed to put financial interaction outside the purview of regulators. This is 100% true. But that's a selling point, at least to those who see it as a positive. That doesn't equate to "crime" though (although it includes crime as a subset) unless you blanked define all financial activity outside the reach of regulation as "crime", which is circular logic.
I don't disagree with a lot of what's said in the article. But there's a lot that is ignored, and a lot that isn't put into context. Yes, this entire system is designed to put financial interaction outside the purview of regulators. This is 100% true. But that's a selling point, at least to those who see it as a positive. That doesn't equate to "crime" though (although it includes crime as a subset) unless you blanked define all financial activity outside the reach of regulation as "crime", which is circular logic.
I work in fintech and I don't see how a run on Tether will result in everyone getting their money back. The people financing it are hidden behind shell corps in shady countries with loose reporting and have not been playing ball with regulators. It's not reasonable to believe they have the reserves.
The systems of payments we have today are social systems. They're built on a system of obligations, credits, debits, and liabilities. The technology used to facilitate modern systems is merely a reflection of that system.
The entire reason for the crypto ecosystem to exist is to have a financial system free of that regulation and governance.
The systems of payments we have today are social systems. They're built on a system of obligations, credits, debits, and liabilities. The technology used to facilitate modern systems is merely a reflection of that system.
The entire reason for the crypto ecosystem to exist is to have a financial system free of that regulation and governance.
Tether is rat poison, and from the very beginning most voices in the cryptocurrency community have refused to call it a "cryptocurrency". It's a private token controlled by a private ledger. I know no one in the space that has a favorable view of Tether.
USDC is regulated and sane centralized alternative. Dai is a sane distributed alternative.
USDC is regulated and sane centralized alternative. Dai is a sane distributed alternative.
I loved this article. I am almost in complete agreement.
Reading the comments here is very worrying. So little understanding of simple economic ideas, like what a Ponzi scheme is.
Truly amazed that people think that Bitcoin is comparable to gold. I am not a fan of gold as an investment, they have that in common. But nothing else.
It is a tragedy that so much energy is used, in times like these, for something so useless.
128 TWh in a year. https://www.sciencealert.com/bitcoin-could-soon-consume-0-6-...
Reading the comments here is very worrying. So little understanding of simple economic ideas, like what a Ponzi scheme is.
Truly amazed that people think that Bitcoin is comparable to gold. I am not a fan of gold as an investment, they have that in common. But nothing else.
It is a tragedy that so much energy is used, in times like these, for something so useless.
128 TWh in a year. https://www.sciencealert.com/bitcoin-could-soon-consume-0-6-...
Crypto is all about decentralized proof of trust yet somehow this eludes people who should know better. Please show me how you solve decentralized proof of trust (double spend) with postgres.
Indeed, crime did have a need for anonymous proof of trust that crypto solved. Why did crime have a need for that? Because crime lies beyond the realm of the status quo.
Criminals are to the status quo as pioneers and revolutionaries are.
In the "normal world", centralization gives us the situation where the organization in charge of authentication is the same organization that has the monopoly on violence. Indeed within the rules of this story we built crypto seems to be "a solution looking for a problem", as another stereotype argument goes. The problem is all around you.
Indeed, crime did have a need for anonymous proof of trust that crypto solved. Why did crime have a need for that? Because crime lies beyond the realm of the status quo.
Criminals are to the status quo as pioneers and revolutionaries are.
In the "normal world", centralization gives us the situation where the organization in charge of authentication is the same organization that has the monopoly on violence. Indeed within the rules of this story we built crypto seems to be "a solution looking for a problem", as another stereotype argument goes. The problem is all around you.
you mean what payment systems and any online game with in-game currency have solved?
>payment systems
You mean monopolisitc central payment systems like visa and mastercard that can push to deny service to a legal business like onlyfans on random religious grounds?
>any online game
Last time I checked the economy of world of warcraft was owned and controlled by Activison-Blizzard, including rights to all in-game currencies, so I don't even know what this argument is supposed to mean.
You mean monopolisitc central payment systems like visa and mastercard that can push to deny service to a legal business like onlyfans on random religious grounds?
>any online game
Last time I checked the economy of world of warcraft was owned and controlled by Activison-Blizzard, including rights to all in-game currencies, so I don't even know what this argument is supposed to mean.
It's understood, but not desirable. Proof of Authority is preferable. Double spend is somewhat separate from proof of trust one you change the consensus algo and make it a permissioned system.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
The opening quote in the article captures it all for me, except the last part. The implied definition of crime is so narrow.
From what I know of the financial markets in the US, mortgages and other loans as well as more esoteric financial instruments -- it's all moving in the direction of Ponzi schemes and get-rich-quick scams. I'd go as far as saying that it is all in fact a big organized crime circuit, if you're just a little flexible in the definition of crime (mostly in the part where crime usually has consequences, but the really big crooks have found a reliable way to "socialize" the consequences of them getting theirs).
In that light, having a public, transparent ledger of all the "important" transactions at the top levels could help reduce the amount of routine white-collar crime that goes on. Perhaps it is not explicitly criminal in nature - or it is, but the offenders have far too many resources to be held accountable -- but all the same it's harmful to society at large. An idealist can dream of a system where these actors can be scrutinized, and named-and-shamed into some kind of socially responsible behaviour.
The opening quote in the article captures it all for me, except the last part. The implied definition of crime is so narrow.
From what I know of the financial markets in the US, mortgages and other loans as well as more esoteric financial instruments -- it's all moving in the direction of Ponzi schemes and get-rich-quick scams. I'd go as far as saying that it is all in fact a big organized crime circuit, if you're just a little flexible in the definition of crime (mostly in the part where crime usually has consequences, but the really big crooks have found a reliable way to "socialize" the consequences of them getting theirs).
In that light, having a public, transparent ledger of all the "important" transactions at the top levels could help reduce the amount of routine white-collar crime that goes on. Perhaps it is not explicitly criminal in nature - or it is, but the offenders have far too many resources to be held accountable -- but all the same it's harmful to society at large. An idealist can dream of a system where these actors can be scrutinized, and named-and-shamed into some kind of socially responsible behaviour.
When I understood the blockchain and proof of work, my first reaction was - this is nuts. It's a waste of computing power and electricity all for removing a trust provider. And immediately the next realisation was that making a blockchain private and removing proof of work made it pointless.
Blockchain is a solution for nothing.
Blockchain is a solution for nothing.
Decentralisation offers the following value over centralisation:
* Control by a majority, not a minority. (democratic)
* Open ecosystem that visible and able to be analysed by anyone (transparent)
* Immutable (no one makes up assets without everyone knowing about it)
* Fair. Same price for everyone at all times, no chance of a monopoly.
Those don't exist in central systems and so the price you must pay for that is speed, scalability and anonymity (which is both used for good or bad). I don't believe crypto is the answer to everything, but I certainly don't see it as useless.
* Control by a majority, not a minority. (democratic)
* Open ecosystem that visible and able to be analysed by anyone (transparent)
* Immutable (no one makes up assets without everyone knowing about it)
* Fair. Same price for everyone at all times, no chance of a monopoly.
Those don't exist in central systems and so the price you must pay for that is speed, scalability and anonymity (which is both used for good or bad). I don't believe crypto is the answer to everything, but I certainly don't see it as useless.
> Control by a majority, not a minority. (democratic)
In what way is that even remotely true for any major cryptocurrency?
>Open ecosystem that visible and able to be analysed by anyone (transparent)
Right. How is that Tether audit going again? And how did all that transparency prevent this week's multimillion dollar Oopsie?
> Immutable (no one makes up assets without everyone knowing about it)
Except, you know, the entire thing being made up by people who automatically get ridiculously large shares of the pie as "early adopters".
> Fair. Same price for everyone at all times, no chance of a monopoly.
See above. And do you have any idea how rampant market manipulation is?
In what way is that even remotely true for any major cryptocurrency?
>Open ecosystem that visible and able to be analysed by anyone (transparent)
Right. How is that Tether audit going again? And how did all that transparency prevent this week's multimillion dollar Oopsie?
> Immutable (no one makes up assets without everyone knowing about it)
Except, you know, the entire thing being made up by people who automatically get ridiculously large shares of the pie as "early adopters".
> Fair. Same price for everyone at all times, no chance of a monopoly.
See above. And do you have any idea how rampant market manipulation is?
First of all decentralization is not a property solely confined to cryptocurrencies. The traditional banking system is decentralized, there are thousands of banks that are all separate entities. There is no single central bank, even central banks are not unique, every country has one. Additionally the traditional banking system and cash have a huge advantage, no global consensus is required, Iran still has a banking system much to the dismay of the American government.
> *Control by a majority, not a minority. (democratic)
It's a majority of hash power in the case of PoW and a majority of capital in the case of PoS, since hash power costs capital in both cases it's a majority of capital that has control, oh and the systems devs of course a small group that essentially decides the future of the system.
> * Open ecosystem that visible and able to be analysed by anyone (transparent)
That is not necessarily a good thing, the fact that all the transactions are public means that they can be analyzed to identify people, this is bad not for criminals that will use sophisticated anonymizing techniques. But casual users that don't know any better and maybe identified doing either illegal (buying drugs), compromising (paying for sex) or simply being associated with other known users. In the traditional banking paradigm these problems are usually circumvented by using cash, or relying on the institutions privacy guarantees when no law enforcement is involved.
> *Immutable
All these schemes while claiming to be immutable are really not, firstly the last block is always subject to being overridden by a longer chain with more blocks, thus everyone waits for multiple blocks(confirmations) before accepting a transaction as committed, secondly even if the development team / or the majority of the miners does not like a specific transaction they can always revert it, by controlling / or being the majority as was the case with the events that lead to the existence of ethereum classic. So these schemes are not really immutable, they are only immutable when a single users tokens are stolen.
As for me, I don't believe that cryptocurrencies are completely useless. I just don't see why everyone is so excited.
> *Control by a majority, not a minority. (democratic)
It's a majority of hash power in the case of PoW and a majority of capital in the case of PoS, since hash power costs capital in both cases it's a majority of capital that has control, oh and the systems devs of course a small group that essentially decides the future of the system.
> * Open ecosystem that visible and able to be analysed by anyone (transparent)
That is not necessarily a good thing, the fact that all the transactions are public means that they can be analyzed to identify people, this is bad not for criminals that will use sophisticated anonymizing techniques. But casual users that don't know any better and maybe identified doing either illegal (buying drugs), compromising (paying for sex) or simply being associated with other known users. In the traditional banking paradigm these problems are usually circumvented by using cash, or relying on the institutions privacy guarantees when no law enforcement is involved.
> *Immutable
All these schemes while claiming to be immutable are really not, firstly the last block is always subject to being overridden by a longer chain with more blocks, thus everyone waits for multiple blocks(confirmations) before accepting a transaction as committed, secondly even if the development team / or the majority of the miners does not like a specific transaction they can always revert it, by controlling / or being the majority as was the case with the events that lead to the existence of ethereum classic. So these schemes are not really immutable, they are only immutable when a single users tokens are stolen.
As for me, I don't believe that cryptocurrencies are completely useless. I just don't see why everyone is so excited.
> All these schemes while claiming to be immutable are really not, firstly the last block is always subject to being overridden by a longer chain with more blocks, thus everyone waits for multiple blocks(confirmations) before accepting a transaction as committed
Not in chains with synchronous consensus and instant finality. No forking.
Not in chains with synchronous consensus and instant finality. No forking.
POLKADOT does that right? Does anybody else do that?
Basically any new proof-of-stake chain. Solana, Avalanche, Cosmos...
Proof of Work/Stake are both oligopolistic, not democratic. If you can buy yourself a larger vote, that's not democratic.
Can you describe your anticipated role of decentralization under China or US regulation? Do you simply expect and plan a parallel black market?
I appreciate the authors sentiments but I missed perhaps the most important one to me. Crypto has really re-invigorated interest in DIY/Tinkerer/random projects with no real purpose. These may appear pointless externally, but internally to the ones working on them they are incredibly fun, educational, and sure, potentially profitable. When industry / tech is in this chaotic phase, often the major benefit is figuring out what doesn't work, what fails, etc. If things were easy, everyone would do it, but when it's hard to get right, amazing innovation can happen along the way. Don't discount the random meandering towards solutions.
I think the thing that bothers me most about using "crypto" to mean "cryptocurrency" is when people write articles deriding the "nothingburger of crypto", I feel conflicted.
Part of me wonders how many non-tech people we're conditioning to assume cryptography is worthless in 2021.
Part of me wonders how many non-tech people we're conditioning to assume cryptography is worthless in 2021.
I'd say about zero.
What's so striking about all this is the sheer scale. There have been bubbles before, but not trillion dollar ones based on nothing.
It's not just Bitcoin and friends. Rivian, which is just starting out as an electric light truck manufacturer, has a market cap of US$98 billion. First vehicles will ship no sooner than January 2022. This is more market cap than Ford Motor, the #1 seller of light trucks for the last 44 years and with a good electric truck in their lineup.
This can't end well.
It's not just Bitcoin and friends. Rivian, which is just starting out as an electric light truck manufacturer, has a market cap of US$98 billion. First vehicles will ship no sooner than January 2022. This is more market cap than Ford Motor, the #1 seller of light trucks for the last 44 years and with a good electric truck in their lineup.
This can't end well.
Rivan began truck delivery months ago.
Lordstown has a suitcase full of cash and a direct flight to Maldives coming up.
"The first R1T rolled off the assembly line in Normal, Illinois on September 14, which means that over about 48 days, the company was producing the R1T at an average rate of nearly 3.8/day (including weekends). ... Nearly all of these vehicles were delivered to Rivian employees."[1]
That's not production. That's debugging the assembly line.
[1] https://insideevs.com/news/544860/rivian-r1t-production-deli...
That's not production. That's debugging the assembly line.
[1] https://insideevs.com/news/544860/rivian-r1t-production-deli...
Bitcoin isn’t in a bubble on any time scale longer than 4 years. Bubbles don’t re-inflate.
For a crypto-skeptic, this is actually a stunning admission:
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
If you acknowledge this, then you acknowledge that crypto has a unique value proposition of being able to shield ones financial transactions. From there, you have to pull in a lot of assumptions that the only time this will be valuable is crime, not to mention what seems to be an assumption that all crime is morally determined to be crime.
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
If you acknowledge this, then you acknowledge that crypto has a unique value proposition of being able to shield ones financial transactions. From there, you have to pull in a lot of assumptions that the only time this will be valuable is crime, not to mention what seems to be an assumption that all crime is morally determined to be crime.
Crime can be as simple as the delta between the desires of those with power and the desire of those without power.
This is the second time this week I've seen an article from Diehl on the front page that is critical of cryptocurrency but has next to zero substance. Weird that people regard him as a crypto expert, he doesn't seem to understand the space very well.
- Comparing Bitcoin to doge and shiba is laughable
- Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...
- Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.
I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.
The majority of coins will eventually fail, and it's even possible all the currently popular ones will be included in that. The road to maturity has been and will continue to be bumpy. But the writing is on the wall that crypto is going to be a major force in global finance for decades to come. Pandora's box is open, anyone who thinks it will entirely flame out and disappear doesn't understand what has happened over the past decade.
- Comparing Bitcoin to doge and shiba is laughable
- Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...
- Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.
I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.
The majority of coins will eventually fail, and it's even possible all the currently popular ones will be included in that. The road to maturity has been and will continue to be bumpy. But the writing is on the wall that crypto is going to be a major force in global finance for decades to come. Pandora's box is open, anyone who thinks it will entirely flame out and disappear doesn't understand what has happened over the past decade.
> This is the second time this week I've seen an article from Diehl on the front page that is critical of cryptocurrency but has next to zero substance. Weird that people regard him as a crypto expert, he doesn't seem to understand the space very well.
What is stated without evidence can be dismissed without evidence. These unfounded personal attacks is not what HW was about, I remember.
> Comparing Bitcoin to doge and shiba is laughable
such insight!
> - Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...
Damn, you got him! By reading the text as literally as possible... I'm impressed!
> - Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.
Didn't you get the memo of his article(s) that crypto is anything but decentralised? The good thing is that you yourself didn't proclaim to be a crypto expert. Fair enough!
> I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.
Is this just psychological projection? Is that really all you have to offer?
What is stated without evidence can be dismissed without evidence. These unfounded personal attacks is not what HW was about, I remember.
> Comparing Bitcoin to doge and shiba is laughable
such insight!
> - Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...
Damn, you got him! By reading the text as literally as possible... I'm impressed!
> - Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.
Didn't you get the memo of his article(s) that crypto is anything but decentralised? The good thing is that you yourself didn't proclaim to be a crypto expert. Fair enough!
> I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.
Is this just psychological projection? Is that really all you have to offer?
> What is stated without evidence can be dismissed without evidence.
Lol, there is no evidence in this article, it's pure conjecture.
Lol, there is no evidence in this article, it's pure conjecture.
It’s the crypto people that have to prove that their stuff means something, the burden of proof is on them
What happened to "What is stated without evidence can be dismissed without evidence."?
What happens to the claims that crypto is something but after 12 years it is still a solution in search of a (legal) problem.
Nobody has anything to show for it.
And you can state the article is conjecture all you want, but if you don’t substantiate that… welll…
Nobody has anything to show for it.
And you can state the article is conjecture all you want, but if you don’t substantiate that… welll…
>this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies
came here to say the same thing, with one addition: unregulated decentralized transfer
the author seems to brush this off as only appealing to criminals
came here to say the same thing, with one addition: unregulated decentralized transfer
the author seems to brush this off as only appealing to criminals
> crypto is going to be a major force in global finance for decades to come.
Oh it'll stick around alright, and it will be a major force, just like drug dealing and insider trading and other illegal activities and scams that run rampant in the world. Ponzi schemes and promises of new riches will always exist, and there are enough suckers born every day to fall for new iterations of fancy digital woo-woo.
> this author doesn't understand the value of decentralized value transfer
You know what the original "decentralized value transfer" mechanism was? Cash. Those paper bills and metal coins we've been using for thousands of years. Nobody doubts the value of decentralized value transfer. Stablecoins, which aim to replace cash, are covered in that article. Personally, I think this is where crypto offers the most promise, but then it isn't really crypto at all, it is just a digitally managed Automated Clearing House for transferring value, i.e. an improved traditional finance, like most countries in Europe have had instant transfers for decades. Nothing "cryptographic" about that.
Oh it'll stick around alright, and it will be a major force, just like drug dealing and insider trading and other illegal activities and scams that run rampant in the world. Ponzi schemes and promises of new riches will always exist, and there are enough suckers born every day to fall for new iterations of fancy digital woo-woo.
> this author doesn't understand the value of decentralized value transfer
You know what the original "decentralized value transfer" mechanism was? Cash. Those paper bills and metal coins we've been using for thousands of years. Nobody doubts the value of decentralized value transfer. Stablecoins, which aim to replace cash, are covered in that article. Personally, I think this is where crypto offers the most promise, but then it isn't really crypto at all, it is just a digitally managed Automated Clearing House for transferring value, i.e. an improved traditional finance, like most countries in Europe have had instant transfers for decades. Nothing "cryptographic" about that.
The original decentralized value transfer was gold and other precious commodities.
Stablecoins are more like cash because, similarly, they are both subject to central bank's monetary policy.
Bitcoin is much more like gold, in that it can only be indirectly influenced by political policy.
Stablecoins are more like cash because, similarly, they are both subject to central bank's monetary policy.
Bitcoin is much more like gold, in that it can only be indirectly influenced by political policy.
The thinly veiled ad hominem stuff against Diehl is uncalled for.
> Smart contracts are, in database terminology, stored procedures that run one of the various incarnations of distributed databases these technologies are built on.
This is a classic misrepresentation of the properties of a smart contract. It's nothing like a procedure and the environment that its executed is different.
A database procedure can be deployed, run and deleted by anyone being a database admin. Anyone else cannot even see the procedures. A procedure can be edited mid-lifecycle too. E.g. we cannot see DB procedures of FB, neither can we interact with them.
A database has mutable state. And every data base makes trust assumptions about the nodes and their operators. You wouldn't invite a malicious actor to run a node in your regular DB cluster.
Anyone can host a blockchain node but not all state can be arbitrarily edited. That may require "work" as in "Proof of Work".
A smart contract can be published by anyone, be run by anyone and it cannot be updated. And it's internal state can be read after any transaction. DB procedures have no internal state that's persisted. They are functional and pure. They update the DB records.
Smart contracts and DB procedures are very different.
This is a classic misrepresentation of the properties of a smart contract. It's nothing like a procedure and the environment that its executed is different.
A database procedure can be deployed, run and deleted by anyone being a database admin. Anyone else cannot even see the procedures. A procedure can be edited mid-lifecycle too. E.g. we cannot see DB procedures of FB, neither can we interact with them.
A database has mutable state. And every data base makes trust assumptions about the nodes and their operators. You wouldn't invite a malicious actor to run a node in your regular DB cluster.
Anyone can host a blockchain node but not all state can be arbitrarily edited. That may require "work" as in "Proof of Work".
A smart contract can be published by anyone, be run by anyone and it cannot be updated. And it's internal state can be read after any transaction. DB procedures have no internal state that's persisted. They are functional and pure. They update the DB records.
Smart contracts and DB procedures are very different.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
"Crime" is a word with bad connotations, but what it actually means is "whatever your government doesn't allow you to do". Being able to do something that a government doesn't want you to do isn't prima facie wrong or immoral in most of the world. Even under more benign governments like the US one, there are plenty of normal activities that it doesn't allow for various bad reasons (war on drugs is a good example). Technically, bypassing the restrictions on drugs, avoiding capital controls or straight up confiscation of deposits, opting out of local currency devaluation, etc. can be "crime". However, it is actually good that crypto makes that possible.
Is crypto a good tool for that, long term, from a technological standpoint? I am not sure. But the author is clearly sneaking in connotations here.
"Crime" is a word with bad connotations, but what it actually means is "whatever your government doesn't allow you to do". Being able to do something that a government doesn't want you to do isn't prima facie wrong or immoral in most of the world. Even under more benign governments like the US one, there are plenty of normal activities that it doesn't allow for various bad reasons (war on drugs is a good example). Technically, bypassing the restrictions on drugs, avoiding capital controls or straight up confiscation of deposits, opting out of local currency devaluation, etc. can be "crime". However, it is actually good that crypto makes that possible.
Is crypto a good tool for that, long term, from a technological standpoint? I am not sure. But the author is clearly sneaking in connotations here.
That's a lot of smart words, but I just paid $7 in bitcoin to top up my Egyptian sim card (wi fi in the hotels is not existent over there, so you must use mobile internet), using bitrefill and lightning. It took a few seconds to complete, I paid zero fees, I didnt have to divulge any information about myself nor to the vendor, nor to any bank or goverment. No registration, no validation, nothing. Vendor did not have to worry about my transaction being fraudulent or that it might be charged back for any reason.
As to the volatility, I topped up my payment wallet with $100 some time ago, used it to pay for many things, and now it shows a balance equivalent of $800. I welcome such volatility.
To me, this clearly shows the superiority of this form of money over previous forms.
As to the volatility, I topped up my payment wallet with $100 some time ago, used it to pay for many things, and now it shows a balance equivalent of $800. I welcome such volatility.
To me, this clearly shows the superiority of this form of money over previous forms.
What an obnoxious piece of drivel.
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
The HN California tech-bros could be forgiven for not "getting it" 2 years ago. However, when leaving your own damn house became a crime, this lack of understanding is beginning to become infuriating.
The value proposition of cryptocurrencies is not only in shielding you from the whims of bureaucrats that are in charge of monetary policies, but of idiotic changes to all policies.
When my country was in a full insane-mode covid lockdown, no centralized database helped me to get a haircut. That haircut guy took only cash or crypto.
When the next insane demand is inevitably decreed upon you, maybe cash won't do anymore either.
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
The HN California tech-bros could be forgiven for not "getting it" 2 years ago. However, when leaving your own damn house became a crime, this lack of understanding is beginning to become infuriating.
The value proposition of cryptocurrencies is not only in shielding you from the whims of bureaucrats that are in charge of monetary policies, but of idiotic changes to all policies.
When my country was in a full insane-mode covid lockdown, no centralized database helped me to get a haircut. That haircut guy took only cash or crypto.
When the next insane demand is inevitably decreed upon you, maybe cash won't do anymore either.
Posting this while the inflation rate of USD is over 6% is kind of tone deaf.
I wish I could have discussions about cryptocurrency as a technology rather than a "get rich quick" scheme. Back in 2017 I was really excited about Ethereum and the promises of scalability not just from Vitalik B. but from other developers too. I still think that cryptocurrency could do good for the world if the issues can be resolved but for now everybody's got their eyes on the price, not the technology's horizon.
It has no use case. Zero
What if you’re stuck in Turkey with its current inflation and want to hedge against it? Or what if you’re someone who would like to in a permissionless way buy Bitcoin options?
What the Hacker News crowd generally misses about crypto is that it’s technology, ideology and finance in one package. They keep on arguing against the storage model itself (centralized vs decentralized) and miss the bigger picture.
So many of these anti blockchain comments remind me of the initial HN reaction to Dropbox and people saying that “hey, you can just set this up yourself on a Linux machine”.
You’re missing the point. A 3 trillion dollar industry doesn’t give a shit about your database takes and how it’s all a bubble - we’re way beyond that.
What the Hacker News crowd generally misses about crypto is that it’s technology, ideology and finance in one package. They keep on arguing against the storage model itself (centralized vs decentralized) and miss the bigger picture.
So many of these anti blockchain comments remind me of the initial HN reaction to Dropbox and people saying that “hey, you can just set this up yourself on a Linux machine”.
You’re missing the point. A 3 trillion dollar industry doesn’t give a shit about your database takes and how it’s all a bubble - we’re way beyond that.
It has an incredibly useful case.
Uncensorable, unstoppable, unseizable, frictionless money.
Have you ever tried withdrawing all of your money from your bank? They will fight tooth and nail to stop you.
Have you ever tried sending money with a wire? Your bank may say "No" you aren't allowed to send your money to who you want. This happened to Wikileaks in 2008.
Have you ever fought with PayPal to get access to your money on their platform? They've shut down millions of legitimate accounts barring people from accessing their own money.
With cryptocurrencies like Bitcoin, you are always in control of your own money because you have not deposited it into someone else's system. It's yours.
If you still call that "zero use case" I can't force you to drink the water I brought you to.
Uncensorable, unstoppable, unseizable, frictionless money.
Have you ever tried withdrawing all of your money from your bank? They will fight tooth and nail to stop you.
Have you ever tried sending money with a wire? Your bank may say "No" you aren't allowed to send your money to who you want. This happened to Wikileaks in 2008.
Have you ever fought with PayPal to get access to your money on their platform? They've shut down millions of legitimate accounts barring people from accessing their own money.
With cryptocurrencies like Bitcoin, you are always in control of your own money because you have not deposited it into someone else's system. It's yours.
If you still call that "zero use case" I can't force you to drink the water I brought you to.
Case closed. /s
That's not a particularly valuable contribution to the discussion, nor is it even true.
A use case for crypto is to be independent of the establishment financial system. This isn't important to that many people, but it is a use case, and there are valid reasons for it.
That's not a particularly valuable contribution to the discussion, nor is it even true.
A use case for crypto is to be independent of the establishment financial system. This isn't important to that many people, but it is a use case, and there are valid reasons for it.
Check out Monero. Untraceable, decentralised transactions have no use case?
Sure would be great for, uh, paying ransoms I guess.
I'm sure you have nothing to hide, and so nothing to fear, hmm? If the world is to move towards digital currencies one way or another, we might as well protect our human rights.
Have you ever used an anonymizing network for your Internet activities? Some of us have to use them for most of our activities, and while you might deem us criminals for that, privacy tech is used for legal activity the vast majority of the time. There are countless people who are currently alive only because of encryption and various privacy technologies, yet your only response is "some criminals could abuse it though"? Is not the most widespread crime in our world the violation of privacy by governments/corporations?
Have you ever used an anonymizing network for your Internet activities? Some of us have to use them for most of our activities, and while you might deem us criminals for that, privacy tech is used for legal activity the vast majority of the time. There are countless people who are currently alive only because of encryption and various privacy technologies, yet your only response is "some criminals could abuse it though"? Is not the most widespread crime in our world the violation of privacy by governments/corporations?
http://shouldiuseablockchain.com/ is my go-to reference personally.
The cryptocurrency world is full of endless, technical publications. Yet what gets posted on Hackernews and upvoted are low quality political panderings from a cryptocurrency competitor.
Compare this post with something from Ethereum: https://vitalik.ca/general/2021/06/18/verkle.html
Compare this post with something from Ethereum: https://vitalik.ca/general/2021/06/18/verkle.html
What about gaming? A huge problem in gaming now is that once games are no longer profitable, the servers go offline and they become unplayable. In-game assets simply disappear, and DRM servers go offline on the whim of the publisher. With the right architecture, crypto could solve both of these problems.
Disclaimer: I don't like DRM or microtransactions, I think both of them make the gaming experience in 2021 pretty terrible.
Disclaimer: I don't like DRM or microtransactions, I think both of them make the gaming experience in 2021 pretty terrible.
What use are records of your in-game assets if the servers where you play the game are down?
How would crypto force gaming companies to keep servers for old games online?
Instead of hitting the publisher's endpoints, they'd hit a web3 endpoint to get the list of digital assets owned by the player
What use is that if the servers running the rest of the game are turned off?
Most (not all) web3 games don't have a server. Just frontend interacting with a smart contract
And what do you think you're getting the frontend assets from? They certainly don't live on-chain, and usually aren't open source.
Yes I realize that could be an issue, but it's way easier to address than keeping a server alive. See: https://archive.org/details/softwarelibrary_flash_games
Distribution of binaries of obsolete games is a solved problem. It costs money to leave dedicated servers running for legacy titles, but costs nothing to leave the Steam page online. Plenty of commercial games are also free to download, but cost money to register and actually play.
> I’m not alone in believing in the fundamental technical uselessness of blockchains.
Hmmm.
Codd delivered "A Relational Model of Data for Large Shared Data Banks" in 1970, and it took something like a decade (waves hands) for RDBMS systems to appear. Packet-switched networks, anyone?
So it seems perhaps hasty to write off the blockchain entirely, though currently the idea seems to need a saner catalyst than these various coins to bring it to fruition.
Hmmm.
Codd delivered "A Relational Model of Data for Large Shared Data Banks" in 1970, and it took something like a decade (waves hands) for RDBMS systems to appear. Packet-switched networks, anyone?
So it seems perhaps hasty to write off the blockchain entirely, though currently the idea seems to need a saner catalyst than these various coins to bring it to fruition.
This entire post seems to avoid or lack the understanding of the basic reasons blockchain were created; that is, to offer a decentralized, permissionless, censorship-resistant network.
This was Satoshi's vision, and those values are a blockchain's express priority over scale and efficiency.
Centralization is great for speed and efficiency, not so great for protection against authoritarian actors (governments or central banks).
This was Satoshi's vision, and those values are a blockchain's express priority over scale and efficiency.
Centralization is great for speed and efficiency, not so great for protection against authoritarian actors (governments or central banks).
We have one already: cash.
As for protection against authoritarian actors. If your state has already gone full panopticon, crypto won't save you, indeed the state will mandate exclusive use of their chosen crypto, gaining even more visibility into your life. If your state has not yet done so, you should fight to preserve liberty and the rule of law. If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency. I regret that the only business I know to be benefiting from bitcoin is ransomware.
As for protection against authoritarian actors. If your state has already gone full panopticon, crypto won't save you, indeed the state will mandate exclusive use of their chosen crypto, gaining even more visibility into your life. If your state has not yet done so, you should fight to preserve liberty and the rule of law. If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency. I regret that the only business I know to be benefiting from bitcoin is ransomware.
> We have one already: cash.
Cash is awful if you live in Turkey, Venezuela, Zimbabwe, Lebanon, etc. The USD has lost 90% of its purchasing power since the 1950's, meaning cash is toxic over longer time horizons. You cannot have a society where everyone seeks to get rid of the reserve asset over time.
> If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
You're going to have much better chances anonymizing yourself, compared to say a bank account.
> I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency.
Bitcoin is a savings account in a world where Bank of America's Savings account yields you 0.01% APY, or up to 0.04% if you have more money. We are increasingly forced to take on more risk simply to maintain the purchasing power of our wealth.
Cash is awful if you live in Turkey, Venezuela, Zimbabwe, Lebanon, etc. The USD has lost 90% of its purchasing power since the 1950's, meaning cash is toxic over longer time horizons. You cannot have a society where everyone seeks to get rid of the reserve asset over time.
> If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
You're going to have much better chances anonymizing yourself, compared to say a bank account.
> I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency.
Bitcoin is a savings account in a world where Bank of America's Savings account yields you 0.01% APY, or up to 0.04% if you have more money. We are increasingly forced to take on more risk simply to maintain the purchasing power of our wealth.
> The USD has lost 90% of its purchasing power since the 1950's
That's a meaningless number without context: The median income gain was 2000% (i.e. double the purchasing power loss) during the same period (median yearly family income was $3300 in 1950 https://www.census.gov/library/publications/1952/demo/p60-00...)
That's a meaningless number without context: The median income gain was 2000% (i.e. double the purchasing power loss) during the same period (median yearly family income was $3300 in 1950 https://www.census.gov/library/publications/1952/demo/p60-00...)
Yes, money creation pushed wages up as it did costs. And gains from technology resulted in real wealth increases for society in general.
However, holding the asset itself resulted in loss of buying power over time. There is a distinction between cash the asset (the thing you hold and trade with), and income.
Holding shares in a corporation over 50 years may be a good idea (depending on the company). Holding land/house over 50 years may be a good idea (depending on the location). Holding fiat cash over 50 years is never a good idea.
And the problem is someone in society has to hold it; we can't all own stocks and houses.
However, holding the asset itself resulted in loss of buying power over time. There is a distinction between cash the asset (the thing you hold and trade with), and income.
Holding shares in a corporation over 50 years may be a good idea (depending on the company). Holding land/house over 50 years may be a good idea (depending on the location). Holding fiat cash over 50 years is never a good idea.
And the problem is someone in society has to hold it; we can't all own stocks and houses.
The flip side is deflation, though. Which isn’t exactly pretty.
If the value of my fiat money is increasing, then I will hold on to it, which is good for me. If everyone does that, then the economy grinds to a halt.
The stock/bond market is, although not always efficient, at least somewhat enabling of economic activity, whereas just holding your currency (including bitcoin) is not.
If the value of my fiat money is increasing, then I will hold on to it, which is good for me. If everyone does that, then the economy grinds to a halt.
The stock/bond market is, although not always efficient, at least somewhat enabling of economic activity, whereas just holding your currency (including bitcoin) is not.
Right, it doesn't necessarily grind the economy to a halt; it simply forces investments to be worthwhile, because now they have to generate enough return to satisfy a higher interest rate. If money is not cheap, speculation is less rampant, but also risk taking is more expensive; this is a forcing mechanism for efficiency.
The interest rate (cost of money) simply returns to a supply/demand market equilibrium. The economy possibly smoothens out, rather than giving us artificial boom and bust cycles thanks to inefficient central bank policies.
The interest rate (cost of money) simply returns to a supply/demand market equilibrium. The economy possibly smoothens out, rather than giving us artificial boom and bust cycles thanks to inefficient central bank policies.
No one in the thread has mentioned "overthrowing a state" except for you.
But what is it actually used for?
Okay, you can donate to WikiLeaks ... But probably 99.999% of people who have possessed cryptocurrency are just speculators: buy low, sell high. And ironically, the exchanges are centralized entities :p
Okay, you can donate to WikiLeaks ... But probably 99.999% of people who have possessed cryptocurrency are just speculators: buy low, sell high. And ironically, the exchanges are centralized entities :p
Bitcoin in particular is used as a store of value, or a form of "digital gold".
Everything is speculation (you hope it goes up in the future, but no one knows for sure), but large corporations are increasingly keeping a balance in Bitcoin, as are wealthy individuals and fund managers.
To understand its place in the world, you need to be a bit more familiar with government bond yield and risks, money creation/monetary policy, the macroeconomics of perpetually rising debt and negative interest rates.
Gold has a $11 trillion market cap, and its not because of industrial use or because it sells well as jewelry.
Everything is speculation (you hope it goes up in the future, but no one knows for sure), but large corporations are increasingly keeping a balance in Bitcoin, as are wealthy individuals and fund managers.
To understand its place in the world, you need to be a bit more familiar with government bond yield and risks, money creation/monetary policy, the macroeconomics of perpetually rising debt and negative interest rates.
Gold has a $11 trillion market cap, and its not because of industrial use or because it sells well as jewelry.
You got brainwashed into believing this by Reddit. Back in 2017 when Bitcoin was utterly crippled in usability and scalability, the centralized forums upon which information was flowing were seized by bad actors and used to manufacture this narrative. Bitcoin was intended to be peer to peer money, not digital gold.
Peer to peer money (low transaction cost, high scalability) is not immediately possible without tradeoffs to decentralization.
You can increase block sizes to a degree, but that threatens decentralization by making it difficult/expensive for nodes to sync and store the chain.
We have an experiment called Bitcoin Cash and endless other forks promising low fees, but adoption has not followed.
You can increase block sizes to a degree, but that threatens decentralization by making it difficult/expensive for nodes to sync and store the chain.
We have an experiment called Bitcoin Cash and endless other forks promising low fees, but adoption has not followed.
>> censorship-resistant
As in impossible to influence via regulation. Once you realize that proper regulation is a good thing and a must in a functioning society, you realize something that can not be regulated can't be allowed to exist as it will undermine said society.
As in impossible to influence via regulation. Once you realize that proper regulation is a good thing and a must in a functioning society, you realize something that can not be regulated can't be allowed to exist as it will undermine said society.
I've yet to see the demise of the movie industry thanks to BitTorrent.
Using the word "regulation" does not give you a moral pass for taking other people's money.
Nobody forces you to use Bitcoin. Just keep using fiat if it's such a good thing for you.
Nobody forces you to use Bitcoin. Just keep using fiat if it's such a good thing for you.
What's most hated about Satoshi's vision is how it prevents, and at the same time, theft through intentional inflation and easily picking/rewarding winners. The lifeblood of contemporary governments is cheating, and thus it makes sense that they will have strong immune responses against anything getting between them and their nutrients.
"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."
What if the actual crime is committed by those that control our money...
Saifedean Ammous' book "The Bitcoin Standard" gives an excellent history of hard money and shows that any new form of hard money will inevitably replace the lesser form (e.g. from the silver standard to the gold standard).
Crypto is composed of interesting projects and scams. Gambling and speculations are symptoms of a wider problem of debased currency and a lack of hard money.
Bitcoin fixes this...
Talking about Bitcoin in the same vain as Crypto shows a profound lack of understanding of history both past and recent when looking at Bitcoin.
While people trade their little Pokemon NFTs Bitcoin will be doing what Bitcoin has been doing from the beginning: Staying exactly 21 million bitcoin - the scarcest and most accessible form of hard money the world has ever seen. It's a black hole sucking in monetary inflation.
1 Bitcoin = 1 Bitcoin.
What if the actual crime is committed by those that control our money...
Saifedean Ammous' book "The Bitcoin Standard" gives an excellent history of hard money and shows that any new form of hard money will inevitably replace the lesser form (e.g. from the silver standard to the gold standard).
Crypto is composed of interesting projects and scams. Gambling and speculations are symptoms of a wider problem of debased currency and a lack of hard money.
Bitcoin fixes this...
Talking about Bitcoin in the same vain as Crypto shows a profound lack of understanding of history both past and recent when looking at Bitcoin.
While people trade their little Pokemon NFTs Bitcoin will be doing what Bitcoin has been doing from the beginning: Staying exactly 21 million bitcoin - the scarcest and most accessible form of hard money the world has ever seen. It's a black hole sucking in monetary inflation.
1 Bitcoin = 1 Bitcoin.
"self-automated bug bounties" is my new favourite phrase.
Crypto is libertarianism-as-code: it promises freedom for all, even from the state (or "cathedral" in Moldbugese), but it's really an unworkable scam whose actual effect is to enrich the founders and the investor elite at the expense of everyone else. Oh, and as a side effect, it contributes to destroying the environment while its proponents tell us this is a good thing.
Don't forget fueling the ransomware explosion.
> Crypto is libertarianism-as-code:
It was supposed to be, but that whole code-is-law thing lasted all of five minutes before the first major hack (Ethereum DAO exploit).
It was supposed to be, but that whole code-is-law thing lasted all of five minutes before the first major hack (Ethereum DAO exploit).
So, let's all use facebook ... no that wouldn't work they sell off our data...google...apple...the government(bailouts anyone)...
as hard as I try I can't seem time find a central authority that's earn my trust..
do I use them now sure.
and if all I need it is for a couple of crypto coins to hold value long enough to buy crap until my next pay check then I could see it being stable enough for that.
file coin seems like a pretty cool protocol.
prediction markets seem like a cool way to keep truth manageable.
and if 10-40 people run a publicly verifiable block chain and they have a stake if it works then I don't see how small groups or towns couldn't run a local blockchain and it's compatible with a bunch of other ones thru defi.
To me the whole point of blockchain and Defi is that the network doesn't scale but does it really need to.
as hard as I try I can't seem time find a central authority that's earn my trust..
do I use them now sure.
and if all I need it is for a couple of crypto coins to hold value long enough to buy crap until my next pay check then I could see it being stable enough for that.
file coin seems like a pretty cool protocol.
prediction markets seem like a cool way to keep truth manageable.
and if 10-40 people run a publicly verifiable block chain and they have a stake if it works then I don't see how small groups or towns couldn't run a local blockchain and it's compatible with a bunch of other ones thru defi.
To me the whole point of blockchain and Defi is that the network doesn't scale but does it really need to.
and as for NFT. I imagine watermarking will be added and apple made billions selling music for 99cents when pirating was at an all time high.
Most people want to see creators create and get paid.
In the long run its going to be about network transaction fees going to near 0.
so as long as distributed means fair competition baked into the networks, crypto will thrive maybe not as an investment but as a way to handle micro payments and funding creators
Most people want to see creators create and get paid.
In the long run its going to be about network transaction fees going to near 0.
so as long as distributed means fair competition baked into the networks, crypto will thrive maybe not as an investment but as a way to handle micro payments and funding creators
The Oracle problem renders the trust component of the blockchain untrustworthy. The storage expense of using a blockchain (because of the validation required) imposes the requirement of using off chain DB for storage. So you end up with the most economically viable use for Blockchain being the validation of high value digital transactions..e.g
Crypto. Perhaps this is why crypto prices will continue to rise, since the validation component requires energy ($) to function and the more transactions that take place, the more validation is required - I believe it does not scale linearly even though it happens in parallel.
Since validation fees are paid in crypto, crypto prices must rise as more validation takes place. It is sort of circular.
I could be 100% wrong though.
Since validation fees are paid in crypto, crypto prices must rise as more validation takes place. It is sort of circular.
I could be 100% wrong though.
I'd add another sub-category: the so-called algorithmic stablecoins. Their biggest flaws being that they can blow up catastrophically in extreme events, something which may be hidden between a veneer of convoluted logic.
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Putting aside cryptoeconomics for a second, a centralized database can be manipulated in a criminal activity. A decentralized, omni-inspected one with no clear owner and no ability to take an axe to it provides a cryptographically sound public ledger (unless it's a private blockchain of course). It'd be very difficult to--independent of the activities that the technology is being used for now--criminally tamper with the history.
I think you have to split it into conceptual layers. Decentralization at the lower layer has value independently of how it's used.
I think you have to split it into conceptual layers. Decentralization at the lower layer has value independently of how it's used.
>Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
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> It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.
Myopic and uninformed.
Pretend crypto doesn't exist and you still have a market rife with moral hazard and technology-hyped asset bubbles that metastasize into systemic risk to the point of bringing down the real economy in increasingly shorter crash cycles.
Is crypto a cause or a symptom?
Myopic and uninformed.
Pretend crypto doesn't exist and you still have a market rife with moral hazard and technology-hyped asset bubbles that metastasize into systemic risk to the point of bringing down the real economy in increasingly shorter crash cycles.
Is crypto a cause or a symptom?
I think this fundamentally ignores what’s guaranteed to happen in the future: corporate ownership of… everything.
The only thing we own these days is our identity. That said, our digital identities are largely owned by user data companies like VISA, Google, et al.
If applications can run on the blockchain, and users have the ability to immediately and irrevocably “nuke” the personal information stored on the block chain, that massively improves on the centralized database model.
The only thing we own these days is our identity. That said, our digital identities are largely owned by user data companies like VISA, Google, et al.
If applications can run on the blockchain, and users have the ability to immediately and irrevocably “nuke” the personal information stored on the block chain, that massively improves on the centralized database model.
I'm very much deep in crypto, "have skin in the game" big time. But are you being honest there?
A majority of coins are owned by corporations. Some coins already have governance through staked amount of coins. ETH2.0 and PoS will centralize the power to the majority holders of ETHs.
When that happens, corporate/"whale" investors will decide the future implementations. Either through governance voting, or just by basically clogging the execution & blockchain through a strike.
A majority of coins are owned by corporations. Some coins already have governance through staked amount of coins. ETH2.0 and PoS will centralize the power to the majority holders of ETHs.
When that happens, corporate/"whale" investors will decide the future implementations. Either through governance voting, or just by basically clogging the execution & blockchain through a strike.
I agree with the author but in the world of startup.. people come to your product/solution only if there is some issue with existing system. With crypto coins, a need is established.
Even though I agree that current crypto coins have no clear value, there is some aspect of it which people want but was probably not done right or sometimes illegal
Imagine being in 90s and everyone doing some silly websites and saying it is future. Then came the giants which actually solved the problem for the masses
Even though I agree that current crypto coins have no clear value, there is some aspect of it which people want but was probably not done right or sometimes illegal
Imagine being in 90s and everyone doing some silly websites and saying it is future. Then came the giants which actually solved the problem for the masses
I'm afraid that the war against crypto was lost once Wall Street decided to join the game. Crypto will not go away regardless of utility or externalities.
Yep. We're getting Economics 2.0, complete with the Vile Offspring and making the earth uninhabitable.
I feel like I have a pretty good idea of Stephen Diehl's opinions on cryptocurrency markets, after reading a lot of his articles posted on HN. I'll read this one too, if there's a new argument in it. Is this one worth reading for someone who is beginning to find them a little samey?
>Until proven otherwise it seems like the goal of the crypto ecosystem is to build an enormous unregulated casino with a crazy party scene.
The goal of crypto was to move blockchains from theory to reality. Upsetting traditional FinTech and its regulation was a side-effect of the experiment.
The goal of crypto was to move blockchains from theory to reality. Upsetting traditional FinTech and its regulation was a side-effect of the experiment.
This is like saying that the goal of the Manhattan project was to reach new heights in our understanding of atomic physics. The people paying for the work had very clear expectations in mind.
I submitted this recently, as a counterpoint to this article:
Yes, You May Need a Blockchain (coindesk.com)
https://news.ycombinator.com/item?id=29319205
The author completely omits any mention of immutability or value storage, instead choosing to characterize crypto as an overengineered scam platform.
Really dubious analysis imo.
Really dubious analysis imo.
"every economist worth their weight in salt"
Which ones might those be? I think the public's trust in economists has been rightly damaged for a long time.
Which ones might those be? I think the public's trust in economists has been rightly damaged for a long time.
“Let me explain why crypto is bad by showing how it doesn’t fit neatly into the definitions of any of the monetary instruments that preceded it”
Also although I don't mention it in this article, I am the CTO of a competing fintech firm
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
Actually, you can have private digital currency without a blockchain that would be perfectly usable for crime. You'd need a server coordinating a scheme like that of https://www.chaum.com/publications/Chaum-blind-signatures.PD..., preferably accessed through Tor for additional privacy.
Actually, you can have private digital currency without a blockchain that would be perfectly usable for crime. You'd need a server coordinating a scheme like that of https://www.chaum.com/publications/Chaum-blind-signatures.PD..., preferably accessed through Tor for additional privacy.
The irony is that this article is correct for “crypto” but not Bitcoin. Every “crypto” could be better done with a database.
But Bitcoin allows journalists like Wikileaks to be paid without it being censored.
You can call that “crime”, but your definition of crime doesn’t comport with natural law.
And censorship resistant money breaks the stranglehold of theft via inflation from the central banks.
It eliminates the primary cause if generational poverty.
I know this site is inhabited by government worshipping authoritarians, but bitcoin will fix that too, eventually.
But Bitcoin allows journalists like Wikileaks to be paid without it being censored.
You can call that “crime”, but your definition of crime doesn’t comport with natural law.
And censorship resistant money breaks the stranglehold of theft via inflation from the central banks.
It eliminates the primary cause if generational poverty.
I know this site is inhabited by government worshipping authoritarians, but bitcoin will fix that too, eventually.
"Any application that could be done on a blockchain could be better done on a centralized database."
The scientific community will disagree with this. The whole culture of independent peer review process assumes there is no centralized control over scientific conclusions, whose rigor stems from decentralized feedback. The time when centralized database (source of truth) became the basis of mainstream science was during the dark ages.
The scientific community will disagree with this. The whole culture of independent peer review process assumes there is no centralized control over scientific conclusions, whose rigor stems from decentralized feedback. The time when centralized database (source of truth) became the basis of mainstream science was during the dark ages.
Any application that could be done on a blockchain could be better done on my centralized database. Buy now.
This is the sound someone makes when they realizing they're slowing down and everyone around them is speeding up.
Update: It seems I've triggered some sensitive HN'rs
Here's how to tell when someone has a real argument - they pick the best possible interpretation of the theoretical foundation of a system and then they disprove it.
Here's how to tell when someone is full of shit - they complain about meme coins.
Update: It seems I've triggered some sensitive HN'rs
Here's how to tell when someone has a real argument - they pick the best possible interpretation of the theoretical foundation of a system and then they disprove it.
Here's how to tell when someone is full of shit - they complain about meme coins.
Funny how he fails to mention that Tether regardless of how dodgy it is provides a lifeline to people in countries undergoing massive inflation like Lebanon.
Legal or not a back up option to a failed currency has real utility. This is why I suspect countries will push ahead with CBDCs and seek to export their use for financial and intelligence reasons.
Legal or not a back up option to a failed currency has real utility. This is why I suspect countries will push ahead with CBDCs and seek to export their use for financial and intelligence reasons.
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This guy always writes such negative posts about crypto while working on his own centralized digital treasury settlement system https://github.com/adjoint-io - the exact thing crypto threatens.
Excellent straw-manning 10/10
This guy has a personal brand by now for putting down crypto.
Like stop writing about it if you don’t like it!
Like stop writing about it if you don’t like it!
Beginning in the 1960s, Clair Cameron Patterson was very vocal against the widespread use of leaded gasolines. He was ignored and mocked for over 20 years, but kept going because he knew it was damaging, and fought to end its use. He didn't just "not like it", he was compelled to improve the world.
Whether you agree with him or not, Stephen believes crypto is damaging to society. As such, he is driven to help root it out.
Whether you agree with him or not, Stephen believes crypto is damaging to society. As such, he is driven to help root it out.
Stephen has a competing product, and a hidden financial motive for slagging cryptocurrency.
A competing product? Not sure how "providing data analytics to community banks" is a competing product to... cryptocurrency? But sure.. you got 'em!
<we should improve society somewhat meme.jpg>
<we should improve society somewhat meme.jpg>
Author's not wrong. I've seen some seriously cringe-inducing "talks" about what blockchain is and is not, and what it can or cannot unlock for you. I also find NFTs to be just...just...confusing.
But mostly I don't care. Do whatever you like as long as you're not hurting anyone. On average people are getting misinformed about some technologies, at worst willingly grifted. But I've seen worse technology trends come (and, by the way, go).
But mostly I don't care. Do whatever you like as long as you're not hurting anyone. On average people are getting misinformed about some technologies, at worst willingly grifted. But I've seen worse technology trends come (and, by the way, go).
The problem is that PoW is hurting everyone via greenhouse emissions.
Algorand is carbon negative.
WHO CARES?
Any cryptocurrency's monetary value is derived from exchange with the others — wasteful PoW titans like BTC and fraudulent wildcat banks like Tether.
By participating in ANY openly traded cryptocurrency, you're participating in that economy that AS A WHOLE is involved in wasting power, fucking the GPU market, and massive financial fraud.
Viewing any coin in isolation is completely stupid. Coins don't exist in a vacuum, you MUST have a holistic view.
Any cryptocurrency's monetary value is derived from exchange with the others — wasteful PoW titans like BTC and fraudulent wildcat banks like Tether.
By participating in ANY openly traded cryptocurrency, you're participating in that economy that AS A WHOLE is involved in wasting power, fucking the GPU market, and massive financial fraud.
Viewing any coin in isolation is completely stupid. Coins don't exist in a vacuum, you MUST have a holistic view.
I've traded Algorand and never touched BTC or Tether.
Your argument is like screaming that the Internet is full of porn and fake news and that any use of the internet (e.g. buying doilies on Etsy) is participating in that economy.
Also, it's not the case that any currency (crypto or otherwise) is derived from exchange with other currencies. It's derived from it's exchange for goods and services. If I can incentivize someone to do something with a cryptocurrency, it has value.
Your argument is like screaming that the Internet is full of porn and fake news and that any use of the internet (e.g. buying doilies on Etsy) is participating in that economy.
Also, it's not the case that any currency (crypto or otherwise) is derived from exchange with other currencies. It's derived from it's exchange for goods and services. If I can incentivize someone to do something with a cryptocurrency, it has value.
What goods and services are cryptocurrencies exchanged with?
A couple people buying VPN accounts and weed are a tiny drop in the ocean that is all the speculation. The vast majority of cryptocurrency usage is fueled by the "get rich quick" hype.
A couple people buying VPN accounts and weed are a tiny drop in the ocean that is all the speculation. The vast majority of cryptocurrency usage is fueled by the "get rich quick" hype.
Which is awesome, but I Algorand is < 0.5% of the crypto-ecosystem
Well, this is how progress happens. Someone complains about a whole industry in broad brushstrokes, someone else invalidates the complaint with a counter example, and we move forward with the better option.
Eh, a "clean" coal burning power plant (do those exist?) doesn't excuse the coal burning power industry. Same for crypto.
Let me get this straight, you think I’m saying that because Algorand is faster, cheaper, and more energy efficient than Bitcoin and Ethereum, that that makes it ok that Bitcoin and Ethereum are slow, expensive, and inefficient?
Have you never gone through the exercise of comparing alternatives before? Or evaluating the strengths and weaknesses of competing technologies?
Have you never gone through the exercise of comparing alternatives before? Or evaluating the strengths and weaknesses of competing technologies?
Not to mention an important vehicle in enabling NK's nuclear program: https://www.bbc.com/news/technology-58719884
And all the other crimes that are made much more efficient/difficult to detect.
And all the other crimes that are made much more efficient/difficult to detect.
it’s impossible to persuade crypto fantasists because they are in a cult
> bitcoin is a meme token for gambling on a fantasy about living in a cyberpunk dystopia.
Ok, thanks.
> It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.
This sure sounds like “a fantasy about living in a cyberpunk dystopia” too. Maybe the author should diversify a little into Bitcoin, and relax.
Ok, thanks.
> It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.
This sure sounds like “a fantasy about living in a cyberpunk dystopia” too. Maybe the author should diversify a little into Bitcoin, and relax.
jude-(1)
I stopped at "decentralized woo woo".
It's the world's first globally accessible, decentralized, transparent, immutable ledger. Lots of value and future value that is being unlocked.
Another rant about crypto which ignores Nano, which has been around for 6 years now.
*y*a*w*n*.
There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.
Nano just got its own currency ticker - XNO - and avoids every fault this author finds in the rest of the field.
Mr. Diehl went far enough to pick out some flaws, and then generalized them onto every variant of the technology without going that little bit further to actually check if he's right or not. Laziness.
There's so many 'Edisons' out there who have decided that because 9,999 filaments don't work that well, lightbulbs are a dead technology. And it's so tiresome - because there's a feckin LED lighthouse beaming photons across the planet as we speak.
*y*a*w*n*.
There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.
Nano just got its own currency ticker - XNO - and avoids every fault this author finds in the rest of the field.
Mr. Diehl went far enough to pick out some flaws, and then generalized them onto every variant of the technology without going that little bit further to actually check if he's right or not. Laziness.
There's so many 'Edisons' out there who have decided that because 9,999 filaments don't work that well, lightbulbs are a dead technology. And it's so tiresome - because there's a feckin LED lighthouse beaming photons across the planet as we speak.
> There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.
There is, the problem is you are not sending value, you are sending the modern equivalent of Charles Ponzi's postal reply coupons.
There is, the problem is you are not sending value, you are sending the modern equivalent of Charles Ponzi's postal reply coupons.
Yawn.
Yes, there are straight Ponzi schemes in crypto. I seem to remember that 'PonziCoin' actually did quite well. Twice. Like, a quarter million dollars in eight hours well.
But there is also utility. Huge utility, recognized by multiple governments by now. And people working relentlessly to free us from depending on the beyond-evil bankers strip-mining every facet of existence on this planet for their own short-term gain.
Yes, there are straight Ponzi schemes in crypto. I seem to remember that 'PonziCoin' actually did quite well. Twice. Like, a quarter million dollars in eight hours well.
But there is also utility. Huge utility, recognized by multiple governments by now. And people working relentlessly to free us from depending on the beyond-evil bankers strip-mining every facet of existence on this planet for their own short-term gain.
> Another rant about crypto which ignores Nano, which has been around for 6 years now.
And also something like Stellar or Hedera which isn't mineable at all and are used for CBDCs.
And also something like Stellar or Hedera which isn't mineable at all and are used for CBDCs.
Or Algorand, etc.
I get that this is all 'new' and confusing, but the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
I get that this is all 'new' and confusing, but the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
All of Stellar, Hedera and Algorand have a big centralization problem, they have solved nothing. Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
> the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
In my experience the people being very optimistic about crypto real world use cases usually have their first exposure with economic theory from within the crypto sphere and lack the real world experience to know some actual pain points of the current economic system. For example the oracle problem is severly glossed over by smart contract approaches, which mostly try to solve trust issues that are essentially solved issues in the real world.
> the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
In my experience the people being very optimistic about crypto real world use cases usually have their first exposure with economic theory from within the crypto sphere and lack the real world experience to know some actual pain points of the current economic system. For example the oracle problem is severly glossed over by smart contract approaches, which mostly try to solve trust issues that are essentially solved issues in the real world.
> All of Stellar, Hedera and Algorand have a big centralization problem, they have solved nothing.
Such claims must be further substantiated with strong and sufficient evidence. Elaborate your claim further with each cryptocurrency with valid sources, otherwise your claim is baseless.
> Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Did you just prove the point of the original comment in this thread? [0] Nano has been ignored once again.
[0] https://news.ycombinator.com/item?id=29331057
Such claims must be further substantiated with strong and sufficient evidence. Elaborate your claim further with each cryptocurrency with valid sources, otherwise your claim is baseless.
> Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Did you just prove the point of the original comment in this thread? [0] Nano has been ignored once again.
[0] https://news.ycombinator.com/item?id=29331057
> Such claims must be further substantiated with strong and sufficient evidence.
No, it's the other way around. Bitcoin only employed approaches that were well-researched already, the innovation essentially was combining these together. The projects I mentioned claim that they can achieve better performance without the known costs of bitcoin (really slow, really energetically expensive). It is up to them to post proof how they achieve that.
> So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Projects with some form of blockchain, which Stellar and Ripple don't have. They are essentially just a horizontically scaled, classic database (running on the nodes), which the clients access. The nodes each have a full copy of the database. There's no blockchain, no mining or any substitute etc.
> Nano
I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets). Nano invented their own consensus protocol. They have the usual suspicious claims (fast, no transfer fees, no/low energy costs) that are only really achievable with a centralized design (i.e. a conventional database). How can they achieve security without heavy costs for appending to the ledger?
No, it's the other way around. Bitcoin only employed approaches that were well-researched already, the innovation essentially was combining these together. The projects I mentioned claim that they can achieve better performance without the known costs of bitcoin (really slow, really energetically expensive). It is up to them to post proof how they achieve that.
> So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Projects with some form of blockchain, which Stellar and Ripple don't have. They are essentially just a horizontically scaled, classic database (running on the nodes), which the clients access. The nodes each have a full copy of the database. There's no blockchain, no mining or any substitute etc.
> Nano
I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets). Nano invented their own consensus protocol. They have the usual suspicious claims (fast, no transfer fees, no/low energy costs) that are only really achievable with a centralized design (i.e. a conventional database). How can they achieve security without heavy costs for appending to the ledger?
> No...
So you have no evidence or sources to your previous claims? As expected.
> Projects with some form of blockchain, which Stellar and Ripple don't have.
Projects such as what? Yet again no examples or sources given and more unfounded claims.
> I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets).
And your point is all of the other projects (including Nano) are not 'blockchains' nor are they 'cryptocurrencies', because it is not mineable and they have 'invented their own consensus protocol'. First of all evidence that it isn't a 'blockchain'? Secondly, so I can modify the very first transaction in each of these 'conventional databases' right now?
Before you avoid giving sources again, what examples satisfies your definition of a 'proper' cryptocurrency and the claims that the aforementioned projects are not 'blockchains' or 'cryptocurrencies' or even that they are 'centralized'?
So you have no evidence or sources to your previous claims? As expected.
> Projects with some form of blockchain, which Stellar and Ripple don't have.
Projects such as what? Yet again no examples or sources given and more unfounded claims.
> I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets).
And your point is all of the other projects (including Nano) are not 'blockchains' nor are they 'cryptocurrencies', because it is not mineable and they have 'invented their own consensus protocol'. First of all evidence that it isn't a 'blockchain'? Secondly, so I can modify the very first transaction in each of these 'conventional databases' right now?
Before you avoid giving sources again, what examples satisfies your definition of a 'proper' cryptocurrency and the claims that the aforementioned projects are not 'blockchains' or 'cryptocurrencies' or even that they are 'centralized'?
> So you have no evidence or sources to your previous claims? As expected.
If someone comes around and claims to have invented a perpetuum mobile, it is not my duty to disproof them.
> Projects such as what?
Such as Bitcoin or Ethereum.
> First of all evidence that it isn't a 'blockchain'?
It's in their whitepapers, read it up. With all due respect, I don't get the feeling you know what these words mean. Hint: the G in DAG stands for "graph", so it can't be a blockchain.
Take a step back for the moment and think about it: The inherent problem cryptocurrencies have to solve, when you take away central coordination, is the trust issue with the data. Bitcoin and other cryptocurrencies tried to replace the trust in the central institution with trust in the implemented market incentives. That's why there is mining. They didn't put mining into the equation because they liked putting out CO2. There has to be something expensive to compensate for the lack of central coordination. That is why crypto is so horribly slow and expensive. The inventors didn't sit around and thought of creating the slowest possible implementation, it simply has to be expensive so that forging the ledger is expensive - because that price is the only thing preventing the rewriting of history.
With a central institution you don't have this problem: If say Paypal is the only institution allowed to write onto the ledger, you can easily have 100k ops per second or more - because these literally are simple writes to a conventional database.
You simply can't have both. In cryptocurrencies, by definition, everyone connected to the net has write access to the ledger. So you have to have a method to make writing to it expensive. If some project comes around and claims to have invented something that can only be described as an economic perpetuum mobile, i.e. having neither central coordination nor expensive writes, it is their burden of proof. Just like bitcoin did.
Edit: I looked into Nanos whitepaper and apparently Nano is trivially DDOSable for very small amounts of money. Have a look yourself:
Page 7: 4.2million transactions = 1.7G ledger size. So a transaction is 405 bytes.
Page 8: A GTX 1060 can calculate 1.25tx/seconds.
Pre Covid a GTX was 200€ and could spam the ledger with 43.74MB/day. So one only needs to invest 100k€ to flood the ledger with 22G/day / 660G/month.
So either a) the whitepaper lies, or b) Nano is completely broken, or c) There is centralization somewhere to ward off that spam.
If someone comes around and claims to have invented a perpetuum mobile, it is not my duty to disproof them.
> Projects such as what?
Such as Bitcoin or Ethereum.
> First of all evidence that it isn't a 'blockchain'?
It's in their whitepapers, read it up. With all due respect, I don't get the feeling you know what these words mean. Hint: the G in DAG stands for "graph", so it can't be a blockchain.
Take a step back for the moment and think about it: The inherent problem cryptocurrencies have to solve, when you take away central coordination, is the trust issue with the data. Bitcoin and other cryptocurrencies tried to replace the trust in the central institution with trust in the implemented market incentives. That's why there is mining. They didn't put mining into the equation because they liked putting out CO2. There has to be something expensive to compensate for the lack of central coordination. That is why crypto is so horribly slow and expensive. The inventors didn't sit around and thought of creating the slowest possible implementation, it simply has to be expensive so that forging the ledger is expensive - because that price is the only thing preventing the rewriting of history.
With a central institution you don't have this problem: If say Paypal is the only institution allowed to write onto the ledger, you can easily have 100k ops per second or more - because these literally are simple writes to a conventional database.
You simply can't have both. In cryptocurrencies, by definition, everyone connected to the net has write access to the ledger. So you have to have a method to make writing to it expensive. If some project comes around and claims to have invented something that can only be described as an economic perpetuum mobile, i.e. having neither central coordination nor expensive writes, it is their burden of proof. Just like bitcoin did.
Edit: I looked into Nanos whitepaper and apparently Nano is trivially DDOSable for very small amounts of money. Have a look yourself:
Page 7: 4.2million transactions = 1.7G ledger size. So a transaction is 405 bytes.
Page 8: A GTX 1060 can calculate 1.25tx/seconds.
Pre Covid a GTX was 200€ and could spam the ledger with 43.74MB/day. So one only needs to invest 100k€ to flood the ledger with 22G/day / 660G/month.
So either a) the whitepaper lies, or b) Nano is completely broken, or c) There is centralization somewhere to ward off that spam.
> apparently Nano is trivially DDOSable for very small amounts of money
Do a little more research - Nano had real life spam attacks, then mitigated the spam problem with an innovative 'bucket' method. This put the lie to the common Bitcoin Maxi claim that "There has to be something expensive to compensate for the lack of central coordination."
As for Nano not being a blockchain; hint: there are chains of blocks. Look at the Nano Wiki page (very short): "Nano uses a block-lattice data structure, where every account has its own blockchain (account-chain)."
I'd say it's funny how confidently wrong your comments are; but it's just way way to common to be anything but tedious. Which was my original point precisely.
Do a little more research - Nano had real life spam attacks, then mitigated the spam problem with an innovative 'bucket' method. This put the lie to the common Bitcoin Maxi claim that "There has to be something expensive to compensate for the lack of central coordination."
As for Nano not being a blockchain; hint: there are chains of blocks. Look at the Nano Wiki page (very short): "Nano uses a block-lattice data structure, where every account has its own blockchain (account-chain)."
I'd say it's funny how confidently wrong your comments are; but it's just way way to common to be anything but tedious. Which was my original point precisely.
> Nano had real life spam attacks, then mitigated the spam problem with an innovative 'bucket' method
So option a) - the whitepaper doesn't reflect reality. And the solution was to make transactions more expensive and slower.
> there are chains of blocks.
With the caveat of the blocks being single transactions and the "blockchain" reflecting only single accounts.
So option a) - the whitepaper doesn't reflect reality. And the solution was to make transactions more expensive and slower.
> there are chains of blocks.
With the caveat of the blocks being single transactions and the "blockchain" reflecting only single accounts.
The transactions are still fee-less and well under a second.
And yes, that's the caveat, if you want to ignore the genius of it and completely get it wrong instead of learning something. It uses blockchain; it's blockchain tech, but you are soo right to say it's not blockchain because it uses blockchian in an innovative way.
Jesus fucking Christ; people who can't admit when they're out of their depth really irritate the ever-living shit out of me. Not you though, you are hilarious.
And yes, that's the caveat, if you want to ignore the genius of it and completely get it wrong instead of learning something. It uses blockchain; it's blockchain tech, but you are soo right to say it's not blockchain because it uses blockchian in an innovative way.
Jesus fucking Christ; people who can't admit when they're out of their depth really irritate the ever-living shit out of me. Not you though, you are hilarious.
> In my experience...
That's probably true but it's also true for the author of the blog. He's a programmer and not an economist.
That's probably true but it's also true for the author of the blog. He's a programmer and not an economist.
People talk about things like Bitcoin as a threat to sovereign currencies, and they are, as competitors, of sorts. But stablecoins are another matter entirely. One huge aspect of the value of sovereign currencies is that they are instruments of law -- courts will settle in them as a lowest common denominator, and it is safe to use them in all sorts of settings as a result.
When dollar-denominated assets appear, they always run the risk of being considered a dollar-equivalent. For example, bank deposits are dollar-denominated, and are considered dollar-equivalent (even dollar-superior, in the sense that there are transactions that you can't legally do with specie, only with bank deposits, like buy stocks). That means that if banks (which are businesses) are not good at doing business, the government is essentially forced to treat them as dollar-equivalents by making them whole. See Savings & Loan Crisis, the GFC, LTCG, etc., etc.
Stablecoins piggyback on the legal aspects of dollars, and as long as you treat them as dollar-denominated assets, you're fine. The second you treat them as dollar-equivalents, you run the risk of a change in the value of that asset being something that the government is forced into supporting.