Does this just reduce join bandwidth? If so it's a minor improvement since the real problems with scalability are transaction size and proof of work cost per TX.
> With traditional cryptocurrencies, users compete to solve equations that validate blocks, with the first to solve the equations receiving funds. As the network scales, this slows down transaction processing times. Algorand uses a “proof-of-stake” concept to more efficiently verify blocks and better enable new users join. For every block, a representative verification “committee” is selected. Users with more money — or stake — in the network have higher probability of being selected. To join the network, users verify each certificate, not every transaction.
Seems they've moved to a Proof of Stake solution, rather than a Proof of Work. Ethereum was meant to switch to it, iirc, but never did.
Ethereum is still planning the switch. They've combined proof of stake with sharding for scalability, and the combined system is being rolled out in three phases, the first of them this year. There's a complete spec for the first phase, and teams building implementations.
Exactly my thought. Joining is just a one-time problem, staying up to date and mining are the big energy and scalability killer. I somehow assumed that Bitcoin already has some functionality (inherited from Merkle Trees) in place that you don't have to download the whole chain?
The scalability problem is fortunately amenable to piecemeal solutions. Some research teams will focus on validation (i.e. novel proof of ____ approaches), others will focus on block propagation, some on bootstrapping (like the OP), novel hash structures for transaction aggregation, etc.
It would be difficult to come out with a new approach that simultaneously advanced the state of the art in every possible scalability dimension. Each individual approach might give a 2-10X improvement on that particular aspect, but it also means that the "bottleneck" keeps shifting, and trending towards scalability.
I would name Nano, a very underrated cryptocurrency. Uses DPoS (Delegated Proof of Stake) instead of Proof of Work, so it doesn't do mining, also it has zero fees and minimal transaction times.
I've ran a full node for some time to support the network, the whole blockchain size was about 5GB, but the downside of zero transaction fees is that there is less incentive for people to run full nodes. I stopped mine out of boredom when the market crashed.
Unfortunately the market is so full of overhyped projects and buzzwords that people are no longer interested in something that just works.
I've had concerns in this area as well, as far as I know the team performed some stress tests and the network can do 100+ transactions per second, maybe more. There is also a small computation that the hardware needs to perform before sending the transaction, which is only a small guard against spam but pretty useful.
afair peak of stress test on main network was >300TPS, on test network is was >1500TPS. there exists dedicated software to create wallets and transaction using GPU, just for stress testing.
A small PoW on each block, however for some reason it can be precomputed which allows you to precompute a spam attack (which has happened from the CEO of BrainBlocks recently..)
It's an interesting issue, although it's a good question if it is possible to stop network spam. Bitcoin's solution to network spam is to limit the amount of transactions and charge a fee, with the fee going up the higher the demand for a transaction.
I don't see this setup working with Nano, as much of the protocol is designed around not having fees. After all, deciding who gets the fees and splitting it (among top representatives?) causes even more processing on the network.
The stake in the network. Each transaction is validated by representatives whose votes are proportional to their stake in the network. An attacker would need to gain 50% of the network value to be able to do some damage.
Agreed, college students can be a good target user-base. Making payment easier/simpler/"more futuristic/cooler" could lead to buy-in/usage. Just recall how it was to interact with your university registrar/bursar...
Assuming they do, what use would they have for this coin afterwards? Can they convert these payments into salaries for staff? Equipment for laboratories? Repairs? etc. etc.
It was for me for a while - I refused to download the entire blockchain. With that said, there have long been mitigations for end users with local wallets.
Not really. The biggest problem is getting more of the participants of the network bootstrapped with a fully validating node. Most people right now choose to rely on others instead which defeats the purpose of Bitcoin and makes the network overall insecure.
It isn't even close to a big problem. Better design is great, but anyone who can watch youtube can still sync to any current cryptocurrency chain. Most people never will though, since there isn't much trust involved in using a chain on a server.
You can bootstrap a node without storing the blockchain. You have to download it though to build up and validate the unspent transaction outputs which are < 1 gb iirc.
I have long wondered how cryptocurrency fans would answer the question:
‘Would you be happy if the crypto-utopia you bring up happens in the next 10 years, and all value is stored/transacted through a cryptocurrency, but it was a coin that you do not possess now, nor could you transfer any of you current currencies into it?’
Say tomorrow someone releases the one true coin, but no one notices. All other cryptocurrencies drop to zero value, then a crypto miracle occurs - the one true coin is uncovered and almost overnight becomes the defacto monetary standard. Would crypto fans be satisfied?
This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
And the top 1% of the American population controls around 40% of the wealth. In accordance with the power law, the top 20% of the population owned 86% of the country's wealth.
Not really, the vast majority of wealth isn't in the form of money (cash or direct debt), it's in the form of ownership of non-money assets such as real estate and productive companies.
Addresses do not necessarily correspond to people or institutions. Those 4% of addresses could represent any number of holders. The other 96% of addresses could be someone's buggy script gone wild.
money have replaced values already owned by people
it didn't pop-up from nothing
crypto currencies need to be acquired using either real currencies or through some form of mining, that requires real currencies to acquire the resources needed to bootstrap it
the crypto space is already a place where rich got richer, less rich got sometimes more rich, most of the times nothing changed for them, really poor individuals from really poor countries couldn't even get started
The point of cryptocurrencies wasn't to make people rich. Anyone can buy in at market value and start using coins for their stored value. That is the point. Your anger in the fact that crypto didn't magically create money where there was none before is misplaced.
Really poor individuals from poor, economically wrecked countries had quite a lot to gain from the accessibility of cryptocurrency. Look at Venezela's attitude towards Bitcoin.
Now expand on this point. What about crypto is preventing people from owning some that isn't also preventing them from owning regular money?
> You mean Maduro's?
It's pedantic to differentiate between a State and its actors when discussing policy like this. I mean Venezuela.
I'm talking the Petro Coin, the raids, everything. The whole policy was a response to fears of increased economic freedom for Venezuela's poorest citizens at a time when the government was trying to offload the pain of its bad economic decisions onto them.
Great point, not to mention the fact that big banks and investment corporations have dabbled in existing crypto. Those big organizations are even less likely to support the one true coin you speak of.
Anyone who answers no isn't a fan of cryptocurrency; you're asking the wrong people. Those people are just fans of getting rich on the latest fad.
Those of us who have been here since the beginning just want cryptocurrency to succeed and flourish and fulfill its roles, and we already know Bitcoin won't be the answer so we're all waiting on The One True Coin.
Someone who is a fan of cryptocurrency itself is a fan of the ideas behind it and what it can bring to the table. People who are only satisfied in the outcome if they become rich are clearly not interested in the real benefits of cryptocurrency. So asking fans of cryptocurrency this question is a waste of time because the answer should be the same.
The point of my comment was to highlight to OP that they have a categorization problem. Just because a division exists doesn't mean you get to call No True Scotsman.
I mean, if your thesis is something like "the embarrassing truth is that the vast majority of Scotsmen is actually people born and raised in Kazakhstan", then yes, you will get the response that Kazakhs are not true Scotsmen and there is nothing particularly fallacious about it.
Yes, and I'm heavily vested, mainly in ethereum. I would be bummed, don't get me wrong, but it would give me hope for us all to get along more internationally.
I am a cryptocurrency fan and developer who wants to build services on top of cryptocurrency networks.
I want a cheap, fast, decentralized solution for token ownership with a great user experience. I want to build back-end solutions for crypto-tokens representing digital collectables, in-game items, etc.
I need a critical mass of users before these services start to become viable as a business model. Thus I need a cryptocurrency for tokens to succeed in a meaningful way. And I want this regardless of whether I own the native token of this network.
I think that's a fair question; A good litmus test is people who had bitcoins prior to 2012 (arbitrary date), I had friends who mined bitcoins because they thought it was "cool" and because they liked the idea, not because it was an investment.
Personally the computational overhead makes me weep a fair amount; we're simultaneously trying to save the planet while making our payment methods several orders of magnitude more expensive in terms of power. But if there was a "coin" that was comparative in terms of energy expenditure with what currently exists then I'd be more than happy to "lose" my wealth in other coins. That is a very low price to pay for such a system.
There’s definitely a net loss from mining (at least while PoW coins are still en vogue), but I think it might not be as large as you’d think, since there’s a rather large energy reduction in the form of criminals and others who move money around without governments’ consent, no longer requiring secret boats and planes and air-conditioned vaults to transport physical cash in.
I want a cryptocurrency which is egalitarian - evenly distributed among people in the world, rather than one in which a few people own the majority and profit hugely.
Yes! And I think there is one aspect of Bitcoin that is precisely backwards in relation to both this and the energy crisis: proof of work is a substitute for proof of identity so it can be anonymous.
Imagine a currency that everyone is born with a certain amount of, with the only price of admission your ability to prove your identity. Suddenly, we have solved the problem of proof of work for allowing this to be a distributed ledger since the trust can be based on reputation. Also, we can impose limits such as perhaps a logarithmic scale of wealth interpretation, where ten million dollars isn't all that much more than one million, if it's all in the hands of one person.
The digital age could be an age of fairness, if we choose to use these tools to design a fair game instead of an unfair one. Note that I mean "fair" not in the sense of two people starting out exactly equal, but where the winner can use their advantage to win more over time until the "match" is over, but one that tends towards a fairness equilibrium, where the advantages gained by one person or group over others are minimized over time or at extreme scales.
This is how I write when I have gotten less than 4 hours of sleep, but hey, I can dream. :)
Okay, let's "imagine a currency that everyone is born with a certain amount of". Assuming that I predict that this currency is going to be valuable, then I can invest $100,000 to organize a shipment of rice to some poor African areas where this thing isn't gaining traction yet, and offer to trade everything that they've been born with for a hot meal. And it (or similar strategies) would plausibly succeed to some extent. See the biblical example of Esau's birthright for an obvious analogy.
The people with businesses get a lot of the new currency from the people that need to work for a living and we're back on track to be right where we started.
A currency is just a measurement device, it's not a replacement for resources, I don't know why people forget that so often.
An early adopter will always have an advantage over somebody who gets on board later. The only way you could prevent this is by actively punishing early adopters. Good luck achieving adoption if you try this.
Bitcoin doesn't punish late adopters, it just does not give them the same advantage as the earlier adopters. Somebody who adopts Bitcoin today will still have a major advantage over somebody who adopts it in 10 years from now, but it might not be of the same magnitude as the people who adopted it 10 years ago have over the people who adopt it today.
The decline in rate of inflation is what prevents punishment of the older adopters. Inflation is inherently punishing of people who are saving an asset, because it steals value from them, or at least would do if demand didn't outpace supply.
If bitcoin offered the same reward to newcomers as it did to the people who adopted it 10 years ago, then nobody would've adopted it 10 years ago, and the result would be that everybody is punished, because the world at large would've ignored a great innovation.
You can't have both! Either you punish the savers by taking value from them and giving it to newcomers, or you let savers keep their value which pushes up the price for newcomers as demand increases. Socialist ideology fails to understand economics as usual.
Now you might argue that the rate of bitcoin's reduction of inflation is just too high, and should've been more gradual, or over a longer period of time. There might be some merit to that idea, but nobody could've accurately guessed the rate at which adoption would occur for a brand new technology.
After everyone is aware of what Bitcoin is, it doesn't really matter how long you make the halving. There will still be risk-takers and there will still be laggards. Some of the laggards will leave it until they can no longer go around with their eyes closed and must acquire some Bitcoin in order to make some purchases. Others will acquire it now (and 10 years ago) even when it is an extremely risky investment. Most people are somewhere in between.
So you have the option right now that you can either: Acquire some Bitcoin while it is apparently still cheap (relative to where it may be in a few years)
Or you can: Chose not to acquire some bitcoin because you think it is overpriced, and in a few years, complain again that bitcoin is overpriced, when it is worth significantly more than it is today.
Late adopters punish themselves by ignoring economic reality, either intentionally (because they are driven by ideology), or accidentally (because they don't take the time out to learn). Once you grasp it, there is only one direction which bitcoin can go over the long term.
Cryptocurrencies are not a replacement for banks; they are a replacement for gold.
If cryptocurrencies ever become mainstream, banking services will be built on top of them, just as they were originally built on top of gold.
The only thing I can think of that cryptos let you do cheaper than banks is rapid, relatively frictionless funds transfer, so I’ll admit their utility there. But other than that, what banking services do cryptos give you?
Loans no, not at all. Money transfer for coin is extremely inefficient. Volatility makes crypto a terrible place to keep money.
Besides, you're paying for the legal and institutional protection anyway. If crypto made money transfer more efficient, they'd use it and still have the value add of a large institution backing transactions.
That's only useful as a hedge for ETH. A mortgage where you have to put down 373% of the value of the house in liquid currency as collateral is not competitive in the slightest.
I thought we were talking about the hypothetical situation where crypto becomes amazing and not at the current state? Of course, crypto can't replace banks as it is now…
Again, nothing stops you from keeping gold under your bed. The reason people don’t do this is because most people don’t actually need, want, or care about having absolute control over their money. And the probability of your home being robbed is much higher than that of your bank (and the FDIC) becoming insolvent.
In reality most of the exchanges and sites dealing with crypto were (and probably still are) built by absolute amateurs with no checks and balances on their apps from a security perspective. Its scary as hell that people trust those sites with their actual money.
The recent QuadrigaCX fiasco shows this very clearly. The entire exchange (one of the biggest in Canada) was somehow just running on the encrypted laptop of this one guy, and after he suddenly died in December, there is 250 million Canadian Dollars owed to 100k+ customers that nobody can recover, because the guy with the password is dead.
Crypto 101: never let anyone have your private key. No-one who religiously followed that rule has ever had their crypto stolen.
Coins go missing from exchanges, which break the basic private key rule. People use exchanges for convenience because as clever as cryptocurrency is, it has no answer to the exchange problem.
The infrastructure of both payments for goods and services, and for storing your assets.
As of now, paying for goods and services with cryptocurrencies is relatively risky; it's hard to get recourse if you're scammed; and the standard credit card infrastructure with chargebacks and fraud protection is comparably more trustworthy.
As of now, storing cryptorcurrencies is risky. And I'm not even talking about the shady brokers/exchanges that can steal or lose their customer's money. You can store it yourself as well as you can - but, as it turns out, most people aren't that good at storing it securely, so all kinds of risks and breaches (e.g. hacking your devices to get access to your secrets) are more common than for bank accounts but, also, the consequences are more severe - if your bank account gets drained in an identity theft attack, very often these funds are recovered or compensated, not so with crypto. So again, the existing financial infrastructure with regulation, FDIC or similar insurance in case of fraud or insolvency, mandated consumer protection in case of scammed credentials - it's more trustworthy than the commonly used processes&procedures&infrastructure of crypto storage.
I don't understand you are talking about theft? like what happens to banks and jewelry stores? like what was happening every day with dollars on far west? and somehow this invalidated the cryptocurrency narrative? how?
> Why would I pay middlemen (banks) when there is no need to? Also why would I trust them, when there is no need to?
Payments are only relative small function of financial sector. Much more important is to act in credit markets, i.e take deposits and issue loans. How did you think that crypto removes need for fees (interest rate) and trust in those applications?
I see this as a disadvantage of using banks. They act as if you can freely access your money in your account, but actually you can't. That money is loaned out for the most part, and it's a trick that keeps the current system going. But once you have a bank run, reality will kick in on how banks really work.
At least the cryptocurrency that you own is really yours today. The numbers on your bank account are yours some day.
Most people I've spoken with about crypto prefer the way banks work. The idea that losing your keys means losing your money, with no recourse, terrifies them.
So, how would you then like to arrange your mortgage if banks are not allowed as intermediaries managing the credit risk between depositors and yourself?
But I would still as a depositor have the promise from the bank that the bank will give me back my cryptocurrency when I want?
If I do, there is practically zero difference how banks would work with crypto and fiat. And that promise can be used as money just like it can now with fiat. Thus banks would be able to monetarily multiply crypto at will as well.
If not, well, how exactly are you planning to stop me and my bank making such a contract? You know, the bank can pay me some interest on my savings is I let them lend the money forward, so both banks amd my incentive is to allow the lending of my deposit.
In practice, there would be 1 big difference: payments are made in cryptocurrency, not in bank credits. And this difference has an impact on all the rest.
We use bank money now because it's more convenient than paying with gold. But imagine that paying with gold was more convenient and preferred. In that case, we would see money in the bank as an investment, not as a wallet.
Your employer does not wire transfers money to your bank, but to your wallet. He pays you "in gold" so to speak. Same when you go shopping etc. There is no bank involved in transferring money anymore.
If you put money on the bank, you cannot use those credits to pay other people, as you are able to do now. Because people expect "gold", not bank credits.
You are correct that in a cryptocurrency world, banks could still have fractional reserves. But the main difference is that there will be a clear distinction between "real money", which is cryptocurrency, and "bank notes", which are a promise of the bank to pay you cryptocurrency. Right now, you cannot make the distinction between the two.
This is also the reason why they were able to let the gold standard disappear, because nobody would notice. If everyone trades in gold, the gold standard cannot just be abolished.
Basically a cryptocurrency world is a gold standard, where gold is the preferred way of paying.
This would also mean that banks will go back to how they operated when there was no central bank. And even further back than that, because payments are more conveniently made with "gold".
Basically everything you just said is already possible with USD instead of Bitcoin. You could demand your employer pay you real cash instead of bank credit, and so on.
The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.
I live in Europe, so no, I do not have USD in my bank account.
What if my real employer doesn't live close to me because he's in a different country? Should he send cash in an envelope? Which cash? The one from my country? From his country?
What if you live in Venezuela, would you still trust the government money?
So no, this is not possible with USD bills.
> banks in the US are extremely reliable and trustworthy
"Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system."
Yes. I think there's value in reducing the politically privileged's means to dominate their power over the general populace. It is my personal belief that people are in poverty because they are politically disposessed, as opposed to the opposite causality arrow (ok obviously it goes both ways but my belief is that it's mostly the other direction).
Typically, states control the money supply, and typically in the direction of impoverishing laborers to fill the pockets of privileged interests. Diminishing this power alone could be transformative.
It doesn't, but it does bring competition to the government controlled money monopoly. Competition is generally seen as a good thing for the majority of people
I guess it technically qualifies as competition because it exists, but in reality it isn't at all competitive. If it were, and the government cared to stop it, it could just make its use illegal. That wouldn't kill it, but most people wouldn't use it because there's nothing to gain using it and only to lose (unless you were doing something illegal already).
The simple fact that you ask this question tells me you don't live in india, where a few years ago the government straight up deleted quite a lot of personal wealth by declaring the two largest notes worthless with mere hours of warning:
> I think there's value in reducing the politically privileged's means to dominate their power over the general populaced
We can argue whether there's value in that. But if you're asking /how/ bitcoin et al can do that, the answer is that it removes direct control over the currency from nations and parliaments.
They may still be able to wield indirect control through a variety of other means, but that /is/ less control than simply being able to declare 500 and 1000 rupee notes valueless.
As long as you can't buy food or pay your electricity bill with any cryptocurrency, you haven't achieved any of these things.
So the question becomes, why should the supermarket or the utility company accept crypto payments instead of dollars, when they know the former can lose 20%-99% of its value overnight, while the value of the latter is guaranteed to be kept stable by the government?
Ah, but you don't need crypto to have that potential. Anyone could issue their own currency, and try to convince people to use it for actually buying and selling stuff. But that convincing part is really the key, and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.
People and companies want to have a central, stable issuing authority they can trust.
>Anyone could issue their own currency, and try to convince people to use it for actually buying and selling stuff. But that convincing part is really the key
Absolutely true, see EcoCash. It's a fascinating case study.
>and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.
Trust is a relative thing. EcoCash is issued by a mobile phone provider. That should be crazy (who would trust verizon to issue currency?) except that _literally no one_ trusts the Zimbabwean government to issue currency any more, so the phone provider won by dint of a) being in the right place at the right time and b) being relatively more trustworthy.
Actively building trust is something you need to do if you've got a pile of venture capital burning down that you need to pay back before you go broke. However, cryptocurrencies are usually not VC-backed products, and therefore don't have time-bombs strapped to them. Bitcoin is doing extremely well in Venezuela right now as faith in the bolivar drops through the floor. Cryptocurrencies are at this point extremely well position to be conveniently accessible any time people's faith in their national currency drops enough for them to start looking elsewhere. This is a slow burn situation.
>People and companies want to have a central, stable issuing authority they can trust.
I'd love to see a citation on that. People trust a wide array of deities and insist that the deities other people trust don't exist. This is a Homo economicus argument, it seems unlikely that we can quantify what people want and how they trust so easily. My anecdotal observation is that people want to have something that sounds plausible enough that they feel comfortable not researching the details. If people wanted a central stable issuing authority they wouldn't accept fractional reserve banking.
> > People and companies want to have a central, stable issuing authority they can trust.
> I'd love to see a citation on that.
Didn't you just provide two examples yourself (Zimbabwe and Venezuela) that alternative currencies are being adopted precisely due to the lack of a stable central issuing authority?
The anarchist in me wants to believe that cryptocurrency will diminish the power of the state but I don't actually have enough faith in humanity that we will come up with something better than crypto-oligarchy.
The story of cryptocurrency over the past couple years has been a really interesting case-study in the application of Libertarian principals.
It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.
To me it's evidence that some form of governance is required to build something which can actually serve the greater good. I also would like to see a stateless currency work out, but there are clearly still quite a few problems to be solved before that will even seem like a possibility.
> It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.
The ten MB block size limit lowers the number of transactions that can occur in a single block therefore inflating what miners can charge for a transaction. Increasing the blocksise would require miners to choose to mine a hard fork. See the DAO hack for what can happen with strong governance.
Well, as one other commenter mentioned, with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.
Another example would be exchanges: a vast majority of people do not use cryptocurrency in a peer-to-peer fashion, but instead go through a small number of centralized exchanges, which have been known to freeze withdrawals, have been riddled with theft, fraud, and a playback of all the financial schemes dreamed up in the last few centuries which have not yet been regulated against in cryptocurrency (pump and dump, Tether etc.).
On top of that, the crypto media sphere seems to be completely unreliable: I've seen many headlines which are deliberately misleading with the intent of stoking a one-sided, glowing narrative about cryptocurrency (I.e. a crypto startup opens their account at Chase bank and the headline reads: "X Coin Begins Partnership with J.P. Morgan Chase", and related online
communities are heavily moderated to support the official viewpoint while silencing others.
Long story short, when I bought a little bit of Bitcoin to play with a few years ago, I could buy a coffee with it, and I could even make purchases with it on Amazon. Since then it's gotten much less useful to the average user.
> , with regard to Bitcoin miners have essentially become a centralized authority, and their decisions on block-size have made Bitcoin less liquid, and less useful as a currency while making transactions more profitable to them.
>Another example would be exchanges
Interestingly enough, with regards to bitcoin, there was a huge powerplay that happened a couple years ago. And this debate proved who had the real power.
A couple years about, almost every major exchange, bitcoin company, merchant payment processor, and bitcoin miner, wanted increase the bitcoin blocksize, in order to reduce transactions fees to users and help adoption.
(Even though this directly hurt the miners, the miners still wanted it, because they supported adoption. Crazy, I know)
But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.
And this was in spite of the fact that almost every single major player in the space wanted this change.
So crazily enough, the central authorities of the bitcoin protocol, are the couple people who hold the keys to a github repository.
> But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.
This is blatant re-writing of history.
A fork was written, Bitcoin Cash, but most people/miners/companies didn't want to use it. It was widely known and the differences/advantages/disadvantages were discussed ad nauseum for months/years.
A Github repo can't force people to run it's code instead of another.
> And this was in spite of the fact that almost every single major player in the space wanted this change.
So why did they keep running Bitcoin Core instead of the fork?
> So why did they keep running Bitcoin Core instead of the fork?
Because it turns out that controlling a github repo is a very powerful power.
> A fork was written, Bitcoin Cash
This has nothing to do with Bitcoin Cash. This has to do with 2XSegwit. An initiative that was supported by every single major miner, all of the exchanges (coinbase, gemini, kraken, ect), as well as the major merchant payment processors (IE, bitpay, and all the others).
There are statements after statements made by all of these players, where they stated support for it. Unfortunately, it seems like the people who control the bitcoin protocol, the developers, had too much power, though.
Did you disagree that every major miner, and Bitcoin business like coinbase and BitPay, put out messages in support of the 2X Segwit agreement?
> those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole
You say this like it's a fact but I feel like it's the opposite. There aren't many compelling examples of this. And to the extent that there are, they exist in a competitive market and their fate is determined by users and investors, who weigh the cost of the greed vs the benefit of the technology and reward/penalize accordingly.
What decentralization of power has occurred in a way that significantly different than any other market? Exchanges presumably control most of the coin. Pump and dumps seem to been extremely likely.
It might not be worse but IMO it hasn't proven to be better.
How are you going to hold any amount of digital money without entrusting another organisation to hold it for you?
That's the decentralisation of power that has occurred.
You don't have to prove your identity. You don't have to prove anything to anyone. You just download some software and generate a private key. Bitcoin is to money what the internet was to book publishing.
Sorry to be "that guy", but libertarianism != laissez faire, it's a principle about governance of people. The gold standard is just as libertarian as cryptocurrencies, and that doesn't require governance to function, and governance through a private centralized bank that everyone opts into is also libertarian. Governance certainly helps in making things more convenient, but it's not required or necessarily desired.
For example, if there are problems with scams or whatever (e.g. impure gold scams, or cryptocurrency manipulation), people may choose non-coercive governance, like banks (e.g. through something like GNU Taler with a bank-backed currency). You could do this with any currency you choose, so which currency you use has little impact on the structure of government and how it interacts with the population, provided the government stays out of it. Because of this, fiat and resource-based currencies are equivalently acceptable for libertarianism.
So yeah, maybe cryptocurrency is tangentially related to libertarianism in that many libertarians are interested in them as an alternative to central, coercive banking, but that's about where the relationship ends. Libertarianism doesn't care if you have governance, as long as that governance doesn't use force.
And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.
> And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.
They used to be. I made online purchases and bought coffee in real life using Bitcoin just a few years ago. The evolution of Cryptocurrency has been away from any real-world usefulness, and toward its current incarnation as a largely speculative instrument.
And I would argue that in fact this has been the result of a Libertarian experiment playing out. Everything about Bitcoin has been opt-in: in principal anyone is free to own a node, and the community would have been free to opt-in to a governance structure which would have discouraged actions which made Bitcoin less useful to the majority of users, but this is not what happened. Instead power was consolidated in the hands of a few, who chose their own self-interest to the detriment of the larger community.
I am not a fan of coercive government, but I struggle to see how the story of cryptocurrency to this point does not provide evidence that some strategy is needed, beyond maximal personal liberty, to discourage bad actors from causing disproportionate harm to the collective.
When new technology or some other fundamental change makes enforcement of the rule of law harder, We The People will grant enforcers more privileges to make sure that they are still able to do their job. It's a job We want done. The road to police state is paved with anarchist intentions.
Sort of. Baudrillard seems to argue from a anti-fragility standpoint and asserts that acts of terrorism have the opposite effect as intended and only seeks to strengthen the hold of the incumbent system even more (see PATRIOT act, new TSA screenings). I agree that technology generally amplifies the power of those that already have power, but I wouldn't go as far as you. I think that banking on any one thing is not the way to go, you need to abandon anything that becomes coopted and always seek destabilization in whatever form it appears.
Why the surprise? BTC is a shallow clone of the bad parts of commodity currency. Nothing new, no new values. Just tightening the same old screws another notch.
> This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
That is a brilliant question!
Instead of all the endless bickering between crypto-fans and -haters reaching from technology to fiscal policy to society, it reduces the conflict to one simple test, as a sort of precondition.
Anecdata, but just going through my set of acquaintances, personal profit was always a factor. And I never even thought to question it. In hindsight, however, it seems (1) such an obvious thing to do, and (2) makes it clear to me that my acquaintances probably wouldn't give a damn about crypto if there wasn't a chance to profit from it.
I mean, the only reason Bitcoin went mainstream in the first place is not because of the technology (which existed for a decade), but because there was a extreme bubble (again) and mainstream people wanted to get rich quick.
I always have been excited about Bitcoin because allows me as a developer to do things with money in the internet. I could create a service like PayPal without the need of having deals with hundreds of banks all over the world. A homeless can have a btc wallet but probably not a bank account. I could automate transfers and payments. In countries like Argentina there are a few banks and they're really bad quality, both in terms of services and tech, so there are not things like stripe, etc.
I'm talking just about the positive potential of Bitcoin as a technology. There are many downsides and the current landscape of cryptocurrencies is not so great.
My vision is that crypto is going to be used like credit/debit cards, as a way to use money digitally, but it will backed against fiat.
> I always have been excited about Bitcoin because allows me as a developer to do things with money in the internet. I could create a service like PayPal without the need of having deals with hundreds of banks all over the world. A homeless can have a btc wallet but probably not a bank account. I could automate transfers and payments. In countries like Argentina there are a few banks and they're really bad quality, both in terms of services and tech, so there are not things like stripe, etc.
But the problem is not the technology (it is there and exists for decades), but the laws. Better concentrate on that problem.
It's also the technology, currently outside of crypto you're always going to be connecting to some company's servers using their API after you get their authorization.
There's no way the current system can have a stable and uniform API that works globally.
For me it's like asking, would you want Amazon to succeed if you did not profit from it?* Obviously, if I am not personally invested in Amazon, I don't really care that much. But it still could have value for society for other reasons than getting rich off of speculating.
* To those people who say, "You can't compare crypto to a company because companies pay dividends," that is specifically why I chose Amazon as an example, a stock that does not pay dividends.
As an example of a tech, if someone asked me would you want self driving cars to succeed if you could not profit off of them, I would say that's a resounding success. A lot of people are excited about this tech because of the improvement in their daily lives, not because of a profit motive. Compare that to crypto
The right question would be: (assuming that there isn't already a monopoly) would you want one specific VCS to gain a monopoly if it was one you have no experience in it? (and all your mastery of other VCS would so become worthless)
1) I would want Amazon-like businesses to succeed -- in the sense of "someone who finds a sustainable way cut the fat out of retailing" -- even if I could not profit as a shareholder. But I still think I would benefit (as a buyer) from that success.
2) I would want decentralized, arbitrary-money-printing-proof cryptocurrencies like Bitcoin to exist as a shield against governments that inflate away their money (like Venezuela or Zimbabwe) or abuse their central bank status for bailouts (in the first world), even if I could not profit as a holder (sorry, HODLer) of the currency. But I still think I would personally benefit as a prudent saver and (non-politically-connected) investor.
Generalizing to be applicable to any utopias:
‘Would you be happy if the utopia you bring up happens in the next 10 years, but you lose some or most of your savings?’
I don't think the issue is controlled inflation. I think the fear is of rapid inflation caused by governments struggling to make interest payments, which could cause the value of any cash or bond positions you have to effectively go to 0.
Similar reason people find gold appealing I suppose.
Intentional debasement is one way of getting out of very serious national financial problems. It is unpleasant, but it's chosen (or, more likely, can't be prevented) because the alternatives are worse. If you make this option impossible for your government, you're setting up your country for some very bad consequences the next time in some economic disaster it would have needed to have that rapid inflation, but can't have it.
Hyperinflation is a symptom of economic problems, not the origin of it. If you find a way to prevent nominal inflation by crypto, it doesn't prevent the related problems. There's a good reason why we got rid of the gold standard, which had all the same problems as a crypto-based economy would have, and was unsustainable because of that.
Since you mention bond positions, if they'd were denominated in non-inflationary crypto, in any such scenario they'd drop anyway - if it wouldn't be possible by inflation, then it'd happen by defaults. Which would also mean a default of all credit institutions. Which would then mean the disruption of most businesses who rely on these institution. Which would then mean nonpayment of salaries. Which would then cause a lack of demand, causing even more economic problems. Compared to that, a semi-orderly inflation (up to the extent that is required) is preferable to a cascade of defaults. The vast majority of the money in economy is anyway in the "I owe you" form, and crypto doesn't change that; even if all the economy would move to a cryptocurrency, only something like 2-5% of it could be in the form of "hard coin that I control" and the rest of it is in debt relationships between various businesses.
It sucks to get paid in some paper that's now nearly worthless - however, the alternative isn't to get paid in hard crypto, in such a scenario the possibility to get paid in full doesn't exist. So if we don't have the possibility to get paid in a devaluated currency, then people either don't get paid at all, or have to suddenly invent a new worthless paper currency and build an infrastructure for it, at a time when they don't really have the time and resources to do it. This isn't a hypothetical example - such "currencies" have developed in e.g. various long-term conflict zones.
you can create a crypto with some pre-set amount of inflation to make up for e.g. lost coins. or create inflating derivative securities. though, having inflation in a single globalized market doesn't make much sense, as there are no competing economies.
I'm into cryptocurrencies (Bitcoin, actually) because it solves a very specific problem that might apply only to my country.
So, anecdote:
I live in Argentina, work for an UK based company. been doing that for the last 10 years.
Before I could trade bitcoin in an almost frictionless way (I.e., before I discovered Localbitcoin.com) my routine was to go to the ATM after the payment got into my european bank account, do a few extracts per day, rinse and repeat until I got all the money I needed.
Rate per extraction was around a few euros if I didn't hit minimum, to a certain % (That at times could be 5%, but can't quite recall as last time was 6 or so years ago). Minimum depended on the current economic situation of my country at the time (I suppose I don't need to explain that).
So, why not wire the money to your local bank account, you might ask?
Well, last time I checked (I moved a year ago to Buenos Aires and haven't checked how it goes here because I don't need to) the process for wiring money to my local bank account was as follows:
(Argentina is not inserted into the international SWIFT system !!!) I had to wire the money to a specific bank account in the US, that belonges normally to the bank I was checking, but couldn't really say. I had to wire the money there from my european bank account with certain conditions, so it could be recognizable that the money belonged to me.
Then, after some time (Could be as short as 2 weeks, but no bank would assure it would work like that every time, and wait times of 1 month or more were totally possible, considering how the Argetinian banks operate, i.e., mob-like) I would get my money _in the local currency_ with the corresponding loss due to exchange rates. AND (that's kind a really big AND, I need bigger caps) the "charge" for the operation was around 100 bucks. PER OPERATION.
"Thats too much" I said. "Yeah, people tend to group operations in half years so transfer is justified" was the answer I got.
I tested this at 3 different banks, got the same reply in all 3. Seriously.
So, now I trade bitcoin. I buy them in the UK, transfer them to my wallet, and use a broker to get the money in my account. The broker takes 2% on all operations, plus their rate is around 2% below of the current BTC price, but I don't mind. At least I'm getting ripped by somebody I want to get ripped by.
And then we have the speed issue: Since Segwit, it can take as little as half an hour to do the whole operation.
2 months ago I woke up with the money in my EU bank account (I'm not an early raiser, may I say), and by noon I had completed all operations and was just waiting for the broker to deposit the money in my local bank account.
BTW, the reason for me using a broker, is that minimum operation volume in LocalBTC is 0.2 BTC, and with the price hike at the middle of 2017 that became a problem; that, plus mostly everybody in Argentina that deals in BTC are fucking histerical trying to do a quick buck, so they start getting nervous if they don't close the operation in under 30 minutes.
And just in case you want to know how the banks operate here, another anecdote:
The dollar fucking doubled it's rate between May and September last year. The measure the gobernment used to stop the rate rise was to take the credit rate to above 70% (Yes, that's a seven followed by a zero).
Then, a lot of people here manage their finances both with credit and debit cards, because it's a lot easier (Unless you want to be carrying a lot of bills in your pockets).
So, what do banks do? They fuck merchants over, by delaying as much as they can transferring the money, because they put that in the financial market (We're speaking in the weeks here, above 3 of them). Even with the fines and shit, they are making shitloads of money. So, that mean that merchants get fucked over twice: they don't get the money in time, and when they get it prices might have changed a lot, so in a lot...
OK, right. You are totally right, I under explained.
Even thought _theoretically_ Argentina is part of SWIFT, it's not being activelly used. I.e., bank accounts do not get assigned a number in the SWIFT system, thus making it impossible to receive an international transfers.
The banks where I checked where #52, #55 and #77
All in all, I received the same information in all 3, even thought they all have a SWIFT code assigned (So that probably mean they don't even have a registered account for the bank).
Here's a page from a rather large bank, where the process is exposed:
It's in spanish, but if you click in either "Dólares" or "Euros" you get some bank icons below (3 in "dólares", 2 in "euros") with the details of the bank accounts where you could send the money. For any other currency, you have to call to get the instructions.
Transferwise does £ to pesos, to where. As stated, bank accounts in the country do not have a SWIFT code assigned.
You have to triangulate the money (Please check my other comments below).
Re: Kraken, the 2% I'm talking about is in the local broker I'm using to convert BTC to pesos. I doubt Kraken can help me there. Not to mention that that Kraken is an exchange. A completelly different bussiness model to Localbitcoins.
I'm not sure you need a swift code, probably just a bank account number/sort code.
>The recipient gets money in their currency directly from TransferWise''s local bank account.
I have not tried Argentina as I have no business there but have sent money to Indonesia which is another tricky place and it worked fine. Fair enough re Kraken - they do GBP to BTC, not BTC to pesos.
Dude.
Each country has their own way to sort stuff internally.
For instance "sort code" is not something you find in countries like Spain (I have a bank account there; sort code is something found in the UK).
Nor are they found in this country. Here, we have what it's called CBU (Uniform bank key).
Again, when you go to a bank branch, _IF_ there's any relation between your bank account and a SWIFT account, they never tell you that information
And, considering that even in the cases you agree to do the transfer, you do not do that to a bank account in the SWIFT system that belongs to the branch but to a bank account in another country, I doubt we are integrated.
I would be fine with that, but I am not hugely into crypto. I have a bit of BTC somewhere. I considered the money gone as soon as I got it. Had gotten a chunk of money and wanted some of it to go somewhere where it could theoretically make me money. I did increase it at one point by going from BTC to Tether after prices went up, then back again on a dip. I don't even check its worth anymore, it's $100 or less I think. Just a little fun thing. Crypto as a concept still seems interesting to me even if it's not a major interest of mine. Similarly I think ipfs and freenet and such are cool, but have yet to get involved with them.
How do you think bitcoin started ? You'd had to be crazy to believe in it 9 years ago, and spend time and energy in the community, nlt to lention monney, to foster the project.
My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things.
Btc was banana money at first, and only people believing it would be a great thing as a concept made it work. We didn't expect to make banks, it was a happy side effect of a mad naive bet.
All great things start like that. Comics are now the thing, but 20 years ago were still for pationate nerds.
> My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things. ... All great things start like that.
"But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright Brothers. But they also laughed at Bozo the Clown."
Elizabeth Holmes, who is currently on trial for fraud charges for covering up the fact that her magic blood testing machine was too magic to work in the real world.
But they were right to laugh at Columbus. He was right for the wrong reasons.
Of course, if you don't ever try it, you can never be right for any reasons.
Bitcoin is IMO likely somewhere in between. It kickstarted a new concept in IT but money is a really simple (although powerful) usecase. I'm more interested what will be done with the concept in the future.
Bitcoin doesn't work in any meaningful sense. It can't be used for purchases in most contexts and you can't use it as a stable store of value. It is also controlled by dubious actors and mining is a horribly destructive practice, both in terms of environmental waste and the constant nuisance of people stealing CPU time. But you were saying?
If you're saying "Bitcoin doesn't work in any meaningful sense" you simply just haven't used Bitcoin. It works absolutely fine, even great most of the time, and accomplishes what I personally see as its purpose.
It can be used for purchases via services like Bitpay which can automatically give a fiat value for the cryptocurrency amount, hence shielding you from price volatility.
Generally though, merchants wouldn't bother accepting it. Alongside the fees and whatnot, adoption is too low, fees are too high, time to confirm is too high, and it can complicate some legal stuff (like issuing VAT invoices).
Let's add this to the list of Bitcoin obituaries that countless people have declared over the past 9 years. Every year that goes on and the network is still kicking is just building its base value. Bitcoin network will out live Hacker News.
It does not really matter how it started but how it is now. I would bet that all these selfless visionary nerds who believed in bitcoin from day 1, now are less than 0.1% of the people who deal with bitcoin today. The rest 99.9% are there for the easy money. At least, this is what I see from my surroundings and the feeling I get from the internet. It might have started great, but it got alienated along the way.
This articulates pretty well something that I've tried to express about how I feel about cryptocurrency before. I don't own any, even though I've worked on a distributed application based on Ethereum and love the concepts because I was worried that by owning any coins I would be less trustworthy as a true believer. On the other hand, without any, I'm worried that I may seem as if I don't really believe in it, as I haven't put my money where my mouth is.
Anyway, I would love cryptocurrency to succeed, and in an efficient manner (say we get all the problems worked out of proof of stake).
you are describing an impossible scenario where nobody notices but overnight it becomes a global standard. if you actually make a scenario that is possible you will see most people would have time to switch to the other and the original will slowly fade. no problem with that. dollar will sometime fade too for something else as all other currencies have done in the past (google some charts online)
When Bitcoin first appeared I thought it was some fly by night scam. Their talk of it being anonymous seemed to be at odds with the technology that put every transaction on the public record forever. Like you could buy drugs with the money, but as soon as you tried to convert it to real money you'd be busted. Or if you ran it through one of those money laundering services, then you'd still be busted as soon as you withdrew the laundered money. For that matter, I expected at least one of the laundering services to be run by the feds so they could get a wealth of data about the people who need to launder money and where it is coming from and going to.
Outside of what others replied to you with, there is another aspect I find about it, that truly resonates and excites me, despite not being a holder. To me, Bitcoin is also a large experiment where laws and rules are written as open source code, which any1 code fork and run their own version of it, or any1 can submit a proposal for.
This is what traditionally legal system with the power of violence used to deal with before. Now we see it implemented as a code. This part is more exciting to me than trying to sidestep whatever misguided government (not just US) rules and actions are.
EDIT: Perhaps proof of work based on burning energy, which is expensive and tends to bring centralized parties, is not the best way to ensure rules are enforced, but the fact the whole thing is open source is great in my opinion.
I don't accept this assessment of how Bitcoin's consensus fundamentally works. Yes, anyone can fork the code, but consensus comes only when the miners choose a fork.
As far as I can see, there's no significant incentive to mine other than money, so miners want money, so you can persuade them with money.
Unless people really use bitcoin to pay for stuff. Then, whatever token can be exchanged for something of value is the one everyone wants, doesn't matter if the miners fork
Unfortunately bitcoin becomes steadily less useful for actually using and paying for stuff as time goes on. Back in the day, it could be used on amazon, buy a coffee etc. Now its just a bizzare experiment in markets without consumers.
yep and therein lies some power. There have been a few wars within bitcoin already. In the real world, people would have died. In the coin world, people just voluntarily chose different pastures.
[Using U.S. law as a convenient set of terms of art, not to be geocentric.]
The internet is a technical embodiment of the First Amendment (freedom of speech, freedom of press, freedom of religion, right of peaceable assembly, right to complain about the government).
Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, and even life/liberty if you accept the unremarkable proposition that it's hard to live freely if you can't buy anything).
Having these technical protections in place are important regardless of their impact on or benefit to any one person.
> Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, ...)
How is it in any way different than having money in your bank account? If the government wants to, they can decide to take all your money from all your account, but they can also decide to throw you in jail until you hand over the keys to your Bitcoins. In the end there is no difference.
And if you want to have a discussion whether there are alternative ways to achieve specific valuable outcomes, count me out. This thread is about whether cryptocurrencies have any potential valuable outcomes besides the potential of lottery-style winnings for early adopters.
Sorry if I seemed hostile, but I couldn't find any better word than nonsense to describe what I presume you meant to invoke by "Technological Singularity". It's about as realistic and scientific as religious extremists telling us to repent and prepare for the Rapture.
Ah, but this unwillingness to consider "why couldn't we do this without crypto", leading to rejection of study of centuries of useful economic and monetary theory development, is precisely what predicates the failure of cryptocurrencies to achieve potentially valuable outcomes.
That's precisely why I bring it up. If a thing is a) valuable/useful and b) possible without cryptocurrencies, why has it not been done before? The fact that it has not, suggests that either a) or b) is false.
That is a false premise. For a crypto to be valuable it needs a network of actors who agree on its value. Looks at bitcoin for example, its bar the most valuable crypto network yet there are many options that a technically superior. However, has first mover advantage and a large network of believers.
Most of us involved since early times ( <$1 / BTC ) were intially attracted to the libertarian ideal of a decentralized currency. Like gold, it's truly yours, and nobody can take it from you if you control the private keys.
It's not like gold's price went to 0 (more precisely, to the level of other noble metals) after the end of the gold standard. Bitcoin might well remain forever as a sort of digital gold with its (entirely stochastic) ups and downs. And why would people invest in a currency just because it is circulating? People invest in dollars because it's stable, not because it circulates a lot (more accurately, in derived products such as bonds, anchored to the US State, not on the dollar printing machines).
and yes i think most cryptocoin loonies want any one of them to succeed , the potential is so crazy high, that wishing otherwise would be foolish
You can call me a fan, I at least think they are cool and clever, and I like the idea. If a magic coin comes along and is the one true coin that elegantly solves all current problems, I'd think that was great. I don't currently hold any amount of crypto with any hope of getting rich off it.. so it wouldn't really matter to me.
A predetermined monetary policy would be great when a financial crisis or credit crunch hit, causing a collapse in the velocity of money /s
While I have invested in crypto and believe it has great potential, one of its touted benefits by its supporters is also one of its biggest pitfalls, namely that its money supply is predetermined. The inability to actively manage a money supply given exogenous shocks to the economy is a big problem.
I think it makes sense. You have an economy built on an economic model rather than an economic model based on an economy.
With the latter you're constantly guessing and tweaking the model and roughly every 10 years there's a crash and the economists say okay, NOW we have it perfect and we'll never get it wrong again.
Why do you need an unlimited money supply? The only thing causing these shocks is that the economy is doing whatever it wants and then the economic model collapses.
Exactly, any supply of money will do, no need to permanently increase the amount in circulation — this is why the market settled on gold (which has an inherently low inflation rate due to the difficulties of mining) and impossible to pass off counterfeit gold at scald.
You need inflation for proper incentives. It's like a tax on the entire network to keep it supported. Without proper incentives, the game theory collapses.
The difference here is that inflation is predetermined and set instead of printing money on demand like we do in the traditional financial system.
“You need inflation for proper incentives. It's like a tax on the entire network to keep it supported. Without proper incentives, the game theory collapses.”
What, specifically, do you think the consequences of a stable money supply are?
No incentive to support the network if there's no block rewards. The transaction fees are not sufficient and just meant to prevent spam. It's also better to tax the network as a whole (through this set inflation) than to tax for each usage.
That’s an interesting speculation, but it remains to be seen what will happen when inflation is near zero.
If people value transacting on the network, then they will pay the necessary fees to keep it running. If they don’t then it will go down.
I suspect this isn’t the big issue people think it is, regardless there’s no way to “prove” that transaction fees won’t be enough — everyone from miners to speculators by owning mining equipment and Bitcoin are specifically betting that transaction fees will be enough.
There's an assumption here that the network will be used and valuable.
If the network is used more it will be more valuable, which means the reward value will increase as the inflation decreases. If nobody uses the network then it'll be worthless, which at that point it doesn't matter since nobody is using it.
Deflation, which given a growing population would always be a given. In turn deflation makes the entire debt system collapse , which is the backbone of economic growth especially in the developed world.
Why should debt support an economy? Without such massive inflation people wouldn’t need to take on much debt to make large purchases such as cars/houses because the prices of cars/houses would be much, much lower.
It only makes sense to take on debt if you have a productive way to put that money to use (Eg a business) that has a higher rate of return than the interest rate.
Debt is the backbone of US GDP growth, money enters the economy as debt, is used to purchase something like a car or a house, subsequently it then reenters the banking system as the person who is being paid deposits their check, and then gets re-loaned out only to often immediately end back up in another domestic bank account that then loans out even more money.
This cycle can continue forever, and the faster this cycle occurs the higher our GDP.
That’s not a bug, it’s a feature — if it were easy to extract (like aluminum), it would have been much more inflationary and thus not a “good” choice for money.
I didn't claim it was a bug. I was trying to make the point that all the tree huggers that scream bloody murder because of Bitcoin mining costs never look at the actual environmental cost of existing systems.
Gold is a fringe commodity valued by a similar small subset of the population that values bitcion. And yeah, I'd say that those people are also causing similar problems to bitcoin because they incentivize significant environmental destruction. Even worse than bitcoin, they also increase the costs of real commercial use cases for gold.
This is categorically false. The gold standard (albeit a reduced version of it established under the Bretton-Woods monetary regime) was abolished in the United States as recently as 1971. In Switzerland this link was abolished in the early 2000's AFAIK.
Economic growth is very heavily tied to increases in the money supply less inflation for developed countries. Without this debt, the cost of doing anything in our economy would be way too large and it would be very difficult for our society to operate. Additionally the need for economic solvency to protect the current social structure is what necessitates government involvement.
I 100% disagree, the central planning of money is (1) what causes inflation, and (2) greatly exacerbates (and in many cases creates) financial crises.
Any supply of money will do, the idea that money should increase in supply along with population growth (or some other arbitrary metric) otherwise we’ll permanently live in a deflationary disaster is an imagined monster — we live in the here and now, therefore people have to spend some amount of money to live (food, housing, entertainment, etc) regardless of whether they perceive the purchasing power of money to increase in the future. By centrally planning (and thus inflating) the amount of money in circulation during financial crises the only thing that is accomplished is a re-inflation of the bubble — essentially they’re sowing the seeds of destruction again, causing the next bubble in an attempt to cure the last one.
Please read this explanation of the financial crisis, I’d be happy to comment further if you have specific critiques on this article (and no I didn’t write it):
A low, but positive, inflation rate is of critical importance.
> Any supply of money will do.
That is just nonsense. If you have a fixed money supply, given that economic growth is happening, would result in a naturally deflationary currency. That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.
The problem then is: if you want a low rate of inflation but there is a natural variation in the growth rate due to the cyclic nature of the economy, then how to create a system that could do that without a monetary authority.
Prove it, show me the world where we had a stable monetary supply that resulted in people having no incentive to invest in anything — where’s the experiment?
Again, you HAVE to spend money to live (otherwise you die). It’s impossible to live without food and water, most people want to live in a house, most people want entertainment, etc. None of those things can be had without spending money.
Also, if your argument is correct, why don’t people put 100% of their money into the stock market (which reliably goes up over long periods of time) and instead choose to spend it?
>That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.
In what world is this true? Time preference is a real thing, and it is unrealistic to assume that 100% of the population will put off non-essential consumption and investment because the price of a Ferrari will decrease by 2.353% next year. Time is a very important factor in the consumption/investment decisions that people take, and modern mainstream economics neglect this fact both on the micro-level and on the macro-level, which is why crazy theories about the neccessity of inflation-rate targeting are able to arise. Most people put their savings in a bank account which the bank lends out to businesses to invest in projects - if anything more savings will lead to more investment than otherwise, which is more important to the bedrock of an economy than spending on consumption.
Also worth pointing out that the period during which the United States experienced its most significant economic growth (mid to late 1800s) was during a period of severe deflation of the dollar.
Keynesian economics (and more generally monetary policy) and inflation-targeting (i.e. the neccessity of having a positive inflation rate) is both theoretically disproven by the existence of time preference (a time preference of zero is literally impossible, it means starving to death) and its heterogenous distribution in a population, as well as empirically by looking at the periods of deflation in the U.S. dollar during the 1800s and the associated economic growth.
> I would gladly trade all my gains for a world where governments have no control over the creation and regulation of money.
In that world, there would also be nothing to stop anyone else from just taking your money by force and without any consequences.
The loudest voices against government regulation of finance usually belong to those with the least understanding of it. Most of the regulation is just there to protect market participants.
Why do governments have to simultaneously be in the business of (1) securing people’s property and (2) creating money and regulating the monetary supply?
Because regulating it is an important part of securing it. They're not separate things.
If I am a victim of fraud and lose my money, I have the concept of the rule of law to help me get my money back. In a decentralized world there is no way to get my money back.
Besides, it is the government's job to help society function well, in part by making the economy successful. Money is just a tool to do that.
They have to supply the money so that they can have something which can be collected with reliable value for taxes. If your government allows you to pay taxes with monopoly money, then Hasbro becomes King. If the government supplies the money, there is no external organization which can inflate the supply to gain control.
> I would gladly trade all my gains for a world where governments have no control over the creation and regulation of money.
Indeed. And not just because they're absolutely terrible at it: giving control over money creation to a government is like giving a drug addict the keys to the heroin factory.
If you do live in a country where there are compulsory contribution to a retirement system, then you are forced to contribute to a ponzi scheme. You may just not realize it.
YES!! Emphatically Yes! I travel quite a bit. I would much rather have 1 wallet no matter the digital currencies than have 10 physical currencies at dubious future value.
I think here's your answer: It isn't just about the tech.
This is what most "blockchain" enthusiasts get wrong. They think it is just about technology, and thus, they can come up with "a better bitcoin."
They're missing that the predetermined monetary policy is the key innovation of Bitcoin, and that by creating a new "blockchain" which prints new money, they are shooting themselves in the foot, because they can't ever be "a superior bitcoin" when they have inflation as part of the parcel.
A free market does not really care about whether some people have the opinion that deflation is bad. At the end of the day, nobody can change Bitcoin's monetary policy, and it will be left to the free market to decide whether or not they are going to put their money in this, or whether they're going to bet on inflation.
Of course this would vastly reduce the Ponzi aspect for early owners which might remove most of the appeal.
And I still wouldn't have much faith in it since I doubt being decentralized is enough of a benefit for people to switch away from government currency and normal banking.
A majority of hashing power attempting to change monetary policy spins off a forked coin which does not have economic value because it does not have economic users.
If the overwhelming majority of bitcoin users (98%+) wished to do so, they could possibly change the monetary policy. Of course this will never happen, because there are die-hards like myself who will always stick with the non-inflationary bitcoin.
And then, the market decides whether to stick with the non-inflationary coin, or to use an inflationary one.
The worst that a majority of miners could do the the non-inflationary bitcoin is temporary denial of service, or attempted double spending of their own money. It's going to cost them an awful lot in electricity to try either, and they're not going to get that money back unless they're generating coins that are in demand to buy.
People need to stop misusing "Ponzi scheme" for anything they think is a scam. A Ponzi scheme is quite specific, if you're just thinking of people trying to sell something to "the next idiot", call it a Pyramid scheme (although I still disagree that it applies to Bitcoin).
That's fine with me as long as it maintains the purpose of the original; to disintermediate the state and political authority from money, and to create a ledger which they cannot tamper with, confiscate, or spy on.
>This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
You seem to be assuming that anyone interested in crypto is in it for the money.
I assure you, that's not the case. To me, getting the money supply out of the clutches of governments is the most important aspect of crypto-currencies.
To answer your question: Which crypto wins and how much it'll be worth are the last of my concern, as I will profit, along with all of society, from getting the govt to surrender management of something they're basically terrible at.
> do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
If the cryptocurrency was at least somewhat open and efficient, then I would be extremely happy. If it was more like a payment layer that only a few large banks could use, I would be still be happy, but much less so.
Most cryptocurrency fans seem to be optimistic investors looking to join in on the massive returns seen by investors in 2016-2017. Most of them care more for generating 'hype' and seeing an increase in the value of the coin they hold, just so they can dump their holdings later. I don't think they'd be too interested in a coin that inflated in value that they didn't hold (they'd probably instead promote something they did hold). Most cryptocurrency fans do not hold one particular coin, and generally change which coin they advocate for pretty often.
Cryptocurrency communities are generally pretty toxic and non-constructive environments. I've been part of a couple, and I've noticed multiple times a massive decline in the quality of the community (and, sometimes, in development as well) as the cryptocurrency got more popular (and more people joined the community).
Yes, as far as I am concerned. There has been a nontrivial number of instances of the payment processor oligopoly wielding its power against things that I care about (by preventing certain companies/institutions/organisations from using it) in the past decade, and I want that sort of thing to become impossible.
Yes, although ironically I might not end up using it much if at all. But it'd be good to have it even so.
The reason is that I think that while governments can be better at monetary policy, they need competition to keep them in check. Other currencies technically provide that competition, but they can be suppressed via legislation in a given jurisdiction, and this is, in fact, commonly done precisely where such competition would have practical sense (e.g. countries with hyperinflation often try to regulate and even outright ban currency exchange; or the various historical bans on private ownership of bullion gold in many countries).
Bitcoin is always there, available to anyone who has Internet access and can get past "great firewalls" (and when people's money are at stake, they are surprisingly good at learning such things). Consequently, the government can only do so much to its own money before it starts losing that competition - Venezuela is one ongoing example.
Why does everyone, especially within crypto, seem to believe a One Coin theory?
Plurality is the name of the game. History has endless examples. Yes nothing would last but...the better monies would move to a better monies. It's called competition. There is very little competition when it comes to monetary policies. Crypto will foster more of it. It can get messy but hopefully it won't get deadly.
The question also presumes that all cryptocurrency fans want cryptocurrency to replace fiat currency in general. I mainly want cryptocurrency to get a niche like what PayPal has. A decentralized PayPal sounds good. It doesn't need to overthrow governments in order to useful.
Absolutely. When I first read about Bitcoin back in 2010 I loved the concept but didn't buy in until 2013. I've happily supported and followed other crypto projects. I've bought into about 5 but follow about 10-15 of them closely.
An overnight crypto miracle won't happen, by the way. Money is too important and requires too much trust for an overnight success to occur.
Every year that the BTC network runs without a major exploit, is another year of confidence in the network protocol's security. Unlike some software categories that are prone to rapid disruption, money is not one of those things.
Disruption occurs a lot slower for very important reasons. People have to trust in a crypto currency in order to store value in it and exchange value for it. That takes time, to test in production if any major exploits exist.
It's not trivial what Bitcoin has accomplished this far.
Full disclosure: I work on the cryptocurrency in this article, Algorand.
There are a lot of questions and speculation here about this paper and Algorand. I would be happy to try an answer them to your satisfaction.
Some context may be helpful first, though. This paper is an innovation about one aspect of our technology. Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
The Algorand pure proof-of-stake blockchain and associated cryptocurrency has many novel innovations aside from Vault. It possesses security and scalability properties beyond what any other blockchain technology allows while still being completely decentralized. Our website, algorand.com, and whitepaper are great places to start to learn more.
If you learn best from videos then I suggest you watch Turing award winner and cryptographic pioneer, Silvio Micali, talk about Algorand: https://youtu.be/NykZ-ZSKkxM. He is a captivating speaker and the founder of Algorand.
Are there reasons that e.g. Bitcoin and Ethereum and Stellar could not implement some of these more performant approaches that Algorand [1] and Vault [2] have developed, published, and implemented? Which would require a hard fork?
My understanding is that PoS approaches follow normal byzantine agreement theory which states that adversaries cannot control more than 1/3rd of the accounts (or money in the case of algorand). You can also delay new blocks more easily.
Ethereum is scared or that so they are implementing some hybrid form.
Bitcoin is doomed from my perspective, because of the focus on proof of work and the confirmation times. When you realize that algorand is super fast, there is no "confirmation time", and there is no waste in energy to mine, then it is hard to back up any cryptocurrency focusing on proof of work.
And what of decentralized premined chains (with no PoW, no PoS, and far less energy use) that release coins with escrow smart contracts over time such as Ripple and Stellar (and close a new ledger every few seconds)?
> Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
What prevents a person from using a chain like IPFS?
Ethereum Casper PoS has been under review for quite some time.
Why isn't all Bitcoin on Lightning Network?
Bitcoin could make bootstrapping faster by choosing a considered-good blockhash and balances, but
AFAIU, re-verifying transactions like Bitcoin and derivatives do prevents hash collision attacks that are currently considered infeasible for SHA-256 (especially given a low block size).
There was an analysis somewhere where they calculated the cloud server instance costs of mounting a ~51% attack (which applies to PoW chains) for various blockchains.
Bitcoin is not profitable to mine in places without heavily subsidized dirty/clean energy anymore: energy and Bitcoin commodity costs and prices have intersected. They'll need any of: inexpensive clean energy, more efficient chips, higher speculative value.
Energy arbitrage (grid-scale energy storage) may be more profitable now. We need energy storage in order to reach 100% renewable energy (regardless of floundering policy support).
Ripple is not decentralized. I don't know enough about Stellar to answer.
Bitcoin is software and can easily implement these features but the community is divided and can't reach consensus on anything. Lightning Network as layer two solution is pretty good from what I know.
Ethereum improvements are coming along very slowly and that's good. They're the only blockchain with active engagement by thousands of multiple parties.
Aragaon and Vault's papers might sound good, but who knows how they'll turn out in production.
Ripple only runs ~7% of validator nodes; which is far less centralized control than major Bitcoin mining pools and businesses (who do the deciding in regards to the many Bitcoin hard forks); that's one form of decentralization.
Ripple clients can use their own UNL or use the Ripple-approved UNL.
Ripple is traded on a number of exchanges (though fewer than Bitcoin for certain); that's another form of decentralization.
As an open standard, ILP will further reduce vendor lock in (and increase interoperability between) networks that choose to implement it.
There are forks of Ripple (e.g. Stellar) just like there are forks of Bitcoin and Ethereum.
> In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied. Of the approximately 150 validators today, Ripple runs only 10. Unlike Bitcoin and Ethereum — where one miner could have 51 percent of the hashing power — each Ripple validator only has one vote in support of an exchange or ordering a transaction.
How does your definition of 'decentralized' differ?
This question seems to assume that the cost of electricity and mining sets cryptocurrency prices, but I'm not sure why that would be the case. I think it's the other way around. Demand for Bitcoin doesn't increase when electricity gets cheaper / mining becomes more profitable. Mining becomes more profitable when demand goes up. If electricity became more expensive or mining otherwise became less profitable, demand for bitcoin does not go down; most traders and users of bitcoin probably don't even notice. The only direct effect is that some miners stop mining (and the network becomes a little more vulnerable to 51%-attacks).
Another way to think about it: if Bitcoin somehow worked without mining, that's no reason for demand or usage of Bitcoin to go down. The value of bitcoins comes from network effects and scarcity.
Q: How erosive is it to the image of cryptocurrencies that there's so many coins? It seems that every week there's a new coin that does XYZ better. Often, it has no infrastructure (hardware or software) other than a limited number of exchanges that are used as speculation.
A terabyte a month! Wow. At this point, it seems like reducing this for most clients would help. Have you looked into recursive zkp like what coda is doing?
Can you provide more detail because from the article this doesn't seem so impressive.
> Vault reduced the bandwidth for joining its network by 99 percent compared to Bitcoin and 90 percent compared to Ethereum, which is considered one of today’s most efficient cryptocurrencies
1) Since when are these considered efficient? I don't think anybody in the know would say this. They're the most popular, but no means the most efficient.
Bitcoin is 250GB, so 90% of that is still 25GB to join the network, which is still ahhh enormous amount. And what's the baseline for comparison here? Were all of bitcoin's transactions replayed on an Algorand test network for this comparison? Or is this a metric from some test usage? If the latter then that's a huge issue since it grows in size.
2) On top of that you're saying it could accrue a terabyte a month in data. What type of usage is this under? Is that on current bitcoin transaction levels? 2017 transaction levels? A steady state tx/s? Is a backup of this data needed or is it throwaway and summarized in the latest blocks? If it's still needed then that's a decentralization issue because not many people will be maintaining full nodes.
3) What type of specs are affected by these changes? Can you still perform atomic swaps? That's a pretty standard requirement nowadays and would hinder the Blocknet and exchange interiperability.
OK I'll bite. Nothing about the article or YT video is innovative, some of it is laughable.
Algorand's consensus per the YT video you linked is
step 1. 1 user is randomly chosen to propagate a new block (can user make up a fake block? let's assume not)
step 2. 1000 users randomly selected vote on that block and if they agree, it's DONE.
(what if 1000 users are in the same country/company, etc. how do you prevent collusion on fake blocks)
This is hilarious. So the only thing you rely on for consensus is 1001 random 'users' input weighted by stake? What happens when your network is bombed with 1000tps and you need to contact 1001 staked users for every block? There are also vulnerabilities such as the recent "fake stake" bug that affect pure POS coins which I won't go into.
Now about the article referencing Vault. I believe NANO came up with this bootstrapping feature:
> Each user account only ever stores the balances of the accounts in its assigned shard
Yes they are replicating NANO's block lattice structure using "shards" with an insecure way of trusting any future chain that includes your old tx's but gives no guarantee on the state of any other account. As I understand it, I can be fed a fake chain while bootstrapping and accept phony funds as long as my balance shows up, right? ...Assuming this feature worked without any security holes, what's to stop other coins from implementing it? You don't need an entire cryptocurrency for it, it's just a feature and if it worked everyone would be using it. The sharding problem has not yet been solved and there are coins like Ethereum that are trying really hard to make it happen.
It's really sad to see this low-quality content come out of MIT. This looks like someone trying desperately to get a piece of the Crypto pie using MIT's reputation as a get rich quick scheme. Just for kicks I looked through reddit/r/cc and found only 5 dead posts mentioning Algorand with no comments on any of them. Their website makes all these claims about "pioneering a sortition algorithm" that looks "totally legit" if you ask me.
Coinmarketcap just reflects what people invest in at a certain time, it doesn't mean that these investments are rational or are based on highly calculated decisions. A lot of coins in the top 100 are copycats, tokens or just concepts, very few are fully functional products.
NANO uses both a DAG and blockchains. The DAG itself is nothing more of a way to say transactions don't have to wait for blocktimes, they just show up as they happen instead of waiting in line for the network.
In NANO every account is a virtual blockchain. This means when you want to send funds, you have to "mine" a low-difficulty block on your own account and simply publish the results of that block to the network. No one does any real mining in NANO, you can think of "mining" your own blocks the same as signing or encrypting messages. Check out https://nanospeed.live for a speed test.
I'm not related to their team or that website and I don't own NANO, but I do follow their news and liked that site.
Nano basically just uses a block lattice, which looks like a blockchain for each individual user. Blocks are broadcasted across the network and confirmed when you receive the block, and ask the representatives to vote on if the block is legit. Representatives are chosen by users, with the reps having the highest Nano backing being chosen. This gives a network setup where once the block is broadcasted, asking the peer if it's good is the only delay. There is a small PoW on each block, which is to stop blocks from being spammed against the network (however it can be precomputed..)
Disclaimer: built some apps on top of Nano, decently pleasant experience. I keep up a bit with the development of the node software.
I was just thinking on my way to work this morning about crypto - it was so much fun riding the thrill late 2017, excluding the tech, it was an exciting time for many. I crave another crypto boom
Well yes, there was a huge cringe factor. I'd say 99.99% of everyone was the opposite, clueless in the midst of it (In hindsight I made my mistakes as well!)
I'm no expert on blockchain, but crypto taught me very very very powerful and insightful investing lessons.
Well, in some sense that's a good thing. Bitcoin relies on a synchronous network - an honest majority of online miners must be honest. Algorand's safety assumption is stronger - the honest stake need not be "always online", and the system cannot fork even under worst-case asynchrony.
As a result I certainly don't trust Bitcoin with anything more than pocket change. I would, on the other hand, put money on Algorand. A Bitcoin attacker could conceivably DOS a handful of honest miners/network relays (given that mining seems pretty centralized), sequester a third of the mining network, and mint money.
No matter how much DOS power you have, you cannot mint money on Algorand without a substantial proportion of the stake.
Hedera Hashgraph uses the gossip protocol and simulated voting protocol to do it. It's possible, there are implementations like Hashgraph already doing a distributed ledger without a full blockchain.
Crypto currencies have all seemed like an obscurantist version of hot potato. Either the hash gets too long to calculate effectively or the amount of money at stake means very very smart people will start finding ways to hack the coin (and they will).
But basically the deal crypto developers are trying to make with me is to trade US backed dollars for "fun bux". These developers are usually very smart people - often much smarter than I. But I don't like smart. Take US dollars. Little pieces of green paper are very uncomplicated and if anyone starts copying them armed thugs show up at their house to have a very serious discussion. And my corner chemist takes dead presidents on delivery no questions asked.
Bro have you looked at the source code for the green paper? There's weird ACL rules, double spending, it's backdoored and pre-mined. Trust me, crypto is wayyy simpler to understand.
This gets asked often, but in case something changed recently - what are the use cases of cryptocurrencies that are not:
- Attempts to side-step the law (however misguided the law is)
- Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA)
- Tantamount to waiting for a greater fool to buy out the current players
I am not looking for answers of the form "well whenever you want to avoid a third party...", I actually want to know what are those cases where you have to avoid a third party, and why.
The economist-in-me appreciates that non-legal activities are perfectly capable of both demanding and supporting a novel financial instrument on their own, I only exclude it from my question because it's a rather obvious application and I would like to probe beyond that.
> Attempts to side-step the law (however misguided the law is)
There are a lot of people in the world that live in places where the law is far more gone than "misguided." For these people, it's not a question of "whether" to side-step the law but "how." You may not care, but they do.
These people are already so far removed from the crypto infrastructure that it's a trivial case.
People who bring this up are almost always people who have never lived anywhere near real poverty or conflict. Barring individual cases, the vast majority of the world's less privileged have neither the means nor the knowledge to buy crypto in any shape
DASH and NANO had several initiatives this past year to achieve adoption in Venezuela due to their humanitarian crisis. It was small, but there were some good results especially by DASH if we believe the media they produced. There was a movement to donate DASH/NANO and get merchants to accept it in exchange for goods. All merchants need is a sticker that displays their QR code and a terminal that can confirm the transaction, which can be done by any smartphone/tablet/computer/IOT with minimal effort. Keep in mind, this happened while DASH and NANO are quite unknown and all crypto was in a bear market, meaning there were few people following the projects that could donate and promote the events.
The hard part is not adoption within poverty-stricken nations, rather adoption in developed nations with complicated tax codes and lack of incentives for merchants to invest in more payment processing tech is the true challenge ahead.
Venezuela is an interesting case in the sense that it is an otherwise well-off, decently well educated country going through a crisis.
My country - India - has the world's largest number of poor. Even if these people were to get smartphones, there are already deeply entrenched players (PayTM, Google Pay) who offer free and instant transactions.
This is true for a lot of African countries as well. No reason for anyone to use a new currency when there's already M-Pesa and UPI and PayTM that use the currency they already know and trust.
It depends on what you consider "side-step the law". If you encrypt your communication so no one can't read it, but the government didn't demand you not encrypt it.. are you side stepping the law? That's kind of what crypto is like buying regular stuff; you're protecting your money (it's value and your right to trade it as you see fit) even though no one is trying to take it at this particular moment.
I'm trying to find mainstream adoption drivers. Securing your money against possible future government intrusion is akin to prepping, hardly a mainstream way of life. Even the prepper community itself is more likely to stockpile gold and ammo instead of crypto currency. There isn't much room left in between the regulars and the preppers to provide demand for crypto currency.
The mainstream driver is going to be some form of 'disaster'. it can be as mild as 1970s style inflation or a 2008 style crash. It can be as severe as a long-ailing Brazilian Cruzeiro or 1998 Russian debt crisis. (People will bring up Germany or Austria after WWII but that really was a unique situation with reparations, occupation, and bad decision making).
Prepping makes sense to the mainstream once they experience a disaster. And those disasters are being manufactured even now by mis-management of debt.
Banks are highly regulated and risk averse. They won’t transfer 100 USD to some country when it takes them more than some percentage of the transfer to do compliance for it. So the transfer is legal but banks can not do it compliant and efficient.
I know of Ukrainian developers being paid in ETH for that reason.
Adult cam models in some countries are another example.
FWIW, complianceless payments are dejure illegal by definition. So any economic activity being made possible by them is roadkill of the current regulatory environment, legally speaking. A nice example of Bastiat's "That which is not seen".
This is just wrong. A kiosk merchant may accept cash payments legally. If she wants to accept cards she has to go through the stricter compliance rules of the card processors. Same applies for crypto.
A transaction does not become illegal just because some class of players do not want to become part of it.
Your use case #1 is money transfer where no centralized database can not be bothered because the overall volume is so small. Long tail of sorts. I think that's a good use case, not sure how much volume overall.
My favorite future use case is electronic cash with privacy.
There are many LEGAL activities that people do not want to show up in a central database. For example, think of many things related to love and relationships.
"tantamount to waiting for a greater fool to buy out the current players" <= this is like investing works in general, or? ;-)
> many LEGAL activities that people do not want to show up in a central database
Unfortunately cryptocurrencies aren't just a central database they're a distributed database - all transactions are public. You can try using a tumbler service but since these are obviously money laundering havens they're not going to last long.
There are also plenty of legal efforts (e.g. free political speech) that are actively being shut down by payment processors of all sorts; these need some means of sustainment and crypto has provided what is needed.
Imagine 3 parties: buyer, seller and third-party shipper. When the buyer has paid to a specific address, he will also email an irrefutable, digital proof of payment to the shipper, who will then ship the goods.
It is trivial to look up the signed transaction to the specific address in the digital currency's blockchain. Hence, the shipping company can handle that situation.
On the other hand, try to get an irrefutable digital proof of payment from a bank. For example, get them to email you anything to you, anything at all, that you can use as proof that you paid last month's rent. A bank cannot do that, not even to save themselves from drowning.
That is also what horse-and-cart sellers said when they saw the first car. The lack of digital proof of payment is obviously not felt when you don't have it in the first place. The same for multi-signature contracts. The same for atomic swaps. None of these things are needed if they do not exist in the first place. People did not even need a roof over their heads until they built the first one.
I don't know either, but usual shipping is FOB - freight on board, so the seller pays half of it. And so the seller typically doesn't do shit until the money is there.
And when it comes to trade between untrusted parties, it starts slow. To build trust.
Though crypto is great to making faster payments, that's sometimes an issue, and it can save the seller from the buyer's scam, but on the other hand completely exposes the buyer to the seller's scams. (Because cryptocurrency transfers are non-reversible usually [as in ever, except with a hard fork].)
That isn't and has never been an issue needing solving in day to day business for shipping companies. Their business isn't giving a shit about the upstream business situation.
I don't know if you've realized this, but HN is religiously against crypto and anything that rhymes with it. Like, irrationally mad.
If you want to explore the utility of crypto go check out different online communities that focus on that, some decent ones on reddit. The level of discussion on HN is usually "crypto baaad, centralized goood". As an economist I'm sure you expect more. Unless you want those ideas reinforced, keep the discussion here!
I think you are conflating bad with unjustified. They aren’t the same but can appear similarly themed. HN is skeptical of the utility and validity of crypto.
That's what I thought too! But no - HN is against crypto at the moral level. One day the almighty father Paul Krugman declared crypto as thought-crime, and ever since, progressives have dutifully towed that line. It's tiring.
I think they subconsciously see it as an attack on state-sovereignty or something like that. The ability to tax and redistribute. That's just me reading between the lines.
You have a valid point, but I just don't have the strength in me to do the original research.
I rather like the level of discourse on HN in general - it's not unusual to find someone providing a high-level though-out response on various subjects. Asking the right question is also hard, but not as hard.
- micropayments: the products that that enables
- web-native currency: Makes it easier for apps to integrate money. Games, chat, maybe torrents we're told
- easier to transfer money between institutions (maybe easy in the US but it's super hard in Canada)
One possible use case: A notary for digital goods. Crypto currencies have a built-in incentive mechanism that keeps a ledger running and verifiable. This allows for a decentralized way to verify ownership of digital goods. More concrete, you could verify that you are the owner of a very rare sword you obtained in an online RPG. Even when the company goes out of business or stops the servers you could still prove that you own it. In other words, owners of valuable digital items might want their ownership to be stored on a public blockchain rather than a database by a private entity.
For example, while it'd be a bit of a hack, you could fairly easily re-use even the various Certificate Transparency blockchains to trade stocks.
Also, I wouldn't say that the incentive mechanisms keep the ledger running. Rather they keep the PoW consensus mechanism running; in all existing trustless decentralized currencies it's your node that verifies the ledger is working correctly, and other people are voluntarily distributing the data without a reward.
I'm genuinely curious why you post this in nearly every single thread about the topic that comes up without fail. It feels like you aren't actually interested in an answer and are instead interested in rather disingenuous in asking the question.
I am curious why you think that those 3 cases are somehow not valid or interesting enough in their own right?
Cryptocurrencies are definitely an “Innovator’s Dilema” situation when it comes to general use. It’s much worse than the established solutions. It’s confusing, error-prone, unreliable, cheap and janky. It’s also not a great business case for the establishment who are currently making billions and billions serving very rich customers.
But... it also brings financial service options to people who have no opinions or only truly awful options.
If you are a non-homeless American, you don’t need crypto. American banks are bending over backwards to serve you. But, if you are a homeless American. Or if you are one of the unbanked billions around the world. Or, if you are a Venezuelan, Nigerian, etc... then the establishment is either dismissing you or actively working to screw you.
Crypto can bring tremendous value to all of them while bringing very little to the establishment by simply acting as a PayPal alternative for the extreme poor. If it manages to survive that, it will get better and better. Eventually it will creep up to becoming useful for rich westerners.
> if you are one of the unbanked billions around the world.
I think I can buy that. The unbanked could become centrally-banked like all of us as their countries develop, but there is a competition between that and the cryptocurrency which could wedge itself in at this point and outcompete the local government simply because the government is small and lacks in experience (maybe corrupt too). Another contender here is WeChat and similar centralized payment technologies, but they too are hamstrung by their own current governments (I'm sure that Payapal is) giving breathing room to competition.
It is not obvious to me which one of the three will win among the unbanked.
Crypto is a pain to use even if you have a bank account, passport to scan and so on. I doubt many of the unbanked will use it to join the financial system. There is more promise from payment systems like M-Pesa, or new semi banks like Revolute I think.
In the long run I think banks will win amongst the unbanked.
You’re still thinking like a mainframe salesman scoffing at PC’s ;) Crypto doesn’t require a bank account, passport, etc... The establishment requires that. A hope is that like the third world skipped telephone lines straight to cellphones, they will skip being dicked around by The National Bank of Venezuela and JCMorgan Chase & Partners, Ltd. and go straight to self-sovereign value exchange.
It's also worth considering that crypto is effectively the greatest experiment the world has ever seen in free banking: https://en.wikipedia.org/wiki/Free_banking. Hypothetically, this could be done with paper+metal currencies, or centralized digital currencies; but for whatever reason, crypto is getting a regulatory pass where past "experiments" have been shut down hard by states who claim a monopoly on issuing currency, for better or worse.
Rather than viewing blockchains through the narrow lens of "Money 2.0", I think it's more relevant to view both money and blockchains as social technologies to solve coordination problems, and then inquire about those technologies' performance characteristics, incentives, externalities, and moral hazards. I think there's longterm potential for blockchain use cases to find traction; but at the same time, it may be that centralized solutions simply achieve superior results, in the same way that Amazon out-competes mom-and-pop retail, and Netflix out-competes buying DVDs. (The market lessons of the last twenty years seem to indicate that consumers value cost and convenience vastly more than abstract notions of freedom.)
What about those with a mimblewimble implementation? As I understand it, those cryptocurrencies know how much was mined, and how much each address owns now, but the intermediate transactions are purged.
(Edited) Let me ask you why do you use cash? For anything? Is it for?:
- Attempts to side-step the law (however misguided the law is)
- Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA)
-
Tantamount to waiting for a greater fool to buy out the current players
The 3rd point is the same for any fiat currency on forex and many governments are the same as the ICO shills.
I'm not justifying them just stating that in many cases the gamble on currency is the same.
You did present a nice Strawman but I'll bite. Ok. I get asked about cryptos quite often also. So if not a digital currency like BTC then what?
Why use cash? Only criminals use cash! Really! If LE should catch you having more than x,xxx.00 in cash they should arrest you? Why? Because obviously you are trying to do something illegal. (civil forfeiture)
Trivial to do tx with 3rd parties???? What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date. Including BTC. Although BTC is an attempt to provide similar means as cash (fiat) in a global digital sense.
> Let me ask you why do you use cash? For anything? Is it for?
In areas that are ahead in digital payments technologies, cash is dying out very fast.
In the US, you may want to use cash (as a seller) to avoid transaction fees. But in countries like Norway that has implemented a cheap national debit payment system (BankAxept), that's not been a big issue. Now the banks in Norway has implemented a common payment app as well (Vipps), which is free for transactions between individuals.. this has started to kill off cash in all the areas it held out before (sales of used items, buying cookies from scouts, etc)
> What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date.
If you ask me, that's because making payment systems is actually extremely hard. It's just that cryptocurrencies pretend it's not, by simply ignoring a whole lot of real-world issues that you would address if you were making a payment system that wasn't trying to make blockchains fit the problem.
Most of the challenges with payment systems are social. Challenges related to what happens if there's an error, a scam, a theft, etc. Cryptocurrencies just avoid it all by saying there is never any errors, even when any reasonable person would say there is.
If you think there's no alternatives, I'd say you're very US-centric. Outside the US there are lots of places that are already most of the way there.
I can only speak for our project, Intercoin. The goal isn’t to sidestep anything. It is to provide:
Security that no third party can just take your money anytime, without your explicit signature.
Liquidity for new tokens issued by projects / communities without great access to global markets and exchanges.
Programmable money that follows rules you can rely on when you invest in a project / deposit money into a community / donate to Haiti.
UBI on a community level funded by community members or donors
Analytics on how money is flowing around available to everyone and not just stored in a central database with information asymmetry.
These can be combined. For example Analytics can help you figure out the cost of food in your community, then vote for a level of UBI that eliminates food insecurity, and adjust this amount on a daily basis through direct democracy (Provably Random Polling.)
Intercoin’s mission is to make access to local fintech more available to local communities and online projects, without having to rely on central banks for monetary policy or the IRS for collecting taxes and being able to calculate eg the Consumer Price Index on the community level
The original use case for cryptocurrency (eg digital sound money, not world computers and the like) is as a long-term (and hopefully independent and uncorrrelated enough) hedge against mis-management and failure of national currency regimes. That remains a legit use case but will take years or decades to materialize. Given that the tech is still in the early stages of its maturity curve and needs more time to robustify, that’s a good thing.
But national currencies are getting increasingly shaky, even the USD where it appears Congress has no political will to control the US national debt and deficit, and where the GOP blows bigger deficit holes with tax cuts and the Dems are talking about MMT. Not to mention the risks to the Euro and Yuan, along with the many smaller countries with distressed currencies.
It’s interesting to me that cryptocurrrency skeptics and critics seem to regularly ignore this as a use case, when in fact it is the most important one (maybe even the only one). It seems many people can’t bring themselves to believe that modern national currencies can fail and don’t need an independent hedge, even though the 1800s and 1900s were full of exactly that.
He covered his bases and talked about everything, but micropayments don’t need expensive decentralization to implement. Incorruptible digital money does.
This is wrong. Satoshi Nakamoto was incredibly well-read in the Austrian school and mentions central bank controlled credit bubbles in his whitepaper as well as in many of his online posts on forums. The genesis block is even dedicated to this goal:
>hedge against mis-management and failure of national currency regimes
At the moment cryptocurrencies seem a good be worse than fiat. Imagine your salary or mortgage was a set number of bitcoins.
There were probably a number of initial uses imagined but if you look as Szabo's twitter pretty much the first link is The Crypto Anarchist Manifesto about circumventing government and libertarian freedom which I think was a big part of the inspiration.
They’re a hedge in that they have different failure modes than govt fiat, which means they’re a potential safe haven in the event of govt currency collapse/hyperinflation/etc. Which is part of what the cryptoanarchists wanted.
Yes they’re volatile, but they’re new, immature tech, with shallow market depth. None of those things will last forever.
Guess if they become accepted enough. At the moment businesses transacting with iffy countries often do the deal in USD so I guess it could be the new USD maybe.
Anonymity. There are some cases you may want to be identified by a random wallet address (with your payment proxied around to make identification very difficult), where the payment is not an attempt to sidestep the law. First example that comes to mind would be memberships to explicit content.
Course, you could just use Visa gift cards for these kinds of usages. It's probably a bit more convenient to do it this way, rather than keep topping up a card.
Some other use cases noting that cryptocurrencies tend to have public ledgers.
Rather than sidestepping the law, you can be sidestepping official corruption or crime. There are lots of cases where people who are supposed to be enforcing the law instead use their law-enforcement powers for their own benefit, sometimes in ways that are illegal, officially speaking, but in an unenforced way.
It's perfectly legal for me to, for example, donate money to WikiLeaks. But Visa and Mastercard aggressively canceled every merchant account that allowed people to donate to WikiLeaks through the Visa and Mastercard systems, apparently because of secret pressure from US government officials who were unhappy about some of the things that WikiLeaks revealed. The Snowden revelations — which may not have been legal, so they are peripheral to your question — very likely wouldn't have happened without WikiLeaks being able to support him, which they could only do because they could receive Bitcoin.
Similarly, many Patreon accounts are getting canceled because their owners have published things that are embarrassing to Patreon, but not illegal (typically, racist remarks). If Bitcoin becomes mainstream, there won't be a centralized authority like Patreon that is in a position to end people's livelihoods because they publish politically undesirable viewpoints. (Right now, those viewpoints are viewpoints that are odious to you, but there's no guarantee that that will be the case in the future; it's easy to imagine Patreon bending to Chinese government pressure to censor people who talk about Falun Dafa persecution or Tiananmen Square, for example, even in countries where that is legal.)
As another example, many Venezuelans are having difficulty fleeing the country, even though fleeing the country is technically legal, due to both official corruption and armed gangs. You could argue that it's not clear what is and isn't legal in Venezuela right now because there are two competing governments, but neither of those governments authorizes demanding bribes from would-be émigrés.
As yet another example, it's perfectly legal in Iran and France for French companies to do business with Iranian companies. But, because much of the world financial system is controlled by the US, it can be difficult in practice; see https://www.washingtonpost.com/world/europe/europe-says-it-w... for more details. Regardless of whether US law is misguided or not, under well-established principles of international law dating back to the Peace of Westphalia, it certainly does not apply to French companies doing business in France with Iranian companies in Iran.
So, in a sense, I think you're right that the main purpose of cryptocurrencies is to sidestep violent coercion. I think you're terribly naïve about how much illegal violent coercion is actually "the law", although that's understandable if you've never lived outside a developed country.
There are other uses as well; it's a dramatically better way to send money overseas, for example. Last time someone sent me money via Western Union, I had to go to three different locations, stand in line for twenty minutes, hand over a massive amount of personal information (perfectly suited for identity fraud or targeted home robbery) to an unaccountable third party, sign a false statement, and walk out the door into a dangerous neighborhood with a pocket full of small bills. For this "service", WU charged me/them about 10% of the money sent, and also didn't inform me when it arrived. Bitcoin transactions require none of this nonsense and cost much less; the last Bitcoin payment I received from overseas cost 0.3%, and I received a notification in a few minutes in my Bitcoin client of the transaction.
Think of crypto as outsourced anti-fraud. If you run a web hosting business, easily >50% of your attempted signups are with stolen identities/credit cards. It’s hard work catching them before the chargebacks come in. With crypto you know with 100% certainty when you receive a payment that you at least have the money!
1 - Attempts to side-step the law (however misguided the law is)
-> Most are attempting to side-step credit card service fees while remaining open to transact across the world in real-time. Most popular CC's fail at the real-time part and cause unnecessary resource usage, but hopefully that will change. Actually, most CC's fail at trying to side-step the law given all transactions and account balances are public for most coins. You could say tax-avoiders prefer money they can hide through sketchy banks or cash rather than CC.
2 - Trivial to do using a typical centralized database (e.g. Federal Reserve or VISA)
-> Bitcoin, Ethereum and others can do Smart Contracts which means delayed sending, multi-sender transactions that serve as escrow and in the case of Ethereum programmable using it's own language to do any number of actions/apps. The important feature is that this is handled by the network using your own transaction, you don't have to set up the escrow through a company like VISA, Paypal, etc.
3- Tantamount to waiting for a greater fool to buy out the current players
-> This is true of all CC because it's an open, yet small market. The earlier you get in, the better your outcome. However, it's not like CC's NEED to explode in price to be useful, competitive or solve a real-world problem. Getting rich is a secondary effect of having a functional CC reach adoption. Look at MemeCoins like Doge and Banano to see adoption is easier when everyone abandons the idea of getting rich off a coin.
Maybe raising money for ventures. A huge amount was raised in ICOs and mostly they were scammy and are heading to zero but there may be a future for more legit versions. There is a bit of law sidestepping about it but you can run them in jurisdictions where they are legal. And there's no real reason for them to be illegal if you are not screwing the investors. CZ of Binance was saying similar recently https://ambcrypto.com/binance-ceo-changpeng-zhao-cryptos-kil...
Donate to Wikileaks when the US government is pressuring every centralized payment processor not to process payments but won't outright ban them. Does that pass?
And I don't see why you dismiss the importance of the first one. What if I'm trying to flee the country with something to my name, like Venezuela. Tough luck?
Indeed, thus “another approach” :) There are several different approaches trying to tackle this same problem in the space, some further along than others, and typically all with different tradeoffs and at different points in the system. e.g. Lightning is arguably addressing some of these issues as well, but at a different point---on top of Bitcoin, rather than instead of.
I called out Coda because it's both an independent system and aimed at a very similar set of issues, but it's absolutely a different approach. Figured it might be of interest to folks who were looking at this article.
This is interesting. It sounds similar to the non-interactive proof of proof of work system that uses "super blocks" of excessive work to prove that blocks in between must have occurred.
There's no free lunch. These gains come with a tradeoff in security. Bitcoin's proof of work which uses an algorithm and processing power to secure it. Vault/Algorand throws out PoW and replaces it that with a pure "proof of stake" system that requires 2/3rds of the currency's value is held by honest actors. In addition, if the network were ever to go offline, there isn't a deterministic way to get it back online.
>In addition, if the network were ever to go offline, there isn't a deterministic way to get it back online.
I haven't heard anyone say this about Algorand. Can you provide more details? Lets say a bug causes all the Algorand nodes to crash. After a patch is released 90% of the network comes back online. What prevents the selected users from arriving at consensus over the next block?
If the network goes down completely, as it's coming back up, groups of nodes will start adding blocks before all of the other nodes are back online. When connectivity is completely restored, you end up with different parallel chains, each of which thinks it's the main chain. With Bitcoin, there's a simple, deterministic way to decide which chain to trust: the one which has had the most work done it. With Algorand, it's not clear what would happen.
(I work for Algorand) This is false. The BFT protocol that Algorand uses guarantees that each round may have exactly one block (up to our security assumptions with regard to honest stake); this is one of the protocol’s “safety” guarantees. In the case that a large number of participating nodes crash, the network will refuse to produce a block until a sufficient amount of stake begins participating again. Nodes that fall behind can use the standard catchup protocol — the one that nodes new to the network make use of — to pick up where they left off.
Calling the case of the network halting "safety" doesn't help things.
To walk through a plausible example: let's say 3 Chinese services control 35% of the stake of Algorand. Without warning or any public announcement, the Chinese government steps in and forces them to turn off their servers. The Algorand network will now stop functioning as it can't reach 2/3rds. Hours go by and no one is able to transact. At this point, the network needs to decide how to proceed. Does everyone just agree to take a complete loss?
Most likely, a group of other stakers would work on a proposal to deal with it, maybe by removing the offline tokens. How do they get consensus for this proposal? And, if they do it, what do they do if the Chinese stakers come back online?
In this case the Chinese government can kill the liveness of the network (preventing it from producing new blocks), but not the safety of the network (they can't fork the chain).
Your question has changed into: "doesn't the system break when a malicious party controls 35% of the stake?"
To which the answer is yes. If a malicious party can control 35% of the stake, that is very bad.
I should add, though, that if you know your machine is going to be taken down, you can mark your account as "offline" via a special transaction, which will allow the network to proceed without you by increasing the probability that others will be chosen to be on a committee.
"If a malicious party can control 35% of the stake, that is very bad."
That didn't happen in this case. The Chinese government never took anyone's keys or controlled any stake, which is the point of the example.
The malicious parties don't need control. They don't need to take anyone's keys or access their servers. They just need to be able to bring it offline, which is much easier to do.
Which raises the question I asked and you didn't answer: if 35% of the stake goes offline with no signs of coming back, how do participants reach consensus?
You are right to call out the difference between "control" in the sense of keys and "control" in the sense of a network adversary. I should have been more careful with my wording there.
It is true that if 35% of the participating stake is suddenly prevented from contacting the network, no new blocks will be created. The word "participating" is important -- you can have stake that is not participating in the agreement protocol, but that is still spendable.
The only way I can think of to mitigate the scenario you've described would be this: before going offline, you can broadcast a transaction which essentially removes your stake from the pool of participating coins until you're able to come online again. This would ensure the network can proceed without you.
If 99% of Bitcoin's hashrate gets taken off the internet, it keeps going without any problem. That's the beauty of a decentralized cryptocurrency. There's no central node and it's supremely fault tolerant.
Algorand has a lot of interesting technology and may have some use cases. But it's more like a distributed database / voting system than a true cryptocurrency.
That is not true. If network partitions happen in bitcoin you are utterly ducked. The system will fork and good luck to recover from that with all the double spendings.
False. Algorand has safety, unless you get confirmation from 2/3 of the "money", you don't go forward. The best you can get here is a denial of service.
Usually, for distributed systems in adversarial settings we talk about safety and liveness. Bitcoin doesn't have safety, and both bitcoin and algorand seems to fail the liveness test as well.
In your terms, both bitcoin and algorand have weak availability.
One could argue that it prevents hashing power attacks, where an attacker can duck with the network with no money at stake. Check the 51% attack websites, it shows how easy it is to duck with altcoins who use pow.
Hadn't heard of vault or Algorand before, but woah, what a team of heavy hitters: Micali, Goldwasser, Andrew Lo, Kenneth Rogoff, Herlihy etc. basically a who's who in CS, Cryptography, Econ & finance. If any group will do crypto right then at least on paper it would look like this team
I wouldn’t call Algorand a shitcoin. There’s Bitcoin, altcoins and shitcoins. Altcoins have credible teams exploring alternative architectures, which is fine. And yes current wisdom is there’s no free lunch and you have to spend some resource to gain decentralized security. But it’s worth having credible altcoins exploring if that rule can, like Neo in the matrix, be bent or broken with some clever crypto or other CS. ;)
838 comments
[ 3.7 ms ] story [ 369 ms ] threadSeems they've moved to a Proof of Stake solution, rather than a Proof of Work. Ethereum was meant to switch to it, iirc, but never did.
https://people.csail.mit.edu/nickolai/papers/leung-vault-epr...
It would be difficult to come out with a new approach that simultaneously advanced the state of the art in every possible scalability dimension. Each individual approach might give a 2-10X improvement on that particular aspect, but it also means that the "bottleneck" keeps shifting, and trending towards scalability.
Source: I'm an academic blockchain researcher.
I've ran a full node for some time to support the network, the whole blockchain size was about 5GB, but the downside of zero transaction fees is that there is less incentive for people to run full nodes. I stopped mine out of boredom when the market crashed.
Unfortunately the market is so full of overhyped projects and buzzwords that people are no longer interested in something that just works.
It's an interesting issue, although it's a good question if it is possible to stop network spam. Bitcoin's solution to network spam is to limit the amount of transactions and charge a fee, with the fee going up the higher the demand for a transaction.
I don't see this setup working with Nano, as much of the protocol is designed around not having fees. After all, deciding who gets the fees and splitting it (among top representatives?) causes even more processing on the network.
XRP, EOS, Tether, Stellar, Tron, Cardano.
All with >$1bn cap.
‘Would you be happy if the crypto-utopia you bring up happens in the next 10 years, and all value is stored/transacted through a cryptocurrency, but it was a coin that you do not possess now, nor could you transfer any of you current currencies into it?’
Say tomorrow someone releases the one true coin, but no one notices. All other cryptocurrencies drop to zero value, then a crypto miracle occurs - the one true coin is uncovered and almost overnight becomes the defacto monetary standard. Would crypto fans be satisfied?
This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
Money isn't effectively and fairly distributed and it's obviously not a pipe dream.
Credit Suisse found that 97% of bitcoin is held by 4% of addresses (though some may belong to exchanges): http://www.businessinsider.com/bitcoin-97-are-held-by-4-of-a...
Still doesn't seem like a pipe dream.
Money is heavily regulated.
Crypto are not.
it didn't pop-up from nothing
crypto currencies need to be acquired using either real currencies or through some form of mining, that requires real currencies to acquire the resources needed to bootstrap it
the crypto space is already a place where rich got richer, less rich got sometimes more rich, most of the times nothing changed for them, really poor individuals from really poor countries couldn't even get started
The point of cryptocurrencies wasn't to make people rich. Anyone can buy in at market value and start using coins for their stored value. That is the point. Your anger in the fact that crypto didn't magically create money where there was none before is misplaced.
Really poor individuals from poor, economically wrecked countries had quite a lot to gain from the accessibility of cryptocurrency. Look at Venezela's attitude towards Bitcoin.
On owning them.
> Anyone can buy in at market value and start using coins for their stored value
Not everybody can, that's the point.
Almost nobody can, expanding the first point.
It's not really a democratic and open process.
It involves a lot of prerequisites that are usually not met by the general population.
> Look at Venezela's attitude towards Bitcoin.
You mean Maduro's?
AFAIK Maduro made bitcoin mining illegal in Venezuela and arrested more than a few miners.
Or do you mean the Petro Coin (a total scam currency) that Maduro tried to force down Venezuelan's throats?
Now expand on this point. What about crypto is preventing people from owning some that isn't also preventing them from owning regular money?
> You mean Maduro's?
It's pedantic to differentiate between a State and its actors when discussing policy like this. I mean Venezuela.
I'm talking the Petro Coin, the raids, everything. The whole policy was a response to fears of increased economic freedom for Venezuela's poorest citizens at a time when the government was trying to offload the pain of its bad economic decisions onto them.
No, it was a scam.
Those of us who have been here since the beginning just want cryptocurrency to succeed and flourish and fulfill its roles, and we already know Bitcoin won't be the answer so we're all waiting on The One True Coin.
Someone who is a fan of cryptocurrency itself is a fan of the ideas behind it and what it can bring to the table. People who are only satisfied in the outcome if they become rich are clearly not interested in the real benefits of cryptocurrency. So asking fans of cryptocurrency this question is a waste of time because the answer should be the same.
The point of my comment was to highlight to OP that they have a categorization problem. Just because a division exists doesn't mean you get to call No True Scotsman.
I want a cheap, fast, decentralized solution for token ownership with a great user experience. I want to build back-end solutions for crypto-tokens representing digital collectables, in-game items, etc.
I need a critical mass of users before these services start to become viable as a business model. Thus I need a cryptocurrency for tokens to succeed in a meaningful way. And I want this regardless of whether I own the native token of this network.
Personally the computational overhead makes me weep a fair amount; we're simultaneously trying to save the planet while making our payment methods several orders of magnitude more expensive in terms of power. But if there was a "coin" that was comparative in terms of energy expenditure with what currently exists then I'd be more than happy to "lose" my wealth in other coins. That is a very low price to pay for such a system.
Imagine a currency that everyone is born with a certain amount of, with the only price of admission your ability to prove your identity. Suddenly, we have solved the problem of proof of work for allowing this to be a distributed ledger since the trust can be based on reputation. Also, we can impose limits such as perhaps a logarithmic scale of wealth interpretation, where ten million dollars isn't all that much more than one million, if it's all in the hands of one person.
The digital age could be an age of fairness, if we choose to use these tools to design a fair game instead of an unfair one. Note that I mean "fair" not in the sense of two people starting out exactly equal, but where the winner can use their advantage to win more over time until the "match" is over, but one that tends towards a fairness equilibrium, where the advantages gained by one person or group over others are minimized over time or at extreme scales.
This is how I write when I have gotten less than 4 hours of sleep, but hey, I can dream. :)
Would that be a new age of fairness?
A currency is just a measurement device, it's not a replacement for resources, I don't know why people forget that so often.
The decline in rate of inflation is what prevents punishment of the older adopters. Inflation is inherently punishing of people who are saving an asset, because it steals value from them, or at least would do if demand didn't outpace supply.
If bitcoin offered the same reward to newcomers as it did to the people who adopted it 10 years ago, then nobody would've adopted it 10 years ago, and the result would be that everybody is punished, because the world at large would've ignored a great innovation.
You can't have both! Either you punish the savers by taking value from them and giving it to newcomers, or you let savers keep their value which pushes up the price for newcomers as demand increases. Socialist ideology fails to understand economics as usual.
Now you might argue that the rate of bitcoin's reduction of inflation is just too high, and should've been more gradual, or over a longer period of time. There might be some merit to that idea, but nobody could've accurately guessed the rate at which adoption would occur for a brand new technology.
After everyone is aware of what Bitcoin is, it doesn't really matter how long you make the halving. There will still be risk-takers and there will still be laggards. Some of the laggards will leave it until they can no longer go around with their eyes closed and must acquire some Bitcoin in order to make some purchases. Others will acquire it now (and 10 years ago) even when it is an extremely risky investment. Most people are somewhere in between.
So you have the option right now that you can either: Acquire some Bitcoin while it is apparently still cheap (relative to where it may be in a few years)
Or you can: Chose not to acquire some bitcoin because you think it is overpriced, and in a few years, complain again that bitcoin is overpriced, when it is worth significantly more than it is today.
Late adopters punish themselves by ignoring economic reality, either intentionally (because they are driven by ideology), or accidentally (because they don't take the time out to learn). Once you grasp it, there is only one direction which bitcoin can go over the long term.
There was a brief moment where companies began paying employees in crypto.
If cryptocurrencies ever become mainstream, banking services will be built on top of them, just as they were originally built on top of gold.
The only thing I can think of that cryptos let you do cheaper than banks is rapid, relatively frictionless funds transfer, so I’ll admit their utility there. But other than that, what banking services do cryptos give you?
Besides, you're paying for the legal and institutional protection anyway. If crypto made money transfer more efficient, they'd use it and still have the value add of a large institution backing transactions.
https://makerdao.com/dai/
$80M DAI issued so far...
https://mkr.tools/
They can also try to outlaw bitcoin, but they have a bit more trouble stealing it.
Can I transmit my gold in any quantity that I want to anyone in the world with an Internet connection for a few dollars in fees?
Because your alternative is to trust the crypto infrastructure, which is far less trustworthy.
In reality most of the exchanges and sites dealing with crypto were (and probably still are) built by absolute amateurs with no checks and balances on their apps from a security perspective. Its scary as hell that people trust those sites with their actual money.
What was stored on the encrypted laptop was all of the cold storage wallets containing the majority of the digital assets.
No less idiotic, but an important factual distinction.
actually banks have failed in the past, this infrastructure not yet
Man, what are you talking about? There's a new "$100 million in coins go missing" story every 6 months.
Coins go missing from exchanges, which break the basic private key rule. People use exchanges for convenience because as clever as cryptocurrency is, it has no answer to the exchange problem.
Bullshit. No "religious" following of rules can protect you against a zero day exploit somewhere in your system.
Actually, there are smart contracts which act as exchanges. Not for all currency pairs yet, but it's on the way.
https://www.coindesk.com/crypto-exchange-zaif-hacked-in-60-m...
As of now, paying for goods and services with cryptocurrencies is relatively risky; it's hard to get recourse if you're scammed; and the standard credit card infrastructure with chargebacks and fraud protection is comparably more trustworthy.
As of now, storing cryptorcurrencies is risky. And I'm not even talking about the shady brokers/exchanges that can steal or lose their customer's money. You can store it yourself as well as you can - but, as it turns out, most people aren't that good at storing it securely, so all kinds of risks and breaches (e.g. hacking your devices to get access to your secrets) are more common than for bank accounts but, also, the consequences are more severe - if your bank account gets drained in an identity theft attack, very often these funds are recovered or compensated, not so with crypto. So again, the existing financial infrastructure with regulation, FDIC or similar insurance in case of fraud or insolvency, mandated consumer protection in case of scammed credentials - it's more trustworthy than the commonly used processes&procedures&infrastructure of crypto storage.
Payments are only relative small function of financial sector. Much more important is to act in credit markets, i.e take deposits and issue loans. How did you think that crypto removes need for fees (interest rate) and trust in those applications?
All the more incentive to not lose them!
Recourses:
- Backed up dat file - Backed up wallet password - Recovery phrase
There, now you have 3 separate ways to not lose your btc!
In other words, banks multiply money right now, but you cannot multiply cryptocurrency.
It's much more honest and clear.
If I do, there is practically zero difference how banks would work with crypto and fiat. And that promise can be used as money just like it can now with fiat. Thus banks would be able to monetarily multiply crypto at will as well.
If not, well, how exactly are you planning to stop me and my bank making such a contract? You know, the bank can pay me some interest on my savings is I let them lend the money forward, so both banks amd my incentive is to allow the lending of my deposit.
We use bank money now because it's more convenient than paying with gold. But imagine that paying with gold was more convenient and preferred. In that case, we would see money in the bank as an investment, not as a wallet.
Your employer does not wire transfers money to your bank, but to your wallet. He pays you "in gold" so to speak. Same when you go shopping etc. There is no bank involved in transferring money anymore.
If you put money on the bank, you cannot use those credits to pay other people, as you are able to do now. Because people expect "gold", not bank credits.
You are correct that in a cryptocurrency world, banks could still have fractional reserves. But the main difference is that there will be a clear distinction between "real money", which is cryptocurrency, and "bank notes", which are a promise of the bank to pay you cryptocurrency. Right now, you cannot make the distinction between the two.
This is also the reason why they were able to let the gold standard disappear, because nobody would notice. If everyone trades in gold, the gold standard cannot just be abolished.
Basically a cryptocurrency world is a gold standard, where gold is the preferred way of paying.
This would also mean that banks will go back to how they operated when there was no central bank. And even further back than that, because payments are more conveniently made with "gold".
The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.
What if my real employer doesn't live close to me because he's in a different country? Should he send cash in an envelope? Which cash? The one from my country? From his country?
What if you live in Venezuela, would you still trust the government money?
So no, this is not possible with USD bills.
> banks in the US are extremely reliable and trustworthy
https://en.wikipedia.org/wiki/List_of_banking_crises#21st_ce...
"Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system."
This means a new one popping up every month... Which in turn means that they are useless as currency.
Cryptocurrency doesn't do this.
http://time.com/4567605/india-currency-change-queues-delhi/
The original statement was:
> I think there's value in reducing the politically privileged's means to dominate their power over the general populaced
We can argue whether there's value in that. But if you're asking /how/ bitcoin et al can do that, the answer is that it removes direct control over the currency from nations and parliaments.
They may still be able to wield indirect control through a variety of other means, but that /is/ less control than simply being able to declare 500 and 1000 rupee notes valueless.
So the question becomes, why should the supermarket or the utility company accept crypto payments instead of dollars, when they know the former can lose 20%-99% of its value overnight, while the value of the latter is guaranteed to be kept stable by the government?
People and companies want to have a central, stable issuing authority they can trust.
Absolutely true, see EcoCash. It's a fascinating case study.
>and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.
Trust is a relative thing. EcoCash is issued by a mobile phone provider. That should be crazy (who would trust verizon to issue currency?) except that _literally no one_ trusts the Zimbabwean government to issue currency any more, so the phone provider won by dint of a) being in the right place at the right time and b) being relatively more trustworthy.
Actively building trust is something you need to do if you've got a pile of venture capital burning down that you need to pay back before you go broke. However, cryptocurrencies are usually not VC-backed products, and therefore don't have time-bombs strapped to them. Bitcoin is doing extremely well in Venezuela right now as faith in the bolivar drops through the floor. Cryptocurrencies are at this point extremely well position to be conveniently accessible any time people's faith in their national currency drops enough for them to start looking elsewhere. This is a slow burn situation.
>People and companies want to have a central, stable issuing authority they can trust.
I'd love to see a citation on that. People trust a wide array of deities and insist that the deities other people trust don't exist. This is a Homo economicus argument, it seems unlikely that we can quantify what people want and how they trust so easily. My anecdotal observation is that people want to have something that sounds plausible enough that they feel comfortable not researching the details. If people wanted a central stable issuing authority they wouldn't accept fractional reserve banking.
> I'd love to see a citation on that.
Didn't you just provide two examples yourself (Zimbabwe and Venezuela) that alternative currencies are being adopted precisely due to the lack of a stable central issuing authority?
Cryptocurrency doesn't diminish a government's ability to enact financial policies within their sovereign borders.
It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.
To me it's evidence that some form of governance is required to build something which can actually serve the greater good. I also would like to see a stateless currency work out, but there are clearly still quite a few problems to be solved before that will even seem like a possibility.
Care to elaborate? Some examples?
Example? Community decision making when forks occur.
> largely used it to pursue their own personal enrichment
I'll let someone else provide examples of that one :)
Another example would be exchanges: a vast majority of people do not use cryptocurrency in a peer-to-peer fashion, but instead go through a small number of centralized exchanges, which have been known to freeze withdrawals, have been riddled with theft, fraud, and a playback of all the financial schemes dreamed up in the last few centuries which have not yet been regulated against in cryptocurrency (pump and dump, Tether etc.).
On top of that, the crypto media sphere seems to be completely unreliable: I've seen many headlines which are deliberately misleading with the intent of stoking a one-sided, glowing narrative about cryptocurrency (I.e. a crypto startup opens their account at Chase bank and the headline reads: "X Coin Begins Partnership with J.P. Morgan Chase", and related online communities are heavily moderated to support the official viewpoint while silencing others.
Long story short, when I bought a little bit of Bitcoin to play with a few years ago, I could buy a coffee with it, and I could even make purchases with it on Amazon. Since then it's gotten much less useful to the average user.
>Another example would be exchanges
Interestingly enough, with regards to bitcoin, there was a huge powerplay that happened a couple years ago. And this debate proved who had the real power.
A couple years about, almost every major exchange, bitcoin company, merchant payment processor, and bitcoin miner, wanted increase the bitcoin blocksize, in order to reduce transactions fees to users and help adoption.
(Even though this directly hurt the miners, the miners still wanted it, because they supported adoption. Crazy, I know)
But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.
And this was in spite of the fact that almost every single major player in the space wanted this change.
So crazily enough, the central authorities of the bitcoin protocol, are the couple people who hold the keys to a github repository.
This is blatant re-writing of history.
A fork was written, Bitcoin Cash, but most people/miners/companies didn't want to use it. It was widely known and the differences/advantages/disadvantages were discussed ad nauseum for months/years.
A Github repo can't force people to run it's code instead of another.
> And this was in spite of the fact that almost every single major player in the space wanted this change.
So why did they keep running Bitcoin Core instead of the fork?
Because it turns out that controlling a github repo is a very powerful power.
> A fork was written, Bitcoin Cash
This has nothing to do with Bitcoin Cash. This has to do with 2XSegwit. An initiative that was supported by every single major miner, all of the exchanges (coinbase, gemini, kraken, ect), as well as the major merchant payment processors (IE, bitpay, and all the others).
There are statements after statements made by all of these players, where they stated support for it. Unfortunately, it seems like the people who control the bitcoin protocol, the developers, had too much power, though.
Did you disagree that every major miner, and Bitcoin business like coinbase and BitPay, put out messages in support of the 2X Segwit agreement?
You say this like it's a fact but I feel like it's the opposite. There aren't many compelling examples of this. And to the extent that there are, they exist in a competitive market and their fate is determined by users and investors, who weigh the cost of the greed vs the benefit of the technology and reward/penalize accordingly.
It might not be worse but IMO it hasn't proven to be better.
That's the decentralisation of power that has occurred.
You don't have to prove your identity. You don't have to prove anything to anyone. You just download some software and generate a private key. Bitcoin is to money what the internet was to book publishing.
For example, if there are problems with scams or whatever (e.g. impure gold scams, or cryptocurrency manipulation), people may choose non-coercive governance, like banks (e.g. through something like GNU Taler with a bank-backed currency). You could do this with any currency you choose, so which currency you use has little impact on the structure of government and how it interacts with the population, provided the government stays out of it. Because of this, fiat and resource-based currencies are equivalently acceptable for libertarianism.
So yeah, maybe cryptocurrency is tangentially related to libertarianism in that many libertarians are interested in them as an alternative to central, coercive banking, but that's about where the relationship ends. Libertarianism doesn't care if you have governance, as long as that governance doesn't use force.
And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.
They used to be. I made online purchases and bought coffee in real life using Bitcoin just a few years ago. The evolution of Cryptocurrency has been away from any real-world usefulness, and toward its current incarnation as a largely speculative instrument.
And I would argue that in fact this has been the result of a Libertarian experiment playing out. Everything about Bitcoin has been opt-in: in principal anyone is free to own a node, and the community would have been free to opt-in to a governance structure which would have discouraged actions which made Bitcoin less useful to the majority of users, but this is not what happened. Instead power was consolidated in the hands of a few, who chose their own self-interest to the detriment of the larger community.
I am not a fan of coercive government, but I struggle to see how the story of cryptocurrency to this point does not provide evidence that some strategy is needed, beyond maximal personal liberty, to discourage bad actors from causing disproportionate harm to the collective.
That is a brilliant question!
Instead of all the endless bickering between crypto-fans and -haters reaching from technology to fiscal policy to society, it reduces the conflict to one simple test, as a sort of precondition.
Anecdata, but just going through my set of acquaintances, personal profit was always a factor. And I never even thought to question it. In hindsight, however, it seems (1) such an obvious thing to do, and (2) makes it clear to me that my acquaintances probably wouldn't give a damn about crypto if there wasn't a chance to profit from it.
I mean, the only reason Bitcoin went mainstream in the first place is not because of the technology (which existed for a decade), but because there was a extreme bubble (again) and mainstream people wanted to get rich quick.
I'm talking just about the positive potential of Bitcoin as a technology. There are many downsides and the current landscape of cryptocurrencies is not so great.
My vision is that crypto is going to be used like credit/debit cards, as a way to use money digitally, but it will backed against fiat.
But the problem is not the technology (it is there and exists for decades), but the laws. Better concentrate on that problem.
There's no way the current system can have a stable and uniform API that works globally.
For example: https://www.coindesk.com/crypto-gaza-west-bank-bitcoin-pales...
* To those people who say, "You can't compare crypto to a company because companies pay dividends," that is specifically why I chose Amazon as an example, a stock that does not pay dividends.
As an example of a tech, if someone asked me would you want self driving cars to succeed if you could not profit off of them, I would say that's a resounding success. A lot of people are excited about this tech because of the improvement in their daily lives, not because of a profit motive. Compare that to crypto
1) I would want Amazon-like businesses to succeed -- in the sense of "someone who finds a sustainable way cut the fat out of retailing" -- even if I could not profit as a shareholder. But I still think I would benefit (as a buyer) from that success.
2) I would want decentralized, arbitrary-money-printing-proof cryptocurrencies like Bitcoin to exist as a shield against governments that inflate away their money (like Venezuela or Zimbabwe) or abuse their central bank status for bailouts (in the first world), even if I could not profit as a holder (sorry, HODLer) of the currency. But I still think I would personally benefit as a prudent saver and (non-politically-connected) investor.
Similar reason people find gold appealing I suppose.
Hyperinflation is a symptom of economic problems, not the origin of it. If you find a way to prevent nominal inflation by crypto, it doesn't prevent the related problems. There's a good reason why we got rid of the gold standard, which had all the same problems as a crypto-based economy would have, and was unsustainable because of that.
Since you mention bond positions, if they'd were denominated in non-inflationary crypto, in any such scenario they'd drop anyway - if it wouldn't be possible by inflation, then it'd happen by defaults. Which would also mean a default of all credit institutions. Which would then mean the disruption of most businesses who rely on these institution. Which would then mean nonpayment of salaries. Which would then cause a lack of demand, causing even more economic problems. Compared to that, a semi-orderly inflation (up to the extent that is required) is preferable to a cascade of defaults. The vast majority of the money in economy is anyway in the "I owe you" form, and crypto doesn't change that; even if all the economy would move to a cryptocurrency, only something like 2-5% of it could be in the form of "hard coin that I control" and the rest of it is in debt relationships between various businesses.
It sucks to get paid in some paper that's now nearly worthless - however, the alternative isn't to get paid in hard crypto, in such a scenario the possibility to get paid in full doesn't exist. So if we don't have the possibility to get paid in a devaluated currency, then people either don't get paid at all, or have to suddenly invent a new worthless paper currency and build an infrastructure for it, at a time when they don't really have the time and resources to do it. This isn't a hypothetical example - such "currencies" have developed in e.g. various long-term conflict zones.
How so? For a net debtor, deflation is potentially ruinous.
So, anecdote: I live in Argentina, work for an UK based company. been doing that for the last 10 years.
Before I could trade bitcoin in an almost frictionless way (I.e., before I discovered Localbitcoin.com) my routine was to go to the ATM after the payment got into my european bank account, do a few extracts per day, rinse and repeat until I got all the money I needed.
Rate per extraction was around a few euros if I didn't hit minimum, to a certain % (That at times could be 5%, but can't quite recall as last time was 6 or so years ago). Minimum depended on the current economic situation of my country at the time (I suppose I don't need to explain that).
So, why not wire the money to your local bank account, you might ask?
Well, last time I checked (I moved a year ago to Buenos Aires and haven't checked how it goes here because I don't need to) the process for wiring money to my local bank account was as follows:
(Argentina is not inserted into the international SWIFT system !!!) I had to wire the money to a specific bank account in the US, that belonges normally to the bank I was checking, but couldn't really say. I had to wire the money there from my european bank account with certain conditions, so it could be recognizable that the money belonged to me.
Then, after some time (Could be as short as 2 weeks, but no bank would assure it would work like that every time, and wait times of 1 month or more were totally possible, considering how the Argetinian banks operate, i.e., mob-like) I would get my money _in the local currency_ with the corresponding loss due to exchange rates. AND (that's kind a really big AND, I need bigger caps) the "charge" for the operation was around 100 bucks. PER OPERATION.
"Thats too much" I said. "Yeah, people tend to group operations in half years so transfer is justified" was the answer I got.
I tested this at 3 different banks, got the same reply in all 3. Seriously.
So, now I trade bitcoin. I buy them in the UK, transfer them to my wallet, and use a broker to get the money in my account. The broker takes 2% on all operations, plus their rate is around 2% below of the current BTC price, but I don't mind. At least I'm getting ripped by somebody I want to get ripped by.
And then we have the speed issue: Since Segwit, it can take as little as half an hour to do the whole operation.
2 months ago I woke up with the money in my EU bank account (I'm not an early raiser, may I say), and by noon I had completed all operations and was just waiting for the broker to deposit the money in my local bank account.
BTW, the reason for me using a broker, is that minimum operation volume in LocalBTC is 0.2 BTC, and with the price hike at the middle of 2017 that became a problem; that, plus mostly everybody in Argentina that deals in BTC are fucking histerical trying to do a quick buck, so they start getting nervous if they don't close the operation in under 30 minutes.
And just in case you want to know how the banks operate here, another anecdote:
The dollar fucking doubled it's rate between May and September last year. The measure the gobernment used to stop the rate rise was to take the credit rate to above 70% (Yes, that's a seven followed by a zero).
Then, a lot of people here manage their finances both with credit and debit cards, because it's a lot easier (Unless you want to be carrying a lot of bills in your pockets).
So, what do banks do? They fuck merchants over, by delaying as much as they can transferring the money, because they put that in the financial market (We're speaking in the weeks here, above 3 of them). Even with the fines and shit, they are making shitloads of money. So, that mean that merchants get fucked over twice: they don't get the money in time, and when they get it prices might have changed a lot, so in a lot...
https://www.theswiftcodes.com/argentina/
The banks where I checked where #52, #55 and #77
All in all, I received the same information in all 3, even thought they all have a SWIFT code assigned (So that probably mean they don't even have a registered account for the bank).
Here's a page from a rather large bank, where the process is exposed:
http://comex.bancogalicia.com/optimice-su-operatoria/bancos-...
It's in spanish, but if you click in either "Dólares" or "Euros" you get some bank icons below (3 in "dólares", 2 in "euros") with the details of the bank accounts where you could send the money. For any other currency, you have to call to get the instructions.
Can't get any more clearer.
Deposit in euros [1] Deposit in dollars [2]
[1] https://www.santanderrio.com.ar/banco/wcm/connect/d475bed5-9...
[2] https://www.santanderrio.com.ar/banco/wcm/connect/08c65dcd-d...
By the way if you are buying BTC, Kraken is much cheaper than 2% (more like 0.2%) and I think they take GBP.
It does sound like the banks are iffy.
I'm not sure you need a swift code, probably just a bank account number/sort code.
>The recipient gets money in their currency directly from TransferWise''s local bank account.
I have not tried Argentina as I have no business there but have sent money to Indonesia which is another tricky place and it worked fine. Fair enough re Kraken - they do GBP to BTC, not BTC to pesos.
Dude. Each country has their own way to sort stuff internally. For instance "sort code" is not something you find in countries like Spain (I have a bank account there; sort code is something found in the UK).
Nor are they found in this country. Here, we have what it's called CBU (Uniform bank key).
Again, when you go to a bank branch, _IF_ there's any relation between your bank account and a SWIFT account, they never tell you that information
And, considering that even in the cases you agree to do the transfer, you do not do that to a bank account in the SWIFT system that belongs to the branch but to a bank account in another country, I doubt we are integrated.
My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things.
Btc was banana money at first, and only people believing it would be a great thing as a concept made it work. We didn't expect to make banks, it was a happy side effect of a mad naive bet.
All great things start like that. Comics are now the thing, but 20 years ago were still for pationate nerds.
"But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright Brothers. But they also laughed at Bozo the Clown."
-- Carl Sagan
https://www.brainyquote.com/quotes/carl_sagan_163043
Going to share another quote, which I think is relative here -
“Those who are crazy enough to think they can change the world usually do.” - Steve Jobs
That's really rude.
Of course, if you don't ever try it, you can never be right for any reasons.
Bitcoin is IMO likely somewhere in between. It kickstarted a new concept in IT but money is a really simple (although powerful) usecase. I'm more interested what will be done with the concept in the future.
He wasn't even right. He was wrong in his estimation of the earth circumference, and lucky that America was there between both oceans...
As an idea, a hope, the starting point for iterating on the future of money.
As a way to make the society think and debate.
And as all that, I think it had been successful.
* Mining has become highly centralized, the opposite of its original intent.
* Transaction fees are too high to justify its use in every day transactions and small transfers.
* Very few merchants accept it for every day transactions, and the number has decreased over time.
Generally though, merchants wouldn't bother accepting it. Alongside the fees and whatnot, adoption is too low, fees are too high, time to confirm is too high, and it can complicate some legal stuff (like issuing VAT invoices).
Despite being a dominant force in film, they're selling poorly today.
Anyway, I would love cryptocurrency to succeed, and in an efficient manner (say we get all the problems worked out of proof of stake).
I guess I put too much faith in law enforcement.
This is what traditionally legal system with the power of violence used to deal with before. Now we see it implemented as a code. This part is more exciting to me than trying to sidestep whatever misguided government (not just US) rules and actions are.
EDIT: Perhaps proof of work based on burning energy, which is expensive and tends to bring centralized parties, is not the best way to ensure rules are enforced, but the fact the whole thing is open source is great in my opinion.
As far as I can see, there's no significant incentive to mine other than money, so miners want money, so you can persuade them with money.
The "consensus" is fundamentally an auction.
The internet is a technical embodiment of the First Amendment (freedom of speech, freedom of press, freedom of religion, right of peaceable assembly, right to complain about the government).
Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, and even life/liberty if you accept the unremarkable proposition that it's hard to live freely if you can't buy anything).
Having these technical protections in place are important regardless of their impact on or benefit to any one person.
How is it in any way different than having money in your bank account? If the government wants to, they can decide to take all your money from all your account, but they can also decide to throw you in jail until you hand over the keys to your Bitcoins. In the end there is no difference.
Meanwhile, the Technological Singularity people are working on the other half of the problem you describe.
And what's this Singularity nonsense of which you speak?
And if you want to have a discussion whether there are alternative ways to achieve specific valuable outcomes, count me out. This thread is about whether cryptocurrencies have any potential valuable outcomes besides the potential of lottery-style winnings for early adopters.
Ah, but this unwillingness to consider "why couldn't we do this without crypto", leading to rejection of study of centuries of useful economic and monetary theory development, is precisely what predicates the failure of cryptocurrencies to achieve potentially valuable outcomes.
That's precisely why I bring it up. If a thing is a) valuable/useful and b) possible without cryptocurrencies, why has it not been done before? The fact that it has not, suggests that either a) or b) is false.
and yes i think most cryptocoin loonies want any one of them to succeed , the potential is so crazy high, that wishing otherwise would be foolish
While I have invested in crypto and believe it has great potential, one of its touted benefits by its supporters is also one of its biggest pitfalls, namely that its money supply is predetermined. The inability to actively manage a money supply given exogenous shocks to the economy is a big problem.
With the latter you're constantly guessing and tweaking the model and roughly every 10 years there's a crash and the economists say okay, NOW we have it perfect and we'll never get it wrong again.
Why do you need an unlimited money supply? The only thing causing these shocks is that the economy is doing whatever it wants and then the economic model collapses.
The difference here is that inflation is predetermined and set instead of printing money on demand like we do in the traditional financial system.
What, specifically, do you think the consequences of a stable money supply are?
That’s an interesting speculation, but it remains to be seen what will happen when inflation is near zero.
If people value transacting on the network, then they will pay the necessary fees to keep it running. If they don’t then it will go down.
I suspect this isn’t the big issue people think it is, regardless there’s no way to “prove” that transaction fees won’t be enough — everyone from miners to speculators by owning mining equipment and Bitcoin are specifically betting that transaction fees will be enough.
If the network is used more it will be more valuable, which means the reward value will increase as the inflation decreases. If nobody uses the network then it'll be worthless, which at that point it doesn't matter since nobody is using it.
It only makes sense to take on debt if you have a productive way to put that money to use (Eg a business) that has a higher rate of return than the interest rate.
This cycle can continue forever, and the faster this cycle occurs the higher our GDP.
Gold, which, by the way, has an extraordinarily high energy and environmental cost to extract.
https://en.wikipedia.org/wiki/Gold_reserve#Officially_report...
The market moved on to other forms of money centuries ago.
Any supply of money will do, the idea that money should increase in supply along with population growth (or some other arbitrary metric) otherwise we’ll permanently live in a deflationary disaster is an imagined monster — we live in the here and now, therefore people have to spend some amount of money to live (food, housing, entertainment, etc) regardless of whether they perceive the purchasing power of money to increase in the future. By centrally planning (and thus inflating) the amount of money in circulation during financial crises the only thing that is accomplished is a re-inflation of the bubble — essentially they’re sowing the seeds of destruction again, causing the next bubble in an attempt to cure the last one.
Please read this explanation of the financial crisis, I’d be happy to comment further if you have specific critiques on this article (and no I didn’t write it):
https://www.unqualified-reservations.org/2008/10/misesian-ex...
> Any supply of money will do.
That is just nonsense. If you have a fixed money supply, given that economic growth is happening, would result in a naturally deflationary currency. That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.
The problem then is: if you want a low rate of inflation but there is a natural variation in the growth rate due to the cyclic nature of the economy, then how to create a system that could do that without a monetary authority.
Again, you HAVE to spend money to live (otherwise you die). It’s impossible to live without food and water, most people want to live in a house, most people want entertainment, etc. None of those things can be had without spending money.
Also, if your argument is correct, why don’t people put 100% of their money into the stock market (which reliably goes up over long periods of time) and instead choose to spend it?
Once it becomes too useful as a value store, it stops being used for trade, which hurts the economy.
So therefore some inflation is a good thing, it means the money keeps moving. If you want to store value you do that with assets other than money.
In what world is this true? Time preference is a real thing, and it is unrealistic to assume that 100% of the population will put off non-essential consumption and investment because the price of a Ferrari will decrease by 2.353% next year. Time is a very important factor in the consumption/investment decisions that people take, and modern mainstream economics neglect this fact both on the micro-level and on the macro-level, which is why crazy theories about the neccessity of inflation-rate targeting are able to arise. Most people put their savings in a bank account which the bank lends out to businesses to invest in projects - if anything more savings will lead to more investment than otherwise, which is more important to the bedrock of an economy than spending on consumption.
Also worth pointing out that the period during which the United States experienced its most significant economic growth (mid to late 1800s) was during a period of severe deflation of the dollar.
Keynesian economics (and more generally monetary policy) and inflation-targeting (i.e. the neccessity of having a positive inflation rate) is both theoretically disproven by the existence of time preference (a time preference of zero is literally impossible, it means starving to death) and its heterogenous distribution in a population, as well as empirically by looking at the periods of deflation in the U.S. dollar during the 1800s and the associated economic growth.
Have we seen this to be a problem within the context of Bitcoin?
In that world, there would also be nothing to stop anyone else from just taking your money by force and without any consequences.
The loudest voices against government regulation of finance usually belong to those with the least understanding of it. Most of the regulation is just there to protect market participants.
If I am a victim of fraud and lose my money, I have the concept of the rule of law to help me get my money back. In a decentralized world there is no way to get my money back.
Besides, it is the government's job to help society function well, in part by making the economy successful. Money is just a tool to do that.
The governments ability to print money has absolutely nothing to do with its police force.
If someone steals money from others, then the police should go in and arrest them. The police don't need a printing press to do their job.
It is perfectly possible for the rule of law to exist, and for decentralized currencies, to also exist at the same time.
there are going to be consequences. It's just that they will be enforced by smart contracts instead of governments..
if that 's the only problem with cryptocurrencies, it can easily be solved with insurance
Indeed. And not just because they're absolutely terrible at it: giving control over money creation to a government is like giving a drug addict the keys to the heroin factory.
Deflationary tokens are not much good as a currency but they are good as a Ponzi scheme.
This is what most "blockchain" enthusiasts get wrong. They think it is just about technology, and thus, they can come up with "a better bitcoin."
They're missing that the predetermined monetary policy is the key innovation of Bitcoin, and that by creating a new "blockchain" which prints new money, they are shooting themselves in the foot, because they can't ever be "a superior bitcoin" when they have inflation as part of the parcel.
A free market does not really care about whether some people have the opinion that deflation is bad. At the end of the day, nobody can change Bitcoin's monetary policy, and it will be left to the free market to decide whether or not they are going to put their money in this, or whether they're going to bet on inflation.
I would have much more faith in a cryptocoin's potential as a currency if the predetermined monetary policy was something like Friedman's k-percent rule: https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule
Of course this would vastly reduce the Ponzi aspect for early owners which might remove most of the appeal.
And I still wouldn't have much faith in it since I doubt being decentralized is enough of a benefit for people to switch away from government currency and normal banking.
A majority of hashing power in the network could change Bitcoins monetary policy.
A majority of hashing power attempting to change monetary policy spins off a forked coin which does not have economic value because it does not have economic users.
If the overwhelming majority of bitcoin users (98%+) wished to do so, they could possibly change the monetary policy. Of course this will never happen, because there are die-hards like myself who will always stick with the non-inflationary bitcoin.
And then, the market decides whether to stick with the non-inflationary coin, or to use an inflationary one.
The worst that a majority of miners could do the the non-inflationary bitcoin is temporary denial of service, or attempted double spending of their own money. It's going to cost them an awful lot in electricity to try either, and they're not going to get that money back unless they're generating coins that are in demand to buy.
You seem to be assuming that anyone interested in crypto is in it for the money.
I assure you, that's not the case. To me, getting the money supply out of the clutches of governments is the most important aspect of crypto-currencies.
To answer your question: Which crypto wins and how much it'll be worth are the last of my concern, as I will profit, along with all of society, from getting the govt to surrender management of something they're basically terrible at.
If the cryptocurrency was at least somewhat open and efficient, then I would be extremely happy. If it was more like a payment layer that only a few large banks could use, I would be still be happy, but much less so.
Most cryptocurrency fans seem to be optimistic investors looking to join in on the massive returns seen by investors in 2016-2017. Most of them care more for generating 'hype' and seeing an increase in the value of the coin they hold, just so they can dump their holdings later. I don't think they'd be too interested in a coin that inflated in value that they didn't hold (they'd probably instead promote something they did hold). Most cryptocurrency fans do not hold one particular coin, and generally change which coin they advocate for pretty often.
Cryptocurrency communities are generally pretty toxic and non-constructive environments. I've been part of a couple, and I've noticed multiple times a massive decline in the quality of the community (and, sometimes, in development as well) as the cryptocurrency got more popular (and more people joined the community).
$100: Absolutely.
$1000: Tough, but I'd do it if it meant the promised change to financial services
$10000: Unlikely, I'd rather keep my non-perfect coins
$100000: No way.
The reason is that I think that while governments can be better at monetary policy, they need competition to keep them in check. Other currencies technically provide that competition, but they can be suppressed via legislation in a given jurisdiction, and this is, in fact, commonly done precisely where such competition would have practical sense (e.g. countries with hyperinflation often try to regulate and even outright ban currency exchange; or the various historical bans on private ownership of bullion gold in many countries).
Bitcoin is always there, available to anyone who has Internet access and can get past "great firewalls" (and when people's money are at stake, they are surprisingly good at learning such things). Consequently, the government can only do so much to its own money before it starts losing that competition - Venezuela is one ongoing example.
Plurality is the name of the game. History has endless examples. Yes nothing would last but...the better monies would move to a better monies. It's called competition. There is very little competition when it comes to monetary policies. Crypto will foster more of it. It can get messy but hopefully it won't get deadly.
However if there is a slight chance I might profit from it, I'll gladly take those odds.
An overnight crypto miracle won't happen, by the way. Money is too important and requires too much trust for an overnight success to occur.
Every year that the BTC network runs without a major exploit, is another year of confidence in the network protocol's security. Unlike some software categories that are prone to rapid disruption, money is not one of those things.
Disruption occurs a lot slower for very important reasons. People have to trust in a crypto currency in order to store value in it and exchange value for it. That takes time, to test in production if any major exploits exist.
It's not trivial what Bitcoin has accomplished this far.
There are a lot of questions and speculation here about this paper and Algorand. I would be happy to try an answer them to your satisfaction. Some context may be helpful first, though. This paper is an innovation about one aspect of our technology. Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
The Algorand pure proof-of-stake blockchain and associated cryptocurrency has many novel innovations aside from Vault. It possesses security and scalability properties beyond what any other blockchain technology allows while still being completely decentralized. Our website, algorand.com, and whitepaper are great places to start to learn more.
If you learn best from videos then I suggest you watch Turing award winner and cryptographic pioneer, Silvio Micali, talk about Algorand: https://youtu.be/NykZ-ZSKkxM. He is a captivating speaker and the founder of Algorand.
[1] https://www.algorand.com/
[2] https://dspace.mit.edu/handle/1721.1/117821
Ethereum is scared or that so they are implementing some hybrid form.
Bitcoin is doomed from my perspective, because of the focus on proof of work and the confirmation times. When you realize that algorand is super fast, there is no "confirmation time", and there is no waste in energy to mine, then it is hard to back up any cryptocurrency focusing on proof of work.
> Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
What prevents a person from using a chain like IPFS?
Ethereum Casper PoS has been under review for quite some time.
Why isn't all Bitcoin on Lightning Network?
Bitcoin could make bootstrapping faster by choosing a considered-good blockhash and balances, but AFAIU, re-verifying transactions like Bitcoin and derivatives do prevents hash collision attacks that are currently considered infeasible for SHA-256 (especially given a low block size).
There was an analysis somewhere where they calculated the cloud server instance costs of mounting a ~51% attack (which applies to PoW chains) for various blockchains.
Bitcoin is not profitable to mine in places without heavily subsidized dirty/clean energy anymore: energy and Bitcoin commodity costs and prices have intersected. They'll need any of: inexpensive clean energy, more efficient chips, higher speculative value.
Energy arbitrage (grid-scale energy storage) may be more profitable now. We need energy storage in order to reach 100% renewable energy (regardless of floundering policy support).
Bitcoin is software and can easily implement these features but the community is divided and can't reach consensus on anything. Lightning Network as layer two solution is pretty good from what I know.
Ethereum improvements are coming along very slowly and that's good. They're the only blockchain with active engagement by thousands of multiple parties.
Aragaon and Vault's papers might sound good, but who knows how they'll turn out in production.
Ripple only runs ~7% of validator nodes; which is far less centralized control than major Bitcoin mining pools and businesses (who do the deciding in regards to the many Bitcoin hard forks); that's one form of decentralization.
Ripple clients can use their own UNL or use the Ripple-approved UNL.
Ripple is traded on a number of exchanges (though fewer than Bitcoin for certain); that's another form of decentralization.
As an open standard, ILP will further reduce vendor lock in (and increase interoperability between) networks that choose to implement it.
There are forks of Ripple (e.g. Stellar) just like there are forks of Bitcoin and Ethereum.
From https://ripple.com/insights/the-inherently-decentralized-nat... :
> In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied. Of the approximately 150 validators today, Ripple runs only 10. Unlike Bitcoin and Ethereum — where one miner could have 51 percent of the hashing power — each Ripple validator only has one vote in support of an exchange or ordering a transaction.
How does your definition of 'decentralized' differ?
- it is very hard to audit the chain for bugs. If someone finds a bug to create coins through thin air you probably won't notice it.
- regulations by states is made hard. If you are required to pay taxes, and you live in a society, then these things do matter.
If you want cryptocurrencies to work, we need cryptocoins that are not encrypting transactions.
Another way to think about it: if Bitcoin somehow worked without mining, that's no reason for demand or usage of Bitcoin to go down. The value of bitcoins comes from network effects and scarcity.
> Vault reduced the bandwidth for joining its network by 99 percent compared to Bitcoin and 90 percent compared to Ethereum, which is considered one of today’s most efficient cryptocurrencies
1) Since when are these considered efficient? I don't think anybody in the know would say this. They're the most popular, but no means the most efficient.
Bitcoin is 250GB, so 90% of that is still 25GB to join the network, which is still ahhh enormous amount. And what's the baseline for comparison here? Were all of bitcoin's transactions replayed on an Algorand test network for this comparison? Or is this a metric from some test usage? If the latter then that's a huge issue since it grows in size.
2) On top of that you're saying it could accrue a terabyte a month in data. What type of usage is this under? Is that on current bitcoin transaction levels? 2017 transaction levels? A steady state tx/s? Is a backup of this data needed or is it throwaway and summarized in the latest blocks? If it's still needed then that's a decentralization issue because not many people will be maintaining full nodes.
3) What type of specs are affected by these changes? Can you still perform atomic swaps? That's a pretty standard requirement nowadays and would hinder the Blocknet and exchange interiperability.
Algorand's consensus per the YT video you linked is step 1. 1 user is randomly chosen to propagate a new block (can user make up a fake block? let's assume not) step 2. 1000 users randomly selected vote on that block and if they agree, it's DONE. (what if 1000 users are in the same country/company, etc. how do you prevent collusion on fake blocks)
This is hilarious. So the only thing you rely on for consensus is 1001 random 'users' input weighted by stake? What happens when your network is bombed with 1000tps and you need to contact 1001 staked users for every block? There are also vulnerabilities such as the recent "fake stake" bug that affect pure POS coins which I won't go into.
Now about the article referencing Vault. I believe NANO came up with this bootstrapping feature:
> Each user account only ever stores the balances of the accounts in its assigned shard
Yes they are replicating NANO's block lattice structure using "shards" with an insecure way of trusting any future chain that includes your old tx's but gives no guarantee on the state of any other account. As I understand it, I can be fed a fake chain while bootstrapping and accept phony funds as long as my balance shows up, right? ...Assuming this feature worked without any security holes, what's to stop other coins from implementing it? You don't need an entire cryptocurrency for it, it's just a feature and if it worked everyone would be using it. The sharding problem has not yet been solved and there are coins like Ethereum that are trying really hard to make it happen.
It's really sad to see this low-quality content come out of MIT. This looks like someone trying desperately to get a piece of the Crypto pie using MIT's reputation as a get rich quick scheme. Just for kicks I looked through reddit/r/cc and found only 5 dead posts mentioning Algorand with no comments on any of them. Their website makes all these claims about "pioneering a sortition algorithm" that looks "totally legit" if you ask me.
https://coinmarketcap.com/historical/20171029/
Coinmarketcap just reflects what people invest in at a certain time, it doesn't mean that these investments are rational or are based on highly calculated decisions. A lot of coins in the top 100 are copycats, tokens or just concepts, very few are fully functional products.
and after
In NANO every account is a virtual blockchain. This means when you want to send funds, you have to "mine" a low-difficulty block on your own account and simply publish the results of that block to the network. No one does any real mining in NANO, you can think of "mining" your own blocks the same as signing or encrypting messages. Check out https://nanospeed.live for a speed test.
I'm not related to their team or that website and I don't own NANO, but I do follow their news and liked that site.
Disclaimer: built some apps on top of Nano, decently pleasant experience. I keep up a bit with the development of the node software.
I'm no expert on blockchain, but crypto taught me very very very powerful and insightful investing lessons.
As a result I certainly don't trust Bitcoin with anything more than pocket change. I would, on the other hand, put money on Algorand. A Bitcoin attacker could conceivably DOS a handful of honest miners/network relays (given that mining seems pretty centralized), sequester a third of the mining network, and mint money.
No matter how much DOS power you have, you cannot mint money on Algorand without a substantial proportion of the stake.
If users cannot verify the amount of coin in the network this is useless.
But basically the deal crypto developers are trying to make with me is to trade US backed dollars for "fun bux". These developers are usually very smart people - often much smarter than I. But I don't like smart. Take US dollars. Little pieces of green paper are very uncomplicated and if anyone starts copying them armed thugs show up at their house to have a very serious discussion. And my corner chemist takes dead presidents on delivery no questions asked.
The economist-in-me appreciates that non-legal activities are perfectly capable of both demanding and supporting a novel financial instrument on their own, I only exclude it from my question because it's a rather obvious application and I would like to probe beyond that.
There are a lot of people in the world that live in places where the law is far more gone than "misguided." For these people, it's not a question of "whether" to side-step the law but "how." You may not care, but they do.
People who bring this up are almost always people who have never lived anywhere near real poverty or conflict. Barring individual cases, the vast majority of the world's less privileged have neither the means nor the knowledge to buy crypto in any shape
The hard part is not adoption within poverty-stricken nations, rather adoption in developed nations with complicated tax codes and lack of incentives for merchants to invest in more payment processing tech is the true challenge ahead.
My country - India - has the world's largest number of poor. Even if these people were to get smartphones, there are already deeply entrenched players (PayTM, Google Pay) who offer free and instant transactions.
This is true for a lot of African countries as well. No reason for anyone to use a new currency when there's already M-Pesa and UPI and PayTM that use the currency they already know and trust.
Prepping makes sense to the mainstream once they experience a disaster. And those disasters are being manufactured even now by mis-management of debt.
I know of Ukrainian developers being paid in ETH for that reason.
Adult cam models in some countries are another example.
FWIW, complianceless payments are dejure illegal by definition. So any economic activity being made possible by them is roadkill of the current regulatory environment, legally speaking. A nice example of Bastiat's "That which is not seen".
A transaction does not become illegal just because some class of players do not want to become part of it.
There are many LEGAL activities that people do not want to show up in a central database. For example, think of many things related to love and relationships.
"tantamount to waiting for a greater fool to buy out the current players" <= this is like investing works in general, or? ;-)
Unfortunately cryptocurrencies aren't just a central database they're a distributed database - all transactions are public. You can try using a tumbler service but since these are obviously money laundering havens they're not going to last long.
Not the case, see payment channels.
It is trivial to look up the signed transaction to the specific address in the digital currency's blockchain. Hence, the shipping company can handle that situation.
On the other hand, try to get an irrefutable digital proof of payment from a bank. For example, get them to email you anything to you, anything at all, that you can use as proof that you paid last month's rent. A bank cannot do that, not even to save themselves from drowning.
Whenever you need to digitally prove payment to a third party, you need to use a payment method that can provide such proof.
I don't see why the shipping company needs to verify anything themselves - they just need a call from the owner of the goods directing the shipment.
And when it comes to trade between untrusted parties, it starts slow. To build trust.
Though crypto is great to making faster payments, that's sometimes an issue, and it can save the seller from the buyer's scam, but on the other hand completely exposes the buyer to the seller's scams. (Because cryptocurrency transfers are non-reversible usually [as in ever, except with a hard fork].)
If you want to explore the utility of crypto go check out different online communities that focus on that, some decent ones on reddit. The level of discussion on HN is usually "crypto baaad, centralized goood". As an economist I'm sure you expect more. Unless you want those ideas reinforced, keep the discussion here!
I think they subconsciously see it as an attack on state-sovereignty or something like that. The ability to tax and redistribute. That's just me reading between the lines.
I rather like the level of discourse on HN in general - it's not unusual to find someone providing a high-level though-out response on various subjects. Asking the right question is also hard, but not as hard.
- micropayments: the products that that enables - web-native currency: Makes it easier for apps to integrate money. Games, chat, maybe torrents we're told - easier to transfer money between institutions (maybe easy in the US but it's super hard in Canada)
For example, while it'd be a bit of a hack, you could fairly easily re-use even the various Certificate Transparency blockchains to trade stocks.
Also, I wouldn't say that the incentive mechanisms keep the ledger running. Rather they keep the PoW consensus mechanism running; in all existing trustless decentralized currencies it's your node that verifies the ledger is working correctly, and other people are voluntarily distributing the data without a reward.
I am curious why you think that those 3 cases are somehow not valid or interesting enough in their own right?
But... it also brings financial service options to people who have no opinions or only truly awful options.
If you are a non-homeless American, you don’t need crypto. American banks are bending over backwards to serve you. But, if you are a homeless American. Or if you are one of the unbanked billions around the world. Or, if you are a Venezuelan, Nigerian, etc... then the establishment is either dismissing you or actively working to screw you.
Crypto can bring tremendous value to all of them while bringing very little to the establishment by simply acting as a PayPal alternative for the extreme poor. If it manages to survive that, it will get better and better. Eventually it will creep up to becoming useful for rich westerners.
I think I can buy that. The unbanked could become centrally-banked like all of us as their countries develop, but there is a competition between that and the cryptocurrency which could wedge itself in at this point and outcompete the local government simply because the government is small and lacks in experience (maybe corrupt too). Another contender here is WeChat and similar centralized payment technologies, but they too are hamstrung by their own current governments (I'm sure that Payapal is) giving breathing room to competition.
It is not obvious to me which one of the three will win among the unbanked.
In the long run I think banks will win amongst the unbanked.
It's also worth considering that crypto is effectively the greatest experiment the world has ever seen in free banking: https://en.wikipedia.org/wiki/Free_banking. Hypothetically, this could be done with paper+metal currencies, or centralized digital currencies; but for whatever reason, crypto is getting a regulatory pass where past "experiments" have been shut down hard by states who claim a monopoly on issuing currency, for better or worse.
Rather than viewing blockchains through the narrow lens of "Money 2.0", I think it's more relevant to view both money and blockchains as social technologies to solve coordination problems, and then inquire about those technologies' performance characteristics, incentives, externalities, and moral hazards. I think there's longterm potential for blockchain use cases to find traction; but at the same time, it may be that centralized solutions simply achieve superior results, in the same way that Amazon out-competes mom-and-pop retail, and Netflix out-competes buying DVDs. (The market lessons of the last twenty years seem to indicate that consumers value cost and convenience vastly more than abstract notions of freedom.)
Only question is when it will end.
- Attempts to side-step the law (however misguided the law is)
- Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA) - Tantamount to waiting for a greater fool to buy out the current players
The 3rd point is the same for any fiat currency on forex and many governments are the same as the ICO shills.
I'm not justifying them just stating that in many cases the gamble on currency is the same.
You did present a nice Strawman but I'll bite. Ok. I get asked about cryptos quite often also. So if not a digital currency like BTC then what?
Why use cash? Only criminals use cash! Really! If LE should catch you having more than x,xxx.00 in cash they should arrest you? Why? Because obviously you are trying to do something illegal. (civil forfeiture)
Trivial to do tx with 3rd parties???? What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date. Including BTC. Although BTC is an attempt to provide similar means as cash (fiat) in a global digital sense.
Then again there is this which is perfectly good: https://en.wikipedia.org/wiki/Contaminated_currency
In areas that are ahead in digital payments technologies, cash is dying out very fast.
In the US, you may want to use cash (as a seller) to avoid transaction fees. But in countries like Norway that has implemented a cheap national debit payment system (BankAxept), that's not been a big issue. Now the banks in Norway has implemented a common payment app as well (Vipps), which is free for transactions between individuals.. this has started to kill off cash in all the areas it held out before (sales of used items, buying cookies from scouts, etc)
> What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date.
If you ask me, that's because making payment systems is actually extremely hard. It's just that cryptocurrencies pretend it's not, by simply ignoring a whole lot of real-world issues that you would address if you were making a payment system that wasn't trying to make blockchains fit the problem.
Most of the challenges with payment systems are social. Challenges related to what happens if there's an error, a scam, a theft, etc. Cryptocurrencies just avoid it all by saying there is never any errors, even when any reasonable person would say there is.
If you think there's no alternatives, I'd say you're very US-centric. Outside the US there are lots of places that are already most of the way there.
Security that no third party can just take your money anytime, without your explicit signature.
Liquidity for new tokens issued by projects / communities without great access to global markets and exchanges.
Programmable money that follows rules you can rely on when you invest in a project / deposit money into a community / donate to Haiti.
UBI on a community level funded by community members or donors
Analytics on how money is flowing around available to everyone and not just stored in a central database with information asymmetry.
These can be combined. For example Analytics can help you figure out the cost of food in your community, then vote for a level of UBI that eliminates food insecurity, and adjust this amount on a daily basis through direct democracy (Provably Random Polling.)
Intercoin’s mission is to make access to local fintech more available to local communities and online projects, without having to rely on central banks for monetary policy or the IRS for collecting taxes and being able to calculate eg the Consumer Price Index on the community level
More info at https://intercoin.org see the presentations and whitepaper.
Besides that, just because something is illegal doesn't make it wrong. Many nations restrict transactions that are not reasonable to restrict.
So what's wrong with side-stepping bad laws (but also monopolistic players in the financial space such as PayPal and Western Union)?
Your second bullet point is mutually exclusive with the first.
But national currencies are getting increasingly shaky, even the USD where it appears Congress has no political will to control the US national debt and deficit, and where the GOP blows bigger deficit holes with tax cuts and the Dems are talking about MMT. Not to mention the risks to the Euro and Yuan, along with the many smaller countries with distressed currencies.
It’s interesting to me that cryptocurrrency skeptics and critics seem to regularly ignore this as a use case, when in fact it is the most important one (maybe even the only one). It seems many people can’t bring themselves to believe that modern national currencies can fail and don’t need an independent hedge, even though the 1800s and 1900s were full of exactly that.
https://en.bitcoin.it/wiki/Genesis_block
"The coinbase parameter (seen above in hex) contains, along with the normal data, the following text:
At the moment cryptocurrencies seem a good be worse than fiat. Imagine your salary or mortgage was a set number of bitcoins.
There were probably a number of initial uses imagined but if you look as Szabo's twitter pretty much the first link is The Crypto Anarchist Manifesto about circumventing government and libertarian freedom which I think was a big part of the inspiration.
(https://mobile.twitter.com/NickSzabo4/status/107401811082955... )
Yes they’re volatile, but they’re new, immature tech, with shallow market depth. None of those things will last forever.
Course, you could just use Visa gift cards for these kinds of usages. It's probably a bit more convenient to do it this way, rather than keep topping up a card.
Some other use cases noting that cryptocurrencies tend to have public ledgers.
It's perfectly legal for me to, for example, donate money to WikiLeaks. But Visa and Mastercard aggressively canceled every merchant account that allowed people to donate to WikiLeaks through the Visa and Mastercard systems, apparently because of secret pressure from US government officials who were unhappy about some of the things that WikiLeaks revealed. The Snowden revelations — which may not have been legal, so they are peripheral to your question — very likely wouldn't have happened without WikiLeaks being able to support him, which they could only do because they could receive Bitcoin.
Similarly, many Patreon accounts are getting canceled because their owners have published things that are embarrassing to Patreon, but not illegal (typically, racist remarks). If Bitcoin becomes mainstream, there won't be a centralized authority like Patreon that is in a position to end people's livelihoods because they publish politically undesirable viewpoints. (Right now, those viewpoints are viewpoints that are odious to you, but there's no guarantee that that will be the case in the future; it's easy to imagine Patreon bending to Chinese government pressure to censor people who talk about Falun Dafa persecution or Tiananmen Square, for example, even in countries where that is legal.)
As another example, many Venezuelans are having difficulty fleeing the country, even though fleeing the country is technically legal, due to both official corruption and armed gangs. You could argue that it's not clear what is and isn't legal in Venezuela right now because there are two competing governments, but neither of those governments authorizes demanding bribes from would-be émigrés.
As yet another example, it's perfectly legal in Iran and France for French companies to do business with Iranian companies. But, because much of the world financial system is controlled by the US, it can be difficult in practice; see https://www.washingtonpost.com/world/europe/europe-says-it-w... for more details. Regardless of whether US law is misguided or not, under well-established principles of international law dating back to the Peace of Westphalia, it certainly does not apply to French companies doing business in France with Iranian companies in Iran.
So, in a sense, I think you're right that the main purpose of cryptocurrencies is to sidestep violent coercion. I think you're terribly naïve about how much illegal violent coercion is actually "the law", although that's understandable if you've never lived outside a developed country.
There are other uses as well; it's a dramatically better way to send money overseas, for example. Last time someone sent me money via Western Union, I had to go to three different locations, stand in line for twenty minutes, hand over a massive amount of personal information (perfectly suited for identity fraud or targeted home robbery) to an unaccountable third party, sign a false statement, and walk out the door into a dangerous neighborhood with a pocket full of small bills. For this "service", WU charged me/them about 10% of the money sent, and also didn't inform me when it arrived. Bitcoin transactions require none of this nonsense and cost much less; the last Bitcoin payment I received from overseas cost 0.3%, and I received a notification in a few minutes in my Bitcoin client of the transaction.
2 - Trivial to do using a typical centralized database (e.g. Federal Reserve or VISA) -> Bitcoin, Ethereum and others can do Smart Contracts which means delayed sending, multi-sender transactions that serve as escrow and in the case of Ethereum programmable using it's own language to do any number of actions/apps. The important feature is that this is handled by the network using your own transaction, you don't have to set up the escrow through a company like VISA, Paypal, etc.
3- Tantamount to waiting for a greater fool to buy out the current players -> This is true of all CC because it's an open, yet small market. The earlier you get in, the better your outcome. However, it's not like CC's NEED to explode in price to be useful, competitive or solve a real-world problem. Getting rich is a secondary effect of having a functional CC reach adoption. Look at MemeCoins like Doge and Banano to see adoption is easier when everyone abandons the idea of getting rich off a coin.
And I don't see why you dismiss the importance of the first one. What if I'm trying to flee the country with something to my name, like Venezuela. Tough luck?
I called out Coda because it's both an independent system and aimed at a very similar set of issues, but it's absolutely a different approach. Figured it might be of interest to folks who were looking at this article.
https://nipopows.com/
I haven't heard anyone say this about Algorand. Can you provide more details? Lets say a bug causes all the Algorand nodes to crash. After a patch is released 90% of the network comes back online. What prevents the selected users from arriving at consensus over the next block?
To walk through a plausible example: let's say 3 Chinese services control 35% of the stake of Algorand. Without warning or any public announcement, the Chinese government steps in and forces them to turn off their servers. The Algorand network will now stop functioning as it can't reach 2/3rds. Hours go by and no one is able to transact. At this point, the network needs to decide how to proceed. Does everyone just agree to take a complete loss?
Most likely, a group of other stakers would work on a proposal to deal with it, maybe by removing the offline tokens. How do they get consensus for this proposal? And, if they do it, what do they do if the Chinese stakers come back online?
Your question has changed into: "doesn't the system break when a malicious party controls 35% of the stake?"
To which the answer is yes. If a malicious party can control 35% of the stake, that is very bad.
I should add, though, that if you know your machine is going to be taken down, you can mark your account as "offline" via a special transaction, which will allow the network to proceed without you by increasing the probability that others will be chosen to be on a committee.
That didn't happen in this case. The Chinese government never took anyone's keys or controlled any stake, which is the point of the example.
The malicious parties don't need control. They don't need to take anyone's keys or access their servers. They just need to be able to bring it offline, which is much easier to do.
Which raises the question I asked and you didn't answer: if 35% of the stake goes offline with no signs of coming back, how do participants reach consensus?
It is true that if 35% of the participating stake is suddenly prevented from contacting the network, no new blocks will be created. The word "participating" is important -- you can have stake that is not participating in the agreement protocol, but that is still spendable.
The only way I can think of to mitigate the scenario you've described would be this: before going offline, you can broadcast a transaction which essentially removes your stake from the pool of participating coins until you're able to come online again. This would ensure the network can proceed without you.
Algorand has a lot of interesting technology and may have some use cases. But it's more like a distributed database / voting system than a true cryptocurrency.
* Bitcoin loses consistency
* Algorand loses availability
I'm glad Algorand exists so that systems which value consistency over availability can be built.
[0]: https://en.wikipedia.org/wiki/CAP_theorem
In your terms, both bitcoin and algorand have weak availability.