> bitcoin is a meme token for gambling on a fantasy about living in a cyberpunk dystopia.
Ok, thanks.
> It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.
This sure sounds like “a fantasy about living in a cyberpunk dystopia” too. Maybe the author should diversify a little into Bitcoin, and relax.
Another rant about crypto which ignores Nano, which has been around for 6 years now.
*y*a*w*n*.
There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.
Nano just got its own currency ticker - XNO - and avoids every fault this author finds in the rest of the field.
Mr. Diehl went far enough to pick out some flaws, and then generalized them onto every variant of the technology without going that little bit further to actually check if he's right or not. Laziness.
There's so many 'Edisons' out there who have decided that because 9,999 filaments don't work that well, lightbulbs are a dead technology. And it's so tiresome - because there's a feckin LED lighthouse beaming photons across the planet as we speak.
I get that this is all 'new' and confusing, but the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
All of Stellar, Hedera and Algorand have a big centralization problem, they have solved nothing. Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
> the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
In my experience the people being very optimistic about crypto real world use cases usually have their first exposure with economic theory from within the crypto sphere and lack the real world experience to know some actual pain points of the current economic system. For example the oracle problem is severly glossed over by smart contract approaches, which mostly try to solve trust issues that are essentially solved issues in the real world.
> All of Stellar, Hedera and Algorand have a big centralization problem, they have solved nothing.
Such claims must be further substantiated with strong and sufficient evidence. Elaborate your claim further with each cryptocurrency with valid sources, otherwise your claim is baseless.
> Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Did you just prove the point of the original comment in this thread? [0] Nano has been ignored once again.
> Such claims must be further substantiated with strong and sufficient evidence.
No, it's the other way around. Bitcoin only employed approaches that were well-researched already, the innovation essentially was combining these together. The projects I mentioned claim that they can achieve better performance without the known costs of bitcoin (really slow, really energetically expensive). It is up to them to post proof how they achieve that.
> So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Projects with some form of blockchain, which Stellar and Ripple don't have. They are essentially just a horizontically scaled, classic database (running on the nodes), which the clients access. The nodes each have a full copy of the database. There's no blockchain, no mining or any substitute etc.
> Nano
I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets). Nano invented their own consensus protocol. They have the usual suspicious claims (fast, no transfer fees, no/low energy costs) that are only really achievable with a centralized design (i.e. a conventional database). How can they achieve security without heavy costs for appending to the ledger?
So you have no evidence or sources to your previous claims? As expected.
> Projects with some form of blockchain, which Stellar and Ripple don't have.
Projects such as what? Yet again no examples or sources given and more unfounded claims.
> I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets).
And your point is all of the other projects (including Nano) are not 'blockchains' nor are they 'cryptocurrencies', because it is not mineable and they have 'invented their own consensus protocol'. First of all evidence that it isn't a 'blockchain'? Secondly, so I can modify the very first transaction in each of these 'conventional databases' right now?
Before you avoid giving sources again, what examples satisfies your definition of a 'proper' cryptocurrency and the claims that the aforementioned projects are not 'blockchains' or 'cryptocurrencies' or even that they are 'centralized'?
> So you have no evidence or sources to your previous claims? As expected.
If someone comes around and claims to have invented a perpetuum mobile, it is not my duty to disproof them.
> Projects such as what?
Such as Bitcoin or Ethereum.
> First of all evidence that it isn't a 'blockchain'?
It's in their whitepapers, read it up. With all due respect, I don't get the feeling you know what these words mean. Hint: the G in DAG stands for "graph", so it can't be a blockchain.
Take a step back for the moment and think about it: The inherent problem cryptocurrencies have to solve, when you take away central coordination, is the trust issue with the data. Bitcoin and other cryptocurrencies tried to replace the trust in the central institution with trust in the implemented market incentives. That's why there is mining. They didn't put mining into the equation because they liked putting out CO2. There has to be something expensive to compensate for the lack of central coordination. That is why crypto is so horribly slow and expensive. The inventors didn't sit around and thought of creating the slowest possible implementation, it simply has to be expensive so that forging the ledger is expensive - because that price is the only thing preventing the rewriting of history.
With a central institution you don't have this problem: If say Paypal is the only institution allowed to write onto the ledger, you can easily have 100k ops per second or more - because these literally are simple writes to a conventional database.
You simply can't have both. In cryptocurrencies, by definition, everyone connected to the net has write access to the ledger. So you have to have a method to make writing to it expensive. If some project comes around and claims to have invented something that can only be described as an economic perpetuum mobile, i.e. having neither central coordination nor expensive writes, it is their burden of proof. Just like bitcoin did.
Edit: I looked into Nanos whitepaper and apparently Nano is trivially DDOSable for very small amounts of money. Have a look yourself:
Page 7: 4.2million transactions = 1.7G ledger size. So a transaction is 405 bytes.
Page 8: A GTX 1060 can calculate 1.25tx/seconds.
Pre Covid a GTX was 200€ and could spam the ledger with 43.74MB/day. So one only needs to invest 100k€ to flood the ledger with 22G/day / 660G/month.
So either a) the whitepaper lies, or b) Nano is completely broken, or c) There is centralization somewhere to ward off that spam.
> apparently Nano is trivially DDOSable for very small amounts of money
Do a little more research - Nano had real life spam attacks, then mitigated the spam problem with an innovative 'bucket' method. This put the lie to the common Bitcoin Maxi claim that "There has to be something expensive to compensate for the lack of central coordination."
As for Nano not being a blockchain; hint: there are chains of blocks. Look at the Nano Wiki page (very short): "Nano uses a block-lattice data structure, where every account has its own blockchain (account-chain)."
I'd say it's funny how confidently wrong your comments are; but it's just way way to common to be anything but tedious. Which was my original point precisely.
The transactions are still fee-less and well under a second.
And yes, that's the caveat, if you want to ignore the genius of it and completely get it wrong instead of learning something. It uses blockchain; it's blockchain tech, but you are soo right to say it's not blockchain because it uses blockchian in an innovative way.
Jesus fucking Christ; people who can't admit when they're out of their depth really irritate the ever-living shit out of me. Not you though, you are hilarious.
Yes, there are straight Ponzi schemes in crypto. I seem to remember that 'PonziCoin' actually did quite well. Twice. Like, a quarter million dollars in eight hours well.
But there is also utility. Huge utility, recognized by multiple governments by now. And people working relentlessly to free us from depending on the beyond-evil bankers strip-mining every facet of existence on this planet for their own short-term gain.
This entire post seems to avoid or lack the understanding of the basic reasons blockchain were created; that is, to offer a decentralized, permissionless, censorship-resistant network.
This was Satoshi's vision, and those values are a blockchain's express priority over scale and efficiency.
Centralization is great for speed and efficiency, not so great for protection against authoritarian actors (governments or central banks).
As for protection against authoritarian actors. If your state has already gone full panopticon, crypto won't save you, indeed the state will mandate exclusive use of their chosen crypto, gaining even more visibility into your life. If your state has not yet done so, you should fight to preserve liberty and the rule of law. If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency. I regret that the only business I know to be benefiting from bitcoin is ransomware.
Cash is awful if you live in Turkey, Venezuela, Zimbabwe, Lebanon, etc. The USD has lost 90% of its purchasing power since the 1950's, meaning cash is toxic over longer time horizons. You cannot have a society where everyone seeks to get rid of the reserve asset over time.
> If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
You're going to have much better chances anonymizing yourself, compared to say a bank account.
> I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency.
Bitcoin is a savings account in a world where Bank of America's Savings account yields you 0.01% APY, or up to 0.04% if you have more money. We are increasingly forced to take on more risk simply to maintain the purchasing power of our wealth.
> The USD has lost 90% of its purchasing power since the 1950's
That's a meaningless number without context: The median income gain was 2000% (i.e. double the purchasing power loss) during the same period (median yearly family income was $3300 in 1950 https://www.census.gov/library/publications/1952/demo/p60-00...)
Yes, money creation pushed wages up as it did costs. And gains from technology resulted in real wealth increases for society in general.
However, holding the asset itself resulted in loss of buying power over time. There is a distinction between cash the asset (the thing you hold and trade with), and income.
Holding shares in a corporation over 50 years may be a good idea (depending on the company).
Holding land/house over 50 years may be a good idea (depending on the location).
Holding fiat cash over 50 years is never a good idea.
And the problem is someone in society has to hold it; we can't all own stocks and houses.
The flip side is deflation, though. Which isn’t exactly pretty.
If the value of my fiat money is increasing, then I will hold on to it, which is good for me. If everyone does that, then the economy grinds to a halt.
The stock/bond market is, although not always efficient, at least somewhat enabling of economic activity, whereas just holding your currency (including bitcoin) is not.
Right, it doesn't necessarily grind the economy to a halt; it simply forces investments to be worthwhile, because now they have to generate enough return to satisfy a higher interest rate. If money is not cheap, speculation is less rampant, but also risk taking is more expensive; this is a forcing mechanism for efficiency.
The interest rate (cost of money) simply returns to a supply/demand market equilibrium. The economy possibly smoothens out, rather than giving us artificial boom and bust cycles thanks to inefficient central bank policies.
Okay, you can donate to WikiLeaks ... But probably 99.999% of people who have possessed cryptocurrency are just speculators: buy low, sell high. And ironically, the exchanges are centralized entities :p
Bitcoin in particular is used as a store of value, or a form of "digital gold".
Everything is speculation (you hope it goes up in the future, but no one knows for sure), but large corporations are increasingly keeping a balance in Bitcoin, as are wealthy individuals and fund managers.
To understand its place in the world, you need to be a bit more familiar with government bond yield and risks, money creation/monetary policy, the macroeconomics of perpetually rising debt and negative interest rates.
Gold has a $11 trillion market cap, and its not because of industrial use or because it sells well as jewelry.
You got brainwashed into believing this by Reddit. Back in 2017 when Bitcoin was utterly crippled in usability and scalability, the centralized forums upon which information was flowing were seized by bad actors and used to manufacture this narrative. Bitcoin was intended to be peer to peer money, not digital gold.
What's most hated about Satoshi's vision is how it prevents, and at the same time, theft through intentional inflation and easily picking/rewarding winners. The lifeblood of contemporary governments is cheating, and thus it makes sense that they will have strong immune responses against anything getting between them and their nutrients.
As in impossible to influence via regulation. Once you realize that proper regulation is a good thing and a must in a functioning society, you realize something that can not be regulated can't be allowed to exist as it will undermine said society.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
Governments, world-wide, may end up emulating China, which is planning to outlaw other crypto-currencies while providing its own. The information gathered by a national government monopolizing crypto-currency is simply too appealing to those that would like to deter crime, stop tax-avoidance, or even understand in real-time what is going on in their economies. After China, I believe that other nations are likely to do the same thing and outlaw or heavily regulate crypto.
They will just try to turn crypto into the existing banking network by forcing citizen coin holders onto the exchanges, banning transactions from non custodial addresses and continuing to control the on-ramps and off-ramps. This way they can monitor transaction and if they don’t like something or are suspicious they can just seize the funds once they hit an on-ramp/off-ramp.
A CBDC will be introduced and all other USD stable coins will be banned and consider counterfeit currency. The US CBDC will replace stable coins and allow the US to continue exporting its currency abolishing other currencies in the process while gathering intelligence.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
After all as we all know: If you've got nothing to hide, you've got nothing to fear.
And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.
Yeah, this is what I don't understand from the naysayers. Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable.
The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.
A blockchain doesn’t provide trust, though. A person who doesn’t understand technology doesn’t trust a distributed ledger, but they do trust their centralised bank because it’s regulated.
It provides "distributed trust", in the sense that you know no single person or group is in control and you trust the distributed consensus, in terms of ledger state and algorithm accuracy.
Current PoW chains, yes. Some other consensus schemes have higher threshold requirements to pull off a similar sort of attack, in particular you can look at Casper FFG and other byzantine fault tolerant PoS schemes.
There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.
Maybe no single entity is literally in full control but large mining pools and the developers of the software both have extreme influence over the chain.
Less snark would be preferred to elicit a response, but yes- there are more cheap computers than people in the world, and smart phones are near ubiquitous even in very poor places. You simply don't have the life experiences to make this criticism. i.e. PRIVILEGE
Don't forget enough tech expertise to be able to use any of this crap in any "decentralized" way (if they all just use coinbase, where is that decentralization?)
But that ledger isn't accurate. It's just distributed and difficult to change.
I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.
The wallet they were in at the time was emptied and no longer exists.
I still receive the relevant court documents as the case continues still.
As far as the ledger is concerned - they are no longer mine.
---
So question to you: How do you reconcile the theft of my property with the ledger at this point?
It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.
So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).
So now what?
Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
>Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks
You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug
Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.
Sure, but value without an enforcement mechanism is not very useful.
People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).
So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.
Then you run off with my initial 50%.
Now what?
----
Every solution I've seen is riddled with pitfalls and gotchas
- Use escrow? Wait - now we're just trusting a central authority again.
- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.
- Sue over the theft? Now the central authority is just the government again, and we're back at square one!
You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.
You're conflating two issues with each other. One is having a decentralized currency with a fixed monetary policy. Another issue is the counterparty risk.
Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.
Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.
See, I think you're disconnecting two issues which are inherently related.
Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.
If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?
The reason I am disconnecting those issues is that Bitcoin was never designed to solve the type of fraud you're talking about. There is no proposed mechanism to solve it, because it's outside of it's scope.
It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.
Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.
But now we're back to a spot where bitcoin doesn't work as a fungible good without an appeal to an outside authority of some sort. Whether that's escrow/insurance/legal contract/etc.
We started with:
"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."
Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.
So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)
Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.
Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).
The ledger gives you a guarantee that only you can spend the BTC that you have access to. Nobody can "freeze" your UTXO or forbid you from accepting transactions.
Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.
The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D
> The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
But this is true of all assets!
Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.
And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.
The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.
Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.
Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!
Not sure why you're being downvoted for providing a good answer here. When you use Bitcoin, or cash it is solely your responsibility to protect that counterparty risk via your own means. Without a contract and receipt, the same would happen to your cash if you walked into a business and the owner decided to keep a small sum of your money with no record of transaction. If you gave a shop owner or autobody mechanic $50-500 cash with no receipt he could very easily just keep your cash. You have no recourse. Call the police? Doesn't matter in real life because you have no receipt or contract. It's your word against his. Since I see that you've just replied and still want "recourse" if someone steals your money I'll just clearly spell that out for you. You cause the level of recourse of your stolen money that you require. Whether via violence or a counter-theft and damage to the thief equaling what was stolen from you. It's left up to you with Bitcoin. If you can't stand the heat, get out of the kitchen. We don't want government intervention.
Except you just wrote a long comment telling me that I should be using government intervention if I want to actually trade bitcoins for goods or services.
You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).
“I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).”
Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.
You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.
But the alternative here is that you have to place all your trust in an unknown and untrusted 3rd party to ever actually make an exchange.
Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)
So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.
After enough confirmations a transaction is final and I can trust that the transaction is final and my account balance on the ledger is correct.
Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.
If consumer protections are your concern these laws exist in many countries regardless of the payment medium.
But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!
Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.
Now what? How do we proceed in a meaningful manner?
How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?
If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.
If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.
What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).
How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.
Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.
"But the trust that a bitcoin transaction is final isn't enough trust to make an exchange!"
Correct. Who said it was?
"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"
We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.
Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.
If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".
> The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here).
Let me ask you to follow up, given what you've said:
> If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats.
Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point.
"Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point."
In the example you gave whether we chose to transact in cash, wire-transfer or bitcoin the result would be the same. I would have to rely on layers, civil or criminal courts, police, insurance companies, debt collectors, thugs or myself to physically retrieve the funds (or equivalent) if possible. If that was not possible some form of fair physical or financial punishment would be dealt to you or not. Honestly for that amount of Bitcoin I wouldn't be bothered and wouldn't follow it up. I would just never do business with you again and from that point forward never relinquish physical custody of goods for sale prior to receiving payment.
"Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here)."
Trusted third parties will always be an issue where there is no trust between the buyer and seller. Sure multisig helps but the difference is Bitcoin gives us power to choose who we involve in the transaction. I and the other party I am transacting with combined are not forced to involve any one individual, company or nation state in the transaction if we do not wish them to be part of it.
I think you are conflating trust in the Bitcoin network with trust in the humans transacting over the network. Regardless of the medium of exchange in order for transactions to occur we as humans need some level of trust in the party we are transacting with, trust in the network we are using to perform the transaction and trust that other humans are going to continue to value the medium being exchanged. Not everyone's level of trust in these aspects are going to be the same and people are going to value some aspects more than others.
Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation. It's already beginning to look like that with most individuals storing their Bitcoin on exchanges. Private wallets will be banned, transacting with non KYCd entities will become impossible using regulated custodians and any Bitcoin received from (or linked to) non KYCd addresses will be automatically seized by the government. At that point the supply can be artificially inflated. The number of Bitcoins in your account doesn't actually have to reflect the amount of bitcoin the custodian holds for you. The surveillance apparatus will become hyper focused on the Bitcoin network and everyone interacting with it. Like Ross Ulbricht you may be able to resist seizure of your Bitcoin but it will just result in a lengthy prison sentence. It may not stay like this forever though.
> Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation.
Ok - I think we're pretty closely aligned here.
I'm further along that trajectory than you, mainly because I think this isn't really an optional outcome that might be avoided, but rather the only functional end state of a currency: The currency is only as good as the government that mediates its exchange.
If mediating that exchange incurs costs, then the government will take steps to either stop mediating those exchanges (ex: China - where all crypto exchanges are illegal by default, so the legal system can no longer be used to offset the cost of those exchanges at cost to itself) or it will bring that currency under control so that it can make those costs predictable and acceptable (ex: The US - where crypto is getting "all the bad bits" added back through legislation)
Which means the original intent of crypto only works in this honeymoon period (which I actually think ended not too long after the silk road went down) where it happens to get treated as an asset by a government that hasn't yet found out that they're essentially mediating exchanges in a foreign currency for free (not something most governments want to do).
"The currency is only as good as the government that mediates its exchange."
That's an interesting way to conceptualise it but I see it from a different broader perspective: A government is only as strong as its ability to issue/acquire meaningful amounts of a valued currency.
Anything that negatively affects these activities will be killed or subjugated to contribute towards them. Bitcoin in its intended form is detrimental to both of these activities so it will be sabotaged by governments one way or another until it is not.
Bitcoin has unique properties that drive it's adoption but all these properties can be diminished or undermined by laws.
"Which means the original intent of crypto only works in this honeymoon period"
If Bitcoin had managed to gain widespread adoption and a large enough percentage of its users held their private keys then it would have been too difficult and unfavourable for governments to start attacking it.
The unsolved technical issues hindered adoption so Bitcoin has been relegated to a volatile store of value giving government the time to realise the threat and act accordingly. Regardless of how unreasonable, harsh or onerous a set of laws are they can be effectively implemented if the portion and power of people they affect is small enough.
You're overlooking defi, this is the thing being revolutionized right now; you can make all the transactions you can afford to pay transaction fees for, trade hundreds of assets, swap tokenized USD for tokenized EUR, all without an intermediary.
To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.
Not your keys not your coins. Unless you trust some central authority to take care of you, which you should by now understand that doesn't always work, and when it doesn't work, it's usually a spectacular failure.
So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.
So we both agree - the ledger is "accurate" only in the sense that the ledger matches... (drumroll) the ledger.
Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).
So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.
the dispute concern is long solved. it happens every day with cash, but also with other form of payments. freight shows interesting practices. and, escrow is still an option.
Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.
> Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange.
Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.
I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)
No idea is perfect. I find that one preferable over the other popular alternatives where a few people's whim are the law.
Note: code is law doesn't imply it can't evolve, adapt, improves. the idea of code is law is the same as being against retro active legislation.
Not your private keys, not your coins. You CHOSE to gamble with your property when you gave it to someone else. Whether you understood this before you lost your property or not, is irrelevant. I've not lost any of my coin UTXOs associated with my own private keys. Unregulated, foreign Magic The Gathering trading card exchange use was never a wise choice from the day Jed McCaleb started that garbage database.
I see your perspective. There's another perspective from which you could look at the details of your situation.
You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.
Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.
Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.
I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)
What recourse do I have that does not require trusting a third party?
I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)
I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.
They want you to go back to frontier days before specialization in the economy, you are supposed to hoard your wealth yourself and protect your family with a gun
This exactly! (not to mention only ever making exchanges in person, because remote exchanges require trust)
Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.
Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.
You could have reduced the risk substantially by transferring off their wallet to yours right after purchase. You still could have purchased your weed too.
There was no holding. It wasn't an asset I was interested in holding, it was a medium of exchange to purchase a good I couldn't otherwise get.
The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.
I got unlucky the last time through and hit it right when the service went down.
Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).
When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.
Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.
Ok, so we're in a spot where trust is literally required - but the ledger cannot be updated to reflect when that trust was broken or misplaced (at least not without falling back to an external power - namely: government).
So again - the entire value of the medium is predicated on having a legal system you can use to resolve these disputes.
Following - that legal system requires all sorts of control to actually resolve those disputes: Many of the things bitcoin advocates actively rail against are just methods of reconciliation (Funds freezing, reversed transactions, 3rd party control of assets, etc).
So either
1. The legal system will stop supporting exchanges of that medium (see: China)
or
2. The legal system will add back all those controls (see: Legislation in the US)
Basically - My entire point is that bitcoin only has value if current governments support its exchange, and they WONT do that if it's a negative to them (and it is, unless they can tax and control it).
> the ability to trust that the ledger is accurate seems extremely valuable
Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?
I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).
One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
> One IMO realistic use-case is providing a wealth preservation mechanism for people living in a country with a corrupt government that's experiencing hyperinflation, for example Lebanon.
Sure, but (like it or not) that's covered under the umbrella of "crime".
In that case, I think the point is that some "crime" is ethically justified and worth supporting technologically. The OP's statement implies that all crime is bad.
> One IMO realistic use-case is providing a wealth preservation
Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any
On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices
On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway
True but opening foreign bank accounts is difficult and like western countries physical cash can be legally seized by authorities even if it was acquired legally.
This is only if the end user allows seizure. If I have only a 12-word seed in my memory and not a single private key written down anywhere in my house and no bitcoin wallet installed on any computer, you have absolutely no way of confiscating anything. It's something that a lot of outsiders do not even realize. Bitcoin is actually entirely un-confiscatable. If someone commits private keys to memory or entirely encrypts and off-sites private keys, exactly how can the money be confiscated? It cannot be confiscated. Any human in the world can move freely about the globe at this point in time with billions of asset value solely residing inside their brain. Import that memory into any mobile or desktop client wallet anywhere in the world, or recite the key secretly to someone else they trust anywhere in the world.
People living under a corrupt government and experiencing hyperinflation are no safer or necessarily better off with cryptocurrency. Conducting cryptocurrency transactions requires a non-trivial amount of infrastructure. Even "offline" transactions with a Rube Goldbergian number of mesh network components needs all those components to work.
A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.
Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.
Banks can give your money away without your knowledge. Happens all the time, and people have little recourse. Worse yet, it's seen as the victim's responsibility and not the bank's.
First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.
That is a straw man. This is not my definition of crime, I was thinking things like money laundering, tax evasion, ransomware payments, and blackmarket purchases.
I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.
Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.
The article discusses pseudo-money, not generic decentralized databases. The main point is that even if a blockchain distributed database technically "works" it is highly inadequate for many practical money-like applications, particularly because trust has to include the real world.
In some context I would agree, there is theoretical value to a decentralized trustless ledger[0]. What I can't agree with, however, is that entries in a decentralized trustless ledger are inherently valuable as cryptocurrency proponents would like us to believe. The entries in the ledger have no inherent meaning, they're just a number associated with another number and the only reason anyone equates that with a monetary value is that, for the moment, they can find someone else[1] to give them money to shuffle those numbers around. I think that, at best, one could say that BTC is backed by hype and speculation. I am not convinced that is a useful basis for a currency[2].
This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.
NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].
[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.
[1] read: greater fool.
[2] Leaving aside all the energy wasted on PoW.
[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.
You must have missed a significant portion of my post if you do not see why I do not believe those are equivalent.
I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.
This is why I always have thought that election voting would be a perfect use case for a blockchain.
Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.
Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.
Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?
Is rubber-hose cryptanalysis the concept of extracting info by torture? I guess... I mean, if you're willing to beat someone to get their SSN, you could probably do a lot more harm already just using that info to apply for CCs and loans in their name.
Maybe I'm mistaken or confused here, but in that specific case you could just give any random 9-digit sequence and it would suffice? A non-SSN voter ID would work just as well for a key.
Are people threatening others based on their votes these days?
EDIT: /u/ninjanomnom brought up a good point regarding heads-of-households, which I hadn't thought of before. I suppose some sort of method would be necessary to obfuscate your vote in some situations.
Right so the problem is that you want to be able to verify your vote, but you don't want anyone else to be able to verify your vote. Your SSN is semi-public and lots of people likely already know it (e.g. employer, who is also a prime candidate to try to buy/coerce your vote). But even with a private key, you have to assume you can be coerced into giving it up.
So any system that allows you to verify a vote needs to come not only with a way for you to validate it, but also with deniability built in. Because if it's not then you can a) sell your vote or b) be intimidated into showing how you voted (which may result in a firing/beating if you did it wrong).
There are, I think, one or two ways to achieve this, but it's a non-trivial problem.
There are a number of attempts to accomplish this goal by using homomorphic encryption, without needing blockchain. For example, https://en.wikipedia.org/wiki/Helios_Voting
Voting is intentionally designed for it to be impossible to verify what your final vote is so that it's impossible for someone to use that to hold you to a particular vote. A classic example being a household all being forced to vote one way by the head of that household. With no verification possible you can freely vote without influence from others who would use that verification for their own ends.
This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.
It generally won't, because the systems are designed to make it difficult to nullify a specific person's ballot after the fact. In some jurisdictions, though, there are specified criminal penalties for doing this.
First of all, what you're talking about more resembles a Merkle Tree rather than a blockchain, because the "chaining" property is really useless in this scenario. Each election can publish the Merkle Tree of its results and you can be sure that your vote was properly registered. Or frankly, just publish the list of one-way hashes and their vote, and you can dispense with all the Merkle-ing.
But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.
As to your first point, I'm not familiar with Merkle Tree's, so I'll learn about that before I respond. Thank you for the insight.
To the second point--I would imagine you would vote in the same way we do today for MVP, in-person / mailing, etc. So the main function would be to verify that your vote was properly recorded and counted.
A Sybil attack in this case is just a reveal (once again) of the oracle problem - a blockchain doesn’t provide proof that you are you. Therefore, it cannot provide proof that you cast only one (or no) vote.
Verifying your identity is outside the blockchain. Thus it can provide no value for voting.
Of all the things you could do with a blockchain, it's probably the worst.
The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.
Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.
You telling me everyone understands computerized voting machines? Because I don't think there's that much of a gap between people who know about those vs people who know about block chains
Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.
That argument doesn't work with currency, because money requires trust by definition (as opposed to immediate barter), and, as a backup -- enforcement.
In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.
If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?
The same can be said about NFTs: you must verify their authenticity off-chain, you must trust that off-chain authority, or sue people off-chain if they infringe on your off-chain property rights...
I'll give you a bad review in a venue where your reputation is more valuable than the trade or I wouldn't trade with you to begin with. Or I would insist on an escrowed bond.
There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.
That only strengthens the article's author's point. Cyber currency just serves as a vessel for a fringe political group's beliefs, which, however strong, are not popular.
Is the author's point that the political views in question are not popular? I thought he was attempting to make the point that the economic system personified in the execution of those political beliefs is not efficient.
Which if the last decade plus of cryptocurrency has taught us anything, we ought to be able to thoroughly discard by this point in time.
I am aware that the political orthodoxy of the time is popular and the view that it should be discarded is unpopular, aside from observing that this would be true of basically any time and place, I have no further comment on that. My point is that the alternative simply flat out works better. I have zero care or interest in what is popular.
Dogecoin started out as an explicitly value-free "let's play with this without risk or seriousness" fork of Bitcoin. The speed with which the scams took it over was instructive and I think indicative of everything that's played out since then... In that sense, Dogecoin was a rousing, complete, wonderful success.
I remember reports telling Dogecoin was one of the safest cryptos to invest in, as it doesn't promise anything, accepts itself existing only for a meme, and all the reports were underlying its honesty, telling "it is what it is". Then it skyrocketed and became a purely speculative one, of course it's not Dogecoin's fault but more like Elon's.
We get it, Steve. You don't like crypto. And it upsets you that other people like things you don't like, so you feel compelled to write the same useless whine over and over to cope.
This particular source is extremely low quality and is motivated by the author's undisclosed competing product. I would like to see higher quality sources on the front page of hacker news one day.
Interesting! What advantage does Adjoint have over all the cryptocurrencies in existence can it handle payments without your bank declining your payment or chargebacks?
I always assumed his anti-crypto writing was related to being in the Haskell community and a lot of Haskell community really going all-in for crypto at some point several years ago. I think because the problems were interesting and the type of hard that Haskell people like.
It's news to me he has other reasons to dislike crypto. I didn't know about adjoint, but that is very curious. I wonder which came first, the distaste or the financial company.
I suspect his opinion would be the same regardless of adjoint.
It's even funnier than that – back in 2019, Adjoint was bragging about "delivering blockchain technology built specifically for the needs of the financial industry" [1]
No idea if they pivoted away from blockchain or just stopped saying it on their website, but it makes me take this with several grains of salt.
He wrote an article a while back insulting the morals of a few colleagues in the Haskell world. When I went to share it with said colleagues I realised he had an account on our internal slack. He had previously worked there on said technologies that he was then slandering, something he hadn't made public.
Can you point out what is low quality about it? Right now it seems that you are just making that claim because you disagree with the thesis of the article.
Using the phrase "woo woo" along with various strawmen & many omissions of why crypto is being adopted was the extent of his criticism, hence low quality. He does not understand crypto & is trying to sell his competing product.
If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
> If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
Is that why crypto is being adopted? Are you serious?
I bet nearly no one who buys crypto even knows what fiat money is nor have they have a clue as to the ideas of the Austrian school of economists. We live in an age of memes and discords.
Crypto and NFTs are primarily being adopted because they are speculative vehicles that generally go up and to the right. It is quite simple.
The current hype cycle would be nothing without the institutional support.
But even before institutional investors started jumping in, traders and other employees of the above institutions have long been a key part of crypto markets.
Again, they do not care about fiat or the Austrian school of economics. Of course they know what those things are but they do not care about them at all.
> He does not understand crypto & is trying to sell his competing product.
This is the repeated refrain of crypto believers. "You just don't get it." And yet when I ask someone to explain it to me (not the technology, the economics) I get hand-waving, self-contradicting promises (e.g. universal identity + resistance to censorship), and appeals to greed ("you must like being poor").
When faced with this, I'm often reminded of Richard Feynman's oft-cited belief that "if you can't explain it to an undergrad student, you don't really understand it". So my conclusion is that either nobody understands cryptocurrency economics and thus no one has been able to sufficiently explain it or the explanations I've heard are complete and accurate - i.e. I do understand it, and it's an emperor with no clothes.
The resource / explanation that really sold me on crypto was this specific podcast episode: Welcome to Bankless 2021 edition. I'm curious to know what you think after listening to it.
I agree. Just the fact that he lumps Doge and Bitcoin together into "meme coins" tells me he has no idea what he's talking about or that he has an ulterior motive.
Whatever you think about those two coins, they are not really similar, especially given that some nations have made Bitcoin legal tender at this point.
I'm very much looking forward to seeing the way cryptocurrency revolutionizes the world in the next 20-50 years, but even I don't see any difference between Dogecoin and Bitcoin other than Doge having a dog on it.
Yes, it's pretty unorthodox to consider Bitcoin a memecoin, but it is fundamentally nearly identical to doge, but with even less energy efficiency.
The fact that it's a more established asset class with wider adoption does make it more useful to most people, but this isn't due to anything intrinsic to bitcoin or dogecoin
No problem. Let's have a look at a high-qualify evidence-backed paragraph of the fine article:
> A stablecoin bank would be subject to exactly the same FinCEN and OFAC money movement restrictions and compliance checks as banks; so know your customer gating, counter-terrorism financing, sanctions enforcement, and anti-money laundering enforcement. And these compliance requirements are the almost always the bottleneck consumers may encounter when doing cross-border transactions, and it’s not a technology issue.
I'm not sure what the fine author means by "A stablecoin bank," and he doesn't really tell us, but it seems like he means a stablecoin issuer who processes creations and redemptions, but doesn't control the use of stablecoins otherwise. In this case, an example of "a completely legal and above-board stablecoin (which doesn’t exist today)" might be GUSD. I'm also not sure why he thinks DAI is illegal, because again he just throws out a bunch of claims without substantiating them.
Anyway, he was actually talking about how stablecoins don't provide any benefit for international settlements. For whatever reason, I have bank accounts in the US and Japan, and I often have to move funds to Japan to pay bills. This takes about a week and costs about 50 basis points. The fine author would like us to know that the 1-week delay and 50 basis point charge are required by law. While this is not my area of expertise, my impression is that none of the regulations mentioned by the author require this process to take 1 week and cost 50 basis points when I am remitting funds *to myself*. I am under the impression, which may be wrong, that I am not breaking the law if I pay for goods in SPL USDC instead of waiting a week to move dollars from FTX to account at Shinsei bank via my US bank and Transferwise at the cost of taking a phone call at 2am and paying 50 basis points plus 20 dollars.
> Nothing about stablecoins is either necessary nor desirable, and any alleged improvement these systems may offer at the moment are purely illusory and derived only from the unstable situation that they temporarily inhabit a yet-unregulated shadow banking system that is either non-compliant or entirely scofflawing.
This seems like an unsubstantiated claim that it's a crime to pay for goods and services using SPL USDC in every country. I don't think that's true, but maybe if the fine author could elaborate I could learn more here.
> A regulated stablecoin bank is just a bank, but with a core ledger built on a terribly inefficient and bizarre piece of software not built for that purpose. All this while guzzling entire nation states worth of energy for no reason. Using inefficient blockchain as core banking software makes old legacy core banking solutions like Jack Henry look like a Ferrari by comparison. Our European allies all built extremely reliable real time payments like SEPA that work marvelously and they didn’t need any stablecoins.
The fine author seems unaware that there are currently deployed blockchains that can process the transaction volume of Visa and use less energy than Visa. That's discouraging, given that the fine author has chosen to write in such an authoritative tone about these technologies.
SEPA might be fine if you live in Europe and everyone you ever need to pay or accept payments from lives in Europe and has never lived anywhere else. It just doesn't do much for me personally when I have to move money from the US to Japan to pay living expenses, my lawyer is in Dubai and wants to get paid in Switzerland, and my developer in Japan wants to get paid in Hong Kong. So I just keep paying like $60 and taking phone calls at 2am to send wire transfers to my lawyer and dreaming of the day I can pay less than a penny and not take any phone calls at 2am if my lawyer adopts existing technology. The fine author would like me to know that this isn't actually a problem and I'm just delusional. That's not particularly hel...
The fungibility of cash is what makes it hard, although likely law enforcement will be able to trace many of these.
For example, you take your ill-gotten gains and just randomly send $1 to a million different addresses, some owned by you, some owned by random people or exchanges or whatever. Nobody's going to say no to free money, so the trail goes cold.
Or you use an offshore exchange that doesn't really practice strong KYC, and exchange the ill-gotten gains for a different cryptocurrency and now without the private ledger of the exchange, the trail is cold.
At one point "mixing services" were the talk of the town, but at this point it's clear that you can get 99% of the benefits of mixing without having to go through an explicit service.
For example, you take your ill-gotten gains and just randomly send $1 to a
million different addresses, some owned by you, some owned by random people or
exchanges or whatever. Nobody's going to say no to free money, so the trail
goes cold.
This one wouldn't really cause the trail to go cold though. It would be trivial to automate the tracking and if all of those funds end up in a single location eventually that would also be trivial to automate tracking. You really would need to do a Mixing with other counterparties to get any kind of anonymity. Even then mixing can be detangled as well.
For Ethereum, there's Tornado Cash[1] and other projects based on zk-SNARK[2] or similar tech. I'm not sure if there's a fully decentralized equivalent for Bitcoin.
"As deaths due to covid increased, the percentage of deaths due to car crashes has decreased"
I somehow think that doesn't mean we made any progress in car/traffic safety. And should not be used as an argument to dismiss/minimize the impact of traffic fatalities.
That is entirely consistent with a few possible (and I would say likely) explanations that include cryptocurrency being beneficial for crime. I'll cover one below.
If crime accounts for some small percentage of financial transactions (we'll say 1% to make it easy, even if that's very unlikely), and those transactions migrate to cryptocurrency first, then what you'll see is a very high percentage of crime in cryptocurrencies, that then drops as the much larger normal transaction flow shifts, even the total amount of crime transactions might be stable or even increasing (as we're talking about percentages of a whole, normal transaction traffic and would have to be shifting very slowly and crime increasing extremely fast for us to see anything else).
I think the thing that bothers me most about using "crypto" to mean "cryptocurrency" is when people write articles deriding the "nothingburger of crypto", I feel conflicted.
Part of me wonders how many non-tech people we're conditioning to assume cryptography is worthless in 2021.
I think the biggest lesson here is that people really, really love unregulated gambling. The same way they love doing drugs, making narcotics an extremely profitable business.
If we don’t legalize the things our population deeply desire, the criminal elements are more than happy to step up and provide said services.
The authors example use cases about a database doing everything except crime summarizes it well. One persons crime is another persons freedom. If you rephrased it as saying, the only thing blockchains provide that a database doesn't is freedom, I think the resounding response would be: Yes.
What I think anti-crypto people object to is the freedom of others, because it represents a limit and undermines the necessary absolute and total Hobbesian sovereignty and dominion of the systems that provide them with their own status, which is based on something other than consent and desire, and when I read these objections, most of what I interpret is that implicit humiliation.
Gambling provides opportunity for people to live independent of being subordinate to an employer, as if your employees suddenly don't have to work for you, it's hard to build and scale social stability and wealth. I sympathize with the morality of reducing gambling as being appropriate for over a thousand years ago, but today? You also can't use shame to control people who can afford to walk away.
The current financial system is designed by-and-for creditors as a means of leverage over debtors, and crypto is explicitly not. The only problems of gambling are really problems with debts, and better laws limiting the power of creditors would solve that. The interests behind the criticisms are clear, but to me dressing them up and carting them around as moral is a bit much.
The very same people complain about Nanny State when they’re stopped from getting scammed, and scream for justice and legal action once they manage to get scammed after all.
See also: people getting absolutely furious when the bank stops them from wiring money to Nigerian scammers for their million-dollar lottery win - and then demanding the same bank reverses the transactions after the jig is up.
They want to freely gamble with cryptos now that everything is going to the moon, but are going to be demanding answers once the bubble pops and the casino takes their life savings
That sensibility is captured well by Jenny Holzer's statement, "Protect me from what I want", which neglects responsibility and puts it on other people whether they want it or not. It's a human personality anti-pattern we generally just tolerate.
Cryptocurrencies represent a respite from the logic of that idea and allow for mutual tolerance, presumably as an alternative to organizing and fighting.
It's not so much a nanny state as a mad aunt in the attic state. (e.g. MMT) Nanny state is an oddly gendered trope, but it's meant to represent not just oversight, but Animus. My argument is essentially that most anti-crypto articles I've read are an expression of ideas that originate from a neurotic animus and an affected condescention that the rest of us just don't buy.
I'd add another sub-category: the so-called algorithmic stablecoins. Their biggest flaws being that they can blow up catastrophically in extreme events, something which may be hidden between a veneer of convoluted logic.
Beginning in the 1960s, Clair Cameron Patterson was very vocal against the widespread use of leaded gasolines. He was ignored and mocked for over 20 years, but kept going because he knew it was damaging, and fought to end its use. He didn't just "not like it", he was compelled to improve the world.
Whether you agree with him or not, Stephen believes crypto is damaging to society. As such, he is driven to help root it out.
This is the sound someone makes when they realizing they're slowing down and everyone around them is speeding up.
Update: It seems I've triggered some sensitive HN'rs
Here's how to tell when someone has a real argument - they pick the best possible interpretation of the theoretical foundation of a system and then they disprove it.
Here's how to tell when someone is full of shit - they complain about meme coins.
Author's not wrong. I've seen some seriously cringe-inducing "talks" about what blockchain is and is not, and what it can or cannot unlock for you. I also find NFTs to be just...just...confusing.
But mostly I don't care. Do whatever you like as long as you're not hurting anyone. On average people are getting misinformed about some technologies, at worst willingly grifted. But I've seen worse technology trends come (and, by the way, go).
Well, this is how progress happens. Someone complains about a whole industry in broad brushstrokes, someone else invalidates the complaint with a counter example, and we move forward with the better option.
Let me get this straight, you think I’m saying that because Algorand is faster, cheaper, and more energy efficient than Bitcoin and Ethereum, that that makes it ok that Bitcoin and Ethereum are slow, expensive, and inefficient?
Have you never gone through the exercise of comparing alternatives before? Or evaluating the strengths and weaknesses of competing technologies?
Any cryptocurrency's monetary value is derived from exchange with the others — wasteful PoW titans like BTC and fraudulent wildcat banks like Tether.
By participating in ANY openly traded cryptocurrency, you're participating in that economy that AS A WHOLE is involved in wasting power, fucking the GPU market, and massive financial fraud.
Viewing any coin in isolation is completely stupid. Coins don't exist in a vacuum, you MUST have a holistic view.
I've traded Algorand and never touched BTC or Tether.
Your argument is like screaming that the Internet is full of porn and fake news and that any use of the internet (e.g. buying doilies on Etsy) is participating in that economy.
Also, it's not the case that any currency (crypto or otherwise) is derived from exchange with other currencies. It's derived from it's exchange for goods and services. If I can incentivize someone to do something with a cryptocurrency, it has value.
What goods and services are cryptocurrencies exchanged with?
A couple people buying VPN accounts and weed are a tiny drop in the ocean that is all the speculation. The vast majority of cryptocurrency usage is fueled by the "get rich quick" hype.
I wonder how much of the Crypto hype is because the US banking system still lives in the 1980s or thereabouts.
If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
Only if you do your transaction on the blockchain. Most are done internally. It's like your bank is not sending someone with a suitcase full of money just because you pay your phone bill.
It's strange to me how the only two options are "pay obscene transaction fees" or "just keep your crypto in a centralized exchange and hope they don't go MtGox". Is it impossible to achieve the stated benefit of being able to make quick and easy transactions and being decentralized?
I spent some time researching the best low transaction fee easily accessible crypto for making a sort of crypto Patreon, but the vast vast majority of all crypto information available was folks speculating what was going to go "up", nobody seems interested in what is actually a decent form of money (cheap&easy to exchange, cheap&easy to transfer, and stable).
I suppose it makes some sense from a game theoretic standpoint. If we consider the decision making entities in the game to be the massive crypto exchanges and miners, the best way they make money is by transaction fees and exchange fees, so they aren't likely to come up with a great micro-transaction and micro-exchange fee system. Oh well.
> Is it impossible to achieve the stated benefit of being able to make quick and easy transactions and being decentralized?
Yes. A transaction is a network-scale operation. It needs to be broadcast and confirmed by at least half the network. Otherwise it wouldn't be decentralized.
As that network increases in size, the resources required for that operation increase proportionally.
"Decentralization" is a bad meme that seems to work at small scales but its adherents refuse to zoom out and accept how technically ridiculous it is at current scales (millions/billions of people).
Why should a transaction need to be a network scale operation in a decentralized scheme? The ultimate decentralized payment mechanism is bartering, in which the transaction only includes the people making the transaction.
Now, I don’t know how to translate that to the digital world, but there’s no clear reason why a decentralized network must inform the entire network of everything that happens in it.
Sure, but still I can transact using currency in the real world without (directly) involving a central authority, announcing my transaction to the whole world, or paying any fees. I cannot do that in the digital world.
Here are some projects working towards addressing the issues of blockchain scalability:
- Lightning network on bitcoin. Super cheap and fast transactions, makes micropayments a reality (this is what Twitter is using)
- Layer 2 solutions on Ethereum. There are two optimistic rollups currently on main net (Arbitrum and Optimism). Reddit has recently committed to building on Arbitrum. There are also ZK rollups (starkware, zksync) coming in the next year or so.
- Less decentralized layer 1 chains like Solana, Avalanche, BSC, Fantom
It's unfortunate that people looking to enter the space have a hard time finding real and relevant info. Not sure what the solution is for fixing the information problem, but there are lots of people building real tech in the space
As I understand it these layer 2 solutions typically require a resolution transaction in order to actually extract value, which has similar costs to a normal on-chain transaction. In the ideal world folks would be able to use the existing infrastructure of established Bitcoin atms to make transactions with low fees, but that doesn’t seem like it will happen any time soon.
Things like the Twitter solution aren’t great, Twitter owns all the currency and is kind enough to let you have some sometimes. If I were to make my app I wouldn’t want ownership of any of the currency, too much liability.
I’m not very interested in the promises of bleeding edge crypto startups, in my experience they almost never pan out, and certainly aren’t accessible to the masses.
Not sure what you mean about layer 2 solutions being similar in cost to layer 1 transactions. See here: https://l2fees.info. Arbitrum and Optimism are both running in "safe mode" so their tx cost will continue to go down.
I agree that the twitter solution isn't great. Just pointing out that Lightning network is a tech that can be used for cheap transactions.
100% agree that none of these solutions are accessible to the masses. Tons of UX issues, most people don't want to self custody, layer 2s can require bridging, etc. But, I don't think it's terribly hard to see how these issues will be addressed and they are actively being worked on
So I may be wrong here but my understanding is that you can’t go directly from fiat to L2 transacting. My goal is to minimize the loss from patron’s bank account to creator’s bank account, and every extra step along the way is a couple percent out of the creator’s bank account and into exchanges/miners’.
Edit: put more simply, a hundred people each want to give $5 to a single person. What path do they follow to ensure that the person can get as close to $500 in their bank account as soon as possible. Bonus question: what is the relation between how much they can get into their bank account and how long they wait?
Ah I gotcha, yea that is mostly true at the moment. I'm pretty sure the only way to go directly from fiat to L2 is through Binance which can transfer to Arbitrum (someone correct me if I'm wrong). All the major centralized exchanges are working on this, so I expect to see more support for direct to layer 2 transfers soon.
Not sure about the amount of time between exchange and bank account, I think that is going to depend on each exchange.
Then you would expect people in the EU to not be interested in crypto, yet it's the opposite. You can pull up search volume for "Bitcoin" across the world (using Google Trends), many European nations are at the top.
As a matter of fact, their search volume is higher than US.
I've actually never woken up on a Saturday morning and thought shit, I could really use 20000 EUR right now, so I couldn't tell you what the limits are. I've never hit them.
The difference is that those people can honestly see and use crypto as speculative assets, which is fine (if we ignore externalities for a second), not making up use cases.
Just because the future is uncertain doesn't mean you can't do research to make a reasonable forecast. Typically speculation is specifically buying/selling without any reasoning other than 'I think someone will pay higher for this in the future'.
Many assets don't even have to appreciate. A car is an asset if I have paid it off. I don't expect someone to pay me more than I paid for it unless it is a collectible or I live in the year 2021.
On your last sentence, I don't know who thought real estate was 100%, because nothing is 100% safe as a store of value, but I guess they paid for it in the end.
Then I can say that I've done my research and I think it's reasonable that USD won't remain global reserve currency forever and that it's replacement won't be a governmental currency, but a decentralized one and Bitcoin would be the only reasonable candidate.
Does this mean that I'm not speculating all of a sudden because I've done research and came up with a reasonable forecast?
People won't invest in a reserve currency, they will use it for trade. Anything people are buying and holding is by definition not a reserve currency. You are describing "treasure".
I mean people buy USD through forex markets all the time, the same way that people buy Bitcoin through crypto exchanges. Also, it won't become reserve currency overnight, it's a gradual process and until it happens it acts as a store of value with a huge upside.
Yes, I would say you are not speculating because speculating is simply buying/selling and hoping to profit.
Whether or not your forecast is reasonable or even useful is not within my sphere of knowledge. I can also almost certainly say that the USD wont be the global reserve currency forever, but making decisions based on a forever timeline poses a wide range of risks.
I often wonder how large a portion of all crypto holders are just FOMO-ing into a speculative asset because the number keeps going up, with no loyalty to the concept of cryptocurrency or its use cases.
Yeah, that whole no chargebacks concept as a “feature” of cryptocurrency has always been a head scratcher to me. I mean, yes, businesses may like that, but crooks like that even more, and it’s almost purely a negative to the vast majority of people, i.e. consumers.
And it’s a core motivation for cryptocurrency, in the original Satoshi paper.
It's beneficial for consumers because businesses can charge less for their products since they're don't have to account for as much shrinkage. I know at least one business that charges substantially less for crypto transactions because of this.
I feel this is an overly optimistic view. There's not many situations in the last 50 years where "businesses being able to charge less" have led to them actually charging less. It reeks of Telcos telling congress how much new laws will drop their prices, then they fire half their employees and raise prices anyways.
This is a microcosm of most of my issues with crypto discussions. In a (quite naive) vacuum, the arguments sound great. If you wanted to run Earth 2.0 with crypto, have at it. It doesn't fit in alongside the existing systems and, by the time it becomes "the main system", you can be certain that those in power have modified it to have the same issues as the original system we all hated.
So the US has an antiquated payments system vis-a-vis Europe, but crypto solves none of those problems. I don't see it. I see FOMO, groupthink and greed.
You fail to see people who lost trust in their governments and organizations? You don't see how people are unhappy with getting their savings diluted by unlimited money printing?
How is it true and factual? The inflation rate is set, it is high now and will be lower in the future to account for that. If you are planning to keep millions/billions sitting around in cash for a decade, instead of investing into assets where it works for you and everyone else, you are the reason we have the inflation rate and deserve to lose out to inflation.
A set yearly inflation rate incentivizes actual investment instead of currency speculation. Basically the system we have now exists to prevent what crypto enthusiasts are trying to push on us: a return to a super volatile currency that when it crashed wasn’t able to be fixed by just printing more money temporarily.
When you hear about things as complex as Monetary Policy, it is best to assume that lots of people have thought about why it is the way it is and why that’s preferable. The “gold standard” and the hoarding of wealth allowed things like feudalism to exist where lords just sat on their land and gold and were richer every year.
Yeah you can pull the “the rich get richer today too” card but so do poor people if they invest in assets, and the difference is that every wealthy person has almost all of their wealth invested in the US economy in order to beat the risk free and inflation rate.
I really, really am sick of the bullshit around the big L Libertarian party (and the crypto enthusiasts who identify with them.) Spreading lies about the evil fed and the evil inflation rate, both of which are a huge improvement over the constant depressions we had prior to this century.
It took thousands of years for people to develop the sophisticated monetary policy we currently have that allows our economy to be extremely stable and continuously grow, generations of very bright people, and anarcho-capitalists want to throw that away to go back to “basics.” At the very least you could do all those people, and the citizens of the world, the courtesy of understanding why were all in favor of yearly inflation (even if we bitch about prices going up.)
It would be if rich people held all their money in cash like Smaug in his mountain, but anyone familiar with the current monetary system would know that people invest in assets to prevent losing out to inflation and this is what we’re going for with a steady inflation rate. Keeps the economy pumping and in times when we hit a recession (not depressions, since we don’t really have those anymore thanks to our modern monetary policy) those same rich people want to get their freed up assets into the economy as quickly as possible.
Correct. Inflation is when the dollar gets weaker for the masses because the elite are printing themselves dollars. Deflation is when the dollar gets stronger for the masses because the elite's proportion of the national currency is decreasing. We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Stronger/weaker refer to the value of a dollar compared to other currencies; inflation/deflation refer to the value of a dollar compared to goods and services. Neither is related to the "elite's proportion of the national currency". Again, I can only suggest reading some articles about this stuff.
> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.
The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.
Can we start by talking about how modern money works in a more factually accurate way. In particular, can we stop talking about "printing money"? Printing money has no impact on the value of money. I think most people in a forum like this understand that but when we talk that way I worry that someone, somewhere doesn't understand.
Money is created when it is borrowed from a bank or banking institution. Even that is an oversimplification but it is still much more accurate than saying money is created by "printing" it because it isn't. One of the really key things to understand is that the money supply is created by government but it is also created by businesses and individuals.
I don't have a dog in this fight, but it always drives me crazy when people talk about economics in a sloppy way.
Sure, but central banks do influence how much banks can borrow, and hence how fast the currency supply grows. Even someone whose understanding of monetary policy is limited to "The Fed has a big meeting each year to decide what the inflation rate will be" can understand why a deflating currency would be really bad.
Weird how most people still don't know about fractional reserve lending and how their food and heat costs more because the ruling class is printing money and giving it to their friends, but if normal people do the same thing they will get locked up.
> You don't see how people are unhappy with getting their savings diluted by unlimited money printing?
Money printing dilutes wealth if you hold it in cash, but every other asset appreciates. Moreover if you have more debt than wealth, money printing reduces that burden.
How many people actually have more wealth than debt but keep it largely in cash? I never understood who exactly has this problem.
The vast majority of humanity has no access to credit besides borrowing cash from Uncle Pedro, no access to any other financial instruments besides cash and keeps their savings under their mattress or in a shoe box. You don't understand who has this problem because you don't know anyone who has this problem, but outside of our comfy western countries most people have this problem.
> outside of our comfy western countries most people have this problem.
Can you cite some evidence that there are people keeping long-term savings* in cash and has adequate internet access and computing resources to participate in cryptocurrencies? I'm still not buying this.
* (I believe people do hold short-term savings in cash, but those are not the type of savings that money-printing erodes significantly.)
What is crypto if not money printing? While any one chain may be limited in issue, you can always just fork it or create a new currency or token. People are printing tokens at a phenomenal rate. And unbacked or badly backed "stablecoins" are money printing of real-looking but unstable currency.
What gives a chain value is the network effects which are notoriously hard to establish. So yes, you can fork it, but can you get people to actually use it? Really doubt it.
Up to a point, more money printing is good for me: dollars become devalued, my employer has to pay me more of them to keep up with the cost of living, but my mortgage is still valued in 2009 dollars. I can pay it off faster, or just have more purchasing power left over every month after paying it on schedule.
> If you're in the majority of people who don't have those things ...
Home ownership in the US is around 65% [0], so the majority do have an asset and mortgage. There are also some people who choose not to own a house but have other types of assets. Things really aren't as dire as you seem to think.
And for those people who actually are harmed by inflation, I think the consensus is that they would be harmed by the other option--deflation--even more, mostly because the disincentive to invest leads to fewer employment opportunities. The Great Depression, a deflationary environment, was not good times.
From your Wikipedia article: “ The name "home-ownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the home-ownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home.”
According to the US Census in 2020, 139.68 million homes in the US with a 64% owner-occupied rate means 89.395 million homes are owner occupied. Let’s say 85% of those are dual-owned (by couples) which I could not get a solid statistic on but several policy websites seem to cite, and we will assume the other 15% are single owners. Then about 165 million people either own or partially own the house they live in, or roughly 50% of the population.
That is the slimmest of majorities, far less than the 65% implies.
Cryptocurrency actually does solve that if you kinda ignore the scalability limitations of blockchain.
Of course, the minute you add another transaction layer or exchanges or other third parties, then that wipes out most of that advantage and generally the more it facilitates cheap and fast transactions the more power is given to the third party and/or more fee is taken.
I’m still a fan of first layer transactions and just making the blockchain much faster using brute force increases in block frequency and block size. Might be able to keep transaction fees low enough to be a useful alternative. But as long as more people are interested in cryptocurrency (and related tech) as a Ponzi get rich quick scheme than as a practical way to facilitate transactions, I don’t see it making a significant dent in the regular financial system.
I think that's certainly a part of it, but it's not the whole story, and I suspect it's perhaps responsible for 1/3 of the story.
A bigger motivation, and perhaps the most quixotic one, is financial security.
No, I don't mean that cryptocurrencies haven't been highly unstable in value.
But the more that the cabal chooses to truly enter the 21st century, the greater the danger of that technology being used as a means of coercion. This has already been seen in the porn industry (both amateur and commercial) and, say what you want about the possible ethical issues with it, but people have the right to produce pornography in the United States and also participate in the same economic system as everyone else. The danger of companies like Visa and Paypal exercising political control over their customers for other reasons is non-zero, and I would even predict that the danger is at least moderate.
Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men. If that wasn't the case, there wouldn't be a big push to create the Lightning network.
The other part of the desire for crypto, from my perspective, is a desire to be a part of a new frontier. We had the personal computing revolution, the internet, the web, web 2.0... and for those who missed out on those or merely miss them, crypto fills that void and provides a new realm of possibilities to explore.
> Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men.
Correct me if I'm wrong, but doesn't the whole blockchain thing depend on an uncountable number of middlemen to verify transactions? They just don't have to trust them. Not to mention they have to count on a market existing for the coins to give them value.
Explained simply, while there are indeed users acting as the middle man verifying transactions, you don't have to worry about trusting them because the system is built in a way where you know exactly what they're going to do.
To add to this idea of mining, theres a more grandiose theory that smart contracts are the additive tool that we can use to build all sorts of incentives in our society for people to collaborate effectively. You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need. This allows them to mine out the value and build a better and more trust-less community at large. It's like a bug bounty but for problems in society.
> You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need.
Wouldn't it be just as possible then to incentivise them to build things to the detriment of society (but that are to my benefit, of course)? We do that today with regular old money and regular old contracts.
We do that today because we are incentivized to acquire monopolies. Or in other words housing and other generalized assets that use a typical ownership model. If individuals can't "own" property, but instead "possess" property via a self assessed real time tax, you eliminate that gluttonous incentives that all humans have for accumulation.
With collective possession you can increase users stake in making sure that negative incentives don't exist. It's all in the game theory of realigning incentives, but before you do that you have to break down how the current system we live in at its foundational root is flawed.
My theory is that we don't understand the economic systems of the crypto economy because they aren't rooted in the same type of economics that exists in our current system. They are completely different incentive systems and are not correlated at all. We just confuse Capitalist values with crypto-economic values, thus leading to entire new schools of thought in how we organize ourselves manage systems.
Cryptocurrency involves numerous middle men, all of which charge very high fees. Miners, exchanges, smart contracts, they're all middlemen and they all charge fees.
It's not that crypto enthusiasts don't like middle men, it's that they want to be the middle men.
Rather than the argument of having middle men vs not having middle men, I’d say that the transparency, accessibility, and hard-set consensus rules are what make something like the Bitcoin blockchain useful. It also allows privacy by means of the ability to generate key pairs and addresses easily and at-will. This combo of features mean that even with middlemen, there are certain rules that cannot be broken without the participation and knowledge of those who use the system.
With banks, money can be secretly and arbitrarily transferred by individuals of power and in some cases even gate-kept from the initial depositors. With crypto I never have to worry about my money being falsely spent under the cryptographic security guarantees of something like Bitcoin. Even with > 51% attacks it would be practically impossible to rewrite significant portions of history and are mostly limited to reorganizing and deleting recent transactions.
This is a genuinely important point - there’s a strain of Puritanism baked into American (& more broadly western) culture that’s getting exported and enforced via our corporate dominance. Apple doesn’t allow porn on the App Store, Tumblr killed porn because of advertiser squeamishness, Onlyfans nearly killed itself because of bank pressure. Say what you will about porn, but 30 years ago gay rights would’ve fallen afoul of the same corporate conservatism - I’m broadly liberal and generally don’t believe a corporation lacks social responsibility, but I’m extremely uncomfortable with the degree to which our cultural values are encoded in especially our financial system.
The problem with bank accounts is the banks. The promise of crypto is that you don't need to trust any institution, such as a bank, to keep track of your money.
Which could be compelling if you lived in a society where the banks were extremely unstable, but looks terrible if you live in one with regulation, deposit insurance and and other account protections.
Of course, "too big to fail" - some of them almost certainly should have, though I would have expected the FDIC to work as intended then (instead of using public funds to prop up the banks themselves, it could have covered our deposits).
Bitcoin is better in those unstable currency countries. The market will decide (has decided in some cases). So maybe inexorably bitcoin will be the reserve currency for a large portion of the planet. And at some point there will be a tipping point where it's going to be attractive enough to all other central banks.
It turns an everyday person worldwide into equals with central banks. That's pretty radical.
Now you need to trust developers who wrote the client code, trust large mining(/staking whatever) pools not to collude and 51% you, and uhhhh trust yourself to not lose the fucking keys, or to be an expert in all the various "protection" schemes like multi-signature wallets (until they explode because there's a bug in them)… You also have to 100% trust yourself to not get scammed — there's no chargeback if you do.
Regarding not losing the keys (ie. responsibility for your own security), this was my #1 grounds for skepticism in crypto when I first entered the space. I could predict that without some compromise on this, most people would not use crypto. However, social recovery is already one potential solution for that, so don’t discount that surprising ideas can come up (https://cryptonews.com/news/social-recovery-wallet-is-better...)
The promise of crypto(currency) is that you buy some and then you get rich.
I'm not even trying to be super-negative here - after all, if it does become a lasting store of value, accepted as money in the long term, then early adopters will be holding something valuable. It could happen. But right now the hype is self-perpetuating.
The technology doesn't really matter that much. If the US banking system wants to compete, it could try paying yield on savings. That's one weird trick that has made banking attractive for well over 1,000 years. A banking system that does not pay yields to savers is just a glorified collection of ledgers.
A crypto system that pays yields on monopoly money is just a glorified collection of ledgers moving fake money around, no?
What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.
There are hundreds of fake monies used all over the world, including many countries with dual currency systems in which they use one fake money internally and one fake money externally. Bitcoin and frankly many other random altcoins are more credible than many of those hundreds of moneys.
The history of banking is replete with unsustainable arrangements involving the quest for yields deriving from speculative assets. Banking systems are continually expanding, exploding, and then expanding again. If we want to make the normal banking system competitive, it has to pay yields even though doing so means risk. The crypto explosion is best understood as a technologically enabled resumption of the usual cycle of banking despite the industrial west's attempt to suspend that cycle through extraordinary regulatory action.
Crypto is used as a commodity and for scams, very rarely as a currency. Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.
> Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.
This is partially true, but I think a bad blanket statement.
Bitcoin has outperformed all other asset classes over the last decade.
You can get crypto credit cards that remove all complexity you aren't forced to deal with anyway. And even if that wasn't the case. Banking is hard, too, so that's a moot argument.
Ethereum and others are moving away from proof-of-work.
Upgrades like taproot and zkrollups improve privacy and can be used today.
I don't think you are up to date.
There are "cash" crypto's out there such as Nano, with sub second transactions, 0 fees, and can run the network on the power of a single windmill.
You're right that our existing digital payment systems are far better than crypto for most transactions, and that crypto (and cold hard cash) dominate black market transactions, but there's a really interesting class of transactions that don't fall into either of these groups: stuff that's technically legal, but sketchy enough that no big corporations want to touch them.
Crypto is increasingly being used as a digital payment workaround for areas that Visa and MasterCard try to avoid, like pornography and donations to controversial organizations. It's probably just a sliver of overall crypto transactions, but this is very much the use case that justifies the bitcoin-as-a-currency model.
Pornography is to Bitcoin as "Linux ISOs" are to BitTorrent.
Yes of course they'd be excited about it. It's gambling, and people really like gambling.
To be blunt, they fucking love it. Like they’ll build an entire city in the middle of an uninhabitable desert just to do it. They’ll give up their kids future for it. People making $7.25 an hour will spend hundreds of dollars a week on scratch off lottery tickets in order to participate in it.
An endless demand for new ways to gamble is the least fucking confusing cultural development to ever happen.
Put people in a prison and they’ll do it with cigarettes. Give a bunch of construction workers a lunch break and they’ll bet on which pigeon is gonna to take off first. Hand a group of people a round ball or a deck of cards and they’ll figure out how to do it.
Beanie babies, little ceramic figures, baseball cards, coins. The desire for people to speculate on synthetically created scarcity is boundless, spanning generations.
Speculation is common to every culture in every era of human history. It's an amazing use case for a new technology with billions and billions of dollars in pent-up demand.
Crypto (and NFT's) are a gambling fad. People will keep doing it until it’s banned, matures, or gets replaced by the next gambling craze.
> If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
As someone born in the EU (now living in South-East Asia) I am still excited about Bitcoin. Because I feel it's the only safe haven for my honestly earned money out of reach of governments and banks. I feel Bitcoin is a too important technology to fail, especially as the world will slowly move towards Central Bank Digital Currencies that will have the same problems as fiat right now.
I view inflation as something bad for society (a hidden tax and form of theft) and CBDCs will be inflationary currencies. I also don't like that governments and central banks will get even more control over people's lives once physical currencies are gone. If you behave bad through the eyes of governments or banks (e.g. using too much electricity, eat too much meat, work as a prostitute, etc...) they might be able to take restrict your earning potential or spending. That is not a world that I'd like to live in.
> Why do you consider it a safe haven for your money when the volatility is so high?
Because I believe in the long term Bitcoin will always go up, as it has done in the past. Especially if central banks keep printing money at high volume, which -at this point- seems unavoidable for the Fed & ECB.
I don't care too much for short term volatility. And as Bitcoin adoption grows, volatility should reduce anyways.
Quite a bit of it also comes from the fact that people are tired from the fed printing money at will, devaluing people's hard work they put in for years to save some money.
Secondly, people in the EU are also excited about bitcoin regardless of the fact that they have what you mentioned.
If PayPal would have realized the vision of Elon Musk, there would be no banks anymore. In that scenario, it would be really hard for crypto to emerge.
"Modern" banking systems still suck if you want to move large amounts of money, move money globally, move money without asking for regulatory permission and waiting for regulatory delays, avoid having your assets temporarily seized because the comptroller makes a paperwork error, etc. etc.
Stephen is mostly likely right that the decentralized nature of Crypto is not really a benefit. That said digital cash and tokens and NFTs do have value and I expect them to get even more popular.
I am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution.
Napter's P2P infrastructure (and later Gnutelle and Bittorrent) allowed it to operate in a legal gray zone or at least have deniability. But Napster's lasting innovation wasn't P2P, it was showing how popular digital music was when it was being fought by the powers that be (and Bittorrent showed how popular digital films would be.)
BitTorrent is still around, primarily for pirating content. It is no where near as popular as the legal means of accessing and distributing digital music and video though -- Netflix, Apple Music, Spotify, Disney+ have grabbed the main innovation and separated it from the decentralized P2P infrastructure that first enabled it.
I think crypto is likely going in that direction. People want digital cash. People want NFTs. But they do not need this wasteful decentralized infrastructure and the complete anonymity that it is designed around.
That said, I think the criminal needs will keep decentralized crypto around forever, even after it is likely banned in most places, just like BitTorrent continues today.
Crypto servers a great purpose just like Napster/Gnutella and Bitorrent did -- it is forcing us to modernize our traditional banking infrastructure to compete with these wildcat currencies.
Digital cash versions of each major currency will exist, be formally blessed by the powers that be, they will probably have at least semi-centralized infrastructure, KYC and rollback capabilities and near 0 gas fees. KYC and rollback capabilities are key for reducing crime.
You are referring to Google Pay/Apple Pay/VISA. This is correct and it is mostly what people use these days.
But it isn't on a block chain and it isn't extensible. With our current digital cash I can not create NFTs and trade then around. It also doesn't allow for arbitrarily large transfers. It doesn't replace ACH or Interac. There are no public ledgers.
I think that digital cash with the features I described above will come into existence, as parallel structures to the existing ones, but probably will see significantly more adoption.
Right now we are seeing fracturing of the cash system with PayPal, Stripe, Venmo, etc. I think there could easily be a consolidation period around block chain official state currencies at some point.
> But it isn't on a block chain and it isn't extensible.
It is very extensible. My bank has an API.
> With our current digital cash I can not create NFTs and trade then around.
I'd call that a feature rather than a bug. I am absolutely able to buy and sell items traceably with other people though. For example I recently bought a house. The transfer was facilitated by my solicitor and recorded in a central government registry.
> It also doesn't allow for arbitrarily large transfers.
Transactions of many millions of dollars are routinely made using existing digital banking technology. My personal account has a 10k/day cap due to money laundering rules but that seems fairly sensible. I can call them up and have it raised for one offs.
That is impossible: the numbers on your bankaccount are multiplied, thanks to fractional reserve. The cash in your hand is not. Maybe not a big deal now, but at some point it might be. And then it's "surprise! The numbers on your account != cash in your hand"
Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.
I suppose much like with BitTorrent, the criminal needs will be both good and bad; allows routing around unjust laws (of which there are many), as well as routing around just laws (of which there are many).
> Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.
I agree. There are regular +100M bitcoin transfers happening between pseudonymity accounts, which could easily be money laundering / tax avoidance by billionaires: https://twitter.com/whale_alert
I think in the fully legal system, all accounts would likely be tied to real identities.
Bittorrent and Napster took advantage of post-scarcity space created by the information age and made distribution of non-scarce resources easier. NFTs, at best, do the opposite by intentionally trying to force scarcity back into a post-scarcity system. For this reason, I do not believe they have value or much of a future.
> am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution
Torrents still account for a massive share of internet traffic. Furthermore, I think it's reductive to just consider it a tool for piracy. Blizzard uses (used?) BitTorrent in their game launcher to alleviate server costs. Not to mention that a lot of bittorrent traffic lives in the fuzzy area of sharing lost media and abandonware. Gabe Newell famously referred to piracy as a service problem, and the success of services like Spotify, Steam and Netflix undoubtedly prove that to some extent. Like yes, the easiest way to dive into the Disney back catalog is through Disney+, but there's also Disney content which, for various reasons, you can't access through the service but still has historical value.
I think that the main problem with this logic is that Bittorrent is a tech designed to illegally distribute a consumer good, ie a movie. Once the movie has made it's final stop, your eyeballs, that's it. It's been consumed.
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
I think that the main problem with this logic is that Bittorrent is a tech designed to illegally distribute a consumer good, ie a movie. Once the movie has made it's final stop, your eyeballs, that's it. It's been consumed.
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Funny how he fails to mention that Tether regardless of how dodgy it is provides a lifeline to people in countries undergoing massive inflation like Lebanon.
Legal or not a back up option to a failed currency has real utility. This is why I suspect countries will push ahead with CBDCs and seek to export their use for financial and intelligence reasons.
I wish I could have discussions about cryptocurrency as a technology rather than a "get rich quick" scheme. Back in 2017 I was really excited about Ethereum and the promises of scalability not just from Vitalik B. but from other developers too. I still think that cryptocurrency could do good for the world if the issues can be resolved but for now everybody's got their eyes on the price, not the technology's horizon.
That's not a particularly valuable contribution to the discussion, nor is it even true.
A use case for crypto is to be independent of the establishment financial system. This isn't important to that many people, but it is a use case, and there are valid reasons for it.
What if you’re stuck in Turkey with its current inflation and want to hedge against it? Or what if you’re someone who would like to in a permissionless way buy Bitcoin options?
What the Hacker News crowd generally misses about crypto is that it’s technology, ideology and finance in one package. They keep on arguing against the storage model itself (centralized vs decentralized) and miss the bigger picture.
So many of these anti blockchain comments remind me of the initial HN reaction to Dropbox and people saying that “hey, you can just set this up yourself on a Linux machine”.
You’re missing the point. A 3 trillion dollar industry doesn’t give a shit about your database takes and how it’s all a bubble - we’re way beyond that.
I'm sure you have nothing to hide, and so nothing to fear, hmm? If the world is to move towards digital currencies one way or another, we might as well protect our human rights.
Have you ever used an anonymizing network for your Internet activities? Some of us have to use them for most of our activities, and while you might deem us criminals for that, privacy tech is used for legal activity the vast majority of the time. There are countless people who are currently alive only because of encryption and various privacy technologies, yet your only response is "some criminals could abuse it though"? Is not the most widespread crime in our world the violation of privacy by governments/corporations?
Have you ever tried withdrawing all of your money from your bank? They will fight tooth and nail to stop you.
Have you ever tried sending money with a wire? Your bank may say "No" you aren't allowed to send your money to who you want. This happened to Wikileaks in 2008.
Have you ever fought with PayPal to get access to your money on their platform? They've shut down millions of legitimate accounts barring people from accessing their own money.
With cryptocurrencies like Bitcoin, you are always in control of your own money because you have not deposited it into someone else's system.
It's yours.
If you still call that "zero use case" I can't force you to drink the water I brought you to.
703 comments
[ 2.9 ms ] story [ 355 ms ] threadOk, thanks.
> It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.
This sure sounds like “a fantasy about living in a cyberpunk dystopia” too. Maybe the author should diversify a little into Bitcoin, and relax.
*y*a*w*n*.
There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.
Nano just got its own currency ticker - XNO - and avoids every fault this author finds in the rest of the field.
Mr. Diehl went far enough to pick out some flaws, and then generalized them onto every variant of the technology without going that little bit further to actually check if he's right or not. Laziness.
There's so many 'Edisons' out there who have decided that because 9,999 filaments don't work that well, lightbulbs are a dead technology. And it's so tiresome - because there's a feckin LED lighthouse beaming photons across the planet as we speak.
And also something like Stellar or Hedera which isn't mineable at all and are used for CBDCs.
I get that this is all 'new' and confusing, but the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
> the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?
In my experience the people being very optimistic about crypto real world use cases usually have their first exposure with economic theory from within the crypto sphere and lack the real world experience to know some actual pain points of the current economic system. For example the oracle problem is severly glossed over by smart contract approaches, which mostly try to solve trust issues that are essentially solved issues in the real world.
That's probably true but it's also true for the author of the blog. He's a programmer and not an economist.
Such claims must be further substantiated with strong and sufficient evidence. Elaborate your claim further with each cryptocurrency with valid sources, otherwise your claim is baseless.
> Stellar and Ripple aren't even proper cryptocurrencies unless you allow for a very lenient definition.
So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Did you just prove the point of the original comment in this thread? [0] Nano has been ignored once again.
[0] https://news.ycombinator.com/item?id=29331057
No, it's the other way around. Bitcoin only employed approaches that were well-researched already, the innovation essentially was combining these together. The projects I mentioned claim that they can achieve better performance without the known costs of bitcoin (really slow, really energetically expensive). It is up to them to post proof how they achieve that.
> So what is a 'proper' / 'real' / 'true' cryptocurrency then? Are there any true Scotsmen here?
Projects with some form of blockchain, which Stellar and Ripple don't have. They are essentially just a horizontically scaled, classic database (running on the nodes), which the clients access. The nodes each have a full copy of the database. There's no blockchain, no mining or any substitute etc.
> Nano
I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets). Nano invented their own consensus protocol. They have the usual suspicious claims (fast, no transfer fees, no/low energy costs) that are only really achievable with a centralized design (i.e. a conventional database). How can they achieve security without heavy costs for appending to the ledger?
So you have no evidence or sources to your previous claims? As expected.
> Projects with some form of blockchain, which Stellar and Ripple don't have.
Projects such as what? Yet again no examples or sources given and more unfounded claims.
> I only replied with the projects named by posters before me. Nano has no blockchain, only a DAG (a proven, decades-old data structure used e.g. in spreadsheets).
And your point is all of the other projects (including Nano) are not 'blockchains' nor are they 'cryptocurrencies', because it is not mineable and they have 'invented their own consensus protocol'. First of all evidence that it isn't a 'blockchain'? Secondly, so I can modify the very first transaction in each of these 'conventional databases' right now?
Before you avoid giving sources again, what examples satisfies your definition of a 'proper' cryptocurrency and the claims that the aforementioned projects are not 'blockchains' or 'cryptocurrencies' or even that they are 'centralized'?
If someone comes around and claims to have invented a perpetuum mobile, it is not my duty to disproof them.
> Projects such as what?
Such as Bitcoin or Ethereum.
> First of all evidence that it isn't a 'blockchain'?
It's in their whitepapers, read it up. With all due respect, I don't get the feeling you know what these words mean. Hint: the G in DAG stands for "graph", so it can't be a blockchain.
Take a step back for the moment and think about it: The inherent problem cryptocurrencies have to solve, when you take away central coordination, is the trust issue with the data. Bitcoin and other cryptocurrencies tried to replace the trust in the central institution with trust in the implemented market incentives. That's why there is mining. They didn't put mining into the equation because they liked putting out CO2. There has to be something expensive to compensate for the lack of central coordination. That is why crypto is so horribly slow and expensive. The inventors didn't sit around and thought of creating the slowest possible implementation, it simply has to be expensive so that forging the ledger is expensive - because that price is the only thing preventing the rewriting of history.
With a central institution you don't have this problem: If say Paypal is the only institution allowed to write onto the ledger, you can easily have 100k ops per second or more - because these literally are simple writes to a conventional database.
You simply can't have both. In cryptocurrencies, by definition, everyone connected to the net has write access to the ledger. So you have to have a method to make writing to it expensive. If some project comes around and claims to have invented something that can only be described as an economic perpetuum mobile, i.e. having neither central coordination nor expensive writes, it is their burden of proof. Just like bitcoin did.
Edit: I looked into Nanos whitepaper and apparently Nano is trivially DDOSable for very small amounts of money. Have a look yourself:
Page 7: 4.2million transactions = 1.7G ledger size. So a transaction is 405 bytes.
Page 8: A GTX 1060 can calculate 1.25tx/seconds.
Pre Covid a GTX was 200€ and could spam the ledger with 43.74MB/day. So one only needs to invest 100k€ to flood the ledger with 22G/day / 660G/month.
So either a) the whitepaper lies, or b) Nano is completely broken, or c) There is centralization somewhere to ward off that spam.
Do a little more research - Nano had real life spam attacks, then mitigated the spam problem with an innovative 'bucket' method. This put the lie to the common Bitcoin Maxi claim that "There has to be something expensive to compensate for the lack of central coordination."
As for Nano not being a blockchain; hint: there are chains of blocks. Look at the Nano Wiki page (very short): "Nano uses a block-lattice data structure, where every account has its own blockchain (account-chain)."
I'd say it's funny how confidently wrong your comments are; but it's just way way to common to be anything but tedious. Which was my original point precisely.
So option a) - the whitepaper doesn't reflect reality. And the solution was to make transactions more expensive and slower.
> there are chains of blocks.
With the caveat of the blocks being single transactions and the "blockchain" reflecting only single accounts.
And yes, that's the caveat, if you want to ignore the genius of it and completely get it wrong instead of learning something. It uses blockchain; it's blockchain tech, but you are soo right to say it's not blockchain because it uses blockchian in an innovative way.
Jesus fucking Christ; people who can't admit when they're out of their depth really irritate the ever-living shit out of me. Not you though, you are hilarious.
There is, the problem is you are not sending value, you are sending the modern equivalent of Charles Ponzi's postal reply coupons.
Yes, there are straight Ponzi schemes in crypto. I seem to remember that 'PonziCoin' actually did quite well. Twice. Like, a quarter million dollars in eight hours well.
But there is also utility. Huge utility, recognized by multiple governments by now. And people working relentlessly to free us from depending on the beyond-evil bankers strip-mining every facet of existence on this planet for their own short-term gain.
This was Satoshi's vision, and those values are a blockchain's express priority over scale and efficiency.
Centralization is great for speed and efficiency, not so great for protection against authoritarian actors (governments or central banks).
As for protection against authoritarian actors. If your state has already gone full panopticon, crypto won't save you, indeed the state will mandate exclusive use of their chosen crypto, gaining even more visibility into your life. If your state has not yet done so, you should fight to preserve liberty and the rule of law. If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency. I regret that the only business I know to be benefiting from bitcoin is ransomware.
Cash is awful if you live in Turkey, Venezuela, Zimbabwe, Lebanon, etc. The USD has lost 90% of its purchasing power since the 1950's, meaning cash is toxic over longer time horizons. You cannot have a society where everyone seeks to get rid of the reserve asset over time.
> If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.
You're going to have much better chances anonymizing yourself, compared to say a bank account.
> I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency.
Bitcoin is a savings account in a world where Bank of America's Savings account yields you 0.01% APY, or up to 0.04% if you have more money. We are increasingly forced to take on more risk simply to maintain the purchasing power of our wealth.
That's a meaningless number without context: The median income gain was 2000% (i.e. double the purchasing power loss) during the same period (median yearly family income was $3300 in 1950 https://www.census.gov/library/publications/1952/demo/p60-00...)
However, holding the asset itself resulted in loss of buying power over time. There is a distinction between cash the asset (the thing you hold and trade with), and income.
Holding shares in a corporation over 50 years may be a good idea (depending on the company). Holding land/house over 50 years may be a good idea (depending on the location). Holding fiat cash over 50 years is never a good idea.
And the problem is someone in society has to hold it; we can't all own stocks and houses.
If the value of my fiat money is increasing, then I will hold on to it, which is good for me. If everyone does that, then the economy grinds to a halt.
The stock/bond market is, although not always efficient, at least somewhat enabling of economic activity, whereas just holding your currency (including bitcoin) is not.
The interest rate (cost of money) simply returns to a supply/demand market equilibrium. The economy possibly smoothens out, rather than giving us artificial boom and bust cycles thanks to inefficient central bank policies.
Okay, you can donate to WikiLeaks ... But probably 99.999% of people who have possessed cryptocurrency are just speculators: buy low, sell high. And ironically, the exchanges are centralized entities :p
Everything is speculation (you hope it goes up in the future, but no one knows for sure), but large corporations are increasingly keeping a balance in Bitcoin, as are wealthy individuals and fund managers.
To understand its place in the world, you need to be a bit more familiar with government bond yield and risks, money creation/monetary policy, the macroeconomics of perpetually rising debt and negative interest rates.
Gold has a $11 trillion market cap, and its not because of industrial use or because it sells well as jewelry.
You can increase block sizes to a degree, but that threatens decentralization by making it difficult/expensive for nodes to sync and store the chain.
We have an experiment called Bitcoin Cash and endless other forks promising low fees, but adoption has not followed.
As in impossible to influence via regulation. Once you realize that proper regulation is a good thing and a must in a functioning society, you realize something that can not be regulated can't be allowed to exist as it will undermine said society.
Nobody forces you to use Bitcoin. Just keep using fiat if it's such a good thing for you.
> Any application that could be done on a blockchain could be better done on a centralized database. Except crime.
Governments, world-wide, may end up emulating China, which is planning to outlaw other crypto-currencies while providing its own. The information gathered by a national government monopolizing crypto-currency is simply too appealing to those that would like to deter crime, stop tax-avoidance, or even understand in real-time what is going on in their economies. After China, I believe that other nations are likely to do the same thing and outlaw or heavily regulate crypto.
A CBDC will be introduced and all other USD stable coins will be banned and consider counterfeit currency. The US CBDC will replace stable coins and allow the US to continue exporting its currency abolishing other currencies in the process while gathering intelligence.
https://en.wikipedia.org/wiki/Executive_Order_6102
Remember, the use of encryption above a certain keyspace is still considered exporting arms, and subject to ITAR.
They will let more suffer from the bubble to allow swift legal reform.
[0] https://www.coindesk.com/markets/2019/10/22/trump-administra...
After all as we all know: If you've got nothing to hide, you've got nothing to fear.
And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.
The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.
Trust will (continue to) come with time.
There are some with lower threshold tolerance of these attacks based on the idea that they're unlikely and the added threshold doesn't actually add security. I don't know about that but some people seem to think so.
But they have access to computers, internet, enough money to pay the tx fees of cryptocurrencies... amazing
I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.
The wallet they were in at the time was emptied and no longer exists.
I still receive the relevant court documents as the case continues still.
As far as the ledger is concerned - they are no longer mine.
---
So question to you: How do you reconcile the theft of my property with the ledger at this point?
It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.
So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).
So now what?
Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.
In theory, DeFi can solve this. In practice it is hampered by poor UX and high transaction/gas fees. I think in the far future, the idea of ever having "your" assets in a wallet whose key you don't control will be seen as a ludicrous archaism. Sorry for your loss btw, that really sucks
You and me both - 41 bitcoin at $4.17 a piece. Admittedly, if they hadn't been stolen I was planning on buying a 1/4 of weed with them, so I probably wouldn't be rich either way... shrug
Fun story though - I can honestly say I spent more than USD 10 million in bitcoin on weed in college. Only about $500 at the time.
Turns out there is some utility to a central authority.
People usually want to trade stored value in exchange for goods and services (at least in a functioning value store - I don't really believe bitcoin serves that purpose at the moment).
So lets say we agree that I pay you 10k in bitcoin in exchange for you remodeling my bathroom (and ignore how unlikely this scenario is with real crypto currencies). I pay you 50% up front (to purchase materials), and 50% on completion.
Then you run off with my initial 50%.
Now what?
----
Every solution I've seen is riddled with pitfalls and gotchas
- Use escrow? Wait - now we're just trusting a central authority again.
- Use Eth contracts? Well, maybe - but it requires a perfectly written contract or you're open to all sorts of strange edge behavior and side effects.
- Sue over the theft? Now the central authority is just the government again, and we're back at square one!
You see the disconnect I'm getting at? Eventually, if disagreements occur about how value was traded, there has to be a reconciliation mechanism. Right now, even in modern crypto - that reconciliation mechanism is still a central authority: Your government.
Bitcoin is not designed to solve the counterparty risk, it's just a digital cash that has a fixed emission schedule. It can be stolen just like regular physical cash can be.
Smart Contracts try to solve the counterparty risk issue, but it's just an extra layer around cryptocurrencies, that has it's pros and cons.
Fraud is not going anywhere anytime soon. If you have no proposed mechanism to reconcile fraud, I'd argue there's not any true value stored.
If the proposed mechanism is "just use the existing government" then the whole house of cards in built on the back of that central authority enforcing ownership for you anyways in which case why not just use the currency that authority already sponsors and has a proven track record of enforcing?
It was designed to solve a specific set of frauds related with having a central authority though: censoring people from financial system, seizing your savings from your bank account and debasing the currency for the benefit of the political elite.
Counterparty risk is real, but there are other ways to solve it, besides having a central authority that has the power to revert transactions, which comes with it's own risks.
We started with:
"Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable."
Except the ledger doesn't actually provide any remedy to counter-party risk at all - I still have to trust a 3rd party at the time of exchange.
So the value of bitcoin is entirely dependent on the risk of the counter-party (because I have to pay to offset that risk, whether that's insurance, a private militia, legal contract enforced by a gov that I pay taxes to, simply eating the lost coins, etc)
Which means the intrinsic value of bitcoin is dependent on my ability to offset that risk - which I realistically (as a law abiding citizen) have to rely on the government to do, because the government has a monopoly on violence and imprisonment.
Which means the intrinsic value of a bitcoin is entirely at the whim of government control anyways. (which we already have an intuitive understanding of - this is why the price will fluctuate so much when news about government regulation or enforcement breaks).
Sure, the state can declare that the Bitcoin you own is not legitimate. It might do so because you're unable to prove the source of funds or maybe because it doesn't like your race or something else about you.
The cool thing about Bitcoin is that it is money that is separated from the state, the same way like Gold is. So as long as you can find a jurisdiction that considers your funds valid, you can escape your state violence. Of course this has it's pros and cons, but that's how it works when you separate money from the state.
This is the 5th comment that I'm making with this throwaway account, after which, I believe, I'm going to be rate-limited and unable to reply for a day. So, sorry for not being able continue this conversation :D
But this is true of all assets!
Bitcoin's only tangible value is that it weighs nothing (which is actually a nice property if you're fleeing your current government - gold is heavy!). But I don't think that's enough to make it a good long term value store for the amount of capital pouring into it.
And just like other assets - I believe its value is entirely based on having a government somewhere that will enforce a code of conduct around exchanges of that asset, and a definition of ownership.
The government issues the currency because the government is able & willing to do absolutely anything in order to resolve disputes between parties that involve real assets - up to and including killing people, killing corporations, or even trying to kill other governments.
Without that commitment, bitcoin sits in a really strange place. I don't believe it will hold value if the governments of more major economies stop supporting it.
Either way - Appreciate the conversation! Thanks for helping fill some time on an otherwise boring afternoon before the holidays!
If I'm understanding this thread, you're saying that bit coin is simultaneously designed to allow for this kind of seizure and not.
Swap the mtGox hacker with the government.
It's useful keeping the two problems connected though, since both are features of competing payment methods
You hinted that somehow a general user of bitcoin might have the power to influence or extort a third party to offset risk - but the reality of the situation is that the only entity I'm in contact with that can provide the resources to influence or extort a 3rd party is my government (doubly so if we assume I'm still bound by my local laws and rote violence isn't an answer).
Possession is ownership on the Bitcoin network. Not ownership in the sense of it is written down in some legal document somewhere but ownership in the sense that you have the power to perform a transaction with what you say you own.
You were trusting a central party all along. If you didn’t you wouldn’t be in the position you are in.
Even the silk-road used an escrow service that required that the seller trust the buyer, and both parties trust the silk-road. (a buyer places coins in escrow with the silk-road, the silk-road confirms it has the coins to the seller, the seller ships the product, the buyer unlocks the coins escrow upon receipt)
So the whole things boils down to "trust" and it turns out that the ledger can't actually provide any trust.
Present forms of digital cash do not offer this. A payment can be reversed if the buyer claims the transaction was fraudulent and the banks involved agree to reverse the transaction. Money can be accidentally withdrawn from my account and I have to ask the bank to return it. In both these cases if the institutions involved refuse to return my money then I have to take the issue to court and I am deprived of using or investing this money in the meantime.
If consumer protections are your concern these laws exist in many countries regardless of the payment medium.
Lets say you and I decide right now that we're going to use these comments to make an exchange. I will give you $5 of bitcoin in exchange for you mailing me a postcard.
Now what? How do we proceed in a meaningful manner?
How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?
If I send the bitcoin first? - the second it hits your account you know for sure it's yours: No need to bother sending the postcard - that's just cash out of your pocket.
If you mail the postcard first? - Well, job's done for me, no need to send any bitcoin at all.
What if we both agree that we trust Bob, and you send him the postcard, and I send him the bitcoin, and he only forwards them along after he gets both? - Oops, now Bob can do all those things you complained about letting the bank do! He can send that bitcoin back and I won't ever get a postcard. He can mail the postcard back and you won't ever get any bitcoin (Transaction reversed!). Worse, he can take anything you give him and do what he wants while he has it (like disappear!) - or hold them much longer than you'd like after he gets them. (Freeze it).
How do you get your stuff back from Bob? Same way you would from a bank - appeal to the government.
Basically - Bitcoin without enforcement is only a ledger. The thing that keeps it in check with reality is an appeal to an authority somewhere, who provides trust that both parties in an exchange aren't getting screwed.
Correct. Who said it was?
"How do we go about making that exchange happen if we assume that either party is self-interested, and not interested in actually completing the deal?"
We don't make that exchange in that case. Or like you mentioned we both acknowledge that we don't trust each other and get a trusted third party involved who we both trust more that the each other. No payment method is immune to this. Notice though that regardless of how much trust that we have or don't have for each other we can both trust that if you do send me $5 of Bitcoin I will receive it. Provided I've taken the necessary steps the transaction will not be reversed. Also note that if I wish I can also be certain that no one can erase whatever I rightfully claim is mine from the ledger or transfer it to another address once I have received it. This cannot be said for any non crypto digital payment system currently.
Bitcoin is a shared digital ledger hosted on a transaction network that is not controlled by a single trusted third party. The thing that keeps the ledger in check with reality is the correctness that it guarantees to those who are using the network to send and receive payments.
If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats. Now with a traditional bank what happens if you claim you sent it and the bank says you didn't. How can I verify that the transaction took place? I can't. I have to trust what you or the bank tell me and I don't know who is telling the truth. Maybe the transaction got lost. Maybe you didn't send it. There is no way to discover the reality of the situation without having to make an uninformed choice about who I trust.
At present Bitcoin is still clunky and has many issues both technical and non-technical to overcome. It is unknown whether these issues can or will be overcome. It has a far way to go if it is to realise the creators vision in a meaningful way by gaining mainstream adoption and use as "digital cash".
Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here).
Let me ask you to follow up, given what you've said:
> If you say you are going to send me a 1700 sats to post a postcard to you and I deliver as promised but in reality you don't perform your part of the deal the ledger is still correct. You still owe me 1700 sats according the deal we made and I can confirm this by checking the ledger. The ledger itself does not know about the deal we made but we both know we made a deal and according to that deal you still owe me 1700 sats.
Now what? Fill me in on how we resolve this situation in your mind, once we've reached this point.
In the example you gave whether we chose to transact in cash, wire-transfer or bitcoin the result would be the same. I would have to rely on layers, civil or criminal courts, police, insurance companies, debt collectors, thugs or myself to physically retrieve the funds (or equivalent) if possible. If that was not possible some form of fair physical or financial punishment would be dealt to you or not. Honestly for that amount of Bitcoin I wouldn't be bothered and wouldn't follow it up. I would just never do business with you again and from that point forward never relinquish physical custody of goods for sale prior to receiving payment.
"Because the bank is acting as the (government approved) escrow service! Basically - The bank is arbitrating the dispute to resolve it (whether you like how the bank resolves that dispute is mostly irrelevant here)."
Trusted third parties will always be an issue where there is no trust between the buyer and seller. Sure multisig helps but the difference is Bitcoin gives us power to choose who we involve in the transaction. I and the other party I am transacting with combined are not forced to involve any one individual, company or nation state in the transaction if we do not wish them to be part of it.
I think you are conflating trust in the Bitcoin network with trust in the humans transacting over the network. Regardless of the medium of exchange in order for transactions to occur we as humans need some level of trust in the party we are transacting with, trust in the network we are using to perform the transaction and trust that other humans are going to continue to value the medium being exchanged. Not everyone's level of trust in these aspects are going to be the same and people are going to value some aspects more than others.
Personally I think if bitcoin doesn't overcome some of its hurdles soon it will probably just turn into a form of the existing banking network through legislation. It's already beginning to look like that with most individuals storing their Bitcoin on exchanges. Private wallets will be banned, transacting with non KYCd entities will become impossible using regulated custodians and any Bitcoin received from (or linked to) non KYCd addresses will be automatically seized by the government. At that point the supply can be artificially inflated. The number of Bitcoins in your account doesn't actually have to reflect the amount of bitcoin the custodian holds for you. The surveillance apparatus will become hyper focused on the Bitcoin network and everyone interacting with it. Like Ross Ulbricht you may be able to resist seizure of your Bitcoin but it will just result in a lengthy prison sentence. It may not stay like this forever though.
So do you want a postcard? :)
Ok - I think we're pretty closely aligned here.
I'm further along that trajectory than you, mainly because I think this isn't really an optional outcome that might be avoided, but rather the only functional end state of a currency: The currency is only as good as the government that mediates its exchange.
If mediating that exchange incurs costs, then the government will take steps to either stop mediating those exchanges (ex: China - where all crypto exchanges are illegal by default, so the legal system can no longer be used to offset the cost of those exchanges at cost to itself) or it will bring that currency under control so that it can make those costs predictable and acceptable (ex: The US - where crypto is getting "all the bad bits" added back through legislation)
Which means the original intent of crypto only works in this honeymoon period (which I actually think ended not too long after the silk road went down) where it happens to get treated as an asset by a government that hasn't yet found out that they're essentially mediating exchanges in a foreign currency for free (not something most governments want to do).
That's an interesting way to conceptualise it but I see it from a different broader perspective: A government is only as strong as its ability to issue/acquire meaningful amounts of a valued currency.
Anything that negatively affects these activities will be killed or subjugated to contribute towards them. Bitcoin in its intended form is detrimental to both of these activities so it will be sabotaged by governments one way or another until it is not.
Bitcoin has unique properties that drive it's adoption but all these properties can be diminished or undermined by laws.
"Which means the original intent of crypto only works in this honeymoon period"
If Bitcoin had managed to gain widespread adoption and a large enough percentage of its users held their private keys then it would have been too difficult and unfavourable for governments to start attacking it.
The unsolved technical issues hindered adoption so Bitcoin has been relegated to a volatile store of value giving government the time to realise the threat and act accordingly. Regardless of how unreasonable, harsh or onerous a set of laws are they can be effectively implemented if the portion and power of people they affect is small enough.
To be candid, you are generally trusting the contracts you're interacting with to be bug free, but you are able to audit the code just as easily as anyone else, and verify that the contracts are as advertised. Unlike dealing with a bank portal, all the logic running on the blockchain is visible and verifiable.
So to answer your questions. Although possible, no reconcile is the pure spirit of a trustless network. Now? you make sure to avoid custodian services and keep your keys safe. or stay away from crypto until/if it becomes as ubiquitous as the Internet.
Which is entirely true, and there are some useful properties to that, but the whole thing falls down the second you have a real dispute over the trade of goods for value (which I might remind you, outside of the pure speculation/gambling that occurs in bitcoin pricing, is the point of actually holding a currency).
So how do I go about safely spending these things? Oh - it turns out that still only works in the context of a central authority and the legal system they support.
Spending these things? I can show you how to hold securely some wallet with your own private keys (no custody), receive then "spend" these things for a few pennies per transactions and with the guarantee nobody will interfere with our exchange. from wherever you happen to reside. there is no central authority able to (practically) control many of the blockchain networks out there.
Yes, and because no one can interfere in the exchange, no one can prevent either party from abusing the other, and no third party can later reconcile the dispute without an outside framework.
I find it pretty unbelievable how comfortable the crypto crowd is about just dismissing reconciliation, when it's literally some of the oldest history have, and one of the more important roles of a functioning government (we literally have 4 thousand year old stone tablets dealing with this: https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-nasir)
so the same thing as "code is law", which is a fundamentally bad idea.
You deferred to a trusted party to secure your wealth and because that third party was untrustworthy, you have to defer to an intermediary.
Had you deferred to yourself to secure your wealth you wouldn't be in this situation. The ledger would be the canonical one of ownership and possession, and you wouldn't have to defer to anyone.
Basically, you kept your bitcoin in a traditional, legally enforceable arrangement instead of the bottom layer, algorithmically enforced environment and now have to defer to the traditional system to restore possession.
I owned no bitcoins at the time I desired to trade bitcoins for a physical product (in this case: ~7g of Cannabis)
What recourse do I have that does not require trusting a third party?
I do not own the required compute power to mine it myself (not technically true at the time, although certainly true today)
I'd like to have you walk me through the exact set of steps to acquire my bitcoin and use them to purchase that physical good, where I can magically avoid placing any trust in a 3rd party.
Which is hilarious. Because that's actually all that bitcoin was good for: black market deals/trades, where enforcement is left up to you anyways.
Unfortunately, that makes it a (fucking terrible) medium of exchange for absolutely anything else, unless you add back in all the government regulation that the crypto folks hate.
The coins would sit in the wallet for as long as it took me to figure out how to place an order on silk-road again, where I would buy down to as small an amount of bitcoin as I could.
I got unlucky the last time through and hit it right when the service went down.
Which is funny - because the attitude that I should be hiding my coins away as tightly as possible is exactly why I'm so non-plussed on bitcoin: It's no longer an medium of exchange, it's a speculative asset with price completely unhinged from utility (which in my opinion is basically just buying black market goods).
2) move it to the private key.
When you're ready to spend it, spend it. Those places where you were looking to buy cannabis have escrow services, at the time you'd have had to trust the platform only upon purchase, nowadays multisig escrow is standard, which requires significantly less trust in a single party.
However you can.
Any time you make a purchase, of anything, you're trusting the seller. Leaving it in their custody is where you screw up. Imagine you bought bitcoin from me, but then asked me to hang on to it for you for free. Or a car. Or anything. It's absurd.
So again - the entire value of the medium is predicated on having a legal system you can use to resolve these disputes.
Following - that legal system requires all sorts of control to actually resolve those disputes: Many of the things bitcoin advocates actively rail against are just methods of reconciliation (Funds freezing, reversed transactions, 3rd party control of assets, etc).
So either
1. The legal system will stop supporting exchanges of that medium (see: China)
or
2. The legal system will add back all those controls (see: Legislation in the US)
Basically - My entire point is that bitcoin only has value if current governments support its exchange, and they WONT do that if it's a negative to them (and it is, unless they can tax and control it).
Authorities must find whoever received those bitcoins and make them transfer the funds back to you.
Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?
I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).
Sure, but (like it or not) that's covered under the umbrella of "crime".
Any other fiat currency already provides this such as usd, euro, Israeli currency etc and they are at least currently far easier to aquire and done have any gas feeds other than consumption tax if any
On Lebanon where electricity is unreliable seems like a particularly bad idea to use any sort of Crypto, let alone the user friction as a consequence of network gas prices
On real world scenarios, if a country is having issues relating to inflation or is a small market to begin with, consumer prices are denominated on Usd or some other currency anyway
A fortune in Bitcoin in a conflict/disaster zone is no more useful than a fortune in dollars in a bank if you can't access it readily. Your fortune means shit if you can't buy a loaf of bread.
Even if you can access the infrastructure necessary to spend cryptocurrency to buy a loaf of bread they provide no protection against localized inflation. Prices of goods in a conflict zone increase significantly due to dangers/difficulty associated with the supply chain or lack thereof. Sometimes they increase due simply to greed. Transacting in a cryptocurrency doesn't help at all with this. Your Bitcoin fortune can be wiped out just feeding your family since your only other option is to starve to death.
First you have to define "crime." If by "crime" you mean "any activity outside the purview of regulatory authorities" then you're defining everything that isn't a bank account as crime. It is circular logic. "Its only use case is crime because using it is crime." If you more narrowly define crime as criminal acts besides just unregulated financial activities, then you can start to see the value proposition.
I'm genuinely not sure what a use case for unregulated financial activity would be that doesn't fall into those buckets.
Someone mentioned retaining assets in countries with hyperinflation. To me it appears a central bank digital currency would be more appropriate there.
"Blackmarket purchases" has the same problem "crime" does, it's self supporting.
This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.
NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].
[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.
[1] read: greater fool.
[2] Leaving aside all the energy wasted on PoW.
[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.
I'll reiterate: the number in the database represents an amount of tokens guaranteed to be accepted by the government of the country I live in. Cryptocurrency 'coins' carry no such guarantee, only the possibility of greater fools.
Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.
Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.
Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?
Maybe I'm mistaken or confused here, but in that specific case you could just give any random 9-digit sequence and it would suffice? A non-SSN voter ID would work just as well for a key.
Are people threatening others based on their votes these days?
EDIT: /u/ninjanomnom brought up a good point regarding heads-of-households, which I hadn't thought of before. I suppose some sort of method would be necessary to obfuscate your vote in some situations.
So any system that allows you to verify a vote needs to come not only with a way for you to validate it, but also with deniability built in. Because if it's not then you can a) sell your vote or b) be intimidated into showing how you voted (which may result in a firing/beating if you did it wrong).
There are, I think, one or two ways to achieve this, but it's a non-trivial problem.
This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.
In what jurisdiction is this the case? I have never heard of it.
But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.
To the second point--I would imagine you would vote in the same way we do today for MVP, in-person / mailing, etc. So the main function would be to verify that your vote was properly recorded and counted.
Verifying your identity is outside the blockchain. Thus it can provide no value for voting.
You mean, other than trusting elected representatives to oversee the election you'd rather trust miners?
The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.
Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.
Relevant XKCD: https://xkcd.com/2030/
Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.
In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.
If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?
There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.
Big sticks just aren't a very efficient solution.
Which if the last decade plus of cryptocurrency has taught us anything, we ought to be able to thoroughly discard by this point in time.
I am aware that the political orthodoxy of the time is popular and the view that it should be discarded is unpopular, aside from observing that this would be true of basically any time and place, I have no further comment on that. My point is that the alternative simply flat out works better. I have zero care or interest in what is popular.
Get a life
Which is: http://adjoint.io
"Adjoint digitises cash and settlement processes for multinational corporates."
It's news to me he has other reasons to dislike crypto. I didn't know about adjoint, but that is very curious. I wonder which came first, the distaste or the financial company.
I suspect his opinion would be the same regardless of adjoint.
It's not like crypto is a thread for this business.
No idea if they pivoted away from blockchain or just stopped saying it on their website, but it makes me take this with several grains of salt.
[1] https://web.archive.org/web/20190502154457/https://www.adjoi...
e.g. https://www.txstate.edu/philosophy/resources/fallacy-definit...
If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.
Is that why crypto is being adopted? Are you serious?
I bet nearly no one who buys crypto even knows what fiat money is nor have they have a clue as to the ideas of the Austrian school of economists. We live in an age of memes and discords.
Crypto and NFTs are primarily being adopted because they are speculative vehicles that generally go up and to the right. It is quite simple.
You're uninformed.
GS, BofA, Barclays, Citi, CS, DB, JPM, MS, UBS, WF and countless funds.
The current hype cycle would be nothing without the institutional support.
But even before institutional investors started jumping in, traders and other employees of the above institutions have long been a key part of crypto markets.
Again, they do not care about fiat or the Austrian school of economics. Of course they know what those things are but they do not care about them at all.
This is the repeated refrain of crypto believers. "You just don't get it." And yet when I ask someone to explain it to me (not the technology, the economics) I get hand-waving, self-contradicting promises (e.g. universal identity + resistance to censorship), and appeals to greed ("you must like being poor").
When faced with this, I'm often reminded of Richard Feynman's oft-cited belief that "if you can't explain it to an undergrad student, you don't really understand it". So my conclusion is that either nobody understands cryptocurrency economics and thus no one has been able to sufficiently explain it or the explanations I've heard are complete and accurate - i.e. I do understand it, and it's an emperor with no clothes.
https://open.spotify.com/episode/1SI7tFrzOXyeQ8NLVFgIRU?si=o...
Whatever you think about those two coins, they are not really similar, especially given that some nations have made Bitcoin legal tender at this point.
Yes, it's pretty unorthodox to consider Bitcoin a memecoin, but it is fundamentally nearly identical to doge, but with even less energy efficiency.
The fact that it's a more established asset class with wider adoption does make it more useful to most people, but this isn't due to anything intrinsic to bitcoin or dogecoin
> A stablecoin bank would be subject to exactly the same FinCEN and OFAC money movement restrictions and compliance checks as banks; so know your customer gating, counter-terrorism financing, sanctions enforcement, and anti-money laundering enforcement. And these compliance requirements are the almost always the bottleneck consumers may encounter when doing cross-border transactions, and it’s not a technology issue.
I'm not sure what the fine author means by "A stablecoin bank," and he doesn't really tell us, but it seems like he means a stablecoin issuer who processes creations and redemptions, but doesn't control the use of stablecoins otherwise. In this case, an example of "a completely legal and above-board stablecoin (which doesn’t exist today)" might be GUSD. I'm also not sure why he thinks DAI is illegal, because again he just throws out a bunch of claims without substantiating them.
Anyway, he was actually talking about how stablecoins don't provide any benefit for international settlements. For whatever reason, I have bank accounts in the US and Japan, and I often have to move funds to Japan to pay bills. This takes about a week and costs about 50 basis points. The fine author would like us to know that the 1-week delay and 50 basis point charge are required by law. While this is not my area of expertise, my impression is that none of the regulations mentioned by the author require this process to take 1 week and cost 50 basis points when I am remitting funds *to myself*. I am under the impression, which may be wrong, that I am not breaking the law if I pay for goods in SPL USDC instead of waiting a week to move dollars from FTX to account at Shinsei bank via my US bank and Transferwise at the cost of taking a phone call at 2am and paying 50 basis points plus 20 dollars.
> Nothing about stablecoins is either necessary nor desirable, and any alleged improvement these systems may offer at the moment are purely illusory and derived only from the unstable situation that they temporarily inhabit a yet-unregulated shadow banking system that is either non-compliant or entirely scofflawing.
This seems like an unsubstantiated claim that it's a crime to pay for goods and services using SPL USDC in every country. I don't think that's true, but maybe if the fine author could elaborate I could learn more here.
> A regulated stablecoin bank is just a bank, but with a core ledger built on a terribly inefficient and bizarre piece of software not built for that purpose. All this while guzzling entire nation states worth of energy for no reason. Using inefficient blockchain as core banking software makes old legacy core banking solutions like Jack Henry look like a Ferrari by comparison. Our European allies all built extremely reliable real time payments like SEPA that work marvelously and they didn’t need any stablecoins.
The fine author seems unaware that there are currently deployed blockchains that can process the transaction volume of Visa and use less energy than Visa. That's discouraging, given that the fine author has chosen to write in such an authoritative tone about these technologies.
SEPA might be fine if you live in Europe and everyone you ever need to pay or accept payments from lives in Europe and has never lived anywhere else. It just doesn't do much for me personally when I have to move money from the US to Japan to pay living expenses, my lawyer is in Dubai and wants to get paid in Switzerland, and my developer in Japan wants to get paid in Hong Kong. So I just keep paying like $60 and taking phone calls at 2am to send wire transfers to my lawyer and dreaming of the day I can pay less than a penny and not take any phone calls at 2am if my lawyer adopts existing technology. The fine author would like me to know that this isn't actually a problem and I'm just delusional. That's not particularly hel...
Thank you for this, I have been wondering why Diehl has been spewing so much hate and disinformation about cryptos.
The least he could have done if he had even a shred of intellectual honesty would have been to disclose it indeed.
[EDIT]: It's even sadder when you go check the site.
The look is exactly that of a scamcoin site, all the way to the animated triangulation and the (two suits and a tech guy) pictures.
So you're saying there IS a use case :)
For example, you take your ill-gotten gains and just randomly send $1 to a million different addresses, some owned by you, some owned by random people or exchanges or whatever. Nobody's going to say no to free money, so the trail goes cold.
Or you use an offshore exchange that doesn't really practice strong KYC, and exchange the ill-gotten gains for a different cryptocurrency and now without the private ledger of the exchange, the trail is cold.
At one point "mixing services" were the talk of the town, but at this point it's clear that you can get 99% of the benefits of mixing without having to go through an explicit service.
[1] https://tornado.cash/
[2] Why and How zk-SNARK Works: https://arxiv.org/abs/1906.07221
- FinCEN Chief Digital Currency Advisor, Michele Korver
https://www.coindesk.com/policy/2021/07/06/fincen-hires-doj-...
I somehow think that doesn't mean we made any progress in car/traffic safety. And should not be used as an argument to dismiss/minimize the impact of traffic fatalities.
If crime accounts for some small percentage of financial transactions (we'll say 1% to make it easy, even if that's very unlikely), and those transactions migrate to cryptocurrency first, then what you'll see is a very high percentage of crime in cryptocurrencies, that then drops as the much larger normal transaction flow shifts, even the total amount of crime transactions might be stable or even increasing (as we're talking about percentages of a whole, normal transaction traffic and would have to be shifting very slowly and crime increasing extremely fast for us to see anything else).
Part of me wonders how many non-tech people we're conditioning to assume cryptography is worthless in 2021.
If we don’t legalize the things our population deeply desire, the criminal elements are more than happy to step up and provide said services.
What I think anti-crypto people object to is the freedom of others, because it represents a limit and undermines the necessary absolute and total Hobbesian sovereignty and dominion of the systems that provide them with their own status, which is based on something other than consent and desire, and when I read these objections, most of what I interpret is that implicit humiliation.
Gambling provides opportunity for people to live independent of being subordinate to an employer, as if your employees suddenly don't have to work for you, it's hard to build and scale social stability and wealth. I sympathize with the morality of reducing gambling as being appropriate for over a thousand years ago, but today? You also can't use shame to control people who can afford to walk away.
The current financial system is designed by-and-for creditors as a means of leverage over debtors, and crypto is explicitly not. The only problems of gambling are really problems with debts, and better laws limiting the power of creditors would solve that. The interests behind the criticisms are clear, but to me dressing them up and carting them around as moral is a bit much.
See also: people getting absolutely furious when the bank stops them from wiring money to Nigerian scammers for their million-dollar lottery win - and then demanding the same bank reverses the transactions after the jig is up.
They want to freely gamble with cryptos now that everything is going to the moon, but are going to be demanding answers once the bubble pops and the casino takes their life savings
Cryptocurrencies represent a respite from the logic of that idea and allow for mutual tolerance, presumably as an alternative to organizing and fighting.
It's not so much a nanny state as a mad aunt in the attic state. (e.g. MMT) Nanny state is an oddly gendered trope, but it's meant to represent not just oversight, but Animus. My argument is essentially that most anti-crypto articles I've read are an expression of ideas that originate from a neurotic animus and an affected condescention that the rest of us just don't buy.
Like stop writing about it if you don’t like it!
Whether you agree with him or not, Stephen believes crypto is damaging to society. As such, he is driven to help root it out.
<we should improve society somewhat meme.jpg>
Update: It seems I've triggered some sensitive HN'rs
Here's how to tell when someone has a real argument - they pick the best possible interpretation of the theoretical foundation of a system and then they disprove it.
Here's how to tell when someone is full of shit - they complain about meme coins.
But mostly I don't care. Do whatever you like as long as you're not hurting anyone. On average people are getting misinformed about some technologies, at worst willingly grifted. But I've seen worse technology trends come (and, by the way, go).
Have you never gone through the exercise of comparing alternatives before? Or evaluating the strengths and weaknesses of competing technologies?
Any cryptocurrency's monetary value is derived from exchange with the others — wasteful PoW titans like BTC and fraudulent wildcat banks like Tether.
By participating in ANY openly traded cryptocurrency, you're participating in that economy that AS A WHOLE is involved in wasting power, fucking the GPU market, and massive financial fraud.
Viewing any coin in isolation is completely stupid. Coins don't exist in a vacuum, you MUST have a holistic view.
Your argument is like screaming that the Internet is full of porn and fake news and that any use of the internet (e.g. buying doilies on Etsy) is participating in that economy.
Also, it's not the case that any currency (crypto or otherwise) is derived from exchange with other currencies. It's derived from it's exchange for goods and services. If I can incentivize someone to do something with a cryptocurrency, it has value.
A couple people buying VPN accounts and weed are a tiny drop in the ocean that is all the speculation. The vast majority of cryptocurrency usage is fueled by the "get rich quick" hype.
And all the other crimes that are made much more efficient/difficult to detect.
If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?
I spent some time researching the best low transaction fee easily accessible crypto for making a sort of crypto Patreon, but the vast vast majority of all crypto information available was folks speculating what was going to go "up", nobody seems interested in what is actually a decent form of money (cheap&easy to exchange, cheap&easy to transfer, and stable).
I suppose it makes some sense from a game theoretic standpoint. If we consider the decision making entities in the game to be the massive crypto exchanges and miners, the best way they make money is by transaction fees and exchange fees, so they aren't likely to come up with a great micro-transaction and micro-exchange fee system. Oh well.
Yes. A transaction is a network-scale operation. It needs to be broadcast and confirmed by at least half the network. Otherwise it wouldn't be decentralized.
As that network increases in size, the resources required for that operation increase proportionally.
"Decentralization" is a bad meme that seems to work at small scales but its adherents refuse to zoom out and accept how technically ridiculous it is at current scales (millions/billions of people).
Now, I don’t know how to translate that to the digital world, but there’s no clear reason why a decentralized network must inform the entire network of everything that happens in it.
- Lightning network on bitcoin. Super cheap and fast transactions, makes micropayments a reality (this is what Twitter is using)
- Layer 2 solutions on Ethereum. There are two optimistic rollups currently on main net (Arbitrum and Optimism). Reddit has recently committed to building on Arbitrum. There are also ZK rollups (starkware, zksync) coming in the next year or so.
- Less decentralized layer 1 chains like Solana, Avalanche, BSC, Fantom
It's unfortunate that people looking to enter the space have a hard time finding real and relevant info. Not sure what the solution is for fixing the information problem, but there are lots of people building real tech in the space
Things like the Twitter solution aren’t great, Twitter owns all the currency and is kind enough to let you have some sometimes. If I were to make my app I wouldn’t want ownership of any of the currency, too much liability.
I’m not very interested in the promises of bleeding edge crypto startups, in my experience they almost never pan out, and certainly aren’t accessible to the masses.
I agree that the twitter solution isn't great. Just pointing out that Lightning network is a tech that can be used for cheap transactions.
100% agree that none of these solutions are accessible to the masses. Tons of UX issues, most people don't want to self custody, layer 2s can require bridging, etc. But, I don't think it's terribly hard to see how these issues will be addressed and they are actively being worked on
Edit: put more simply, a hundred people each want to give $5 to a single person. What path do they follow to ensure that the person can get as close to $500 in their bank account as soon as possible. Bonus question: what is the relation between how much they can get into their bank account and how long they wait?
Not sure about the amount of time between exchange and bank account, I think that is going to depend on each exchange.
You mean with one centralized authority you have to trust?
As a matter of fact, their search volume is higher than US.
This is certainly not the case everywhere in the EU. In Germany for example it usually takes days. Not sure about other countries.
I can get money from Germany to Colombia in under a minute via n26 and transferwise. Maybe we're not talking about the same country.
Fees however, are around 1EUR
Anyway, still seems inferior to nano.
For the longest time, real estate was assumed to be 100% safe until 2008, etc.
You can also use some of them, like live in a house asset.
Many assets don't even have to appreciate. A car is an asset if I have paid it off. I don't expect someone to pay me more than I paid for it unless it is a collectible or I live in the year 2021.
On your last sentence, I don't know who thought real estate was 100%, because nothing is 100% safe as a store of value, but I guess they paid for it in the end.
Does this mean that I'm not speculating all of a sudden because I've done research and came up with a reasonable forecast?
Whether or not your forecast is reasonable or even useful is not within my sphere of knowledge. I can also almost certainly say that the USD wont be the global reserve currency forever, but making decisions based on a forever timeline poses a wide range of risks.
And it’s a core motivation for cryptocurrency, in the original Satoshi paper.
This is a microcosm of most of my issues with crypto discussions. In a (quite naive) vacuum, the arguments sound great. If you wanted to run Earth 2.0 with crypto, have at it. It doesn't fit in alongside the existing systems and, by the time it becomes "the main system", you can be certain that those in power have modified it to have the same issues as the original system we all hated.
A set yearly inflation rate incentivizes actual investment instead of currency speculation. Basically the system we have now exists to prevent what crypto enthusiasts are trying to push on us: a return to a super volatile currency that when it crashed wasn’t able to be fixed by just printing more money temporarily.
When you hear about things as complex as Monetary Policy, it is best to assume that lots of people have thought about why it is the way it is and why that’s preferable. The “gold standard” and the hoarding of wealth allowed things like feudalism to exist where lords just sat on their land and gold and were richer every year.
Yeah you can pull the “the rich get richer today too” card but so do poor people if they invest in assets, and the difference is that every wealthy person has almost all of their wealth invested in the US economy in order to beat the risk free and inflation rate.
I really, really am sick of the bullshit around the big L Libertarian party (and the crypto enthusiasts who identify with them.) Spreading lies about the evil fed and the evil inflation rate, both of which are a huge improvement over the constant depressions we had prior to this century.
It took thousands of years for people to develop the sophisticated monetary policy we currently have that allows our economy to be extremely stable and continuously grow, generations of very bright people, and anarcho-capitalists want to throw that away to go back to “basics.” At the very least you could do all those people, and the citizens of the world, the courtesy of understanding why were all in favor of yearly inflation (even if we bitch about prices going up.)
> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."
Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.
The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.
Money is created when it is borrowed from a bank or banking institution. Even that is an oversimplification but it is still much more accurate than saying money is created by "printing" it because it isn't. One of the really key things to understand is that the money supply is created by government but it is also created by businesses and individuals.
I don't have a dog in this fight, but it always drives me crazy when people talk about economics in a sloppy way.
Money printing dilutes wealth if you hold it in cash, but every other asset appreciates. Moreover if you have more debt than wealth, money printing reduces that burden.
How many people actually have more wealth than debt but keep it largely in cash? I never understood who exactly has this problem.
Can you cite some evidence that there are people keeping long-term savings* in cash and has adequate internet access and computing resources to participate in cryptocurrencies? I'm still not buying this.
* (I believe people do hold short-term savings in cash, but those are not the type of savings that money-printing erodes significantly.)
If you're in the majority of people who don't have those things, life just gets harder and wealth gap keeps getting larger and larger.
Home ownership in the US is around 65% [0], so the majority do have an asset and mortgage. There are also some people who choose not to own a house but have other types of assets. Things really aren't as dire as you seem to think.
And for those people who actually are harmed by inflation, I think the consensus is that they would be harmed by the other option--deflation--even more, mostly because the disincentive to invest leads to fewer employment opportunities. The Great Depression, a deflationary environment, was not good times.
[0] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
According to the US Census in 2020, 139.68 million homes in the US with a 64% owner-occupied rate means 89.395 million homes are owner occupied. Let’s say 85% of those are dual-owned (by couples) which I could not get a solid statistic on but several policy websites seem to cite, and we will assume the other 15% are single owners. Then about 165 million people either own or partially own the house they live in, or roughly 50% of the population.
That is the slimmest of majorities, far less than the 65% implies.
[0] https://www.census.gov/quickfacts/fact/table/US/PST045219
Of course, the minute you add another transaction layer or exchanges or other third parties, then that wipes out most of that advantage and generally the more it facilitates cheap and fast transactions the more power is given to the third party and/or more fee is taken.
I’m still a fan of first layer transactions and just making the blockchain much faster using brute force increases in block frequency and block size. Might be able to keep transaction fees low enough to be a useful alternative. But as long as more people are interested in cryptocurrency (and related tech) as a Ponzi get rich quick scheme than as a practical way to facilitate transactions, I don’t see it making a significant dent in the regular financial system.
ROTFLMAO
The article is titled handwavy
A bigger motivation, and perhaps the most quixotic one, is financial security.
No, I don't mean that cryptocurrencies haven't been highly unstable in value.
But the more that the cabal chooses to truly enter the 21st century, the greater the danger of that technology being used as a means of coercion. This has already been seen in the porn industry (both amateur and commercial) and, say what you want about the possible ethical issues with it, but people have the right to produce pornography in the United States and also participate in the same economic system as everyone else. The danger of companies like Visa and Paypal exercising political control over their customers for other reasons is non-zero, and I would even predict that the danger is at least moderate.
Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men. If that wasn't the case, there wouldn't be a big push to create the Lightning network.
The other part of the desire for crypto, from my perspective, is a desire to be a part of a new frontier. We had the personal computing revolution, the internet, the web, web 2.0... and for those who missed out on those or merely miss them, crypto fills that void and provides a new realm of possibilities to explore.
Correct me if I'm wrong, but doesn't the whole blockchain thing depend on an uncountable number of middlemen to verify transactions? They just don't have to trust them. Not to mention they have to count on a market existing for the coins to give them value.
Read, as distinct from our current champion middle-men, chosen by favor, regulation, and access to capital.
To add to this idea of mining, theres a more grandiose theory that smart contracts are the additive tool that we can use to build all sorts of incentives in our society for people to collaborate effectively. You don't have to force people to collaborate towards the greater good if you can just incentivize them to build the thing you need. This allows them to mine out the value and build a better and more trust-less community at large. It's like a bug bounty but for problems in society.
Wouldn't it be just as possible then to incentivise them to build things to the detriment of society (but that are to my benefit, of course)? We do that today with regular old money and regular old contracts.
With collective possession you can increase users stake in making sure that negative incentives don't exist. It's all in the game theory of realigning incentives, but before you do that you have to break down how the current system we live in at its foundational root is flawed.
My theory is that we don't understand the economic systems of the crypto economy because they aren't rooted in the same type of economics that exists in our current system. They are completely different incentive systems and are not correlated at all. We just confuse Capitalist values with crypto-economic values, thus leading to entire new schools of thought in how we organize ourselves manage systems.
It's not that crypto enthusiasts don't like middle men, it's that they want to be the middle men.
With banks, money can be secretly and arbitrarily transferred by individuals of power and in some cases even gate-kept from the initial depositors. With crypto I never have to worry about my money being falsely spent under the cryptographic security guarantees of something like Bitcoin. Even with > 51% attacks it would be practically impossible to rewrite significant portions of history and are mostly limited to reorganizing and deleting recent transactions.
Bitcoin is better in those unstable currency countries. The market will decide (has decided in some cases). So maybe inexorably bitcoin will be the reserve currency for a large portion of the planet. And at some point there will be a tipping point where it's going to be attractive enough to all other central banks.
It turns an everyday person worldwide into equals with central banks. That's pretty radical.
I'm not even trying to be super-negative here - after all, if it does become a lasting store of value, accepted as money in the long term, then early adopters will be holding something valuable. It could happen. But right now the hype is self-perpetuating.
What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.
The history of banking is replete with unsustainable arrangements involving the quest for yields deriving from speculative assets. Banking systems are continually expanding, exploding, and then expanding again. If we want to make the normal banking system competitive, it has to pay yields even though doing so means risk. The crypto explosion is best understood as a technologically enabled resumption of the usual cycle of banking despite the industrial west's attempt to suspend that cycle through extraordinary regulatory action.
This is partially true, but I think a bad blanket statement.
Bitcoin has outperformed all other asset classes over the last decade.
You can get crypto credit cards that remove all complexity you aren't forced to deal with anyway. And even if that wasn't the case. Banking is hard, too, so that's a moot argument.
Ethereum and others are moving away from proof-of-work.
Upgrades like taproot and zkrollups improve privacy and can be used today.
Literally none of this is true except maybe "riskier".
Crypto is increasingly being used as a digital payment workaround for areas that Visa and MasterCard try to avoid, like pornography and donations to controversial organizations. It's probably just a sliver of overall crypto transactions, but this is very much the use case that justifies the bitcoin-as-a-currency model.
Pornography is to Bitcoin as "Linux ISOs" are to BitTorrent.
To be blunt, they fucking love it. Like they’ll build an entire city in the middle of an uninhabitable desert just to do it. They’ll give up their kids future for it. People making $7.25 an hour will spend hundreds of dollars a week on scratch off lottery tickets in order to participate in it.
An endless demand for new ways to gamble is the least fucking confusing cultural development to ever happen.
Put people in a prison and they’ll do it with cigarettes. Give a bunch of construction workers a lunch break and they’ll bet on which pigeon is gonna to take off first. Hand a group of people a round ball or a deck of cards and they’ll figure out how to do it.
Beanie babies, little ceramic figures, baseball cards, coins. The desire for people to speculate on synthetically created scarcity is boundless, spanning generations.
Speculation is common to every culture in every era of human history. It's an amazing use case for a new technology with billions and billions of dollars in pent-up demand.
Crypto (and NFT's) are a gambling fad. People will keep doing it until it’s banned, matures, or gets replaced by the next gambling craze.
As someone born in the EU (now living in South-East Asia) I am still excited about Bitcoin. Because I feel it's the only safe haven for my honestly earned money out of reach of governments and banks. I feel Bitcoin is a too important technology to fail, especially as the world will slowly move towards Central Bank Digital Currencies that will have the same problems as fiat right now.
I view inflation as something bad for society (a hidden tax and form of theft) and CBDCs will be inflationary currencies. I also don't like that governments and central banks will get even more control over people's lives once physical currencies are gone. If you behave bad through the eyes of governments or banks (e.g. using too much electricity, eat too much meat, work as a prostitute, etc...) they might be able to take restrict your earning potential or spending. That is not a world that I'd like to live in.
Because I believe in the long term Bitcoin will always go up, as it has done in the past. Especially if central banks keep printing money at high volume, which -at this point- seems unavoidable for the Fed & ECB.
I don't care too much for short term volatility. And as Bitcoin adoption grows, volatility should reduce anyways.
Secondly, people in the EU are also excited about bitcoin regardless of the fact that they have what you mentioned.
But right now, that market is fully open.
Um, no. I'm not used to that. My latest online German-bank-to-German-bank giro transfer took the usual two-to-three business days.
I am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution.
Napter's P2P infrastructure (and later Gnutelle and Bittorrent) allowed it to operate in a legal gray zone or at least have deniability. But Napster's lasting innovation wasn't P2P, it was showing how popular digital music was when it was being fought by the powers that be (and Bittorrent showed how popular digital films would be.)
BitTorrent is still around, primarily for pirating content. It is no where near as popular as the legal means of accessing and distributing digital music and video though -- Netflix, Apple Music, Spotify, Disney+ have grabbed the main innovation and separated it from the decentralized P2P infrastructure that first enabled it.
I think crypto is likely going in that direction. People want digital cash. People want NFTs. But they do not need this wasteful decentralized infrastructure and the complete anonymity that it is designed around.
That said, I think the criminal needs will keep decentralized crypto around forever, even after it is likely banned in most places, just like BitTorrent continues today.
Crypto servers a great purpose just like Napster/Gnutella and Bitorrent did -- it is forcing us to modernize our traditional banking infrastructure to compete with these wildcat currencies.
Digital cash versions of each major currency will exist, be formally blessed by the powers that be, they will probably have at least semi-centralized infrastructure, KYC and rollback capabilities and near 0 gas fees. KYC and rollback capabilities are key for reducing crime.
Literally all my cash is already digital.
But it isn't on a block chain and it isn't extensible. With our current digital cash I can not create NFTs and trade then around. It also doesn't allow for arbitrarily large transfers. It doesn't replace ACH or Interac. There are no public ledgers.
I think that digital cash with the features I described above will come into existence, as parallel structures to the existing ones, but probably will see significantly more adoption.
Right now we are seeing fracturing of the cash system with PayPal, Stripe, Venmo, etc. I think there could easily be a consolidation period around block chain official state currencies at some point.
It is very extensible. My bank has an API.
> With our current digital cash I can not create NFTs and trade then around.
I'd call that a feature rather than a bug. I am absolutely able to buy and sell items traceably with other people though. For example I recently bought a house. The transfer was facilitated by my solicitor and recorded in a central government registry.
> It also doesn't allow for arbitrarily large transfers.
Transactions of many millions of dollars are routinely made using existing digital banking technology. My personal account has a 10k/day cap due to money laundering rules but that seems fairly sensible. I can call them up and have it raised for one offs.
So basically we have protections against this problem in the traditional system and the crypto system is trying to replicate fractional reserves.
Tether also is engaging in massive fractional reserve lending. Apparently only 3% of Tethers are backed by cash holdings: https://news.ycombinator.com/item?id=27151370
That is not a fair statement and you know it. Only a fraction of cryptos maybe. Most do not.
I suppose much like with BitTorrent, the criminal needs will be both good and bad; allows routing around unjust laws (of which there are many), as well as routing around just laws (of which there are many).
I agree. There are regular +100M bitcoin transfers happening between pseudonymity accounts, which could easily be money laundering / tax avoidance by billionaires: https://twitter.com/whale_alert
I think in the fully legal system, all accounts would likely be tied to real identities.
Torrents still account for a massive share of internet traffic. Furthermore, I think it's reductive to just consider it a tool for piracy. Blizzard uses (used?) BitTorrent in their game launcher to alleviate server costs. Not to mention that a lot of bittorrent traffic lives in the fuzzy area of sharing lost media and abandonware. Gabe Newell famously referred to piracy as a service problem, and the success of services like Spotify, Steam and Netflix undoubtedly prove that to some extent. Like yes, the easiest way to dive into the Disney back catalog is through Disney+, but there's also Disney content which, for various reasons, you can't access through the service but still has historical value.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.
Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?
Legal or not a back up option to a failed currency has real utility. This is why I suspect countries will push ahead with CBDCs and seek to export their use for financial and intelligence reasons.
That's not a particularly valuable contribution to the discussion, nor is it even true.
A use case for crypto is to be independent of the establishment financial system. This isn't important to that many people, but it is a use case, and there are valid reasons for it.
What the Hacker News crowd generally misses about crypto is that it’s technology, ideology and finance in one package. They keep on arguing against the storage model itself (centralized vs decentralized) and miss the bigger picture.
So many of these anti blockchain comments remind me of the initial HN reaction to Dropbox and people saying that “hey, you can just set this up yourself on a Linux machine”.
You’re missing the point. A 3 trillion dollar industry doesn’t give a shit about your database takes and how it’s all a bubble - we’re way beyond that.
Have you ever used an anonymizing network for your Internet activities? Some of us have to use them for most of our activities, and while you might deem us criminals for that, privacy tech is used for legal activity the vast majority of the time. There are countless people who are currently alive only because of encryption and various privacy technologies, yet your only response is "some criminals could abuse it though"? Is not the most widespread crime in our world the violation of privacy by governments/corporations?
Uncensorable, unstoppable, unseizable, frictionless money.
Have you ever tried withdrawing all of your money from your bank? They will fight tooth and nail to stop you.
Have you ever tried sending money with a wire? Your bank may say "No" you aren't allowed to send your money to who you want. This happened to Wikileaks in 2008.
Have you ever fought with PayPal to get access to your money on their platform? They've shut down millions of legitimate accounts barring people from accessing their own money.
With cryptocurrencies like Bitcoin, you are always in control of your own money because you have not deposited it into someone else's system. It's yours.
If you still call that "zero use case" I can't force you to drink the water I brought you to.