While the points made by the author are still true of some cryptocurrencies (including Bitcoin, and Ethereum which are still unsuitable for fast, cheap and efficient payments), it is yet another cryptocurrency rant which bundles only Bitcoin and Ethereum as having the same characteristics and faults in all cryptocurrencies.
Many cryptocurrencies will not survive new regulations once introduced, but it seems that Stellar has a great chance of surviving given that it is making the interesting case for CBDCs [0] [1] and being used by money transfer companies and also powering stable-coins. [2]
So, some cryptocurrencies are more useful than others.
This sort of comment is exactly why articles like this will never result in constructive discussion on HN (or elsewhere). It doesn't address any of the comments in the article and doesn't even give any concrete examples of its point (in this case the "utility to society"). Don't take this personally, crypto always results in comments like this. It just turns into a vacuous slinging match. I tend to flag the articles about cryptocurrency/blockchain unless they contain some actually new technical innovation.
This is the most anti-cryptocurrency tech page that I can think of, with daily negative sentiment articles popping up. It's either bitcoin will destroy the world, ether is a giant cesspool that can be implemented with a database or the favourite Tether is a huge scam and will destroy the world. Let's not forget the NFT's are full-on money laundering scheme and LOL why would you buy JPGs if you can right click and save.
Trust me, people (as in cryptocurrency realists) tried explaining in the comments, but the sentiment is too strong. Due to the meteoric rise in value and the fact that a lot of HN somehow ended sitting on the sidelines, people can't stop foretelling the impending doom and gloom while being oblivious to the underlying tenet that all of this crypto technology brings.
I fully agree with you that articles like this turn into vacuous slinging match between camps. It's not tho because there are no concrete answers from the crypto side, it's simply due to the population on HN - it's impossible to have a constructive discussion if the sentiment is so negative. So yes, I also flag such content, because these discussions represent catnip for me and provide zero value.
I think the issue is more nuanced. Many of the arguments against cryptocurrencies (or blockchain technologies) do have merit in my view (e.g. Theter being a scam, economic concerns such as deflation or the problematic envrionmental impact of PoW) but that does not mean that the entire space and any further innovation in it should be dismissed outright. However, I agree with you that this is the prevailing sentiment on HN. I find this quite sad because substantiated discussions on reddit about cryptocurrencies gets drowned out by all the shilling that is going on.
I'd really like to discuss arguments against blockchain as I view some very valid (especially long-term deflation concerns) others not so much (Tether, PoW), but sadly not here (or reddit for that matter). I wonder if just stating my views around Tether (eg. not a problem, not relevant, not really a scam) will be enough to trigger knee-jerk reaction.
Sad that it has to be like that, I view HN as the #1 place where engineers, technologists, geeks and nerds meet. Looks like they all enjoy some blockchain bashing.
Well, what's the point? We've argued the same points with the same people over and over again. It's always the same arguments and nobody is convincing anyone of anything.
As a currency? I have that already. And its stable, accepted almost everywhere, doesn't waste tons of energy and cannot be lost by forgetting a password.
As ownership verification for items? I have that as well: Contracts, Bills and Agreements. They can even be digitally signed, which has all the advantages of an NFT (integrity, authentication, non-repuditation) with none of the disadvantages.
So what tangible advantages does "crypto" have in these areas for society?
> As a currency? I have that already. And its stable, accepted almost everywhere, doesn't waste tons of energy and cannot be lost by forgetting a password.
So you were born (or at least live) in a country that has a stable currency which is accepted almost everywhere, and you can trust your politicians to not undermine this currency by bad economic policies and/or creating very high inflation. Congratulations! However, a large part of earth's population do not enjoy this stability. For them crypto offers a way to store wealth that cannot be debased nor easily seized by authorities in bad faith.
Some estimates are that 2 billion adults do not even have banking.
You say your currency does not waste tons of energy. How much energy would you say the financial system in your country use in order to keep a sound ledger and enforce the monetary rules & policies?
Bitcoin uses less energy than the gold industry. And gold mines wreck the environment (https://earthworks.org/campaigns/no-dirty-gold/impacts/). But you don't hear much about that even though most gold is used as a store of wealth, much like Bitcoin is.
Energy usage should also not be equated to bad energy production, though of course miners can use bad energy source instead of sustainable energy.
> How much energy would you say the financial system in your country...
This is trivial to calculate. BTC alone uses more power than a number of mid-sized countries, like New Zealand. New Zealand, who run their own financial systems, payment networks, banks, insurance, industry, agriculture and .. well just an entire country off less power, providing more services to more people and higher transaction throughput while they're at it too.
(NZ's payment card transaction rate appears to be an average of around 550 per second.)
Sure, but BTC is global so you need to divide BTC's energy usage with the population of New Zealand to make a fair comparison.
New Zealand's population is 0.06% of the world population. Best guess of Bitcoin energy usage put it at around 100 TWh so New Zealands part would be 0.06 TWh.
So I think we should really compare pro rate BTC usage of 0.06 TWh against NZ's 40 TWh. I have no idea how much of NZ's usage is spent on financial system though.
The question was how much does the financial system in your country use. So I picked a country to show an example. You then changed the question
> but BTC is global
So what? It supports fewer transactions per second, by a factor of almost 100, than NZ's system uses, it doesn't provide anywhere near the range of services, financial or otherwise, and it burns more power. It's a great comparison as it is. BTC is power-hungry and comparatively low-capability.
> The question was how much does the financial system in your country use. So I picked a country to show an example. You then changed the question
Not really. I am saying consider that energy usage for traditional banking is also high. If you compare numbers then I believe it needs to be global or pro rata.
> It supports fewer transactions per second
I don't think this is a relevant comparison to be honest. The high energy usage of Bitcoin is not to handle transaction volume, but to secure the network and funds.
Payment cards is a secondary payment layer on top of the banking settlements. Bitcoin is more equivalent to bank settlements.
Second layer solutions for Bitcoin such as Bitcoin Lightning and crypto payment cards (Crypto.com, Coinbase etc) are more comparative to bank settled payment cards and can (and does) provide much higher transaction volumes for Bitcoin. Which also means that payment card energy usage should not be included in any comparison if done (imho).
Just as a side-note, Christmas lights in US used more energy than Bitcoin miners (at least a couple of years ago) and for sure more than a lot of countries. Bitcoin provides sound money for unbanked people all over the world. What would you rather have?
The "stability" argument doesn't work when the value of bitcoin can fall against the dollar by 10-20% quite frequently. People love it because it's mostly been volatile in the "up" direction, but in terms of price stability of goods and services it's terrible.
But in terms of price stability as a fraction of the sum, its unrivaled.
Things are still very early so people don't know what to make of it, but stable is a not a property I would assign to the dollar. Given that one economy mutates and another doesn't, you have to realize its not bitcoin thats moving against the dollar. Its the dollar moving around the bitcoin.
If the dollar was unstable and and bitcoin stable, I would expect to observe the exchange rate between USD and other currencies fluctuate wildly while at the same time observing the BTC-$other exchange rate not fluctuating much.
This is not what I see. USD with the various other currencies I tried had 1-10% variation in the last 12 months. In each of those currencies, bitcoin varied by about 300%.
Even gold, which has zoomed up this millennium, makes bitcoin look stable in comparison.
Can you name any non-crypto asset that has had an approximately constant price in bitcoin?
>and you can trust your politicians to not undermine this currency by bad economic policies and/or creating very high inflation. Congratulations! However, a large part of earth's population do not enjoy this stability.
And how do cryptocurrencies, fluctuating between extremes of overblown worth and deep falls at a whim solve this problem exactly?
>For them crypto offers a way to store wealth
No they don't, because the tokens by themselves are worthless, as they do not enjoy a backing entity (like real currencies) and have no intrinsic worth (like gold). Since their entire worth depends on what others are willing to pay, "crypto" is, and always will be, a null-sum-game...for every penny someone makes, someone else has to lose one.
>How much energy would you say the financial system in your country use in order to keep a sound ledger and enforce the monetary rules & policies?
I know that BTC uses up the energy equivalent of an entire nation like New Zealand. So this single crypto currency alone requires as much power as a country, which has a banking system, communications infrastructure, public services, hotels, supermarkets, street lights, air conditioned homes, foundries, factories, agriculture and transportation.
So no, I do not need to know how much energy my country spends on its banking system energy-wise to say with absolute certainty that it's orders of magnitude less than "crypto".
>Bitcoin uses less energy than the gold industry
The "gold industry" excavates, cleans and prepares a resource that has widespread applications in electronics, metallurgy and science. The device you wrote your post on most likely has gold inside it, as do most electronics we use on a daily basis.
So other than "crypto", this industry thus produces something of ACTUAL, TANGIBLE AND INTRINSIC WORTH.
>Energy usage should also not be equated to bad energy production
Yes it should, because every KWh wasted on "crypto" is energy not available elsewhere. If we took the energy equivalent wasted on it, and used it to power de-salination plants, we could probably provide clean drinking water to hundreds of millions of people.
You could have a currency where taxes are already built into the transfer system and the government is funded by those transfers.
Your argument is kind of like saying your paper filling system is as good as a database. With a database your don't have to be physically present like a paper filing system. With block chain you don't need permission to access the database, it is a new thing that enables more things that centralized systems used to control and rent seekers built walls around.
>a currency where taxes are already built into the transfer system
My income tax is automatically deducted from my paycheck, transfer taxes and VAT are automatically taken care of.
> With block chain you don't need permission to access the database
If we are talking about databases now instead of distributed ledgers (aka. cryptocurrencies), then yes I need a permission, because if I store business relevant data somewhere, I need a mechanism to ensure that only authorized parties can access it. This is doable in blockchain-based databases of course but it's much easier in a classic RDBMS or document-store (noSQL) system.
Again, these are solved problems, and "blockchain" provides no benefit over existing solutions, but impacts usability, efficiency, scalabitily and speed.
The ratio of legitimate to illegitimate use of traditional currencies is way different than the ratio for cryptocurrencies. Of course the total number is smaller, since the total number of cryptocurrency users in general is smaller.
The point is that there is massive legitimate use of traditional currencies, which makes them a benefit despite the illegitimate uses. The same is just not true for cryptocurrencies.
Also, traditional currencies have many, many safeguards against illegitimate use. Cryptocurrencies are specifically designed to prevent those safeguards.
There is a good reason that ransomware only took off once cryptocurrencies became available.
It is "legitimate" to use a cryptocurrency to buy pot. It may not be legal, depending on your jurisdiction; but "illegitimate" is a fuzzy word, expressing some kind of subjective disapproval.
I personally think it's illegitimate to criminalise drug use. But that's just a subjective, personal opinion.
I'm still waiting for the "Iranian government moves to crypto to get around OFAC" articles. If there's one group of people who'd benefit from sanctions-resistant money it's them.
Virgil Griffith, possibly the dumbest smart man alive. Asks the state department if he can go to North Korea to talk about cryptocurrency, gets told "no, of course not", somehow decides to go anyway, talks about evading sanctions with cryptocurrencies, and is finally greatly surprised when he gets arrested.
We're close to having the world's No. 1 and No. 3 economies, by GDP based on PPP, ban crypto. This lets us run a natural experiment.
In ten or twenty years years, will the massive diversion of power and talent to cryptocurrencies leave the U.S., EU and others better off? Or will crypto be remembered as America's backyard steel furnaces [1]? Until we're there it will be difficult to either confirm this is the right course or build the political will to ban crypto.
We've been close since it started becoming popular. At this point, "being close" is like the being close of fusion: It's really close, but always just too far away.
It's less a backyard furnace and more the MLMs that everyone in Albania invested in in 1997. They at one point locked up [edit](50%) of their GDP - and their economic advisor - before having a civil war about it. This required the IMF to airdrop big bags of money to bail them all out. [1]
There's nothing to wait for proof on, it's been 13 - almost 14 - years and it does nothing better than a classical system other than regulatory arbitrage, grift and crime.
The fundamentals are crystal clear. It's hot garbage - rather, it's Mary Kay for young men. [2] And that's if we're lucky.
[edit] It's an unholy fusion of a grey goo coal-powered linked list and anarchocapitalist libertarianism [3].
> The wide appeal of Albania's schemes can be attributed to several factors, including Albanians' unfamiliarity with financial markets; the deficiencies of the country's formal financial system, which encouraged the development of an informal market and, within this market, of the pyramid schemes; and failures of governance.
> There were also governance problems, both in the financial sector and more generally. The regulatory framework was inadequate, and it was not clear who had responsibility for supervising the informal market. Even after the approval of a banking act in February 1996 that appeared to give the Bank of Albania the power to close illegal deposit-taking institutions, the central bank could not obtain the government's support. Indeed, the government was supportive of the companies: senior government officials frequently appeared at company functions, and, in November 1996, even as the pyramid schemes began to crumble, the prime minister and the speaker of the parliament accepted medals in honor of the anniversary of one of the companies. During the 1996 elections, several of the companies made campaign contributions to the ruling Democratic Party. There were allegations that many government officials benefited personally from the companies.
If y'all don't think this is embodied by Hester Pierce I don't know what to say.
I wish people would differentiate between crypto that's based on proof of [algorithmic] work vs based on proof of [other] work vs proof of stake vs other methods. The reasons people are giving to ban crypto all point to proof of [algorithmic] work, primarily Bitcoin, which was crypto 1.0. The algorithms work and there is a lot of interesting innovation that's come out of Bitcoin. However, it's not sustainable. Ethereum and other cryptocurrencies are moving to other proof mechanisms, or have already done so. That means those cryptocurrencies do not have the environmental impact of Bitcoin, including the power demands.
There are problems with proof of stake, so it's not like everything is rosy, but those problems are being worked. Cryptocurrency in some form is here to stay in my opinion, though there may be a prohibition-like period for a decade if it gets banned.
> There are problems with proof of stake, so it's not like everything is rosy, but those problems are being worked.
Is that it's like cold fusion. Some stuff was worked on for centuries before we managed to solve it. Some stuff we still haven't, after millennia.
Bitcoin was a breakthrough due to Proof of Work. It was a major breakthrough. The other Proofs of Whatever are far from guaranteed to raise to the same level.
There's a huge mix of wishful thinking and G.R.E.E.D.
Ethereum's proof-of-stake network has been running in parallel for a year with billions of dollars in ETH deposited. What's left is to point the rest of the network to it, and there are multi-client testnets for that running right now.
If people buy cryptocurrencies instead of holding dollars they contribute to financial stability of the US economy. Why? Because holding dollars is risk free through the deposit insurance program. Meanwhile holding Bitcoin also forces you to bear all its risks. Nobody sheds a tear when Bitcoin crashes. It's doing it all the time! Meanwhile, a systemic break down of the dollar would also ruin the real economy.
India can’t ban math / bitcoin signatures anymore than China can ban tutoring and california can ban learning calculus. non resident Indians control a lot of wealth, maybe more than resident Indians, and they remit a decent amount to india.
PPP is useful for buying chai and vegetables, but useless at buying iPhones, teslas, nvidia hardware. Also Chinese and indian real estate isn’t price in the same property tax regime as the usa, so it’s priced 4x too high and their economic numbers all inflated.
India and china have capital control (limit on foreign investments into and out of their countries). but no export control on the fruits of their labor and their literal labor leaving the country (which is convertible to Capital at scale). it’s all theater. the world is global full stop.
>This is presented as an ownership record for the media, often with no legal basis
Ah yes, the mystical "legal basis" meaning that a nation state can use violence and kidnapping to enforce ownership in whatever way it sees fit instead of having palpable, trustless, mathematical proof of ownership.
Proof of ownership is meaningless without some mechanism to enforce said ownership. If I take something of yours and you can prove it's yours, so what? Without some means of enforcement, your proof has no actual effect.
This, I mean one expects a piece from the government against Signal or something because the children, etc... No, crypto now seems to mean cryptocurrencies. Pretty bad trend. I can imaging you feel the same when you work with corona viruses these days ;)
I mean, yes, but also that ship has sailed. You can't force language upon people, this is going to be how people refer to it, similar to the media's hacker and what a hacker means in the field.
Marketing people try to redefine terms all of the time. That doesn’t mean the rest of us should help them, especially when it’s being done to defraud buyers. During the mortgage bubble, realtors and bankers tried to redefine common terms, too, but that didn’t stick past it popping.
Nothing in this article is new at all (except NFT which wasn't in fad before). I've heard the same arguments ten years ago and repeatedly during the ten years. They never stopped the spread or appreciation of BTC. Whether you like to dislike BTC, it is here to stay.
Well, not in China though, huh. Yes the case remains the same, because the fundamentals remain the same. It was bad then and it's bad now. What's changed is the scale of the risk it poses to global economies. This is triggering a different response. Let's see how it plays out.
Big difference between making money on something and it having actual real world utility, and long run viability as anything other than speculative vehicle.
"I made money so that proves me right" is a pretty weak argument, that could be said about any pyramid scheme. People who made money buying dotcom stocks in the late 90s or houses in the mid 2000s were "right" too, until they weren't.
Things without intrinsic value tend not to hold their market value over the long term.
I do think Bitcoin has some marginal value, e.g. for countries with hyperinflation and no capital markets, use as payment for illicit activities... But not very compelling overall.
Still, gold is a close analogue. But there are important differences there.
> Still, gold is a close analogue. But there are important differences there, still.
The biggest difference is that gold does not require significant upkeep to maintain. Mining gold extracts a resource, which can then be used at low marginal cost. Running proof of work computations enables transactions to occur, and is rewarded as compensation. If the proof of work computations stop, then the reward can no longer be spent. This is why I refuse to use the term "mining", as it brings in a large number of incorrect assumptions of the process.
Yeah, didn't want to go into all the details in my original post. But over 50% of mined gold is actually used for industrial or jewelry purposes.
Also you can't create "Gold 2.0" out of thin air. Or flash sell millions of ounces of physical gold tanking the price in a matter of minutes.
Bitcoin is only valuable because it's called Bitcoin and has a cool origin story, yet the Blockchain mechanism backing it has been replicated quite exactly many times.
There is power in shared belief, but something without a strong cushion of intrinsic value will inevitably get sold off when the hard times comes.
Not that I'm big on gold for investing purposes...
> Whether you like to dislike BTC, it is here to stay.
Some cryptocurrencies are here to stay. However, with the Tether scam situation unveiling itself, Bitcoin and many other cryptocurrencies are in danger of losing their 'value' and it will cause a crash in prices in some useless cryptocurrencies.
They'll always be with us, like beanie babies. But like the fall of Steg the $40,000 stuffed Stegosaurus - now valued at $900 - history will not be kind to the valuations.
Well, yes, none of the points raised are new. But none of them have been satisfactorily addressed, either. If somebody is shouting that the emperor has no clothes, saying that you heard the same thing yesterday doesn't magically erase the emperor's nudity.
I do if it risks harming society. I certainly advocate against PFOAs. The answer to PFOAs isn't "just don't buy non-stick pans and tell anyone who encourages you to do so to 'shut up.'" It's a broad-based ban.
Cryptocurrencies don't represent even 1% of global energy consumption. Whatever pollution it's responsible for pales in comparison to the lifestyle of developed nations.
I partially agree with you. It's true that bitcoin is not producing anything of value. It failed at everything. It's not a currency, it's not decentralized, it's not fungible, it's not untraceable and anonymous. It's nothing.
That energy would be much better spent mining monero which does have all of those properties.
Monero is untraceable and anonymous only insofaras you have confidence in their tumbler/aggregation functionality. But at least it's meant to be anonymous and untraceable; bitcoin isn't. Monero isn't fungible in any sense that distinguishes it from BTC.
I believe Monero is less profligate with the environment than BTC or ETH, but I can't cite.
We can talk about carbon taxes and renewable energy if you'd like, but if we're going to go down the path of "any energy use is sin unless I approve of it", then I ask again; do you not bore of telling others what to do?
Huh, that's a domain name I didn't expect to see here. For those who don't know, the Watershed is a not-for-profit organisation that comprises a cafe/bar, independent cinema, and a media studio and a bunch of other miscellaneous functions in a single building in Bristol, UK.
The name is a pun in that it's a media organisation (with watershed being a common term in broadcast media), but it's also literally a shed near the water.
The biggest case against crypto seems to be proof of work is inherently bad, because wasting power is bad for the environment. This completely side steps the fact that the entire world is moving towards carbon neutrality in electricity generation, in which case power consumption will no longer be an environmental issue. I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation.
The sheer wastefulness of it. Can you see the objection in making a million cookies (completely carbon neutral of course), and throwing 999.999 of them away?
No, it doesn't. Every TWh wasted on proof of work delays decarbonizing the rest of the economy. There's no benefit to anyone to build a whole ton of solar and wind capacity then literally wasting it on a sudoku puzzle of global scale. That doesn't help. If anything it hurts because it generates e-waste. 27 thousand tons of e-waste per year. [1] E-waste without a disposal strategy, that gets buried or burned or dumped on poor countries.
97% of all bitcoin miners will never mine a block in their entire useful lives. They will be manufactured, plugged in, they'll sit there, desperately guessing, never guess right, and be thrown out.
> in which case power consumption will no longer be an environmental issue.
But it is right now.
We don't live in a world with carbon neutral power generation. We're not there. PoW is even encouraging people to bring fossil-fuel based generation back online just for mining and making the transition to low-carbon economies slower.
> I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation.
Yeah, let's have that argument when we're closer to actually having that. Oh, and before you say "Increased demand will get us there sooner"... no, it won't, we already have a huge amount of demand that can't be met, it's making things worse.
>the entire world is moving towards carbon neutrality in electricity generation
Yes, and increasing energy demand for crypto is slowing down that move towards carbon neutrality. If you have more demand, you need more carbon neutral energy generation until you can be fully neutral.
“The laws of supply and demand mean that the amount of energy consumed closely tracks the price of the cryptocurrency in question: increases in demand correspond directly to increases in energy use. Although some newer cryptocurrencies avoid this through alternative protocols (“proof of stake” etc), they remain a distinct minority. Additionally, inter-currency trading means that their value closely tracks that of the larger cryptocurrencies, meaning that changes in their price have a similar effect on the total energy consumption.”
I’m a little confused by that last part, maybe a more economically-minded commenter can help me. How does the price change of a small-cap proof-of-stake currency have a similar effect on energy consumption as a larger, proof-of-work one?
I believe the author is saying the reverse is true. The larger currency directly correlates and effects the smaller one. In my experience watching the markets, it does seem to hold true. And the smaller currencies are too small to really effect the larger ones.
There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound.
If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement. Why did the financial system seize up so quickly? How are settlements handled between financial institutions? How does the flow of assets actually work in practice? Who owns the settlement systems and where are financial assets kept and why? Not the digital accounting, but the actual custodial functions.
Cryptocurrencies, especially NFTs, have a very important use case in these areas.
> There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound.
Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises.
> Cryptocurrencies, especially NFTs, have a very important use case in these areas.
Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
> Everyone with a finance background hates crypto.
This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies.
> Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution.
There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
Many people also trust large companies/their government not to freeze/confiscate their assets and think this is a silly use case. Those same people have likely never had their account closed and lost thousands of dollars of digital assets, and have never had to flee their homes for safety from their own governments.
Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
> This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies.
I suppose I should have said economists, and yes like the other examples, there's always the 10th dentist syndrome. However, the consensus is clear among economists. Folks in finance are just out to make money, for themselves, not you. See 2008.
> There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
There are people that believe the earth is flat and that the COVID vaccine improves your 5G reception and makes you magnetic. These are things we can measure.
An NFT does not constitute ownership, of anything. You have to trust the author of the NFT is who they say they are, that they have the 'right' to mint an NFT, and that they'll never mint another one. Because they at their sole discretion can. It's nonsense. No legal right is conveyed with an NFT. It's just a signed URL. I can `ln -s ssh-keygen nft-keygen` and do the same thing at home.
> Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
100% of the value of an NFT is created, derived and enforced by the government, the judicial system and contract law. Pretending otherwise is a great way to overpay for jars of air.
Honestly, cryptocurrencies remind me of that game called Evo where every player issues their own currency [0].
For Bitcoin, the owner might not be super obvious as Satoshi is gone but all the small coins are clearly run by their development team. Apparently, the people who play that game are smart enough to not run "crypto schemes" and use their currencies as a medium of exchange.
I personally don’t understand the appeal of NFT art, but I’m interested in NFTs as in-game assets that can be shared across games without any central entity being able to take them from me. I can also keep these assets after a game shuts down and other games can be built using them. It’s certainly a better experience than I get on Magic Arena or Magic the Gathering Online right now.
> SWIFT banking transactions being done by XRP blockchain.
A classical solution, not an extant classical solution. Check out ISO 20022.
Obviously a SWIFT message takes a few milliseconds to make its way to a correspondent bank. The extra time is AML/KYC. Avoiding that is what we call regulatory arbitrage. Yes, if you pretend regulations don't exist you can do things faster - sometimes cheaper! For instance, you can just dump carcinogens in the local river.
> I don’t have the time to do your research for you.
Ah yes the classic refrain of the coiner in a corner.
> Eliminating fraud between counter parties.
Yes crypto is a famously fraud-free space. [1]
> So many industries rely on a trusted central party/authority. What happens when they get disrupted. Peer to peer is happening.
Yeah bud middle men exist because they create value. If they didn't people would, and this is true, disintermediate them. Say what you will about capitalism, it's famously good at removing waste.
> Defi is currently paying 19.5% interest on stable coins. And loans are at 1% interest.
Yes we call this a failure to price in risk. Again, see [1]. This sounds like the refrain of those advocating for mortgage-backed securities in 2007.
> With costs so low, rates are better.
Again, no, this is a failure to price risk. This is "FrEe TenDies" a-la the legend of 1r0nyman and his box spreads. To quote the legend himself, "literally can't go tits up." [2]
And Quant with their Overledger product binds traditional finance and crypto/blockchain together with an enterprise product, but their attitude towards the crypto scene is ambiguous at best but irritated at its worst.
> Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises.
There are no 'first principles' that tie loosely-defined and emotionally-charged statements such as 'hates crypto' or 'believes in vaccination' to specific groups of people.
My opinions about cryptocurrency are derived from first principles.
My observations of the space have led me to draw parallels between anti-vaxxers and crypto advocates. I firmly believe crypto advocates are the anti-vaxxers of finance. Their positions similarly stem from a misunderstanding of the system and a strong distrust of authority.
Per your link:
> Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.
If you do not think I've adequately addressed your position I'd love you to explain why you think my opinions are based on that of a broader group - and how that has led to an irrational or dysfunctional decision-making outcome.
>Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises.
Nope. but nice try associating us with anti-vaxxers and climate change deniers so that you can ignore it and make us seem evil and corrupt. gg.
>Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
first off is a shared ledger, imo thats enough right away.
a film about Stuart Brand gated by an NFT https://weareasgods.structurefilms.com/
i can watch it, then share/sell/rent my access token to others. These tokens also used for gating discord groups/chatrooms/physical access to buildings e.g. Mila kunis and Ashton kutchers new animation stonercats.com
community groups / clubs / memberships: web3baddies.com fwb.help songaday.world creators.mirror.xyz dune.foundation daohaus.club citydao.io
publishing/crowdfunding: mirror.xyz
voting: snapshot.org
auction houses: docs.zora.co
proofs+attestations for privacy layer: sismo.io
games: zkga.me
public goods + foss funding: clr.fund gitcoin.co
.... just a small sample of the thousands of things being built, accessed with the same api, and you dont have to give over email addresses and passwords. people experimenting with ideas for money and government and ip and coordination/communication systems. pretty neat.
also the inevitable response is to pick one of these things out and say "you can do this with firebase", yes. but we are doing ALL of this on e.g. ethereum. all open and composable. one person builds a lending platform, someone else builds a management contract on top of it, another builds loans ontop of that, etc
> Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution
Well let's skip past money transfer as it's too obvious
1. Collateralised loans: The ability to take out loans on crypto-assets without any gate-keeper or credit checks
2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker. Traditional financial markets require multiple millions in investment and advanced software to market make, but this could be opened to anyone. Imagine for example being able to invest not in SPY, but in market making a SPY order book
3. Quick and final settlement. For example stock transfers still take 2 business days to clear, a tokenised stock on a blockchain could settle in minutes and irreversibly
NFTs have all sorts of uses for ownership tracking. An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
> 1. Collateralised loans: The ability to take out loans on crypto-assets without any gate-keeper or credit checks
Margin loans have existed for as long as time - long before the SEC and Reg T. In fact, I do believe they contributed to the Great Depression. You can grab one from Robinhood for a tax deductible 5% or IBKR for a tax deductible 1.x%. No credit checks or gate-keepers. It's literally the least risky loan anyone can make to a counter-party. You just hit the "withdraw cash" button.
> 2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker.
Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
> 3. Quick and final settlement.
Yeah this isn't a technical problem, it's regulatory arbitrage. Settlement takes seconds in a classical system except when regulatory processes introduce delay. You can by definition "settle" faster in a MySQL store than in a blockchain right?
> An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
> > 2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker.
> Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
Buying shares in a market maker is absolutely worse than directly market making yourself - you can't pick and choose your markets, you are paying for staffing overhead of the company, you are paying a stock exchange and broker fees.
Therefore automated market-making is something crypto does better than a classical solution.
Ok, but is there any reason that you think a decentralized AMM would be more efficient than an equivalent centralized system vended by NASDAQ? Of course not, the latter would be faster and cheaper. It just doesn't exist yet. The former is boat anchored to the blockchain making it infinitely less efficient and more expensive.
You're just describing an opportunity that exists in classical markets. No reason someone couldn't build it, faster, and more efficiently.
Sure but it won't because anyone can, today, throw a CRUD app on AWS that handles ticketing. The technology is not the reason Ticketmaster is successful. They're successful because of the value they add and the agreements they hold. They're owned by Live Nation. Live Nation owns the venues and manages the careers of artists.
You're welcome to start a competitor today on AWS. It will be cheaper, faster and more effective than a crypto solution, and have all the same features. And it will still fail because the act of issuing and redeeming tickets from a technological perspective is not how Ticketmaster creates value. They're not a $24B business because they figured out how to print QR codes and scan them later.
This is another one of the so-called killer apps that folks hold out to enthuse crypto audiences but it doesn't stand up to the slightest bit of scrutiny.
The three core axioms of crypto hold that (1) if you think crypto is a solution to any given problem, you either don't know enough about crypto or about the problem - and (2) if you develop a real honest to goodness business around crypto you can immediately make it cheaper, faster and more efficient by removing the crypto. Lastly (3) you should do it before your competitors do to maximize your edge. But crypto isn't about solving problems or creating value, it's about selling blue sky securities [1].
"Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution"
Okay it cost hundreds of dollars to send money to my family as part of an estate close. It also took a week to get all the transactions completed. This would have been a few minutes and a few dollars with crypto.
The reason behind the financial crisis was that no one trusted the collateral was unencumbered. No one would send their collateral expecting their counterpart was insolvent.
Market Making
It's trivial to add liquidity without a dedicated market maker. Multiple platforms do this quite effectively now with thousands of instruments.
International Transfers
Worth mentioning this works almost instantly and costs almost nothing. Transfers can take days and have significant fees today.
I would think the seizing up of the financial system in 2008 was more a symptom, than the actual thing itself that needs fixing. How would trustlessness prevent the mortgage/real estate crisis that happened? Doesn't seem like in itself these things would remove the incentive to design predatory mortgages, and exploit an inflated market. Real estate is already non fungible, no?
The reason the financial system bubbles up then crashes is due to fractional reserve banking. Its what caused the the great depression. Its what caused the great recession. If fractional reserve banking and all its sneaky variants can't exist, and the value of a currency is static, immutable, with custody solely held by the person who owns it(not the bank, not some federal institutions), bubbles become impossible and thereby so do the crashes.
The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system.
The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.
Honestly all I can say to this is that I wish I believed in anything like you do the concept of money and capitalism. I wish I shared with you the idea that it is "thermodynamic laws" that rules these things, it must be nice to have a ground to stand on!
Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete."
Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.
Thankfully concepts like survival of the fittest, thermodynamics, capitalism, market dynamics, gravity, and math don't care who believes in what, and they would not care if you nor I believed in any of them at all. I choose to respect gravity, and it serves me well.
Bitcoin does not prevent fractional reserve banking. Even though you cannot mint more Bitcoin, you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database. Nobody will stop you. Fractional reserve banking does not rely on actually physically printing money. Similarly, fractional reserve banking for BTC would not rely on actually mining BTC.
The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
> you absolutely can increase the "number of BTC stored in customer FOO's account" entry in your database.
I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin.
Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal.
> The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.
The claim appears to be that BTC will fix the problems caused by fractional reserve banking. This is silly if fractional reserve banking can exist just fine even if everything is denominated in BTC.
> Tell me what would a fractionally reserved loan offer me that the actual amount that I could possess would not?
Slack in the motion of finances. It prevents the entire system from seizing up when there are problems.
Yes, people who want to bank themselves won't have access to any of these systems. But I personally think that people are fools for thinking that even if BTC takes over the planet that everybody will operate their wallets themselves, especially if lighting is what is needed to scale.
> There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
I have no idea how this is related to the discussion at hand.
> Slack in the motion of finances. It prevents the entire system from seizing up when there are problems.
That's not my problem. Why would I, a greedy actor, ever care about the system at large? Just give me my BTC. Why would I ever take frBTC (fractionally reserved BTC) over BTC?
> I have no idea how this is related to the discussion at hand.
What I'm saying is the frBTC (fractionally reserved BTC) is just another altcoin, no different than puppyCoin, BitcoinSV, or buttCoin. The thing you talk of about a fractionally reserved BTC already exists, has been happening, and will continue to happen for as long as people can fork code. The trick is convincing anyone at all that they are the same thing.
>If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement.
That is literally just a symptom of not having a land value tax. Any reduction of the interest rate, for whatever reason (justified or not), makes the speculators go wild. The big difference between housing and stocks is that housing is a basic need and excluding people from being able to meet their basic needs has been a common source of unrest.
People already figured this crap out centuries ago. They always demand the same things. "Free the land, forgive the debts"
Freicoin was an interesting experiment but it also showed that there is nothing of substance in the cryptocurrency space. Almost nobody wants to actually run an economy on cryptocurrencies if they have a good enough fiat currency offered by their government. Everyone is in it for the speculation but I personally don't care as long as it doesn't become legal tender in my country.
Crypto is credit money with zero obligations allowing all participants to walk away without notice.
Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period.
Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power.
Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy.
Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency.
Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people.
If you want to gamble buy cryptocurrencies, they are better than the casino.
Most of these statements are the opposite of truth.
For example, creation of crypto has no or extremely little variability in obligations for many years. Statement about no obligations is false. There's at least an obligation to be able to transact.
Creation of fiat can be changed on a whim with a poorly formalized goals. Obligations change too.
You could replace Crypto with Gold to see your arguments make no sense. Including the energy required to mine. Also many cryptos aren't unlimited (like Ethereum).
When the percentage increase of the currency is slower(gold, most crypto) than the value of that currency increases over time, and as you say, it becomes entrenched.
When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched.
The only fair system is one in which is stable over the long-term, and where past value is equal to current value.
>When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched.
Productive assets don't entrench wealth because of inflation, they entrench wealth because they create returns to capital. The generationally wealthy would be just as wealthy relative to the rest of the population if fiat inflation had been zero for the last century. If you don't want wealth to beget more wealth you need to not only avoid deflation, but also eliminate interest, dividends, and other mechanisms by which holders of capital receive real returns to that capital.
I don't believe this to be true, but understand that the systems involved are fairly chaotic so I'm willing to change my mind. The reason that you think these things are the drivers of wealth is that they rely on the currency/asset imbalance and then simply leverage on top of it. Fix the underlying issue, the down-stream effects goes away.
I give Japan as an example of a country that just so happens to be balancing their money supply with their increase in assets. Their interest rates are flat and the only return you get on them is based on very real risk that can go the other way. Their stock markets are just about flat and is only recently hitting a new all time high after 30 years. Capital should give returns, yes, but increased productivity should be shared by all, so you should see slight wage increases.
Only roughly 2% of my portfolio is in crypto so I am far from an evangelist but I don’t feel that this is a very compelling argument. I don’t disagree with these points, but it is only half the story. A)doesn’t mention that ethereum is in the process of changing to proof of stake so that should largely decouple the energy correlation. B)most importantly, fails to note rising global inflation and central banks running wild printing money. Large, Non meme coins can act as a store of value similar to gold given their network effects. C)of late, the stock market has become every bit the casino that crypto is so I don’t see this as a purely crypto problem. Hell, the stock market has been rife with fraud and greed for decades.
Importantly, a criticism that he missed would be to the digital gold argument. If things ever do “hit the fan”, there is no guarantee of electricity or of governments not shutting down the internet. Poof, crypto all gone.
It's interesting to contrast these two observations:
> The most popular blockchains use a protocol called “proof of work”, which requires vast amounts of computation (and thus electricity) to operate at scale.
> One popular way of making money through cryptocurrency is to start a new currency, while retaining a large chunk of it for yourself.
when the only way for coin creators to avoid retaining large chunks for themselves is to distribute it fairly through proof-of-work (most still end up concentrating wealth by issuing the majority of coins in the first few years, but a never changing block subsidy would avoid that).
the most interesting news to come out of crypto in the last decade is the fact that we now have the means to stand up a globally accessible digital clock that pays people to keep it ticking
3 of 8 references in the Bitcoin whitepaper are about decentralized time keeping
incentives around consensus (agreement about history, tick by tick by tick) can get a little confusing but basically all ticks hold some data (merkle proofs of a tree of transactions) and Proof of Work leaks some money per tick while Proof of Stake pays people interest on their "at risk" investment to keep ticking
Ethereum adds a Turing complete virtual machine onto the clock, tracking function arguments, return values and code deployed to the virtual machine as data in each tick of the clock
there are a bunch of modern implementations of the Ethereum model in NEAR, Solana, Polkadot, Avalanche and others who have found a viable way to parallelize the single threaded virtual machine of Ethereum -- driving to make everything faster and cheaper so this idea can operate at scale and www shopping cart speeds
if you can get past the emotionally charged hype and news cycles vying for our attention, you will notice, with few exceptions, that the coins of 2017 and NFTs of 2021 are very early and relatable applications about things we care about and understand: money and shiny things. DeFi (decentralized finance) is about porting the financial system to this new new forever-clock
but the brand new primitives of (a) identity, enabled by public/private key cryptography (b) money, enabled by irrefutable record of time-bound value (c) ownership, identity + money and (d) provenance, identity + money + time ... are all just starting to build up
we're only just now learning to use this digital clock so we're thinking of it, naturally, as a permutation of what we already know, not something completely new. see tech adoption cycle, etc
your best bet in this environment, imho, is to focus on the actual tech -- it's no more complicated than a slow, expensive database that can't tell a lie (as long as it's economically viable to keep the clock ticking, and who knows how long that will be). at least that's good enough for the first year or so until you get used to it.
disclosure:
I'm learning how to teach people about this stuff at https://near.university and we're hiring 1000 teachers
165 comments
[ 0.19 ms ] story [ 291 ms ] threadMany cryptocurrencies will not survive new regulations once introduced, but it seems that Stellar has a great chance of surviving given that it is making the interesting case for CBDCs [0] [1] and being used by money transfer companies and also powering stable-coins. [2]
So, some cryptocurrencies are more useful than others.
[0] https://stellar.org/blog/the-case-for-cbdcs-on-stellar
[1] https://resources.stellar.org/stellar-for-cbdcs
[2] https://ir.moneygram.com/news-releases/news-release-details/...
It's an interesting pitch, but irrelevant. If a central bank is launching a digital currency, they're going to do so on their own terms.
Is it because you know it is relevant?
So it has been admitted and my point is still not refuted.
So it has been admitted and my point is still not refuted.
This is the most anti-cryptocurrency tech page that I can think of, with daily negative sentiment articles popping up. It's either bitcoin will destroy the world, ether is a giant cesspool that can be implemented with a database or the favourite Tether is a huge scam and will destroy the world. Let's not forget the NFT's are full-on money laundering scheme and LOL why would you buy JPGs if you can right click and save.
Trust me, people (as in cryptocurrency realists) tried explaining in the comments, but the sentiment is too strong. Due to the meteoric rise in value and the fact that a lot of HN somehow ended sitting on the sidelines, people can't stop foretelling the impending doom and gloom while being oblivious to the underlying tenet that all of this crypto technology brings.
I fully agree with you that articles like this turn into vacuous slinging match between camps. It's not tho because there are no concrete answers from the crypto side, it's simply due to the population on HN - it's impossible to have a constructive discussion if the sentiment is so negative. So yes, I also flag such content, because these discussions represent catnip for me and provide zero value.
Sad that it has to be like that, I view HN as the #1 place where engineers, technologists, geeks and nerds meet. Looks like they all enjoy some blockchain bashing.
As a currency? I have that already. And its stable, accepted almost everywhere, doesn't waste tons of energy and cannot be lost by forgetting a password.
As ownership verification for items? I have that as well: Contracts, Bills and Agreements. They can even be digitally signed, which has all the advantages of an NFT (integrity, authentication, non-repuditation) with none of the disadvantages.
So what tangible advantages does "crypto" have in these areas for society?
So you were born (or at least live) in a country that has a stable currency which is accepted almost everywhere, and you can trust your politicians to not undermine this currency by bad economic policies and/or creating very high inflation. Congratulations! However, a large part of earth's population do not enjoy this stability. For them crypto offers a way to store wealth that cannot be debased nor easily seized by authorities in bad faith.
Some estimates are that 2 billion adults do not even have banking.
You say your currency does not waste tons of energy. How much energy would you say the financial system in your country use in order to keep a sound ledger and enforce the monetary rules & policies?
Bitcoin uses less energy than the gold industry. And gold mines wreck the environment (https://earthworks.org/campaigns/no-dirty-gold/impacts/). But you don't hear much about that even though most gold is used as a store of wealth, much like Bitcoin is.
Energy usage should also not be equated to bad energy production, though of course miners can use bad energy source instead of sustainable energy.
This is trivial to calculate. BTC alone uses more power than a number of mid-sized countries, like New Zealand. New Zealand, who run their own financial systems, payment networks, banks, insurance, industry, agriculture and .. well just an entire country off less power, providing more services to more people and higher transaction throughput while they're at it too.
(NZ's payment card transaction rate appears to be an average of around 550 per second.)
New Zealand's population is 0.06% of the world population. Best guess of Bitcoin energy usage put it at around 100 TWh so New Zealands part would be 0.06 TWh.
So I think we should really compare pro rate BTC usage of 0.06 TWh against NZ's 40 TWh. I have no idea how much of NZ's usage is spent on financial system though.
> but BTC is global
So what? It supports fewer transactions per second, by a factor of almost 100, than NZ's system uses, it doesn't provide anywhere near the range of services, financial or otherwise, and it burns more power. It's a great comparison as it is. BTC is power-hungry and comparatively low-capability.
Not really. I am saying consider that energy usage for traditional banking is also high. If you compare numbers then I believe it needs to be global or pro rata.
> It supports fewer transactions per second
I don't think this is a relevant comparison to be honest. The high energy usage of Bitcoin is not to handle transaction volume, but to secure the network and funds.
Payment cards is a secondary payment layer on top of the banking settlements. Bitcoin is more equivalent to bank settlements.
Second layer solutions for Bitcoin such as Bitcoin Lightning and crypto payment cards (Crypto.com, Coinbase etc) are more comparative to bank settled payment cards and can (and does) provide much higher transaction volumes for Bitcoin. Which also means that payment card energy usage should not be included in any comparison if done (imho).
Just as a side-note, Christmas lights in US used more energy than Bitcoin miners (at least a couple of years ago) and for sure more than a lot of countries. Bitcoin provides sound money for unbanked people all over the world. What would you rather have?
LOL, no, it does not. It does nothing at all for the unbanked.
Things are still very early so people don't know what to make of it, but stable is a not a property I would assign to the dollar. Given that one economy mutates and another doesn't, you have to realize its not bitcoin thats moving against the dollar. Its the dollar moving around the bitcoin.
This is not what I see. USD with the various other currencies I tried had 1-10% variation in the last 12 months. In each of those currencies, bitcoin varied by about 300%.
Even gold, which has zoomed up this millennium, makes bitcoin look stable in comparison.
Can you name any non-crypto asset that has had an approximately constant price in bitcoin?
And how do cryptocurrencies, fluctuating between extremes of overblown worth and deep falls at a whim solve this problem exactly?
>For them crypto offers a way to store wealth
No they don't, because the tokens by themselves are worthless, as they do not enjoy a backing entity (like real currencies) and have no intrinsic worth (like gold). Since their entire worth depends on what others are willing to pay, "crypto" is, and always will be, a null-sum-game...for every penny someone makes, someone else has to lose one.
>How much energy would you say the financial system in your country use in order to keep a sound ledger and enforce the monetary rules & policies?
I know that BTC uses up the energy equivalent of an entire nation like New Zealand. So this single crypto currency alone requires as much power as a country, which has a banking system, communications infrastructure, public services, hotels, supermarkets, street lights, air conditioned homes, foundries, factories, agriculture and transportation.
So no, I do not need to know how much energy my country spends on its banking system energy-wise to say with absolute certainty that it's orders of magnitude less than "crypto".
>Bitcoin uses less energy than the gold industry
The "gold industry" excavates, cleans and prepares a resource that has widespread applications in electronics, metallurgy and science. The device you wrote your post on most likely has gold inside it, as do most electronics we use on a daily basis.
So other than "crypto", this industry thus produces something of ACTUAL, TANGIBLE AND INTRINSIC WORTH.
>Energy usage should also not be equated to bad energy production
Yes it should, because every KWh wasted on "crypto" is energy not available elsewhere. If we took the energy equivalent wasted on it, and used it to power de-salination plants, we could probably provide clean drinking water to hundreds of millions of people.
Your argument is kind of like saying your paper filling system is as good as a database. With a database your don't have to be physically present like a paper filing system. With block chain you don't need permission to access the database, it is a new thing that enables more things that centralized systems used to control and rent seekers built walls around.
Like a consumption tax/sales tax/GST?
My income tax is automatically deducted from my paycheck, transfer taxes and VAT are automatically taken care of.
> With block chain you don't need permission to access the database
If we are talking about databases now instead of distributed ledgers (aka. cryptocurrencies), then yes I need a permission, because if I store business relevant data somewhere, I need a mechanism to ensure that only authorized parties can access it. This is doable in blockchain-based databases of course but it's much easier in a classic RDBMS or document-store (noSQL) system.
Again, these are solved problems, and "blockchain" provides no benefit over existing solutions, but impacts usability, efficiency, scalabitily and speed.
This could be said about money in general, but in both cases it’s not really helpful for the debate.
The point is that there is massive legitimate use of traditional currencies, which makes them a benefit despite the illegitimate uses. The same is just not true for cryptocurrencies.
Also, traditional currencies have many, many safeguards against illegitimate use. Cryptocurrencies are specifically designed to prevent those safeguards.
There is a good reason that ransomware only took off once cryptocurrencies became available.
It is "legitimate" to use a cryptocurrency to buy pot. It may not be legal, depending on your jurisdiction; but "illegitimate" is a fuzzy word, expressing some kind of subjective disapproval.
I personally think it's illegitimate to criminalise drug use. But that's just a subjective, personal opinion.
What? The peak of ransomwares was during the 2000s.
In ten or twenty years years, will the massive diversion of power and talent to cryptocurrencies leave the U.S., EU and others better off? Or will crypto be remembered as America's backyard steel furnaces [1]? Until we're there it will be difficult to either confirm this is the right course or build the political will to ban crypto.
[1] https://en.wikipedia.org/wiki/Backyard_furnace
We've been close since it started becoming popular. At this point, "being close" is like the being close of fusion: It's really close, but always just too far away.
There's nothing to wait for proof on, it's been 13 - almost 14 - years and it does nothing better than a classical system other than regulatory arbitrage, grift and crime.
The fundamentals are crystal clear. It's hot garbage - rather, it's Mary Kay for young men. [2] And that's if we're lucky.
[edit] It's an unholy fusion of a grey goo coal-powered linked list and anarchocapitalist libertarianism [3].
[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
[2] https://mobile.twitter.com/tracyalloway/status/1467720876741...
[3] https://i.redd.it/1fwrkwoec7281.jpg
> It's an unholy fusion of a grey goo coal-powered linked list an anarchocapitalist libertarianism
and your third link :-D
I like that one better.
> The wide appeal of Albania's schemes can be attributed to several factors, including Albanians' unfamiliarity with financial markets; the deficiencies of the country's formal financial system, which encouraged the development of an informal market and, within this market, of the pyramid schemes; and failures of governance.
> There were also governance problems, both in the financial sector and more generally. The regulatory framework was inadequate, and it was not clear who had responsibility for supervising the informal market. Even after the approval of a banking act in February 1996 that appeared to give the Bank of Albania the power to close illegal deposit-taking institutions, the central bank could not obtain the government's support. Indeed, the government was supportive of the companies: senior government officials frequently appeared at company functions, and, in November 1996, even as the pyramid schemes began to crumble, the prime minister and the speaker of the parliament accepted medals in honor of the anniversary of one of the companies. During the 1996 elections, several of the companies made campaign contributions to the ruling Democratic Party. There were allegations that many government officials benefited personally from the companies.
If y'all don't think this is embodied by Hester Pierce I don't know what to say.
[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
There are problems with proof of stake, so it's not like everything is rosy, but those problems are being worked. Cryptocurrency in some form is here to stay in my opinion, though there may be a prohibition-like period for a decade if it gets banned.
> There are problems with proof of stake, so it's not like everything is rosy, but those problems are being worked.
Is that it's like cold fusion. Some stuff was worked on for centuries before we managed to solve it. Some stuff we still haven't, after millennia.
Bitcoin was a breakthrough due to Proof of Work. It was a major breakthrough. The other Proofs of Whatever are far from guaranteed to raise to the same level.
There's a huge mix of wishful thinking and G.R.E.E.D.
PPP is useful for buying chai and vegetables, but useless at buying iPhones, teslas, nvidia hardware. Also Chinese and indian real estate isn’t price in the same property tax regime as the usa, so it’s priced 4x too high and their economic numbers all inflated.
India and china have capital control (limit on foreign investments into and out of their countries). but no export control on the fruits of their labor and their literal labor leaving the country (which is convertible to Capital at scale). it’s all theater. the world is global full stop.
Ah yes, the mystical "legal basis" meaning that a nation state can use violence and kidnapping to enforce ownership in whatever way it sees fit instead of having palpable, trustless, mathematical proof of ownership.
You can have a claim of ownership that has some mathematical properties of course.
Crypto != Cryptocurrencies (or more generally: cryptoassets)
But what can we do?
"Crypto" being an abbreviation will still only mean "cryptoasset" in some contexts, and retain other meanings in other contexts.
Ship has sailed.
Train has left platform.
"Crypto", "cyber", "literally", "exponential": I wish language wouldn't change under my feet. I feel as if I'm standing on linguistic jelly.
"I made money so that proves me right" is a pretty weak argument, that could be said about any pyramid scheme. People who made money buying dotcom stocks in the late 90s or houses in the mid 2000s were "right" too, until they weren't.
Things without intrinsic value tend not to hold their market value over the long term.
I do think Bitcoin has some marginal value, e.g. for countries with hyperinflation and no capital markets, use as payment for illicit activities... But not very compelling overall.
Still, gold is a close analogue. But there are important differences there.
The biggest difference is that gold does not require significant upkeep to maintain. Mining gold extracts a resource, which can then be used at low marginal cost. Running proof of work computations enables transactions to occur, and is rewarded as compensation. If the proof of work computations stop, then the reward can no longer be spent. This is why I refuse to use the term "mining", as it brings in a large number of incorrect assumptions of the process.
Also you can't create "Gold 2.0" out of thin air. Or flash sell millions of ounces of physical gold tanking the price in a matter of minutes.
Bitcoin is only valuable because it's called Bitcoin and has a cool origin story, yet the Blockchain mechanism backing it has been replicated quite exactly many times.
There is power in shared belief, but something without a strong cushion of intrinsic value will inevitably get sold off when the hard times comes.
Not that I'm big on gold for investing purposes...
Some cryptocurrencies are here to stay. However, with the Tether scam situation unveiling itself, Bitcoin and many other cryptocurrencies are in danger of losing their 'value' and it will cause a crash in prices in some useless cryptocurrencies.
The Tether scam situation has been unveiling itself since 2016.
Is there any recent news that's made it more likely Tether will default soon?
Do people not get bored of telling others what to do?
What next, "The Case Against Popcorn"?
https://twitter.com/TikTokInvestors/status/14672257141642649...
Do you argue for banning the sale of something when someone shills it to you? No, you tell them to shut up
That energy would be much better spent mining monero which does have all of those properties.
I believe Monero is less profligate with the environment than BTC or ETH, but I can't cite.
False equivalence.
We can talk about carbon taxes and renewable energy if you'd like, but if we're going to go down the path of "any energy use is sin unless I approve of it", then I ask again; do you not bore of telling others what to do?
The name is a pun in that it's a media organisation (with watershed being a common term in broadcast media), but it's also literally a shed near the water.
POW is that, but worse.
97% of all bitcoin miners will never mine a block in their entire useful lives. They will be manufactured, plugged in, they'll sit there, desperately guessing, never guess right, and be thrown out.
[1] https://digiconomist.net/bitcoin-energy-consumption
But it is right now.
We don't live in a world with carbon neutral power generation. We're not there. PoW is even encouraging people to bring fossil-fuel based generation back online just for mining and making the transition to low-carbon economies slower.
> I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation.
Yeah, let's have that argument when we're closer to actually having that. Oh, and before you say "Increased demand will get us there sooner"... no, it won't, we already have a huge amount of demand that can't be met, it's making things worse.
In short, can they compete with traditional heating? Radiators, in floor heating, heat pumps, etc. I doubt it.
Yes, and increasing energy demand for crypto is slowing down that move towards carbon neutrality. If you have more demand, you need more carbon neutral energy generation until you can be fully neutral.
I’m a little confused by that last part, maybe a more economically-minded commenter can help me. How does the price change of a small-cap proof-of-stake currency have a similar effect on energy consumption as a larger, proof-of-work one?
If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement. Why did the financial system seize up so quickly? How are settlements handled between financial institutions? How does the flow of assets actually work in practice? Who owns the settlement systems and where are financial assets kept and why? Not the digital accounting, but the actual custodial functions.
Cryptocurrencies, especially NFTs, have a very important use case in these areas.
Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises.
> Cryptocurrencies, especially NFTs, have a very important use case in these areas.
Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies.
> Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution.
There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
Many people also trust large companies/their government not to freeze/confiscate their assets and think this is a silly use case. Those same people have likely never had their account closed and lost thousands of dollars of digital assets, and have never had to flee their homes for safety from their own governments.
Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
I suppose I should have said economists, and yes like the other examples, there's always the 10th dentist syndrome. However, the consensus is clear among economists. Folks in finance are just out to make money, for themselves, not you. See 2008.
> There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can).
There are people that believe the earth is flat and that the COVID vaccine improves your 5G reception and makes you magnetic. These are things we can measure.
An NFT does not constitute ownership, of anything. You have to trust the author of the NFT is who they say they are, that they have the 'right' to mint an NFT, and that they'll never mint another one. Because they at their sole discretion can. It's nonsense. No legal right is conveyed with an NFT. It's just a signed URL. I can `ln -s ssh-keygen nft-keygen` and do the same thing at home.
> Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
100% of the value of an NFT is created, derived and enforced by the government, the judicial system and contract law. Pretending otherwise is a great way to overpay for jars of air.
For Bitcoin, the owner might not be super obvious as Satoshi is gone but all the small coins are clearly run by their development team. Apparently, the people who play that game are smart enough to not run "crypto schemes" and use their currencies as a medium of exchange.
[0] https://wiki.play.eco/en/Economy#Minted_currency
I personally don’t understand the appeal of NFT art, but I’m interested in NFTs as in-game assets that can be shared across games without any central entity being able to take them from me. I can also keep these assets after a game shuts down and other games can be built using them. It’s certainly a better experience than I get on Magic Arena or Magic the Gathering Online right now.
I don’t have the time to do your research for you. If you want to ignore the paradigm disruption that is happening. That’s on you.
Accounting 101…
Eliminating the need for a centralized party, one must trust, in the middle of transactions. Enabling triple entry accounting.
Eliminating fraud between counter parties. Eliminating the middle man.
So many industries rely on a trusted central party/authority. What happens when they get disrupted. Peer to peer is happening.
Defi is currently paying 19.5% interest on stable coins. And loans are at 1% interest. Financial services are being turned into software contracts.
Eliminating physical infrastructure, employees, overhead. With costs so low, rates are better.
A classical solution, not an extant classical solution. Check out ISO 20022.
Obviously a SWIFT message takes a few milliseconds to make its way to a correspondent bank. The extra time is AML/KYC. Avoiding that is what we call regulatory arbitrage. Yes, if you pretend regulations don't exist you can do things faster - sometimes cheaper! For instance, you can just dump carcinogens in the local river.
> I don’t have the time to do your research for you.
Ah yes the classic refrain of the coiner in a corner.
> Eliminating fraud between counter parties.
Yes crypto is a famously fraud-free space. [1]
> So many industries rely on a trusted central party/authority. What happens when they get disrupted. Peer to peer is happening.
Yeah bud middle men exist because they create value. If they didn't people would, and this is true, disintermediate them. Say what you will about capitalism, it's famously good at removing waste.
> Defi is currently paying 19.5% interest on stable coins. And loans are at 1% interest.
Yes we call this a failure to price in risk. Again, see [1]. This sounds like the refrain of those advocating for mortgage-backed securities in 2007.
> With costs so low, rates are better.
Again, no, this is a failure to price risk. This is "FrEe TenDies" a-la the legend of 1r0nyman and his box spreads. To quote the legend himself, "literally can't go tits up." [2]
[1] https://rekt.news
[2] https://www.reddit.com/r/wallstreetbets/comments/ahy7dy/the_...
You have a severe case of 'groupthink'.
https://en.wikipedia.org/wiki/Groupthink
My observations of the space have led me to draw parallels between anti-vaxxers and crypto advocates. I firmly believe crypto advocates are the anti-vaxxers of finance. Their positions similarly stem from a misunderstanding of the system and a strong distrust of authority.
Per your link:
> Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.
If you do not think I've adequately addressed your position I'd love you to explain why you think my opinions are based on that of a broader group - and how that has led to an irrational or dysfunctional decision-making outcome.
Nope. but nice try associating us with anti-vaxxers and climate change deniers so that you can ignore it and make us seem evil and corrupt. gg.
>Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
first off is a shared ledger, imo thats enough right away.
a film about Stuart Brand gated by an NFT https://weareasgods.structurefilms.com/ i can watch it, then share/sell/rent my access token to others. These tokens also used for gating discord groups/chatrooms/physical access to buildings e.g. Mila kunis and Ashton kutchers new animation stonercats.com
sybil resistance + ubi: proofofhumanity.id brightid.org joincircles.net
borrowing and lending assets: aave.com
savings accounts: yearn.finance
self repaying loans: alchemix.fi
community groups / clubs / memberships: web3baddies.com fwb.help songaday.world creators.mirror.xyz dune.foundation daohaus.club citydao.io
publishing/crowdfunding: mirror.xyz
voting: snapshot.org
auction houses: docs.zora.co
proofs+attestations for privacy layer: sismo.io
games: zkga.me
public goods + foss funding: clr.fund gitcoin.co
.... just a small sample of the thousands of things being built, accessed with the same api, and you dont have to give over email addresses and passwords. people experimenting with ideas for money and government and ip and coordination/communication systems. pretty neat.
also the inevitable response is to pick one of these things out and say "you can do this with firebase", yes. but we are doing ALL of this on e.g. ethereum. all open and composable. one person builds a lending platform, someone else builds a management contract on top of it, another builds loans ontop of that, etc
Well let's skip past money transfer as it's too obvious
1. Collateralised loans: The ability to take out loans on crypto-assets without any gate-keeper or credit checks
2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker. Traditional financial markets require multiple millions in investment and advanced software to market make, but this could be opened to anyone. Imagine for example being able to invest not in SPY, but in market making a SPY order book
3. Quick and final settlement. For example stock transfers still take 2 business days to clear, a tokenised stock on a blockchain could settle in minutes and irreversibly
NFTs have all sorts of uses for ownership tracking. An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
Margin loans have existed for as long as time - long before the SEC and Reg T. In fact, I do believe they contributed to the Great Depression. You can grab one from Robinhood for a tax deductible 5% or IBKR for a tax deductible 1.x%. No credit checks or gate-keepers. It's literally the least risky loan anyone can make to a counter-party. You just hit the "withdraw cash" button.
> 2. Accessible market-making: The ability to provide capital to a decentralised exchange to operate as an automated market-maker.
Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
> 3. Quick and final settlement.
Yeah this isn't a technical problem, it's regulatory arbitrage. Settlement takes seconds in a classical system except when regulatory processes introduce delay. You can by definition "settle" faster in a MySQL store than in a blockchain right?
> An obvious one is event tickets - these could have anti-scalping measures enforced (only able to sell back to venue instead of being able to sell at increased prices to others)
Yeah that's something Ticketmaster can do today.
> Yes, this is a great way of solving a problem crypto created for itself - illiquid markets for jars of air that is. In classical markets you can just buy shares in a market maker. Crypto's biggest market makers are centralized - Alameda Research and Cumberland/DRW. The latter is also a massive market maker in classical markets.
Buying shares in a market maker is absolutely worse than directly market making yourself - you can't pick and choose your markets, you are paying for staffing overhead of the company, you are paying a stock exchange and broker fees.
Therefore automated market-making is something crypto does better than a classical solution.
You're just describing an opportunity that exists in classical markets. No reason someone couldn't build it, faster, and more efficiently.
Blockchain is an inefficiency and a liability.
You're welcome to start a competitor today on AWS. It will be cheaper, faster and more effective than a crypto solution, and have all the same features. And it will still fail because the act of issuing and redeeming tickets from a technological perspective is not how Ticketmaster creates value. They're not a $24B business because they figured out how to print QR codes and scan them later.
This is another one of the so-called killer apps that folks hold out to enthuse crypto audiences but it doesn't stand up to the slightest bit of scrutiny.
The three core axioms of crypto hold that (1) if you think crypto is a solution to any given problem, you either don't know enough about crypto or about the problem - and (2) if you develop a real honest to goodness business around crypto you can immediately make it cheaper, faster and more efficient by removing the crypto. Lastly (3) you should do it before your competitors do to maximize your edge. But crypto isn't about solving problems or creating value, it's about selling blue sky securities [1].
[1] https://www.investopedia.com/terms/b/blueskylaws.asp
Okay it cost hundreds of dollars to send money to my family as part of an estate close. It also took a week to get all the transactions completed. This would have been a few minutes and a few dollars with crypto.
The reason behind the financial crisis was that no one trusted the collateral was unencumbered. No one would send their collateral expecting their counterpart was insolvent.
Market Making
It's trivial to add liquidity without a dedicated market maker. Multiple platforms do this quite effectively now with thousands of instruments.
International Transfers
Worth mentioning this works almost instantly and costs almost nothing. Transfers can take days and have significant fees today.
Do you have any links for this?
The current financial system has layered over the original concept of money so many things its unrecognizable to its natural form. Go back to where money originated, and you'll realize its an evolutionary necessity for social cooperation, a mediator of morality between selfish actors. Think about the natural formation of seashell necklaces, to the cigarette packs as money traded by prisoners, the rocks traded by penguins, the gold coins by the roman empire, to the nutrients traded by trees in mycelial networks. The control and manipulation of a currency is the perversion of the transfer of work between agents in an economic system. It corrodes the network and does not allow the system to function properly, and when that system fails to function, so do the moral obligations and contracts that the money represents. What happened in 2008 was a result of a system that can't fulfill its promise to uphold the necessary thermodynamic laws that should be maintained by an economic system.
The problem with real estate is its not divisible, its not consistent, and its not exactly fungible, but investors found ways to turn it into a tradeable asset class during the mortgage crisis. With bitcoin what are these creative investors going to do? Create bitcoin derivatives? You can already trade it near instantly at any fraction or denomination you wish.
Whatever happens, you can know that things are generally as they should be, that the human suffering that does happen is ultimately unavoidable, better than the alternative. You must never feel the stings of witnessing grand injustice, of all the death in everything, or at least those stings are buffered. You can wake up and say: "maybe we still have to tweak our implementation here and there, but the laws of our world are consistent, as well as (paradoxically) complete."
Really, I envy you! I envy you like in some ways I envy the spiritual, faithful people of the world, who similarly know there is a cosmic justice, karma, that the dealings of people are within a bounded system that will, god willing, normalize, like warmer air on cold.
The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
I hope you realize you're not bringing a new argument to the table. This is exactly what exchanges already do, which is why there's a saying: If you dont hold the private keys you don't own the coin.
Engineers will eventually build a system that obsoletes the need for someone else to hold custody of your money, its the entire DeFi space that's under development right now. At that point there's very little a fractional reserve system can offer. Who's going to want to trade with you when the currency you got when you took out a loan isn't a bitcoin but "a bitcoin guaranteed by bank of america". There is an obvious difference because users cannot pull out the sum and hold the private keys to it. And if the bank does lend you real bitcoins to which you can own the private keys to. Simply put, that cannot be by definition fractionally reserved, because its the real deal.
> The community is just full of goldbugs, which makes businesses actually operating in this manner today unattractive.
Not even going to respond to this one. I'll let you guess the basic fallacy you're breaking here.
Tell me what would a fractionally reserved loan offer me that the actual amount that I could possess would not?
If I don't own the actual amount, then how do I send it to other people's wallets?
And if the actual amount can never technically get into other people's wallets, why would anyone even accept them over the real thing?
And if it does enter other people's wallets, mathematically how does the system fractionally reserve?
And if people start accepting the loans themselves, would the loans be priced equally the same, or would it be traded at a different value?
And if the loans and actual thing work in different valuations, then aren't they different currencies?
So then what does one being fractionally reserved have anything to do with the original which is not?
There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
You can even claim litecoin, dogecoin, ethereum, tether, buttcoin, and all the other coins are its alternative forms, and they exist just fine.
And exactly as you have said, fractional reserve btc banking will exist just fine as well, just like every last one of them.
The question is: will it have anything at all to do with the original thing?
Slack in the motion of finances. It prevents the entire system from seizing up when there are problems.
Yes, people who want to bank themselves won't have access to any of these systems. But I personally think that people are fools for thinking that even if BTC takes over the planet that everybody will operate their wallets themselves, especially if lighting is what is needed to scale.
> There are many alternate forms of btc already, just look at bitcoin cash, bitcoin sv, bitcoin gold, bitcoin sv, the list goes on and on and on and on.
I have no idea how this is related to the discussion at hand.
That's not my problem. Why would I, a greedy actor, ever care about the system at large? Just give me my BTC. Why would I ever take frBTC (fractionally reserved BTC) over BTC?
> I have no idea how this is related to the discussion at hand.
What I'm saying is the frBTC (fractionally reserved BTC) is just another altcoin, no different than puppyCoin, BitcoinSV, or buttCoin. The thing you talk of about a fractionally reserved BTC already exists, has been happening, and will continue to happen for as long as people can fork code. The trick is convincing anyone at all that they are the same thing.
That is literally just a symptom of not having a land value tax. Any reduction of the interest rate, for whatever reason (justified or not), makes the speculators go wild. The big difference between housing and stocks is that housing is a basic need and excluding people from being able to meet their basic needs has been a common source of unrest.
People already figured this crap out centuries ago. They always demand the same things. "Free the land, forgive the debts"
Freicoin was an interesting experiment but it also showed that there is nothing of substance in the cryptocurrency space. Almost nobody wants to actually run an economy on cryptocurrencies if they have a good enough fiat currency offered by their government. Everyone is in it for the speculation but I personally don't care as long as it doesn't become legal tender in my country.
The case against crypto.
Crypto is credit money with zero obligations allowing all participants to walk away without notice.
Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period.
Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power.
Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy.
Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency.
Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people.
If you want to gamble buy cryptocurrencies, they are better than the casino.
For example, creation of crypto has no or extremely little variability in obligations for many years. Statement about no obligations is false. There's at least an obligation to be able to transact.
Creation of fiat can be changed on a whim with a poorly formalized goals. Obligations change too.
When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched.
The only fair system is one in which is stable over the long-term, and where past value is equal to current value.
Productive assets don't entrench wealth because of inflation, they entrench wealth because they create returns to capital. The generationally wealthy would be just as wealthy relative to the rest of the population if fiat inflation had been zero for the last century. If you don't want wealth to beget more wealth you need to not only avoid deflation, but also eliminate interest, dividends, and other mechanisms by which holders of capital receive real returns to that capital.
I give Japan as an example of a country that just so happens to be balancing their money supply with their increase in assets. Their interest rates are flat and the only return you get on them is based on very real risk that can go the other way. Their stock markets are just about flat and is only recently hitting a new all time high after 30 years. Capital should give returns, yes, but increased productivity should be shared by all, so you should see slight wage increases.
Importantly, a criticism that he missed would be to the digital gold argument. If things ever do “hit the fan”, there is no guarantee of electricity or of governments not shutting down the internet. Poof, crypto all gone.
It's been in process for years. This is a meme in itself.
Why does central banks printing money have anything to do with crypto?
It affects crypto the same as it affects corn and soybeans and gold and the S&P and any other investment.
Central banks printing money seems inherently unfair if you're a creditor and a boon if you're a debtor.
Until the majority of global debt is denominated in Crypto (ie never) - it doesn't change anything WRT central banks.
> The most popular blockchains use a protocol called “proof of work”, which requires vast amounts of computation (and thus electricity) to operate at scale.
> One popular way of making money through cryptocurrency is to start a new currency, while retaining a large chunk of it for yourself.
when the only way for coin creators to avoid retaining large chunks for themselves is to distribute it fairly through proof-of-work (most still end up concentrating wealth by issuing the majority of coins in the first few years, but a never changing block subsidy would avoid that).
3 of 8 references in the Bitcoin whitepaper are about decentralized time keeping
incentives around consensus (agreement about history, tick by tick by tick) can get a little confusing but basically all ticks hold some data (merkle proofs of a tree of transactions) and Proof of Work leaks some money per tick while Proof of Stake pays people interest on their "at risk" investment to keep ticking
Ethereum adds a Turing complete virtual machine onto the clock, tracking function arguments, return values and code deployed to the virtual machine as data in each tick of the clock
there are a bunch of modern implementations of the Ethereum model in NEAR, Solana, Polkadot, Avalanche and others who have found a viable way to parallelize the single threaded virtual machine of Ethereum -- driving to make everything faster and cheaper so this idea can operate at scale and www shopping cart speeds
if you can get past the emotionally charged hype and news cycles vying for our attention, you will notice, with few exceptions, that the coins of 2017 and NFTs of 2021 are very early and relatable applications about things we care about and understand: money and shiny things. DeFi (decentralized finance) is about porting the financial system to this new new forever-clock
but the brand new primitives of (a) identity, enabled by public/private key cryptography (b) money, enabled by irrefutable record of time-bound value (c) ownership, identity + money and (d) provenance, identity + money + time ... are all just starting to build up
we're only just now learning to use this digital clock so we're thinking of it, naturally, as a permutation of what we already know, not something completely new. see tech adoption cycle, etc
your best bet in this environment, imho, is to focus on the actual tech -- it's no more complicated than a slow, expensive database that can't tell a lie (as long as it's economically viable to keep the clock ticking, and who knows how long that will be). at least that's good enough for the first year or so until you get used to it.
disclosure:
I'm learning how to teach people about this stuff at https://near.university and we're hiring 1000 teachers
come help us, please
(edit: formatting)