Tell HN: We have a responsibility to speak out against blockchain technologies
For those not familiar with the industry, the YouTube documentary "Line Goes Up" by Dan Olson (https://www.youtube.com/watch?v=YQ_xWvX1n9g) has been pointed to many times in HN threads, and is a great introduction to how dangerous these technologies really are. Within a few hours of following any tutorial on building a decentralized app, most developers should be able to see what an absolute disaster zone trying to work with this fundamentally broken technology would be, and what a nightmarish step backwards it is for developers concerned with cost, speed, privacy, safety, and ease.
I think it is important as technologists, engineers, and developers that we start making it very loud and clear to the public how fraud-ridden and dangerous these systems are. With most early-adopters running dry, the Ponzi scheme will only be able to continue by expanding into the average consumer market - and if as a community we stay silent about why and how these systems are simply convoluted scam practices, we are dooming ourselves to work with them.
393 comments
[ 3.1 ms ] story [ 342 ms ] threadI don't feel any moral grounds to say anything to him, he does it for engineering and fun and really actualizes himself. He is my older brother finally creating something meaningful for people and having rightful rewards. He is hidden in the moral waves, harvesting something he can, surfing in the sunshine. I don't know how to think about this.
Is housing not a bubble? Then, how could prices be that inflated in most places, even with a stable (or just slightly increasing) population?
Is stock trading not a bubble, because "real companies exist and have a value"? But, their price is probably 20x their "real worth"?
Is selling vegetables in grocery stores at 20x the price the farmer gets morally clean?
Is it morally clean to keep putting CO2 into the air that everybody breaths?
There are a freaking lot of "unclean" things in the world. I don't understand why a lot of people seem to focus on cryptocurrencies and blockchains.
Similarly I don't see anything wrong working for a betting company or even a company that produce dangerous or addictive drugs.
I consider it morally wrong to work for the government or for criminal organisations which steal money under the threat of violence or kill people for reasons other than self defence.
all of those have so-called market cycles, which is what you described here. the price continues to increase (bull market), as each trader sells higher to another sucker, who wants to sell higher to another sucker... until eventually it runs out of new suckers and the price collapses for some time (bear market). each dollar you gain is a dollar someone else loses. those suckers at the end of the bullrun transfered their money to earlier suckers and lost everything.
the "ponzi" nature of crypto isnt specific to crypto at all - this is how all markets operate.
But when you look at these things from the individual perspective, we all take a risk when buying things. The people that don't assess their risk when they buy lose, the ones that do don't lose.
However, in the midst of a mania, unfortunately nobody is going to listen to a group of engineers telling them about the dangers of blockchain.
The only thing that will, and can, stop the madness is politicians getting off their backsides and implementing related laws and regulations.
If you want to talk to anyone, and have any potential effect, talk to the people in government.
Another valuable insight into the dubious, duplicit world of crypto.
Telling people that you don't like what they're doing is not an effective way to modify their behavior. You need to provide competing incentives, and somehow I doubt y'all are up to that.
Is there even one thing about owning crypto that people need protection from?
Its an asset class like any other and if you want an NFT buy an NFT. If you want to buy a pokemon card, buy a pokemon card. If you'd rather spend it on a car, buy a car.
You're gonna get fraudsters with any asset. People will sell you houses that have bug problems hidden from you. Car dealerships will fleece you and have been since the first car salesman existed. Scammers have been counterfeiting dollars since they have been printed. McDonalds has been selling tasty unhealthy foods since they became a franchise. Mail order brides have been scamming the purchasers of their wife and money.
Are we supposed to now shout out about every scam in existence? What makes crypto so unique among scammable things (literally everything) that it needs an army of anti-cryptocurrency advocates running down the streets with pitchforks and cardboard signs?
The "technological veil" over it seems to confer more legitimacy to crypto projects than is really warranted.
E.g. people buying land in the "metaverse", which is really just some hastily implemented crap game/mmo.
Less technical people aren't going to understand that the perfectly legitimate technology is a ruse covering up illegitimate investment ideas.
But personally, Im not too worried. Fiscally irresponsible people will always find a way to throw away their money one way or another. It will seem quite obvious in hindsight, however.
So was pokemon. By my definition that's a crap game even without crypto. But millions of people have fun playing it and its a big part of their lives, so who am I to judge?
"Investments" in crypto tend to have value because you can sell it to somebody else for more, not because the intrinsic value increases over time. E.g. like a cashflowing business increasing their cashflow, or raising rents on a rental property.
This is self referential, people aren't paying more because it provides higher intrinsic value, but due to speculation.
It's different from NFTs, which are just pointers to an item rather than the actual item itself.
But I agree with you that crypto bears some similarity to art/gold/collectibles. However crypto can be spawned out of thin air and these other things can't.
Why would the world settle on using a Blockchain where a few whales hold huge percentages of the coins? People will just invent a new one and standardize on that. If decentralized apps become the new norm.
This would devalue existing blockchains and their tokens greatly. The only ones motivated to stay on a Blockchain with enormous inequality are the few early adopters. The public would create a standard and adopt that in longer run if Blockchain backed decentralized apps are truly the future.
Let's say I can magically create thousands of copies of the mona lisa, perfect 100% copies of the original at the Louvre with no method known to man now or in the future to distinguish them.
Now imagine that I shuffle those 100% perfect copies with the original and distribute them all across the world in galleries, auction houses, museums, some universities etc. (basically any facilities with a chance to have access to people with the ability to notice that this might be the original painting).
Assuming that the experts trying to find the original now that it is gone from the Louvre are honest and don't lie:
Do you believe the Mona Lisa would still retain its value assessment?
Yes, we're aware that capitalism has a lot of things that look a lot like crypto. Do you know what? Those are the worst parts of capitalism. You're describing artificial scarcity. You're seeing large sums of money go to things you don't personally value and that probably don't deserve as much as more noble efforts. Is it fair? Fuck no. Does that somehow merit _more_ of it? Absolutely not.
Arguing against these inherently political notions with regard to crypto is _exhausting_. You are basically implying that other people who don't get on board are hypocrites when the fact is that reality is so much more nuanced than these low-effort reactionary whataboutisms and many people see that as clear as day.
Even in the context of the original game release in 1996?
> But millions of people have fun playing it and its a big part of their lives
Yes and all they have to do for that is buy one of the many Pokemon games between 1996 and 2021 and start playing and enjoying the game for whatever it is they get out of it, be it story, gameplay, collecting or PvP.
Now where is the connection to cryptocurrencies and NFTs? Could you be specific?
The point of that comment was to say "crap" is an entirely subjective opinion. Myself telling you that yes it was crap even in 1996 is not going to change the validity of the sentence I just said.
The connection which you aren't able to see which to me is extremely obvious, is that people who play with crypto "start playing and enjoying the game for whatever it is they get out of it, be it story, gameplay, collecting or PvP."
Cryptobros aren't in it as a hobby or because they "just enjoy the tech like other people enjoy pokemon", they want to make money with a speculative asset and spread false promises to rope in as many people as possible to drive up the price.
If that is not the case, well let it crash. After all: You can still enjoy it without the gambling aspect or even popularity, can't you?
Regarding 'stay poor', the vast majority of crypto 'investors' bought in during 2021, meaning that most of them have lost money. Which is of course expected for any net negative 'investment'. It is not cryptoskeptics who are staying poor, I'm afraid
I think it was more aimed at people thinking of getting into cryptocurrency.
For what it’s worth, I mined BTC when you could profitably with a GPU. I mine ETH today using gminer on flexpool.io. I actually made money on DOGE and several other alt coins.
I’ve spent years studying cryptocurrency. I don’t get it. I think it’s a scam too and I believe the world would be better off had it never been invented.
I do believe there is value in 'Decentralation' and some other blockchain ideas but all implementations of it thus far as proven not very effective.
The blockchain concept is a very bad fit for almost every kind of decentralization you'd want, because it's basically a linked list with a central clock[1] limiting the number of blocks you can happen (and this is necessary to allow the consensus to converge).
[1] even though it's implemented in a distributed manner, there's still one and only one clock per chain and everyone must take its turn to use of of the precious clock slots.
Bitcoin is a hack to get control back from government. It's a technical solution to a political problem.
I wouldn't use it in production. I'd rather have a network of private banks (without governments and central banks printing money as much as they like - and bailing out their friends) and a currency based on the value of a basket of everyday items (wheat, wood, iron).
>The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
Bit like anti vaxxers saying the vaccine isn't a vaccine because it doesn't have 100% sterilizing immunity. It just goes to show the argurers are not very well informed on what vaccines and or Ponzis are by the usual dictionary definitions.
And they always will. Maybe it is crypto, or maybe it is LuLaRoe or Beanie Babies. There is no saving them.
Also, if mainstream crypto is a Ponzi scheme, how is fiat currency not?
This is what we call survivorship bias.
> Also, if mainstream crypto is a Ponzi scheme, how is fiat currency not?
This is utter nonsense.
Fractional reserve lending means that money enters the supply on loan. It has to be returned to the issuer, and once its returned, it blinks out of existence. The demand for repayment of the loan is what backs every dollar out there. Each dollar is fully backed by the demand to repay the loan that issued it and the social and institutional mechanisms that enforce this including the courts.
The attributes of a Ponzi scheme are:
1. People invest into it because they expect substantial profits, and ...
2. ... that expectation is sustained by such profits being paid to those who choose to cash out. And...
3. ... there is no external source of revenue for those payoffs. Instead...
4. ... the payoffs come entirely from new investment money, while ...
5. ... the operators take away a large portion of this money.
Go ahead and explain how that maps to the world's reserve currency. After all category (1) is patently invalidated because nobody holds USD expecting a return in USD. They expect to lose 2% on average to inflation.
Forex is a highly-leveraged speculative zero-sum game where you're betting against a different trader. It's provably zero-sum like futures trading. Negative sum if you include the rake. The total supply of both sides of that trade remains the same, it's simply a redistribution of wealth from the losing trader to the winning trader.
It's also strictly a pair trade meaning that you're buying one currency and selling a different one at the same time, on the anticipation that you can unwind that for more than you spent to enter it. Forex trades are never just "USD" it's always "USD/YYY."
This is completely different than expecting to earn money by holding USD.
The modern crypto market is a disaster because cryptocurrency is a fiat, not a security or trading asset. People insist on it being the new gold though, so it's weaknesses are exploited and people get scammed left right and center. It's not surprising that when you abuse technology, bad things happen; it's put us in a situation where we're desperately trying to make these platforms safe for purposes they were never intended to fill. Of course there are going to be problems.
Even though I think NFTs are gaudy wastes of time, and Bitcoin is an inside joke for long-running IRC chats, I don't really care that much if the concept of a blockchain lives or dies. If anything, I'm glad that the recent publicity has gotten people to care about actually interesting and meaningful technology like IPFS and hashing algos.
Regardless of what any of us say, do or express, the blockchain is explicitly designed to keep on trucking. There's nothing you can do now, the only "ethical" way out is to ignore it and hope that your silence on the topic encourages other people to stop using it too. In the meantime, new technology is going to continue to be new, and gulliable individuals will continue to be scammed anywhere they choose to put their wallet on the line. There really is nothing new under the sun; not Bitcoin, not the blockchain, and certainly not scamming people online.
It seems to me that people that do an hour of research are polarized hard. Either love it or hate it. The more time you spend understanding the space the more nuanced it becomes. Many are using the technology to facilitate scams and overpromising, but that doesn't make the technology fundamentally useless or bad.
True enough, but since I have yet to see a use for the technology that isn't pretty much just a means to scam people, I'm totally fine calling the entire space a giant scam.
To put it in perspective, when the internet was 7 years old, the world wide web didn't even really exist beyond a concept yet.
Nobody was pushing the internet to the general public in the 1970s, and hardly anyone saw it as a technology to be used by them anyway. When the technology became cheap enough for the general public in the late 80s, then first did we see experiments aimed at the general users and we got stuff like IRC, email, etc. soon after.
Blockchain technology—in contrast—has been available to the public from day 1 and and so far the record is far poorer then that of the Internet in terms of usefulness.
The web is a network application on the internet.
Blockchain is a network application on the internet.
After 13 years the total number of blockchain users is likely less than 100 million worldwide. From 1993-2006 the web grew to a billion users. In 1993 only 8% of US households had a computer with a modem…
Considering the web, mobile, and social media that blockchain has been able to leverage over the past 13 years it should have at least 20X the number of users.
Blockchain user adoption has been a complete failure up to this point.
I wrote a rant about this earlier this week:
https://blog.cryptostars.is/blockchain-the-most-poorly-adopt...
In terms of replacing the financial system - I've been active in this space for a while now. I've been to meetups, events, large confs, etc in addition to the usual online hangouts. The overwhelmingly majority of users interacting with the blockchain don't know or care about "replacing the financial system". You can tell because they can't go 10 seconds without referencing their investment in dollars (how much they made or lost) or "I 100x'd it" or whatever. There are a few true believers who think in terms of "replacing the financial system" but out the 13% of US households that have anything to do with crypto the vast majority of usage is speculative trading. The blockchain to them is just another ticker symbol someone told them about and they click around in a web interface to buy/sell/trade.
We have a historical example of a new and "innovative" consumer financial product - the credit card. The Diners Club Card was introduced in 1950. By 1970 51% of US households had one. I don't have to tell you that is pretty good adoption for a completely different time and era but when something is immediately and obviously useful people adopt it. Always have, always will.
The first transatlantic telegraph cable was laid in the 1850s, and how many decades did it take for international phone calls to be essentially free?
The first road vehicles were unreliable and suffered from poor roads, it took decades for the Model T to arrive.
The first mobile phone was invented in 1973, how long did it take for there to be cell service across most of the world?
So, to answer your question, technologies can be in their "early phases" for quite a long time before they have any meaningful impact.
He gets totally annihilated by Letterman. Bill can't even say a single use-case that is better than what already exists.
Bill mentioned email, and that's better in some ways, they just didn't get into it.
There wasn't in 1995 much that was dramatically valuable for regular folks. The conversation doesn't get into what the potential would be.
This is Bill being reasonable. He comes across as a fair-minded person, not a delusional zealot. He's about the opposite of what crypto-enthusiasts sound like. He doesn't come across as someone making outrageous claims and thus undermining his credibility.
Blockchain does not fit that meaning.
Immutable doesn’t mean, “as long as 51% of miners want it to not change”.
Immutable doesn’t mean, “doesn’t change unless we get hacked and then we’ll change it”.
I could give more examples. Blockchains are not immutable.
I mean, it's pretty easy why blockchains are considered immutable, you can even code one from scratch in Python in less than 200 lines of code.
To control 51% of all those hashing power, an entity would need to power computers that works as much as that, along with paying for the equipment and energy consumption and whatever costs needed for the operation. Current estimates of Bitcoin mining energy usage stands at 71 TeraWatthour, enough to power the whole country of Austria.
Or they'd need to find a way to break SHA256. That's a risk you don't hear much about.
I think it's fairly destructive to just discount new technology based on feeling. It really is a fun technology to learn and the more minds like we see on HN that research the topic, the more likelihood we will have in expanding the usefulness and security of blockchain use-cases.
Bitcoin promised to be a decentralized alternative to fiat currency and failed when it couldn’t scale to be even a tiny fraction of the global transaction. When people tried to improve on the original proposal they also failed at the very same thing while inventing new problems in the mean time. As of yet the only realized potentials of the technology are scams (which were never promised—at least to my knowledge).
Compared to Web 1.0 I think it is pretty safe for you to discount the technology based on a history of scams and failure to realize promised potentials.
https://www.crypto51.app/
You only mentioned BTC but that’s just one coin. Several alt coins (with multi billion market caps) have had 51% attacks including ETC and BSV.
But anyway the original point was that it is literally wrong to say that blockchains are immutable. You didn’t address that point at all, so I guess you agree with it?
If it's illegal to transact with the US under a previous version of this hypothetical blockchain banking technology, that's your 51% right there.
How could blockchain allow legal banking institutions to refuse to follow the law?
Your "we" in the second example is the majority of network users - any network where that isn't true is not decentralized.
You do not know what you are talking about. The fact that grifters often don't know what they are talking about and use that to whip up positive spin on blockchain tech does not give you any good excuse to do the opposite - you are both morons.
So... you’re saying it’s mutable.
Nothing needs an immutable public ledger. Any fraud due to shipping, or banking, or taxes, is a problem of inaccurate entry of data into a ledger, not nefarious changes to what already exists.
- https://en.wikipedia.org/wiki/Certificate_Transparency
- https://en.wikipedia.org/wiki/Lab_notebook
- https://www.newamerica.org/digital-impact-governance-initiat...
Adjustments needed for shipping, banking, or taxes are trivially accommodated; those are additional events which can be appended to the log.
There seems to be a misunderstanding. The ledger is immutable. That doesn't mean the state is immutable! Immutable state is not very useful. A judge could absolutely order that the ownership of some parcel is changed, but the change will appear as a separate record and everybody will be able to see the change and nobody can credibly deny that the change happened, not even the judge.
If you wanted something to be immutably published you probably want to get it into a major print newspaper; it would be extremely difficult to find and destroy every single copy of the WSJ for 2022-01-28.
Even that is not immutable though, finding and destroying every single copy is possible. Hopefully you agree that it is nice to have the word "immutable". And maybe you agree that most of the times you have called something "immutable" what you have really meant is that mutating it would be extremely expensive.
Historic bitcoin blocks are mutable, but mutating them is very expensive and also has never happened, this seems like a good use-case for the word "immutable".
I assure you I am not. I am simply pointing out the ridiculousness of someone stating that blockchains are immutable when they are changeable and have changed.
In contrast, your example of snatching up every copy of a major print newspaper for a single day has never happened and will never happen.
But blockchains have changed and once regulators and courts get involved, you'll see just how malleable they are.
https://paragonie.com/blog/2017/07/chronicle-will-make-you-q...
Your comment reminds me of Guns... and how crazy the US people are about them haha.
You have now seen a use for the technology which is not a scam.
From what I've seen, its an auction to provide a service.
Why would I ask my neighbour to host data, rather than two or three expert companies that understand backups, power- and temperature requirements?
I think people use S3 not because their prices are great, but because they're not comfortable trusting some no-name company that offers better pricing. Protocols like Filecoin aim to remove the need for trust, by having untrusted storage providers prove that they're storing some data.
These anonymous storage providers almost certain aren't following convention best practices in terms of RAID, UPSs etc, so a single copy of the data has a greater likelihood of being lost, but we can compensate for that with extra redundancy.
But I'll also try to answer your new question: You're right that it's just an auction to provide a service, but crypto enables the auction!
S3 can charge such high margins because they're a trusted brand, the chance they'll lose my data is much lower than the chance I'll lose my own data, but this makes it hard for anyone else to enter the market without spending a lot of time proving themselves. Filecoin includes fancy cryptography and incentive schemes which, if you trust them, allow you to trust any storage provider using Filecoin.
Crypto payments means that anybody, anywhere in the world, can participate in the auction without spending any time negotiating contracts or setting payment rails. They can turn their computer on and start storing files.
This turns file storage into a commodity service and allows you to store your files for commodity prices, that's an incredible win!
This is very frequent tone on many subreddits, whether you used it intentionally or not, you became part of the problem: none blockchains can scale and all are bad for planet, but have you seen how good solana actually is?
This week Solana had some problems with network congestion, subreddit was instantly flooded by what initially looked to be anti-CC movement, but quickly turned out to be Stellar supporters looking for new buyers, day before trading value dropped 15%...
Edit:
This is it, look at what I did. I didn't say anything bad about solana or PoS but people jumped to comments to protect this project asking me to explain myself from something I did not say. I didn't even state my opinion on blockchain, PoS, Solana nor Stellar.
How is Solana bad for the planet exactly? I don't use Solana, or particularly like it, but it's proof of stake, so if you'd resist the urge to jump to conclusions, you'd find with a couple of minutes of research that its energy usage is comparable to a few average households.
https://solana.com/news/solana-energy-usage-report-november-...
>> …uses an estimated 11,051,066 kWh per year. This is the equivalent of the average electricity usage of 1038 American households.
>>> How much does AWS use for a comparable number of transactions? Your numbers don’t mean anything without additional context.
lol
From your own link though, with the current usage of the Solana network, a transaction consumes about as much energy as a google search. Not exactly something worth drawing out the energy pitchforks over.
>I didn't say anything bad about solana or PoS
Isn't this a contradiction?
This is the opinion i started finding on subreddits more and more often, not my opinion.
As long as we transition to Proof of Stake networks, people who aren’t interested in blockchains should just ignore them and governments can go after anyone who uses blockchain (or any other technology) to scam people.
the point of blockchain technology is decentralization, the chain going down over some "features", design flaws; barely qualifies it as a layer 1
"you know you've done something wrong when a blockchain has a status page"
All in all it seems the guy is preaching to the choir and grinning along with head nodders and not actually educating anyone on anything.
Edit: finally finished the video, the guy did a pretty good job criticizing the current state of affairs, the relative uselessness of organization on blockchains, NFTs in particular, web3 and the tokenization of the universe, but I think he's wrong about the utility of cryptocurrency as currency, and the potential to tokenize real world assets that are already bought and sold, for record keeping purposes.
I reach this conclusion, not as a cynic, but as a skeptical advocate.
I ask everyone I can this line of question and have yet to get an answer that doesn't involve magical thinking.
Question:
Other than "decentralization", what value does blockchain provide that can't be provided with existing technology (which will always be inherently less technically complex and thus easier and cheaper) can't do?
My sense is that the answer is "nothing" (except decentralization).
If that's correct, then all of the technical complexity is to be able to achieve decentralization.
However...
The mass market (everyone to the right of the chasm... early majority, late majority and laggards) has proven with our dollars that we don't care about a goal of decentralization. In fact we make sacrifices to have more centralization because we love it. It simplifies our lives.
So if the major market doesn't care about the only real value, then there is no real mass market value.
In that case, blockchain would be just another early adopter solution trying to not die off in the chasm.
> For example, in April and May alone, more than 30 thousand unique wallets bought NFTs from popular marketplaces such as nonfungible.com on any given day this month! This is down slightly from the 39,000 buyers throughout March.
I've heard on a podcast that there are only 400 000 wallets owning NFTs. It's a minuscule market, and it's not getting invariably hotter. It's very possible we're hearing so much about them now because the market is already contracting.
And this terrible detail coming from a scourge of the Earth website all in on NFTs and other scams: https://earthweb.com/nft-statistics/
My opinion: The problem is not that traditional technology can't provide the same value. It could, but it doesn't. The world is still in the process of mapping all societal/legal/finacial rules and procedures to a digital framework. In germany it is called "digitalization". And (at least) germany mostly sucks at doing this. In a way, blockchains provide a playground to explore possibilities no traditional framework i know of does.
anyone can write a contract to automate taking out a loan, investing it, and pulling out the money, develop exotic securities, and bespoke arbitration. anyone can do it regardless of credentials or connections; just a month of learning.
pretty darn cool to have unbridled access to a distributed computer.
Nothing crypto is producing is new.
We've had stablecoins before in the form of wildcat banks. [1] They were backed at some point by barrels of nails with a few flakes of gold on top, and what little gold there was, was spirited around from bank to bank in front of the inspectors. That ended predictably.
We've had "ICOs" in the form of blue sky securities. [2] Companies that did nothing sold on the premise that you could simply sell the shares to someone else for more money. That ended predictably.
We've had "high yield investment platforms" in the form of actual honest-to-goodness Ponzi schemes before. That ended predictably.
We've had free reign access to leverage to buy more securities before - it led to the Great Depression. We had rhypothecation of securities and totally baseless collateral generation before - it led to the Great Recession.
Crypto hasn't created anything new fundamentally, it's just re-hashing all the stuff we outlawed before because it was an objective breeding ground of fraud and crime and grift. The only thing new about the crypto economy is that the pitches are structured as "${previously_failed_idea} except on the Internet."
[1] https://en.wikipedia.org/wiki/Wildcat_banking
[2] https://en.wikipedia.org/wiki/Blue_sky_law
Orchids and Baseball cards and Beanie-Babies. We don't need a decentralized immutable, distributed ledger to verify something's value. We're already good at prescribing disproportionate value to arbitrary things. I don't think we ever cared that it was centralized or not.
This is availability heuristic. Many financial innovations work out well and power everything we do today without a second thought. Credit cards, internet banking, mobile banking, etc etc etc. Should we ban all financial innovations because a subset can cause collapse?
For stablecoins, the difference here is that all data is open. So for example with the latest news with MIM/abracadabra, all the loans/treasuries and collateralization ratios are viewable by everyone [1] and on chain as well. For Dai/frax/etc as well.
[1] https://dashboard.abracadabra.money/
For ICOs, this exists today as well in our regular regulated markets as well. Don't tell me you think AMC or GME is worth what they are worth.
> Crypto hasn't created anything new fundamentally, it's just re-hashing all the stuff we outlawed before because it was an objective breeding ground of fraud and crime and grift. The only thing new about the crypto economy is that the pitches are structured as "${previously_failed_idea} except on the Internet."
I'm not sure this is true.
All of these tools are strictly regulated specifically to avoid that collapse. Because we learned from when they collapsed before not to let them run wild and do whatever they wanted because it's a bad time.
> For stablecoins, the difference here is that all data is open.
Only some fraction of the data is open. You have no access to exchange books. You can see where things are on chain, but the backing is completely opaque. Have you seen Tether's audits? I haven't. I know they wired all the cash to back one attestation over from Bitfinex the morning of the attestation and wired it back. Hat tip to the New York Attorney General. And they're far and away the largest.
Trustlessness can by definition only extend to what can be wholly represented on chain. Stablecoins cannot.
> For ICOs, this exists today as well in our regular regulated markets as well. Don't tell me you think AMC or GME is worth what they are worth.
They're not good investments because they're overpriced, but they're not zero-sum. They have customers and the intrinsic value of the shares increases (ideally) through dividends, buybacks and capital reinvestment over time. This means returns aren't exclusively generated by other shareholders but instead through a third party (customers).
Not every equity will win, and you can of course lose money buying them, but equities are positive sum.
Don't conflate a stock being "worth what they're selling for" with them being a zero-sum game like token offerings.
Many algorithmic stablecoins like DAI can be fully audited on chain and have proved to be robust (so far, 4 years). They let you trustlessly borrow USD, top up your collateral and whatever else you would do with a loan but with no middlemen.
I've been reading your comments for a while, and have been getting real value from it but I think you are missing the mark on the detail. Unfortunately to really tell the difference, it requires an indepth exploration, preferably actually coding it. I know this is a cop out for an argument, but from experience it takes dozens of replies to really get to this depth.
You can't make something from nothing. Alogrithmic stablecoins are just the financial equivalent of honey pots. If you can knock them off their peg you can win big and this has happened many times. Perpetual motion doesn't exist and neither do stable long-term fractionally reserved algorithmic stablecoins.
This is true of all pegs - even in classical finance. This is literally how George Soros made all his money. [1]
MIM and UST are two fractionally reserved algorithmics that got knocked off their pegs yesterday. And this isn't even the first time for UST, I'm led to believe they required a capital infusion of a few hundred million greenbacks to maintain the peg a while ago.
> They let you trustlessly borrow USD ...
Not USD, no. A stablecoin with an opaque backing.
> ... top up your collateral and whatever else you would do with a loan but with no middlemen.
Of course there are middlemen, it's the validators or miners and contract authors and liquidity providers. There's a ton of middle men.
[1] https://www.investopedia.com/terms/g/soros.asp
> Of course there are middlemen, it's the validators or miners and contract authors and liquidity providers. There's a ton of middle men.
It's absurd to equate these entities with middlemen in the same sense as central banks and retail/investment banks are middlemen to loans. Again, let's speak the facts, demonstrate in DAIs history:
Where did a validator or miner, deny or cheat a loan? Plenty of examples in traditional finance.
Where did the contract authors or liquidity provides exercise power over the protocol that substantively affected the users of the protocol where it was not transparent and went against the rules which the users signed up for? The same happens all the time with tradfi.
But regulations didn't come before the credit card did right? Only after they were invented were regulations built. Let builders build.
> Only some fraction of the data is open.
We're talking past each other here. I'm talking about a subset of algorithmic stablecoins
> They're not good investments because they're overpriced, but they're not zero-sum. They have customers and the intrinsic value of the shares increases (ideally) through dividends, buybacks and capital reinvestment over time.
They're not zero sum. AMC, GME do not make money, so profits don't cover corporate expenses. They are quickly bleeding money.
Most people in crypto are aware of why Tether is bad. In fact a huge portion of stable-coins are handled algorithmically and backed by their network asset. You are building strawmen, likely out of ignorance.
haha, I strongly suspect I know much more about this space than your average coiner. Simply because you disagree doesn't make my positions wrong. You haven't actually indicated anything wrong with my position other than your frustration and a few ad hominem attacks.
Algorithmic stablecoins are (a) a tiny fraction of the stablecoin space and (b) pegs. Pegs are honey pots for attackers. This is true in classical finance too - and attacking the peg can be extremely lucrative. Just yesterday MIM and UST got knocked off their pegs. I'm led to believe this isn't the first time UST got knocked off its peg and required airdropping hundreds of millions onto it. And knocking the GBP off its peg is how Soros made his money.
Fractionally reserved stablecoins that never lose their peg are a perpetual motion machine. [1]
[1] https://bennettftomlin.com/2021/07/27/my-second-appearance-o...
eg.
https://www.certik.com/
And I already have unbridled access to my own computer, which seems to have more compute power than the EVM.
have fun :) play around on the testnets first.
That's all fine, until the SEC come knocking. The only advantage in the crypto space is that you try to skirt financial regulations. Establishing a new broker-dealer, bank, etc, requires a substantial capital investment to meet the minimum regulatory requirements. That gives some crypto companies an advantage (for now), since they can skip all that, but you can see sure that established interests are not taking this lying down and new regulations are in the pipeline. Once the global regulation of cryptocurrency is completed, either crypto will be dead or it will have to play the same rules as the rest of the financial industry.
The infrastructure of crypto is blatantly inappropriate for the domains people are trying to apply it to. Which leaves open the question, why are they pushing for it?
The answer should be clear to anyone with a passing knowledge of the crypto scene.
It should be building awareness towards what cryptocurrencies and technologies based on the blockchain actually are and why they can't at all achieve what people invested in crypto promise. For the people that are vulnerable, politicians and organizations, in short: people being manipulated by outright false promises and deliberately vague "arguments" (like there always being that one coin nobody uses which of course solves all the problems of the topic at hand).
Crypto doesn't offer much in terms of decentralization, but one thing it does decentralize incredibly well is advertisement and evangelism because every single cryptocurrency holder has a true financial incentive to spread overhyped and false information around anything remotely connected to blockchain technologies in order to drive up the price.
But these days, I can't help but think that we've inadvertently created a paperclip maximizer without even bothering to create an AGI first. Humans are the AGI, and we're going to happily use more and more energy to play this stupid game for as long as it looks like there's a profit to be made, even if the global outcome is to our own detriment.
If we want this mess to go away, we need to find a way to change the incentives globally.
I've consulted for several companies trying to do blockchain based non-money things and can't emphasize to them enough that no one outside computer science and math fields will ever associate them with anything but cryptocurrency (and thus scams) for the rest of our lifetimes.
How so? "Private blockchains" (with no general access + cryptographic proof of commitment) are practically indistinguishable from plain old Merkle trees, and yet I don't see many people arguing that git is some sort of "scam" even outside the CS and math community.
Don't kid yourself, people follow the money.
Bitcoin is a flagrant example of this property of capital.
up: Oh my god, capital as an emergent bigger entity, ok, ok, now I'm scared, thank you :)
up2: So you either fuel it or not, choices choices
up3: This is such a beautiful thing we are all mixed up in, don't you think?
It's easy to misread that as something like everybody wins, but it's worth noting that such exchanges can still be extremely exploitative.
And by the way, your statement is also extremely ill-defined. If you say that most transactions are not zero-sum, you are presupposing some kind of value system, which you didn't specify, and the value system for which that is true are also very ill-defined.
It's also true that a positive sum interaction could absolutely be exploitative. So the actual amount of exploitative interactions is strictly higher than the number of zero sum or negative sum interactions.
One could say something similar about "betterment" in your original statement.
> Capitalism/free markets do not guarantee that humans are not shitty
Obviously.
> but I challenge you to find a social system that does.
We shouldn't let the perfect be the enemy of the good. It irks me when "capitalism/free markets" is presented as some kind of "best possible economic system," or that it cannot be challenged unless the challenger is perfect. It's a set of trade offs (advocated by people with their own agendas), and I see little reason why different people shouldn't advocate different sets of trade-offs.
I think that the fact that this applies to capital in general and to abstract SHA256 capability in particular is much more interesting. After all, a bitcoin ASIC is not an interpersonal relationship or a goal of anyone or any group of people.
Forex yes, futures yes, derivatives yes - these are speculative or hedging instruments. Not investments. I've never heard anyone advocate people HODL /NQ futures in their investment account and borrow against them as an investment strategy. Let alone calling them "the future of money." But this is basically what crypto is.
Money market funds aren't investments, they're cash equivalents, but they still facilitate lending. They're the present of money.
Equities are positive-sum instruments where you purchase a fractional ownership stake in a business that employs people and uses the revenue from their business to return capital to investors in the form of dividends, buybacks or intrinsic value appreciation. Their performance is inherently tied to labor.
These are not at all the same thing.
The idea that there's any viable technical reasoning behind TSLA trading as high as it is, or behind what happened with GME and AMC last year is simply fanciful. It's like you've never seen an IPO pump and dump. It's literally the exact same market behavior you saw with ICOs; side-note: it's even worsened now with the advent of SPACs.
Yeah, you can argue until the cows come home that "equities are positive-sum instruments where you purchase a fractional ownership stake in a business," but that doesn't mean that hedge funds won't treat them as speculative instruments, particularly around earnings calls. Or that hedge funds won't try to spin the narrative to justify their risky positions (e.g.: the short squeeze on GME).
Again, just to reiterate: the markets are almost completely decoupled from labor (for better or for worse). It's all speculation (to certain degrees).
Equities may trade above a fair valuation - individually, or as a group. That doesn't mean they're not as a group positive-sum instruments. You may lose money on a positive-sum instrument. They're also not money, and never claimed to be.
You're forcing a narrative around short timeframes. Equity markets are tied to the performance of the business in the full course of time which is tied to labor.
Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference. It's just trading bags of air back and forth.
They're not though, and they haven't been for centuries. I gave you 3 examples off the top of my head. Markets are tied to sentiment; let me refer you to the Keynesian beauty contest[1]. This is very basic economic theory.
> Crypto like futures and options are zero-sum or negative-sum instruments if you include the rake. Every dollar in appreciation comes from a new investor. Every, single, one. That's the difference.
There is no "rake" in crypto, so I'm not even sure what you mean by that. Second, every dollar in appreciation on a decentralized exchange (say, SushiSwap) is a result of the automated market maker's supply and demand response. This is functionally exactly the same as what happens with order books (like on the stock market) but it just happens to use liquidity pools to facilitate this (because volume is much lower). For every seller, there's a buyer, and for every buyer, there's a seller: that's how markets work. Third, crypto is actually not at all like options because whereas option contracts can expire worthless (e.g. they run out of time and can no longer be exercised), if you buy some poopcoin, even if it tanks, you'll still own said coin (kind of like a penny stock).
> It's just trading bags of air back and forth.
This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.
[1] https://en.wikipedia.org/wiki/Keynesian_beauty_contest
Give GME a hot minute and the same thing will happen - it has already started. Peaked at $500 and is sitting at $98.50.
> There is no "rake" in crypto, so I'm not even sure what you mean by that.
There's a few different rakes. The overwhelming majority of crypto trading takes place on centralized exchanges where they take a commission on each trade. Off exchanges, in PoW currencies, new coins are issued which are then sold on these centralized exchanges to pay the bills. This exerts negative price pressure socializing the cost of running the network - another form of rake. In a PoS currency new tokens are issued to validators where non-stakers are diluted - another form of rake.
In each case (exchanges, miners, stakers) a commission is taken by the folks operating the game, which is exactly what a rake is in poker.
Expiry is not why options are the same as crypto. It's the zero-sum nature that's the same. Winners pay the losers, no new value is created in the options market. Ditto the crypto market.
> This might be true, but people trade all kinds of things I personally find dumb (Pokémon cards, rare sneakers, etc.). Looks like a lot of people see value in cryptocurrency, who am I to judge.
For sure, but Pokemon cards aren't claiming to be money and aren't legal tender in one of the poorest countries on earth. It's an issue due to scale, not due to its intrinsically being dumb, which to be clear, it also is. We cannot allow it to get to the point where its stupidity represents a systemic risk to the rest of us who choose not to treat Pokemon cards as money.
Chasing power (be it financial, social, political) is a flagrant example of this property of People.
TL;DR: The problem isn't capital. It's humanity as a whole.
I don't see how humans doing what they want fits in there. People aren't slaves to their desires that have a mind of their own, people are the minds which make up desires and destroy them. On the other hand, a paperclip maximizer - or, I think, capital - has a singular desire, which is to make as many paperclips as possible or as much profit as possible, everything else be damned, forever.
In the end, more efficient ways of achieving the same result will prevail in a well functioning market. Currently everything is skewed because crypto is mined with cheap coal power that the global society is subsidizing by paying for externalities.
I don't think crypto is unique in this. Gold and diamond production is also pretty expensive and useless (apart from their industrial applications, which are limited in comparison to their use to store value).
I disagree. Pricing externalities into energy costs isn't sufficient, because proof of work is basically pissing massive amounts of irreplaceable energy resources into the wind in order to play a stupid, unnecessary game. I think it's better those resources stay in the ground or be used for a more productive purposes, and making miners pay more for energy isn't going to change the fundamental wastefulness of their activity.
that's a perfect way to describe it. thanks. sigh.
We are spitting distance from post-scarcity in the developed world. The problem is that we are addicted to power and status (which both feed on scarcity).
I think there should be more political pressure behind banning crypto currencies and companies that deal with them should be cut out from banking system.
I would be even okay with just doing it for proof of work coins, if people want to keep doing their libertarian experiment it's okay for me, but at least remove this insane incentive to use more and more resources.
https://www.acronymfinder.com/AGI.html
Shameless plug: basex.com
> BaseX measures "triple bottom line" - People Planet Prosperity - new definition of value - accounting for environmental impact and wellbeing.
It's is all about incentives.
In 1997, Albania was transitioning from a communist state to a market economy. This created a power vacuum and a distrust in the institutions of government and finance. This allowed MLMs/pyramid schemes to blink into existence and multiply out of all proportion. At its peak, almost half of the entire GDP of Albania was locked up in them. "When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed." [1]
This isn't all fun and games and innocent gambling. This is a cancerous symptom of the failing of the state.
[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
> An estimate of Romanian newspaper România Liberă gives the amount of money involved as 1.4 trillion lei or about 20% of the 1993 expenditures of the Romanian government of 6.6 trillion. The New York Times estimated the scheme attracted between $1 billion and $5 billion
Anecdotally, people got involved in it fully knowing it was a Ponzi scheme, but hoping they could get their money out before the music stopped playing. And some of them did!
In fact, my first computer was bought by my parents with Caritas money.
This isn't a new paper on quantum computing. Many of us understand the technology quite well.
DLTs can indeed be incredibly useful, e.g. when multiple parties use the tech as a trusted pseudonymous data log, e.g. drug tracking from production to pharmacies. Or decentralized certificate wallets which allow you to actually own certificates you earned and prove that those are valid.
Those are just not the stories media can sell as good as "some stupid link to an ape / rock picture has been sold for x gazillion USD".
Most people are dumb and uninformed, that’s not something that is going to change. If this new blockchain world that is being created only work for an imaginary world where agents are rational logical, and well educated the result will be disastrous.
Do you really believe that making mistakes is somehow on the rise, or that as a race we are getting less intelligent? This doesn't seem like a genuine argument other than a generic "people are dumb and getting dumber" statement.
Why can't they just use a database? Tracking information isn't a new problem.
* Because most traditional databases are not designed to be decentralized.
* Because administrators by default can change data in databases. Of course you can work your way around that and get an audit for your solution. But it is a native feature of blockchains.
Let's say it is law pharmacies have to ensure each drug they sell was produced by a trusted vendor and rules regarding logistics (e.g. temperature) were respected. Nobody must be able to manipulate that data and it has to be available offline for all pharmacies in case the network goes down. It'd be almost trivial to set something like this up using a blockchain. In an early prototype, you'd just give each party one or more wallets (private keys), allow the pharma to mint a token for each package and track how those are sent between wallets, each representing a different state in the supply chain. Pharmacies run a full node to have data available in case anything goes down. I made it a bit easier here than it likely would be in reality, but I hope I can transport the beauty of the approach.
Also, the problem itself is very convoluted and likely doesn't exist in the real world. You trust the vendors enough to let them do the data entry but distrust them thinking that they will manipulate the entered data somehow? It's a very strange situation
Scenarios like this are not "very strange" but very real. Europe and China are actively working on blockchain projects, e.g. https://ec.europa.eu/cefdigital/wiki/display/CEFDIGITAL/2021... or https://www.reuters.com/world/china/china-selects-pilot-zone...
"Hey you know about these things. Is web3 the next evolution of the internet and should I buy in?"
"No and no"
"You're just mad because you missed out"
"Here's a collection of material I've been saving that says I'm right. You might want to take a look before you invest"
"You sound negative"
"Ok, consider me the 10th man then. Ignore me if you want"
And just leave it at that. You can lead a horse to water...
https://themindcollection.com/the-tenth-man-rule-devils-advo...
Crypto is useful because it lets people play with their own schemes and nobody can stop them. It seems like most uses of crypto are for some form of token gated community.
While token gates are a valuable concept, it is true that many communities themselves are not worth joining and are inflating their perceived value.
I do think that the recent spate of critiques are fairly poor also. Critiquing antiques like bitcoin or lolling about say early DAOs falling over due to bugs doesn’t really make a compelling argument.