Ask HN: What real world problem does cryptocurrency solve?
I can easily get on the hate train, and view cryptocurrency as a pointless waste of resources. What am I missing? To name a few problems they might solve:
International transfer of value Protection from monetary policies Money laundering (real for some)
142 comments
[ 3.4 ms ] story [ 199 ms ] threadSpecifically one where the other party is laying claim to assets you earned?
In these type situations, an asset that:
seems pretty darn useful.Says you.
You can buy crypto person to person. The transaction isn't registered on any exchange.
You can mine it. Nothing gets registered anywhere.
If you choose to buy cryptos on regulated exchanges (why would you ?), bear the consequences of your choices.
Assuming you have any other or the bulk of your net worth is not stored as crypto.
I mean this is already a silly scenario where you’ve got married to someone you have an intensely adversarial relationship with and tried to hide all your assets by making them unusable.
In societies so broken and unsolidaric that individuals have to fall back on such matters, maybe. Also very useful if you are a drug cartel, a shady bussines or similar — so people that totally won't do damage to the cohesion of society in historic experience.
The current divorce laws in most western societies pretty much match my description, especially the US.
If in your world, those count as "broken and unsolidaric (sic)", then: sure dude.
So while I understand (and empathically feel) the circumstances leading to male divorcees in the US thinking this would be a good idea, I think there are easier solutions with much, much less side effects.
Or have people in the US given up on changing society via democratic means to such an degree they don't see a viable way to change such a simple thing like divorce laws?
Crypto would change nothing unless you are much better at laundering money than everybody else.
The narrative behind crypto reminds me a lot of gold bugs who rave on and on and on about how defective the existing fiat monetary system is , in hopes to push up the fiat prices of their asset.
Every speculative asset needs to have a narrative tied to it to help newcomers rationalize buying in their fomo. (Look at GME, louisiana bonds etc etc etc). That doesn’t mean that it’s not a good tool to make a quick buck if your timing is right.
You are making assumptions.
It might have been your motivation back then.
It most certainly wasn't the motivation for many people I know in the space.
I was introduced to bitcoin by someone who was also promoting this:
https://www.youtube.com/watch?v=2nBPN-MKefA
and the interest I developed for it was both because the tech. was interesting and new and it resonated with my political sensibilities.
Strictly nothing to do with drugs.
What other real world use case has there been for crypto so far that’s actually 1-useful and 2-adoptable ?
The government will just crack down on it eventually and the transparency of the blockchain will be used against you.
We need a political solution, not a technical one. In my ideal society I would still have private banks and I would have a currency 100% backed by real goods. There just wouldn't be a government bailing out banks when they screw up, vomiting up regulations and stealing your money every year.
That said, some of my friends went all in on BTC and got insanely rich, started buying islands in the Caribbean and places in Switzerland. Hopefully some of the crypto money will start a government-less society experiment somewhere, somehow, at some point.
No government can mint more crypto due to awful monetary policy.
Also, no, money laundering is not possible on most chains since all transactions are public.
Citation needed — as far as I know there are cryptocurrencies where this is not the stated goal. Also public does not equal no money laundering, because the transactions are at least pseudonymized.
Dubious sales on the darknet were literally the real world problem that made cryptocurrencies what they are today.
You can have anonymous BTC address. You can tumble it and you can exchange it at anonyy location.
It is the most anonymous digital currency after cash cards.
> It is the most anonymous digital currency after cash cards.
Monero is far, far more private. There is a reason why most reputable cryptocurrency exchanges don't accept it and it's because of its privacy features.
These make it impossible to trace your transaction history (and comply with regulations), which is quite trivial to do with Bitcoin.
Towards the end of the last millennium we ditched that standard and let central banks juggle the pools from which money is derived.
I always liked how Bitcoin went back to the mining principle: a scarce resource that is hard to produce being used as an intermediary for the exchange of goods.
The ultimate reduction of this, for me, is to base mining purely off of time. Every citizen is given a certain number of tokens per day — the same for everyone — because in the end, time is all we have in the mortal world.
I don’t know how to square that off with cryptocurrency in its current form (the rich get richer — those with lots of electricity run the mines.) Maybe there’s a future for my proof of life coin?
It’s abstract, but the usefulness in the current cryptocurrency whirl is in making me even think this might be possible. If Bitcoin is Perl 4, then what instruments will be the equivalent of Go?
- My country imposes export controls on foreign currency. I want to move my money out of my country.
- I am unbanked and want to buy a good or service on the internet.
- I do not trust the counterparty that I am dealing with on the internet. Using cryptocurrency means that my maximum loss is the vavlu of the transaction (I don't have to give credit card or banking info)
- My government wants to seize my assets, I want to make it difficult.
- I want to send money back home to my family. Currently the only option is Western Union which is charging 20% commission. Cryptocurrency results in less than 1% commission.
- I've lost my phone and wallet, I can still get cash from a bitoin ATM using the crypto I'm storing in my brain.
Background: my mother had her account and assets frozen for a crazy long time after changing her name. Turns out accounts are bound to your name only, and support is unhelpful at best, so when her business started turning profit and she wanted to change her private acc to business they locked up her funds and refused to process the needed papers, citing she is not the account holder (despite sending ample proof). it's been a nightmare getting someone on the phone who was willing to clear it up.
Individual experience, but paypal to me has ever since been a prime example of why you might not want to use a large private corp for money transfers
How would crypto have solved this ?
Can she do business accepting only bitcoin ?
How does crypto accounting work ?
A crypto payment processor allows setting up a payment gateway like Paypal, but accepting USDC instead. When accepting payment, the amount is deposited into the business owner's own wallet. The business owner can choose to accept payment in USDC. USDC is a ERC20 token, each backed by 1 USD or Treasury equivalent, operated by Circle, registered with FinCEN and dozens of other regulators, with monthly reports published by Grant Thornton. USDC token is available for use on the Polygon network, where a transfer costs between a tenth to one cent.
The main advantage over Paypal using the above process involving USDC on Polygon is, she can run her business via a wallet she controls without worrying about a clumsy corporate locking up her funds, and lower transaction fees.
The main disadvantage is - her customers must use USDC on the Polygon network - and adoption of crypto for ecommerce payments, let alone on a specific network like Polygon, is still early.
By holding the funds in the business' own wallet, if the payment provider suspends services, the funds are not seized by default - and not having liquidity immediately seized during the crucial moments where the business is suspended have important advantages for many businesses.
The payment provider and the bank are separate. It seems to me that you could substitute the word “bank account” for “wallet” in your second paragraph and it would still be true. Bank accounts have very well proven reliability at this point, plus the fact that currency in a bank account does not fluctuate in value like a stock. So again, it’s hard to see how that virtue is unique to cryptocurrency.
Yes, and cryptocurrency is one take on it, while adoption is still early, it has traction, more so than previous attempts.
Central banks are also working in this area with CBDC's, they can see the benefits of bypassing corporate financial intermediaries too.
We can use bank accounts to gain similar benefits, if it's remade or improved, though the retail banking industry is very resource intensive compared to running the Polygon network.
What other remake are you aware of, people can work with today?
However, it could be, at the end of it, by spurring competition, we have Central Bank CBDC's bypassing the retail bank to build a relationship with all currency users instead of cryptocurrency specifically replacing the financial system. That's another way to go about it.
Cryptocurrency have demonstrated the fundamentals of technology are mature enough, the retail bank, financial institutions, and the billions of dollars they earn being an inefficient middle man recording shared facts, it's ripe for disruption from two ends - Towards complete centralisation at the central bank (blockchain or not), or towards decentralisation via cryptocurrency.
To be a bit mean but how do you find the Bitcoin ATM?
For something critical like all your money?
Good luck
Im quite good in remember
This is worse than if you use a credit (or debit in some places) card. With a credit card you have a legal protection and the card issuer has to refund you if the product or service isn’t delivered, it’s called a chargeback. Crypto has no consumer protections, traditional payments do.
Crypto is irreversible (in most cases) by design, that will always be worse for the consumer and “better” for the vendor. Essentially making it easier to defraud people trying to make purchases.
The only time this works is if the vendor is unable to take credit card payments because they are selling something illegally, but that’s not the example you used.
The point about currency collapse is interesting to me, because (like almost all crypto apologist points) it assumes you already have a bunch of it/made a bunch of money on it before the bad thing happens. Everyone else gets to suck eggs, as the saying goes.
Of course if everyone in the hypothetical country had crypto, it would cause the crypto to collapse as well…
If you were Lebanese I would argue that having a bank account was a silly thing to do. Foreign bank accounts were illegal/difficult and domestic bank accounts are now worthless. You could own crypto or some kind of real good, such as a warehouse full of a commodity like wheat or diesel. Those are your options for hanging on to your wealth.
Summarizing & paraphrasing :-) Greece instated capital controls virtually over night, likely illegally as there is freedom of capital movement in the EU [1]. The money on a bank account resides in a particular country, so its legislation applies. Which country's legislation applies to funds in a globally distributed blockchain, whose copies reside all over the globe?
[1] https://www.bbc.com/news/business-33303540
edited for spelling
Bitcoin fixes that and removes the middlemen.
>- My country imposes export controls on foreign currency. I want to move my money out of my country.
Never understood who is the counter-party in these scenarios. Someone must sell you the crypto for seemingly worthless local currency. (Unless you somehow smuggle mining equipment in and buy local electricity)
Who would make that trade? Specially if currency was collapsing or not usable.
I meant mostly that if you store your assets in crypto - it can help a lot in situations like this, presenting a great use case.
But let's say you are in Africa and have a lot of local hyper-inflating currency. Who will give you crypto for that? Or at least more than they need for immediate needs.
It's already hard to find unregulated exchanges
Forex exchange is pretty cheap these days with things like Wise.
You can technically charge your debit / credit card just by knowing the number.
All the others are political problems and they can't beat a state actor. Eg. You won't stop the government from seizing your assets: they'll put you in jail until you give them up. We should think about a political solution, not a technical one (I'm all for abolishing the government).
I'm surprised they didn't crack down on crypto earlier, I suspect they're using it as a sort of inflationary device. Having extra unbacked crypto in the world means you have more money in the world, making the rest of the money a little bit less valuable - but I don't think crypto was considered seriously enough to affect fiat, at the beginning. Now, when you want to push your currency or local assets up you can just ban/harm crypto (which is what Russia proposed with the RUB going down a month ago).
I’m not sure what you would be doing where that would make sense that’s not an illegal/illicit transaction.
When I enter my debit card and PIN into an ATM belonging to a legally regulated bank, I can be reasonably certain that it won't directly steal all my money. Using a BTC ATM, however, sounds like a convenient way to have all your funds stolen without having to wait for the next big crypto hack/fraud.
https://www.saveonsend.com/money-transfer-services/
A Government forces a private company to restrict 9 million CAD donated to a cause.
https://twitter.com/sweis/status/1049047164117078016
IMO the main use case is a decentralized currency that isn't centralized by any specific government (but may be, given enough power). Also things like escrow in a 0 trust system are possible.
That being said, like everything, there are _massive_ tradeoffs to this. Almost nobody actually needs this. IMO buying and selling drugs on the internet was one of few actual use cases, whther "right" or not.
People have always found alternatives, for example in South Korea index option trading was historically popular. In the United States it was originally illegal online poker, now single stock options are popular. In Europe trading FX was once popular.
Many of these outlets that either replace or augment gambling have now been supplanted by crypto trading. In many markets you can actually see how declining activity in one aligns with increasing activity in crypto.
> Then you have to actually give people money. > > You know how, whenever there’s a debate about cryptocurrency, some crypto fanboy gushes about how it makes sending money so much easier? And if you’re like me, you think “yes, but right now you can just enter a number into Paypal, that already seems pretty easy to me”? > > I take it all back. The crypto future can’t come soon enough. Sending money is terrible. > > Paypal charges 2-3% fees. If you’re sending $50K, that’s a thousand dollars. Your bank might do wire transfers for you, but they have caps on how much you can send, and that cap may be smaller than your grant. Wires can involve anything from sending in a snail mail form, to going to the bank in person, to getting something called a “Medallion Signature Guarantee” which I still have not fully figured out. Sometimes a recipient would tell me their bank account details, and my bank would say “no, that account does not exist”, and then we would be at an impasse. If you have double (or God forbid, triple) digit numbers of recipients, it all adds up.
[0] - https://www.coindesk.com/learn/what-are-ethereum-gas-fees/
Regarding the transfer cap, I really don't understand this. Is that a cap on personal transfers?
Regarding Paypal price, let me ask this: Is the 3% Paypal asks required costs o working with fiat currencies? NO.
Then that is that? That is the price Paypal asks for using their product. Is a price on a free market.
So how will this happen in the crypto space?
Will everybody know how to do transfer with crypto? Or will there appear some products that might charge a fee to facilitate the transfer? And if they will appear what stops them to add 3% fee?
If the answer is everybody will know how to keep a personal wallet and do transfers then the answer is probably wrong. People (outside our small IT bubble) don't want to learn complicated technologies so a nice product with a good UX might appear that will do what PayPal did for credit cards transfers and they will find a way to charge their users.
If you’re not trying to avoid legally-owed taxes or commit crimes, these things can all be done by traditional means.
I can even get free (both personal and business) bank accounts.
Free bank accounts are becoming pretty rare, unfortunately. Give it a couple of years and they'll be extinct :-(
Yes, I'm aware of the fact that the ledger is public, but not everyone is.
Can't have a bank run with closed banks! (Taps forehead).
So, crypto is a bank always open. It's better money than actual money.