I mean it has good use cases they're not just the ones that scheme promoters want to be true. I know TFA pokes some holes in the censorship resistance attribute of bitcoin but i think everyone can agree it does provide value transfer solution that is much harder to block than Visa/Stripe/etc.
1). Silk Road or dark net markets in general. Can't be done with Visa or other existing solutions at any kind of scale
2). Funding of political dissidents. Wikileaks, canadian truckers, etc. These people got blocked by traditional payment providers but still received crypto. (there are still other obstacles for dissidents but at least this solves 1)
3). Money laundering. Find someone who sells bitcoin miners, buy them with dirty money and use them to mine bitcoin sent to fresh address not tied to your other activity.
4). Uniswap and maybe flash loans in defi seems like new things I haven't seen in tradfi or elsewhere. Maybe some cool promise here
I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
While there might be cases you consider moral or ethical even though they’re illegal I’m not sure I’d consider this a net positive or any reason to think crypto will enjoy mass adoption.
Yes. It's not a compelling argument that something can be used well for crimes. If cryptocurrency is just John Wick tokens, it not only isn't useful to most people, but further it's anti-useful to society in general and will likely be suppressed.
It's also hard for me to understand these "payment outside of X authority system" ideas when the value shifts so wildly and so unpredictably. No one wants to get paid, not even criminals, in a currency that might be worth 20% less tomorrow, depending on what's going on with Matt Damon's Super Bowl ad for the criminal currency or whatever.
Right, doing illegal stuff is the killer app is my point. I don't know if it's a net positive either, but it's a positive for some users. I hope it's clear I wasn't advocating for any of these things just pointing to successful applications of the technology
The problem with 1-3 is that they only work because regulators haven't tried very hard to stop them. If you require crypto exchanges to verify that funds in accounts are not coming from these types of sources before allowing you to take fiat out you've now vastly reduced their usefulness to the degree that only sophisticated criminal participants have any chance of actually getting usable money out of their schemes.
Proof of Stake seems like it could have a lot of interesting use cases.
I'm imagining you want to run a server in which you want to prove a given open-source version of the code is processing the inputs, and the outputs are available for anyone to observe, verify, & store.
I imagine there's some ways to do this already, though.
Proof of Stake just seems like a protocol that isn't too wasteful and inefficient and could make for a decent standard.
Agreed, there are use cases, even obvious use cases. Blockchain provides guarantees that other databases do not. They're just guarantees that assume that some portion of people connecting to it are bad actors. Most people don't really care about solving that problem because they just don't give those people access, but that implies a single authority for access ie: centralization.
So blockchain only makes sense when:
a) You have bad actors
b) You need decentralization
The use cases for that are, for the most part, "subvert government authority". There are some cool other things you can do, like web of trust stuff, but the vast majority of the market is in the "subvert government authority" in one way or another, or is an outright scam.
I don't think this is so crazy of an idea. Many of our institutions (example: democracy, checks and balances) are designed to "subvert government authority" in exactly the same spirit. The idea is to ensure that some rules are followed regardless of who is in charge.
How is carrying money around subverting government authority? You can carry 500K in your wallet on your bank card but if you carry 10K in cash it's somehow different?
it's a little disingenuous not to put remittance on this list as it's one of the few legitimate and not morally dubious ones. I have gotten screwed on exchange fees and wire fees remitting and using crypto is much easier.
don't have time to read the article so I'll take your word for it, but I will note that upon skimming it seems to really look at bitcoin a lot. Bitcoin might be one of the worst cryptocurrencies to remit.
I will concede international transfers is not a very large use case, and definitely doesn't justify the market capitalization of the blockchain base currencies FWIW
Most people receiving remittances need fiat money.
For amounts under ~$500, cryptocurrency off-ramps are often less convenient and more expensive than an international cash-to-cash remittance with Western Union or Moneygram.
I have no problem with properly regulated stablecoins (and hoping they come about soon). Blockchains are only necessary for one thing and that is cryptocurrency. Doesn't matter if that currency happens to be a digital representation of EUR or USD or whatever.
If you think they're more expensive to use than centralized providers, you're probably using ethereum or bitcoin. I can send USDC on Algorand in any quantity for less than a cent
When I said 'fiat money', I meant stuff that you can use to buy things in a store. I live in a city that has a large blockchain community, but I'm not aware of any physical retailers that accept payment in USDC.
I imagine folks receiving remittances in Manila, Mexico City, Nairobi, Delhi etc. would have difficulty using stablecoins (whether backed or algorithmic) to buy food and other necessities.
I didn't mention remittance because from people I personally know who send money back home they are getting much lower fees using traditional finance rails
1. The trigger – Inflation/distrust in government/bank withdrawal restrictions/paypal freezes your funds/country is at war/etc
2. The response – People gravitate towards a system that is resilient to whatever failure mode they experienced
Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. Meanwhile in places that are smaller/less stable/not economically self-sufficient/on the fringe, people are increasingly turning to it as the best alternative.
I think the idea would be that in a scenario where crypto becomes a currency, there wouldn't need to be an off-ramp (at least immediately, think war/revolution). You would trade the crypto like "real" money.
This requires price stability, which is at odds with the use of crypto as a speculative investment vehicle. People use fiat to transact because it is stable. It’s stable because a central bank is using tools available to bring about stability.
It's a hedge. Like anything other hedge it's not bulletproof. I'm blessed to live in a country that has sound monetary policy (you do too probably). But there are millions (if not billions) of people who don't. Crypto offers a way to avoid capital controls when governments fail. It's not the crypto itself, its just the most convenient way. See: https://restofworld.org/2021/the-cryptocurrency-dons-of-beir...
Sort of agree. Find ways to issue them digital wallets with fiat currency support. Venezuelans using Zelle to transact in dollars comes to mind. It’s a financial inclusion and digital identity story, high level. But if you’re violating nation state laws (AML/KYC/money laundering/capital controls), you’re not likely to avoid repercussions for that, state monopoly on force and all that jazz.
There's another likely scenario (at least in my mind) where Bitcoin is a global reserve "currency" like gold used to be. In this instance, the on/off ramps that exist already would still likely be the ones around. That is to say, completely centralized instiutions that interface with completely centralized fiat currencies. Bitcoin isn't going to replace countries, countries will likely have fiat stablecoins which is exactly where our increasingly cashless societies are headed towards.
tldr; either the crypto itself is traded like real money, or a l2 or even centralized unconnected layer is - either way on/off ramps that currently exist (p2p and centralized) continue to exist and thrive.
If someone is trying to escape their local currency, they won't want an on/off ramp. In foreign nations with a large underground USD economy, people skip the local currency and trade/spend USD directly. The same could happen with BTC. In fact in the most extreme cases this transformation is already happening: https://www.reuters.com/technology/venezuelas-economy-regres...
> But a major part of Venezuela's crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.
> "Nobody is going to tell you 'every night when we do the books, we convert bolivars into bitcoin,' but yes, this is happening."
I've used crypto for regular monetary transactions (selling art) and it's a huge pain in the ass compared to using actual currency. The idea that people are going to do day-to-day purchases with bitcoin is pure fantasy, it would be a huge step back from what most people are used to.
You pay fees for every single transaction: chain storage, gas, if you want to deposit or withdraw or exchange to another currency, etc; it's slow to go through and at peak times you get gassed out and it doesn't go through at all.
The value fluctuates wildly at all times of day, so your transaction might lose a significant percent of value before you've had a chance to even access it let alone trade it for a more stable currency or asset. Oh, and you have zero safety net for if something is entered wrong, a key is lost, if you end up not receiving the item you purchased, you're outta luck and there's no bank or credit card agency you can petition for a chargeback. Plus you lose ALL your money with no recourse if you can't keep track of a non human memorizable secret key, or if it gets in any way intercepted or stolen from your computer, or if you accept the wrong transaction...
How can everyone convert bolivars into bitcoin? That would imply that equal amounts of bitcoin are being sold by someone in exchange for bolivar. Who is that and why do they think it's a good deal?
People who spend it before it gets inflated but yes you are right, if everyone is posting sell orders and nobody is picking those up then the Bolivar will plummet vs Bitcoin.
For real, every time I try to answer my I do crypto, often people just don't understand. They just don't. They just don't understand why I don't trust entities.
If you don't understand this, then you don't understand crypto. Period. There is no other debate necessary. Period. Full stop. We go on our own way.
The problem is that crypto doesn't really solve those problems either. As the article says far more eloquently.
I understand that you are saying you were burned by a central authority. But the truth is that the only way to get everything to work is with a central authority. The article gives examples of crypto being fully reliant on central authorities, for instance.
Everything being done by crypto today could be done better by trusted companies putting together a semi-open peering arrangement that both doesn't waste pointless electricity and that doesn't allow just any potentially hostile actor join the group of authorized peers.
The question to me really is which central authorities you trust less...
And for me it is at the moment the crypto side. I don't trust exchanges and I can't be bothered to do local transactions. So central government "approved" system is easier for my life.
In fact, given that ownership is fundamentally a mutually agreed upon social norm, and not any sort of real truth - Even if you trust the central authority of your locality less, they are likely a much better resource regardless.
I really think crypto advocates just don't actually understand how power works. Power is not the number in the ledger, it's the number of people who will step up to enforce it for you.
It turns out that number is very, very tiny for crypto. Much, much larger for your local currency - even if it's not as large as you'd like it to be, or "fair" as you think it should be.
His example and your support is mixing up central authorities that matter for crypto.
Crypto companies with legal exposure? Yes can be censored.
Open source crypto protocols? As long as raspberry pi’s and digital comms exist, it’s akin to saying the govt can shut down Linux. This is the censorship resistance that matters. It’s not perfect (some ungodly amount of nodes are in AWS and the Trail of Bits report did a good write up as well).
The central authority here is open source software. The author spent a lot of words demonstrating they didn’t know this at all.
Open source crypto protocols are completely irrelevant without connections to crypto companies.
There's this fantasy that crypto can replace money, and that you would therefore never need to trade it for real dollars. That's not going to happen, for reasons outlined in the article and because no medium of exchange that's deflationary can ever be a currency.
If it goes up in value over time, it's an investment and people won't spend it.
Will the open source be free forever? Sure. Whatever. Can people run nodes that burn electricity? Yup. Does that matter? In no way that's relevant to the general public.
Worse, even the crypto networks themselves are subject to issues with their authority: Enough bad actors who join can steal the value of a large percentage of the network.
When we're looking at potential theft of billions of dollars, you better bet that someone will invest the hundreds of millions required to rewrite the chain and take control of a large number of coins.
Then what? Then everyone will need to get together and act like a central authority to either rewrite the chain back to its state before the attack, in which case you do need to rely on a central authority, or you need to admit that _allowing untrusted nodes into a financial network is a Bad Idea._
"Censorship resistance" is irrelevant too, by the way.
> Open source crypto protocols are completely irrelevant without connections to crypto companies
Bitcoin, an open source crypto protocol, launched without the existence of crypto companies.
Mt Gox, instead of helping btc, almost set it back years due to the hack.
Bitcoin grew adoption and scale on tor/DNMs and localbitcoins, both of which had organic, non-exchange economic activity which kept accounting in pure crypto vs returning to fiat/needing an exchange.
The attack you’re describing is a 51% attack, and it had yet to happen due to protocol design on the main chains. If it does, I suppose you’d be right.
But I generally think you don’t understand how the tech works and what proof of concepts exist to disprove your opinions, or at least strongly counter your opinions. and without addressing why they’re wrong you have a weak argument.
What good is Bitcoin without the ability to trade it then?
Your assertions are the ones that are extraordinary, so yours is the side that requires proof. You're effectively claiming that a distributed peer database with a somewhat secure history has some kind of intrinsic value. I'm calling that BS.
Where is the money? Where is the _value_?
The fact that a few people were trading Bitcoins doesn't mean it can ever go mainstream. Something that's a niche hobby isn't going to change the world. If you want to use Bitcoin as a hobby barter medium, then have fun, but that doesn't imply value outside of a tiny community.
Prove me wrong. A "proof of concept" is in the technology domain. For crypto to work outside of a community of crypto-libertarians, it needs to be usable by regular people. Libertarians are famous for not actually being able to design social systems that work in the real world; last time they tried they were chased away by bears. [1]
And as the article pointed out (did you read it?), most apps that support crypto rely on a centralized server since the chain can't be downloaded to mobile devices. How useful is a medium of exchange that requires you to bring a laptop with you everywhere?
> Your assertions are the ones that are extraordinary, so yours is the side that requires proof.
Ah, or your assertions are akin in a technical sense to saying “the internet is a complex series of tubes, prove me otherwise!” Your criticism is based on a pretty clearly patchy technical understanding.
Banning Linux would result in stagnating development because most Linux developers do not want criminal prosecution. Only the most diehard contributers would remain. No more drivers upstreamed from vendors.
I fail to see how a currency that a) requires internet access, and b) can fluctuate so massively over the course of a few months, is any kind of solution to instability in developing countries. crypto is also arguably as or even more at the whim of national governments. look at what happened when China banned it. they're not gonna be banning dollars or gold anytime soon.
also, perhaps the cause of people not understanding you is not some kind of lack of mental faculties on their part, but your - what I would describe as - extremely obnoxious style of communication
Hey - I get it, I used crypto precisely because I wanted to avoid government regulation when buying black market goods back when the silk road was still a thing.
But I think you're absolutely bonkers if you think that any crypto today is actually a real solution to your lack of trust.
Here's my take:
You think that by using crypto, you're avoiding trust in governmental and financial institutions - and in some (incredibly limited - aka drug/gun) markets you are, but the exchange that you are making (intentionally or not) is not trivial, and not acceptable for most people most of the time.
What you are giving up is the power of the governmental institutions to enforce any sort of agreement or contract you make using crypto. Not their currency, not their problem. It's now your problem to resolve scams and fraud, and you have to do it using your limited powers.
And to be clear - you have really, REALLY fucking limited powers here. Unless you are so wealthy that those "entities" that you so dislike are mere nuisances dealt with by the law firm you have on retainer, or you can fund your own black-ops team, you're living in lala land if you think you can personally enforce the contracts you make. You can't. You don't have the oomph. Full Fucking Stop.
---
So I understand your lack of trust, but hate to break it to ya, bud - crypto is not solving your problem.
Simple example: You hire a contractor to remodel your bathroom, and you pay him in crypto (and we'll ignore for a moment just how laughably absurd the chances of this actually happening are...). You agree to pay 20K for the remodel, with 10K up front. He runs off with your 10k. Now fucking what?
in crypto land, you would never do that! You'd set up a smart contract to automatically move money from your wallet to his as milestones are hit in the project! It's beautiful! Maybe they could run off with your $1k upfront, but maybe your smart contract can even get that back if a milestone isn't hit in time.
Now all you need is connected oracle that can judge completion percentage of a bathroom and communicate with the blockchain! /s
Now flip the story and you are the contractor and hit the first milestone. The customer however refuses to acknowledge that milestone and holds on to the funds demanding some extra work not in the original contract.
You are out the labor and materials with no payment and no recourse. It's not beautiful for the contractor why would he agree to this with no arbiter between the two of you. And as soon as you introduce an arbiter you are back to someone else enforcing the agreement not the blockchain. The blockchain adds nothing here that a standard court of arbitration doesn't.
Can you trust your local supermarket to accept Bitcoin if it is banned? The point of a currency is primarily to facilitate trade, everything on top of that is just there to make the process more efficient and lower transaction costs.
I personally think Bitcoin is a terrible currency for non speculative trading due to scaling problems and it's volatility.
Your own way is a deadend. There is nothing there. A currency is about relationships and trust. You can't own those things, you can at best only enforce them against people's will if they don't maintain them voluntarily.
Yet Monero isn't winning. It is very clear that this is not the dominant use case for cryptocurrencies and blockchains since we've got a system that is maximally resistant to interference and it is dwindling away.
Pretty good answer, but I’ll caveat with wealthy/elite provably bought into this a while ago. A subset of them run OpEds in NYT criticizing the space as bunk. Another large subset have been in it for years.
Some data points to support this:
- most major algorithmic hedge funds, market makers, etc are significantly involved. Not the janky crypto native one, the lethal ones from NY.
- Microstrategy had to convince a whole slew of board members and legal to convert their treasury to btc (“wealthy/elite”). Saylor is on record as saying that all but 1 of them where already on the space and fine with it, or something to that effect.
- this is old days btc lore, but there is a famous known event of Wences Cesares and I want to say Reid Hoffman having a SV get together with a few other who’s-who and sending a couple mil in btc around their phones while sitting in a living room. This
And related Got most of the early day big tech people who are in it now to invest. This was years ago. Peter Thiel is the most public of this group today.
- CIA had the btc core lead Dev visit to explain the tech in 2011 (Gavin Andresen/spelling).
- Go to a digital assets event in DC that gets actual DC people to attend, and you’ll have notable elected officials discussing its use as a covert tool
- US has paid foreign fighters in it
- Bank of International Settlements is allowing member banks to hold a % of btc in reserves
- Fidelity has mined btc since early 2010s and is notably involved today.
There are a lot of examples like this out there. It’s a large wealth transfer currently benefiting really top crust people/orgs and the tinfoil hat crowd. Everyone else is reading Paul Krugman opeds and calling it a day, or missing the key so-what of the tech that’s worth committing to.
This captures some of the reasons why crypto is very big in Nigeria.
With Naira the currency being as stable as a pendulum gets on a windy day, many middle class fellows seek to store their money in some form of stable assets.
Crypto seems to be the easiest to acquire for the common folks while the politicians prefer and have access to US Dollars.
I would place "trust in government" with "lives in a hegemonic superpower". You can fully understand the use cases while also believing that they aren't that compelling unless you live in global south.
The fact is there is no reason to believe holding crypto would retain value if the united states went through an country-ending economic crisis; it more likely that your crypto would also just become equally worthless and also crash in value. Treating the United States as a "future Argentina" makes no sense, especially when it's the US-based VC investors who are indirectly backing the value of Argentinian purchased bitcoin. If you end up in a situation where the USD worthless, then there is no wealthy counter party to prop up the value of your cryptocoin.
It makes no sense to look at third world countries with relatively tiny economies and believe that crypto will retain its value if the US went through a similar situation.
Also, you can fully understand the hypothetical use cases in the global south whilst being aware that crypto competes with hegemonic superpowers as a way to store wealth there too (and other stable currencies, and lots of other things that hold value and are easy to barter with) in those markets, and generally has fewer or worse on/off ramps for the average person there. People aren't sending money to Coinbase Global Inc because they haven't had access to international money transfers or the ability to store their wealth in anything other than rapidly-depreciating pesos before.
I mean, I'll happily concede that cryptocurrency was something that was actually stable in value, was widely accepted and understood in local markets in the global south so you could buy food, save for your kids education and bribe the border guard with it, then it would be even better than gold earrings, black market banknote swaps, hawala or trusting you would be able to access your offshore account in future. But it isn't, the fact that some people would dearly like it to be that way doesn't make it that way (especially not the "stable in value" part), and there isn't an obvious route for it to be that way.
Experienced hyperinflation, experienced civil war, experienced buying bread with 200,000 dinars one year and 2,000,000 next year etc. Experienced scary people with guns knocking at your door. My family and their ancestors all lost all their money and possessions numerous times over the last 100 years, including in the mid-90's.
And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like, who think Crypto will somehow solve such problems based on their theoretical envisioning of only a specific part of dystopian future. I still believe Crypto, like anything else, survives at the mercy of your local government. It has a tremendous set of requirements, complexity, and telltale signs, to be helpful against hostile government which can and will knock at your door with a gun, or criminalize all crypto use/mining/exchange, etc.
I think you're exactly right. Cryptocurrency is built for a dystopian future where the people have access to stable, unmonitored internet (in other words, a contradictory situation that will almost certainly never exist). If the dystopian country retains the technical capacity for widespread internet, the dystopian government will have the ability to detect and crack down hard on cryptocurrency users (if they're worth the trouble). If the dystopian government lacks the ability to crack down like that, the dystopian country has almost certainly lost the technical capacity for widespread internet, making cryptocurrency moot. And in all cases, there are better alternatives to whatever problem cryptocurrency is meant to solve (e.g. gold bullion, US dollars), except in some very narrow cases.
Your story is an anecdote, and an interesting one, but not sure if your conclusions are valid. Crypto is used in China for subverting government oversight, and they are far more advanced than Bosnia at digital control.
Absolutely and fair point: My story is indeed an anecdote; but it was not strictly meant to address the question of whether Crypto is useful or not in escaping government oversight, but the specific hypothesis in the post I replied to:
"Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. "
As such, I wanted to provide a counter-point/perspective, anecdotal as it may be.
I haven't lived in such a place but this is always how I think of it.
The tech is the easy part. If you're conducting illicit transactions in some kind of attempt to dodge regulations - however your (potentially) corrupt regime defines "illicit" and whether the "regulations" are just - then obfuscation isn't going to help you for very long.
The ability to use the internet at all is a function of the willingness of the people in charge of a government to 1) allow usage of the Internet by anybody and 2) the willingness of the people in charge to allow you in particular to use the Internet.
Every time I am running a mental simulation about using a different currency as medium of exchange I come to the conclusion that the moment the government bans the currency, your network of people who will openly admit to accepting the currency will shrink to nothing. Yes you can't enforce the law on the Blockchain but you can still enforce the law in the physical store.
> And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like
A lot of the arguments in this thread could apply to free speech as well. Pretty scary how many HNers feel that way.
There are a lot of people who don't understand these problems at all, and therefore distrust crypto. There are also a lot of people who understand these problems very well, and therefore distrust crypto.
In developed nations, populations who are unbanked/underbanked typically have much bigger fish to fry. In developing nations, they typically already have a solution to the banking problem... and also bigger fish to fry.
You'll notice that every article hyping up cryptocurrency as a solution for these things refers to "early adopters". The adopters are no longer early; they're now a perpetually fringe sub-population. (They're also presently experiencing inflation in crypto for the first time.)
>If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
If the wasteful people doing non-crime activities on the blockchain weren't there it'd be incredibly easy for the authorities to crack down. In other words, if the only legitimate use cases of crypto is facilitating crime, it can only even achieve that goal as long as many people are using crypto for the other stuff you think is wasteful.
There is a gradient of “being censored”, and not all of it involved being illegal.
In Vietnam, the government does capital control by limiting what bank can do with my money (I can’t request them to send 20k to the US unless I have an approved list of reasons). However, it is not illegal for me to send the money abroad, providing I can do it legally myself. So bitcoin is useful to me
This is true. "Virtuous liquidity" is the term I've heard used. The same thing is true of Tor right? if the _only_ people using it are bad the usage itself is what gets criminalized. The speculators on crypto likely provide a lot of this
Re:3) If I remember correctly a lot of the "support scammers" also use crypto for laundering. Since getting straight into bank accounts and actually doing transfers often fails - even with the "help" of the victim - another way for them to get their money is having the victim buy gift cards, and then they'll sell on the scammed gift cards (at a loss, of course) for crypto and then cash that out.
You also forget 5) Outright scams, like rugpulls or boiler room-style scams.
Three of these are just money laundering and then the 4th is "and maybe some cool ideas." I really don't see how the money laundering is a long term niche. They'll get regulated eventually.
I do think the whole event has dredged up some interesting ideas and desires that were being ignored, but of lot of those "cool promise here" ideas could probably work without a blockchain.
Let's take a modern example of the canadian truckers. How would you get money to them when Canada was able to get US companies to block their funding with fiat?
Use a different company and hope another few million doesn't get locked up? That seems like the only alternative and I'm not sure many people would think that's a viable alternative.
Personally I hope it is and I don't see how it couldn't be. Bitcoin is uncensorable as far as I can tell. Countries have not proven themselves capable of stopping internet traffic and thus countries have shown they do not have the power to censor bitcoin transactions.
I am sure countries will want to censor it, but I don't believe they will be able to, as such the only risk to bitcoins long term viability is the markets demand. There are numerous examples of illicit goods that governments have proven incapable of reducing the demand for, e.g. drugs. So I don't think bitcoin is going anywhere.
I think bitcoin will take a different censorable form and we'll start seeing companies on top of the blockchain that can do things like refund unauthorized transactions and things of that nature, but the base layer will remain uncensorable and thus bitcoin could become both convenient enough (although not better, in my opinion) for rich countries to use as currency while holding the characteristic of providing tremendous benefits to citizens in oppressed poor countries.
Calling it a scheme seems a bit rough. It's a market mostly unencumbered by regulation (not true of on/offramps), online 24x7 and not directly controlled by governments -- an entirely new asset class with unique properties. It allows for new business/cause funding models. Anyone can participate regardless of "credit rating" or ideology and no one needs a custodian.
The whole crypto lending to me seems like having a cake and eating it too. Which surprisingly kinda works for a while. Have crypto and let it appreciate, but at the same time use it to gamble for even more appreciation...
5) Running various investment scams such as Ponzis, and pump-and-dumps (AKA rug pulls) in an anonymous fashion. There is a lot of money to made doing this right now...
The biggest use case for Bitcoin is of it being an escape from arbitrary printing of money by central banks. The richer your home country, the further you are from intuitively grasping how catastrophic printing is in the long run.
Bitcoin's price is primarily driven by market manipulation fueled by arbitrary Tether-tron printing. Tether-tron is used entirely internally by a criminal syndicate in order to create fraudulent chinese 'cookie cutter' exchanges, in a manner similar to casino chips - ie - "Here's $100 million for your new exchange, that you can only use to buy crypto within 'the family', incidentally pumping up their prices along the way'".
This is in addition to the arbitrary Tether-eth printing that you ought to be well aware of.
Bitcoin isn't immune to money printing at all. The value of Bitcoin comes from people using it as a speculatory vehicle rather than a medium of exchange of goods and services. If the price of a commodity like rice hyperinflates, this does nothing to the price of Bitcoin because nobody uses Bitcoin to buy rice. As a result, the price of Bitcoin would inflate at the same rate as the underlying fiat used to exchange Bitcoin.
My point is that there is no reason for the price of Bitcoin to inflate alongside actual commodities, which is validated by the fact that BTC fell while inflation rose. Gold similarly has a low correlation with inflation.
In the short term, absolutely no asset class is immune to fed monetary policy ie interest rates, QE/QT. In the long run, fiat has only lost value relative to all hard assets (gold, RE, Bitcoin etc) I'm not sure how what you're saying is an indictment of Bitcoin or gold.
It's useful for illegal stuff so far. But if it's the only real use case, governments can and will just outlaw exchange into fiat.
Beside that, you still need to trust the developers. Sure, you can not partake in a fork but so you can decide to not do business with certain corporations or governments.
>>These people got blocked by traditional payment providers but still received crypto.
I thought their crypto payments were tracked (open ledger) and basically nixxed? I.e. this was the grand counter-example of crypto use case :-<
We can discuss our personal opinion on the Canadian protests of Winter of 2022, but I strongly believe that for average citizen, Crypto payments leave a HUGE exposure / attack surface. YES, there's going to be a Hacker News person who can figure out how to safely transfer crypto, and maybe even do something practical with it, in duress situations; but I feel that would end up complex enough to be achievable effectively with other crypto-less, equal-complexity methods. Meanwhile, average citizen's ability to safely and anonymously and SAFELY use crypto under duress is extremely limited.
Personal opinions aside it is a valid use case. They can track the wallet and they will, but they cannot close/lock the wallet as they did bank accounts. As you’ve implied there are methods to achieve anonymity but they require technical knowledge. If this becomes a commonly understood use case it will likely become easier for the average person.
I believe in this case they did close/lock the wallet, as it was held by the exchange. How far they go to recoup money that did make it to individuals is up to the attorney general and courts and politicians to decide - but critically, means are extremely there. It is empathically and trivially known who the recipients are. This is the part that feels like we are intentionally ignoring - eventually crypto intersects with the real world.
There were technically superior and more anonymous ways to do that kind of particular transaction of course. But we may differ as to what "average person" is and what their technical competence will be in the near to medium future. I believe average person still has tremendous phishing and scam risk with a regular, regulated, fairly static, designed for ease of use, documented, go-to-branch-and-we'll-guide-you-through-it electronic banking. I am skeptical of our ability to create a safe path for the average person through the dynamic, unregulated, ever-changing, technically complex, myriad-clients-and-zillion-methods-and-gazillion-exchanges all chock-full of scammers world of crypto.
That's not a trait of crypto in general, just bitcoin (and ETH, and most other non privacy-focused coins). Take a look at Monero or ZCash to see how untraceable the trucker convoy (or similar) donations would have been if they had just used a different cryptocurrency.
I used to think there were use cases but not anymore. Currency is the only possible one but since it is digital, it leads to the same but different centralization. The days of mining bitcoin in the background and "winning" a full bitcoin are gone.
There is no need for crypto for money laundering when it can be done at scale at Deutsche Bank.
The anonymous use cases are a chicken/egg problem because you still need on/off ramps. but the other issues make global crypto currency a no go.
> I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
I don't think "censorship resistance" is the correct term. I think what you're really describing is "law enforcement resistance" (e.g. your activities are illegal).
And even in those cases, unless cryptocurrency is circulating as actual currency in the economy (which it isn't), most of the law-enforcement resistance is fatally compromised by the need for onramps and offramps.
The problem is the only situations where crypto is more effective than the alternative (a well operated SQL database owned by a bank headquartered in a geopolitically secure jurisdiction with stable courts) is a really shitty one: when you live in a Mad Max world with no stable rule of law.
In other words, it just so happens that the exact situations where crypto is useful, are the same situations where it is very hard for capitalists to earn a good return on their capital. Unstable places or illegal markets.
It's not that the existence of crypto doesn't make sense. It's that investing in it makes no sense, because it will only be successful in scenarios where "investing in things" at all is a lost cause.
the #1 use case by far is as a pyramidal pump-and-dump scheme. it may not be what anyone considers a legitimate/palatable use case, but it is objectively what cryptocurrencies are being enthusiastically used for, and they work well for the purpose. the people who got in early have typically gotten rich off it, and the people who have not either play the (necessary) role of the sucker, or catch on and try to start their own coin where they are in at the start.
The only use, which is enough, is to subvert those who claim authority over others.
A specific example is committing crimes: buying or selling drugs, money laundering, tax evasion, etc.. but maybe its building a nest egg to help escape an abusive relationship or God knows what. Hiding money from some sort of extortion.
Most "crypto" isn't hidden, it isn't crypto. It's gimmicky marketing. Not currency either.
Fully fungible (all units equal) crypto (hidden) currency (means of exchange, store of value) is incredibly useful. Everyone understands why untraceable money that you can send cheaply, globally and securely in an instant is useful.
Monero, maybe not the best or final ideal tech, but it has real utility.
Crypto is not a subversion of central banks and governments. It's just an amusing gimmick that exists at their pleasure, like the state lottery.
> end users always want a way to get money out of crypto and back into fiat currency. And this desire hands governments all the tools they need to starve the crypto ecosystem at will, by cutting off access to inflows and outflows if participants don’t follow the rules. When a reasonably competent and powerful government cares enough about stopping something from happening, it is very difficult, if not impossible, to continue doing business as usual. And this reality continues to take the hand-wavily libertarian crowd of crypto enthusiasts by surprise.
> The persistent requirement for fiat on- and off-ramps is why virtually every anti-censorship technique that crypto comes up with instantly suffers from the same Achilles heel.
> In crypto, on the other hand, you can speculate on shitcoins and make bets in DeFi, and that’s about it.
Giant long article and only one small mention of DeFi (which I'd argue is a great use case, despite all the hacks going on) and it isn't even accurate. DeFi isn't about betting.
Not being in the space myself - can you generalize the whole thing by saying it is about any one thing? Speculative asset appreciation seemed to mostly be what drove people to it. Curious about the good emergent behaviors, as the bad ones are literally advertising themselves.
I'm getting downvoted on my comment, but your provides good value by asking for more information, so maybe I can earn back a bit of karma with a kind reply.
A good example of the value of DeFi is a project like AAVE [1]. It isn't about asset appreciation, it is about creating a frictionless lending/borrowing market based on collateral that anyone can participate in.
If I have some crypto and I want to take a loan out against it for something else, I can do so without having to go to a bank, ask for permission, KYC, or anything. The protocol itself is fully decentralized and no single entity can shut it down (or even modify it). It literally happens in a single transaction. It is global. It is 24/7. It is transparent and on-chain. Oh and the rates are actually pretty decent (no middleman).
People might ask 'why' one would want to do that and it really is just an answer of something that happens every day in TradFi markets as it is. It may not be helpful for you, but it certainly has value. Sure, people can use this for speculation, drugs or whatever. But I personally see this as extremely empowering for a variety of my own reasons.
After spending the last year+ very deep into DeFi, I've seen my fair share of scams and hacks. But my eyes have also been opened to the potential of what is out there. DeFi is the first real use case of crypto that I've seen that has value.
The practical use case is pretty simple - being able to hold large sums of money yourself securely while being able to move it to who/where ever you want in less than an hour, 24/7, no questions asked.
Before Bitcoin it was practically impossible to do this without a bank as an intermediary and even then would require large fees, talking with people, lots of hang ups, just to manage your own money.
Say you want to move $ from service A to C, before Bitcoin it was not possible without a bank intermediary (B). There is processing time, high fees, business hours, etc.. So you’re handholding the process A to B then B to C.
With crypto I can move money directly A to C at 4am on a weekend, any amount, without talking to anyone for a tiny fee.
Or if I want to move it into my wallet and hold it personally I can do that do. Before Bitcoin that was literally impossible without physically walking into a bank.
In my experience (UK traditional banking system) I can move money directly A to C at 4am on a weekend, any amount, without talking to anyone for a NO fee. That's just how online banking works, and I'd have to increase the sums of money involved by an order of magnitude or two before having to walk into a bank. What sorts of values of A, C and $ do you have in mind where a bank isn't cheaper, faster and more convenient than crypto?
First your bank can’t move money from A as it doesn’t control A. A and C and services or even my personal wallet, not banks. The point is a bank is not needed to facilitate the transfer.
Instead of having to move money from wallet to bank to stock exchange, money can move directly from wallet to exchange and vice versa, no bank.
This is the “works on my machine” of the banking world. Local transfers in the UK work well but if you try to do the same transfer to a non-UK bank account, you will no longer have those same features. This is because each country implements it’s own banking protocols. In crypto, there is a single protocol that all users agree on, and so you can trade ETH, USDC, and other tokens all in the same way regardless of your physical residence.
I agree with basically everything here. There two fundamental problems here:
1. Crypto is being designed by smart engineers who fully understand the financial system. Specifically they don’t understand why it is the way it is. It didn’t just magically appear this way full of obvious flaws. It grew over thousands of years; and
2. Most of the people pushing crypto are honestly just trying to get rich quick. Most missed out on the Bitcoin wealth transfer so they are eager to jump on or create the next Bitcoin. And pretty much all of them have a vested interest in convincing you.
> Specifically they don’t understand why it is the way it is. It didn’t just magically appear this way full of obvious flaws. It grew over thousands of years
That's just an argument in defense of status quo. It's actually pretty common for industry outsiders to disrupt old industries. Think Uber/Airbnb/Facebook/Tesla, etc. Thousand year old industries get disrupted all the time.
There is only one use case and that is the originally intended use, as a currency completely decoupled from any one country’s monetary meddling and thus liberating the populace from poor central planners and/or authoritarians. That’s it. That’s all there is to it.
Except, it's not that? Or at the very least it's a poor version of that.
Want to get and move Bitcoin easily? You are going through an exchange, which will absolutely be regulated at some point.
Not going through an exchange? Well, I suppose you can try and find a local person who already has some Bitcoin to sell you and work out some sort of shady transfer and hope neither of you get scammed.
Now you have some "currency", and it's relatively easy (but not free) to move it to someone else's wallet. The value may have doubled or halved since you acquired it. So you want to move it quick. Except it's not quick. But you get the transfer done.
Now the person who receives it has to convert it into usable currency - no one is buying food or energy with Bitcoin. To be free from meddling, they too need to find and meet with someone who will give them cash for their coins.
But wait, that's not all! Most folks interacting with the coin are using exchanges. And they come from well regulated places. So the laws and financial planners of those countries will indirectly impact the price of the coin. If coins suddenly get taxed heavily, out a local fiat gets strong, or whatever, that will impact the value of existing coins as people either flee to or from the coins as a store of value. So even if countries don't directly regulate coins, they'll still be impacting them.
Sadly, this is true. As great as it is, bitcoin has many issues, in order:
1) The fact that Bitcoin mining traffic is detectable by ISPs (similar to torrents), so if a country prohibits it, the ISPs could simply detect that traffic trivially and get you arrested. Or simply block downloads of the client, etc
2) The centralization (or lack of democratization) of mining. A few huge pools, mining rig operations instead of individuals running software on their computers. SHA-256 ASICs and lack of blockchain pruning caused this.
3) The overreliance on exchanges - not your keys, not your coins etc
4) Every transaction is trackable, no real anonymity
5) The -even daily- value fluctuations
6) Hard to understand for layman people
That said even with all of these drawbacks people do use it in real life for its original intended purpose (remove the middleman), specifically in third world countries. But I think it would be great to go back to 2009 with all of the current knowledge and redesign these bits
I think that inevitably, it will be banned at some point in the future due to 1) and 2).
Argentina is currently experiencing a booming inflation and local distrust for its currency is at an all time high (and that's saying a lot). Many Argentinians (of a certain technical inclination) are very much into crypto, as a "second best" alternative after US dollars. I know that many Argentinians lost their savings in the LUNA crash.
Definitely. Somehow the author went and brought valid arguments against ETH and web3 but failed completely at point #2.
Just to answer the author concerns about point #2. There are coins with entire Blockchain that can fit in my OnePlus 7. I am from Algeria (a country without a financial system), LTC and XMR are the coins that brought me out of poverty, not because of gambling but they allowed me to do software development consulting online without begging services like Wise to not ban my account for random suspicions.
The author somehow talks about Crypto currency but somehow keeps pointing to flaws in exchangers with KYC.. Again, a lot of progress has been made here, exchangers without KYC emerged (check out Bisq net)...
I just wish people would point out more honest reviews of the such technologies so we can improve together as a society.. Cryptocurrency might not add a lot to your life, but there are many people having access to instant, cheap and secure transactions is a game changer.. I don't care about the legality of it as those broken laws are probably not protecting the average citizen.
Having read through the thread, I don't think many in highly developed countries can ever grasp why crypto is huge in Africa.
I'm from Nigeria. The Central Bank makes all sorts of policies around inflows and outflows.
E.g. DigitalOcean just has warned me that they will block my account. I checked and realised that the MasterCard issued by my bank has stopped honouring any payment denominated in dollars.
You could pay for this few months ago. But now nothing. I don't even know how to go about it. My friend had run around just to pay for Figma.
Sometimes you have to even call friends in diaspora to make payments for you on International sites and just pay them back via crypto.
Inflow here is such a hustle.
I've used wise.com a lot and do like their services but they no longer support Nigeria.
The paradox of this "don't-tread-on-me"-ism is that it leads to authoritarianism. Economic policies that don't explicitly strive for egalitarianism contribute to widening wealth distributions (a la the game of monopoly). Increasing levels of wealth inequality causes people to abandon democratic principles, and embrace populist autocrats. [1]
The frustrating truth is, the solution to corruption is: justice and accountability. Not just blindly throwing out democratic principles and bypassing the law.
And, if BTC wins, we replace it with a monetary structure set by one software engineer. The monetary policy encoded in the BTC blockchain is indeed immutable (assuming no future hard fork) but that doesn't make it good. The payout structure that grants a huge portion of all BTC ever to early adopters would, in my opinion, be the largest transfer of wealth from the many to the few in human history if BTC did indeed take over. I find that to be considerably worse than monetary policy where at least I have some tiny amount of control through the levers of democracy.
ENS (Ethereum Name Service) [0], Handshake (An experimental peer-to-peer root naming system.) are so far the only valid use-cases and a need for a blockchain.
Unless you want a repeat of this [2] or this [3] with .io or someone on the other end changing the domain or address from one to another whenever they want to.
I can transfer crypto faster and a lot cheaper than any money transfer. Hell I can receive and withdraw same day.
2. Earning interest
By parking my money in a stable coin and dropping it into an AMM like uniswap I can earn 10x-50x more interest than just parking it in my bank account. No volatility. Only risk is hacker risk.
When you say cheaper and faster, what are you comparing to? If I want to convert and send USD from the US to EUR in Germany the crypto solution will be expensive (trading fees on both legs) and pretty slow (time it takes for the exchange to send EUR to your German bank account).
Yeah this strikes me as odd too. My bank will instantly deposit transfers while the (free) ACH process takes time to clear. I can transfer up to something like $99,999 a day which is fine for my needs. At worst case a $15 fee to wire funds which I could probably get waived if I asked customer support nicely. There is also plenty of recourse in the unlikely event something goes wrong.
Sure, but I'd say for just about every person the risks far outweigh the rewards. And IMO adding intermediaries to account for that risk seems an unnecessary abstraction given the current system.
Re: 1), I can transfer money within the Eurozone at no cost, 24/7, practically instantaneous. It's really hard for any crypto solution to beat that. For non-Euro transfers, I regularly send USD wires and they clear the same day. The fees are a fixed $25 (so 0.25% for a $10k transfer), which IMO is reasonable.
Re: 2), uhh, yeah. I think that's what Celsius users believed too.
The 1) part is true for most of the developed countries (except the US, apparently), and even for many underdeveloped countries: IIRC in some African countries people transfer funds between cell phone accounts.
> It's really hard for any crypto solution to beat that.
Not really.
One can do that with either XRP, Stellar, or Algorand blockchains with has virtually little to no fees, much faster and far cheaper than a wire transfer, all worldwide.
Perhaps is that why Moneygram realised that Stellar was a great use-case for their service? [0]
re 1)
try to make 5 transfers of 3-7k euros to other people, get your account blocked, go to bank to find somebody to tell you why they did and what they want, wait indefinitely after you provide them explanations and paperwork
Unfortunately 1) Isn’t ubiquitous. In Canada it costs me $2.50 locally, arrives in hours, clears in days. It also only works for Canadian recipients. And wires (which I also send regularly) cost $75 and require me to be there in person. Not to mention the amount of information I have to extract from the recipient.
So when I use crypto I have a product that when compared to the current methods is faster, easier, cheaper with no transaction size or geography restrictions.
2) a centralized company taking deposits is not the same as a smart contract.
The earning interest is like picking up pennies in front of a bulldozer. You'll be OK 99% of the time but then you'll get flattened. You'll earn maybe 10% interest per annum, but be at risk of losing 100% of your deposit at any moment. Your deposit is completely uninsured. If you have no solid guarantee that you'll get your money out, use the precautionary principle to conclude that you won't.
Also, for 10% of something to be more than pocket change, you need to deposit much more than pocket change. If you're depositing pocket change into these services, you're not really investing. If you're depositing more than pocket change, you're running a big risk.
Essentially my deposit goes into a pool of two currencies. Let’s use USDC and EUROC for example.
The pool is used to facilitate people trading from USDC to EUROC and vice versa. To trade through the pool you’re charged a small fee. 0.01% to 0.3% in most cases.
Those fees are then distributed to all the people who deposited in the pool. Proportional to their share of the deposits.
I like to think of it as breaking up the fees charged by (now) unnecessary forex brokers and agents and distributing it back to the people.
You could say the exact same thing about basically any activity though. I have zero interest in watching sports, yet "they" insist on putting it on TV and pumping out CO2 for stadiums etc.
Personally, I think that's the right mindset to take here: I don't see the point, but people are allowed to do things I don't see the point of so <shrugs>
To me, the fact that Bitcoin is a money out of the hands of governments, or anyone really, is the use case. It's also cool that you can use your brain to effectively store your money.
Of course, if you believe that governments are good stewards of money, you will probably not find a use case.
The brain wallet part is very cool unless you’re like me, and don’t have a particularly good memory. “What was the sixth word of my mnemonic? Strand? Strait? Spleen? Oh God, what if I never recover my 35 Shibs…”
Is it really? If you can't change it for goods and services before turning it back into regular, government controlled currency, is it out of the hands of governments? If China can get all the miners to move to Kazakhstan, were they ever out of government control?
You may have answered your own question. You don't need to turn it back into fiat for it to be used in the long run. Lightning network makes txns quick and cheap, and BTC volatility has been going down enough that it isn't hard to imagine it being stabler short term against fiat (though long term it will gain value as fiat collapses)
Not a joke. In the 2013s it went from $10s to $1000 (100x), 2017 it went from $300 to 20k (70x), 2021 it went from 6k to 60k (10x). In each of these cases, the crash floor is also a smaller multiple. Overall, Bitcoin is becoming more contained in its rise and fall.
Indeed, but that's regulation. Regulation can be changed which is where we're heading with greater adoption and mass support. Even if not for the regulation, it'll make Bitcoin the store of value backing currencies in time (this one's my opinion, you don't have to agree)
The problem, though, is that you give up the benefits of working within a regulated system. Things like being able to stop or reverse mistaken or fraudulent transfers, protections from fraud, protections from whoever is handling your money for you (with crypto, someone is still handling your money for you) going out of business, etc.
Everything has an upside and a downside. But in the regulated system, you at least have a chance at some sort of recourse if something goes sideways.
By government's hands being out of Bitcoin, I was mostly referring to its fixed money supply and the fact that its "permissionless", like cash.
> Things like being able to stop or reverse mistaken or fraudulent transfers, protections from fraud, protections from whoever is handling your money for you (with crypto, someone is still handling your money for you) going out of business, etc.
That's only true when you do on-chain transactions, or in the case of fiat, when you pay with cash. If you worry about dispute arbitration, you could use the same dispute arbitration services that exist for fiat. For example, I don't see a reason why payment networks like Visa or Mastercard couldn't add support for Bitcoin eventually. You'd still get a currency that can't be arbitrarily debased and that you can easily transfer on and off the payment network.
As a side note, a lot of Bitcoiners would hate me for saying the above. A large chunk of the community believes that everything needs to be decentralized and it has probably hindered adoption.
visa and Mastercard can unilaterally reverse transactions whereas the entire point of crypto is that there's no centralized authority that can rewrite history
As soon as it becomes big enough, the US govt has the power and ability to effectively 51% the entire network. They haven't yet only because it doesn't threaten the dollar.
or just, you know, make it illegal, immediately shutting down Coinbase and cutting off the law abiding 99% of the population from using it. What is the value of a Bitcoin after it's banned by one or more major countries?
You are aware of how fiat currency works, right? The government can create that money with as much friction as is present in their keyboards.
And anyway, they don't actually need to run any new nodes, just compromise communication between them until all the blockchain records on the individual nodes are bunk.
You don't have to believe that governments are good stewards of money. You have to believe that they are better stewards of money than Satoshi was when he decided on the mining curve.
This article doesn't mention the one article of faith every crypto utopian I've run into really believes: the US dollar and every other currency will collapse soon and be replaced by crypto.
And on the other side of the ring, we have the anti-crypto absolutists who will do anything to: 'ban all crypto, 100%', 'destroy all of it', 'let it all die in a fire', which I'm afraid is as equally delusional as the crypto utopians who believing that Bitcoin will be the world reserve currency.
The truth of the matter is, both of these extreme camps are going to be very disappointed in the future.
If the USD collapses the US will just issue a new currency and it's domestic economy will remain even if the might of the dollar in the global economy is gone.
If other nations with collapsing currencies are any indication, that's not how it works. People always move to a better, harder currency. What authority would the government be left with if the money fails? How would the government distribute money?
The only use case for crypto is to get others into the ecosystem to buy the flavor-of-the-month coin so the value of yours goes up and you can cash out.
Crypto advocates will keep waiting even when billions have been lost to scams which is the primary and only use for crypto.
I agree with many of the crypto critics that the answer after this tedious search is that there exists no legitimate usecase in this industry and there never will be.
For the majority of people on earth, it has not changed their lives in any meaningful way. Their lives may in fact be indistinguishable from an alternate reality where crypto was never invented.
Benz made the first car in 1886, which in your analogy means today is 1900.
I will be curious to see how crypto holds up in recession or under monetary crisis.
One of the reasons it was created hasn't really been tested, since the economy in the west hasn't faced a major crisis since its invention.
It seems plausible (if unlikely) that external events could push crypto adoption into more "normal" use cases. E.g. Israel's recent ban on cash transactions points to one way more things may become untenable in traditional finance.
I don't actually have strong opinions on what will happen - I do find your analogy fun to think about though!
For the record, I don't think crypto is useless, I just don't think it's hitting that bar for a transformative technology. It's proponents certainly do describe it as potentially transformative or revolutionary.
Yes, I'm aware the dates of invention don't quite align, and the time window is cherry-picked for dramatic effect. But it's food for thought.
Nobody was debating the utility of cars and phones 14 years later. With crypto, it's like we're still looking for something as fundamental as an essential use case.
Yeah.. the hype I think makes it harder to appreciate the main use case, which essentially was already covered by the first cryptocoin, and is still where it sees the most real-world use: resistance to state control. Folks use it to evade capital controls, use darkweb markets, launder money, find radical activism, etc.
That's still a big deal, but it's far short of the impact-for-everyone promised by some folks in the industry.
It is a very high bar. But I believe that the bar matches the claims made about the technology. Few advocates seem to be talking about cryptocurrencies as a useful tool for incremental progress (granted, this could be my bubble talking). Advocates seem to be saying that it will remake the world in extremely fundamental ways.
This conversation is silly. You are snapshotting the transformative window. If you snapshotted the internet in the 70s or 80s you'd get a much more mundane picture.
I don't know if I think cryptocurrency will be as transformative as the internet or the mobile phone, but I think it will be within a level or two of that scale. It makes good on its promise year after year. NFTs just became popular in the last few years, and that is only one example of many. Are you going to bet against NFTs in the long run? I certainly wouldn't. We don't even know all the technologies crypto is going to enable yet.
The cleanest and easiest use case I see for crypto is just optimizing the whole securities issuance and fund management legacy system. For my business in alternative investments if I want to raise money for a project with a Regulation D offering I need to spend a lot of time and money jumping through hoops and dealing with numerous financial institutions.
The typical flow of information, effort and money goes like this: the sponsor (me) creates the investment opportunity under Regulation D of the SEC ruleset with the help of some securities attorneys, a managing broker dealer (SEC compliance) signs off on it and circulates it to broker-dealers via selling agreements, then, wealth advisors who are registered with those broker-dealers can sell our offering to their clients, those clients then fill out a subscription agreement and send their money to a third party called a transfer agent, the transfer agent takes in the agreements and cash, logs all the details about the investor and manages the payment of distributions with a mixture of direct deposit and paper checks, and generates tax documents via mail, these distributions and tax documents then go to the financial custodian of the asset for each investor.
This process involves 8 to 10 different parties, multiple financial institutions and reams of paperwork. The cost of capital is approximately 11% using this method.
I dream of the day that I can offer a tokenized security on the blockchain, that is held by the investors themselves in their wallet, with distributions paid with USDC directly to their wallets. The reduction in cost would be incredible--all we need is the legal framework to allow it.
But why bother with blockchain in that case? What you’re describing is a legal solution centralised by the government, and any hash tree with work in a non-distributed situation.
But on a fundamental level you're not describing a technical hurdle, you're describing a social-policy hurdle. Like, wouldn't you agree that if there was policymaker will to make this process more efficient, it could be more efficient without a blockchain?
Suppose that blockchain did not exist but that securities law did not require you to consult securities attorneys to "create the investment opportunity". You would have an efficiency gain by cutting out the attorneys.
In particular I think about your "dream": you dream that in lieu of paying people with a mixture of direct deposit and paper checks, you could pay them with an electronic currency; but presumably at least some of the people being paid with paper checks want to be paid with paper checks (if not, you'd presumably pay them all with direct deposit) and while securities law probably doesn't let you disburse via Paypal or Venmo or any other electronic account transfer, if it did, doing so would be approximately the same as USDC, right?
It seems to me to make a sustainable case for blockchain, you need to basically say assuming the exact same regulatory posture and the exact same degree of technical laziness in terms of automating steps not currently automated, would blockchain make it better?
Nomad was hacked. Unless the hackers are generous and return the $--or--somehow used a weak private key to store the eth, there is no way to get the $ back even in the age of the universe. That's the 'use case' I suppose: One-way, irrevocable money transfers and storage.
Have these people writing these kind of articles ever downloaded a browser wallet and played around with Defi? The amount of ignorance here is staggering. How is it on HN? HN is supposed to be a place for people who are tech savvy and are able to think about the future and imagine it different from yesterday.
Please do not assume this. The people who criticize crypto generally know more than the people relentlessly shilling it. Do not mindlessly repeat the "few understand" trope
I wasted a year of my life working for a crypto company, I've actually committed code to Ethereum through the Geth project. I learned it's all a casino of completely useless money moving schemes.
What makes even ENS cool tech? The sole purpose of those .eth domains is to receive crypto, ohh and make the founders extremely wealthy. Why did they need to launch an ENS coin, other than to dump on the public when it was 5x the current price.
Consider the sheer amount of new tech, or more general, of new ideas being shared here and on other places every single day. How is a single person supposed to evaluate all that?
You don't even need to go that broad. I'm working in the cloud infrastructure field (think Kubernetes and such). Just following all developments in that narrow space is such a mind-boggingly huge task that it's physically impossible for a single person to follow all of it (except at extreme surface level). And that's before we consider other areas of tech. Or other areas of interest (politics, science, culture).
To make the task of navigating the world even somewhat tractable, we all have to rely on outside authorities whom we trust for a lot of our information diet. Hence why I am very grateful for known figures like Moxie Marlinspike to examine this topic and provide me with a succinct summary of their impression through writing. That's not to say that I take everything Moxie says as gospel, but I know enough about him to judge which of his statements can be trusted and which need to be taken with a grain of salt.
* Ens domains: so it's sort of a DNS for cypto resources? Cool I guess, but it has no use outside of the crypto space.
* PoolTogether: that's literally a lottery. Hardly an innovation.
* Aave: oh, _another_ crypto lending platform. Aside from the fact that most of these are Ponzi/scams that have collapsed in spectacular fashion recently (see Anchor, Celsius, etc), this is another app that only exists within crypto to earn more crypto.
Those 3 examples illustrate the problem of "dApps". There may be a vibrant ecosystem of idea and apps, but when you try to unwind them you realize most of them are entirely self-referential within the crypto ecosystem and there's no utility connecting them to the real world. That's because the few apps that do try to connect to the real world quickly realize that the space of problems that can actually be solved by crypto there is ridiculously small.
Currently we've hired more than 0 people through a global outsourcing company. The outsourcing company sends us invoices, we wire them dollars, they charge us 3% on top of extremely bad forex rates plus 10% for their services, then a local company who's hired "our staff" processes payroll, pays local taxes and insurance, etc. The whole process of getting the money to the recipient takes days to a month.
Currently we have more than 0 staff who have been displaced by a war and do not have good access to local banking, so we pay them in dollar stablecoins. This does not cost ~15% and does not have a latency of days to a month.
You should perhaps read the comment again? The comment mentions two disjoint sets of people who are presently paid in different ways. It does not mention any transition of any people between the sets.
The second set of people must also be paid according to the laws of the country they are currently residing in. By paying them without informing the country, you are skirting its laws and doing so in a way that is easily tracked.
I have some good news and some bad news. The good news is that I have discovered that it is in fact legal to pay contractors in these countries. The bad news is that I also recently paid a local moving company for a move and purchased some onigiri at a convenience store without personally verifying that these businesses and their employees pay their taxes. Feel free to report me to the kōban.
If you paid with real money that went into a real bank account, the government knows if they paid their taxes. If you paid them with crypto because they shadily asked you to, don't be surprised if you get caught up in an investigation. Your payments are easily tracked.
It's quite unlikely to see such a liberal use of numbers from an English native speaker, but this is a somewhat popular way of describing similar situations in Russian (and probably some other languages).
Using numbers in this fashion is a way of specifying the perfect condition while simultaneously letting the listener/reader know that the situation is either less or more than ideal.
Plus, it adds a subtle comical effect. Puts some supererogatory emphasis on things, so to speak :)
It seems like the majority of the cost savings is due to skipping outsourcing and a company that pays local taxes and insurance.
The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
> It seems like the majority of the cost savings is due to skipping outsourcing and a company that pays local taxes and insurance.
None of the cost savings are related to local taxes and insurance since they still need to pay for these things. ~15% is what's charged collectively by the outsourcing company, their bank, and their local partner. I agree that they provide a valuable service, but it's not clear to me that the service is worth 15% of the otherwise-gross cost of employing someone. One thing they could do to convince me it is worth more would be to transmit the funds promptly to the recipient.
> The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
Some centralized crypto exchanges currently have pretty competitive forex rates. You'd basically have to go to IBKR to do better.
What you are paying for is not the ability to transfer money but for the ability to do local taxes and local insurance correctly. Just moving to crypto will not solve this.
When you actually drill into what filecoin is and how it works you realize it's literally worse than any other form of data backup that I've heard of. No sane engineer would ever use it for any reason other than it being related to the crypto industry. It offers far worse utility than using AWS S3 buckets, at a far higher price, and with tons more risks for no upsides.
And that is a perfect metaphor for 99% of crypto "usecases"
SEPA Instant Credit Transfer [1] has a soft limit of 10 seconds and hard limit of 20 seconds for money transfers between accounts of different banks. What's the use case for "faster than 10 seconds"?
But the other cool thing about crypto is that it's programmable, so you can arrange 100s of transactions between parties. Micro finance loans, royalties and distribution, etc etc
GNU Taler https://taler.net/ is the closest thing that I personally want of crypto, which is electronic cash (NOT a centralized bank currency).
Yes, I like paying by card. No, I don't like it making everything I do traceable.
I do want to live in a sovereign nation. Probate court and criminal court orders are important. But make it generally really hard for governments to interfere legally, and prevent technically the casual inspection of data.
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[ 2.2 ms ] story [ 4999 ms ] thread1). Silk Road or dark net markets in general. Can't be done with Visa or other existing solutions at any kind of scale
2). Funding of political dissidents. Wikileaks, canadian truckers, etc. These people got blocked by traditional payment providers but still received crypto. (there are still other obstacles for dissidents but at least this solves 1)
3). Money laundering. Find someone who sells bitcoin miners, buy them with dirty money and use them to mine bitcoin sent to fresh address not tied to your other activity.
4). Uniswap and maybe flash loans in defi seems like new things I haven't seen in tradfi or elsewhere. Maybe some cool promise here
I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
While there might be cases you consider moral or ethical even though they’re illegal I’m not sure I’d consider this a net positive or any reason to think crypto will enjoy mass adoption.
It's also hard for me to understand these "payment outside of X authority system" ideas when the value shifts so wildly and so unpredictably. No one wants to get paid, not even criminals, in a currency that might be worth 20% less tomorrow, depending on what's going on with Matt Damon's Super Bowl ad for the criminal currency or whatever.
I'm imagining you want to run a server in which you want to prove a given open-source version of the code is processing the inputs, and the outputs are available for anyone to observe, verify, & store.
I imagine there's some ways to do this already, though.
Proof of Stake just seems like a protocol that isn't too wasteful and inefficient and could make for a decent standard.
So blockchain only makes sense when:
a) You have bad actors
b) You need decentralization
The use cases for that are, for the most part, "subvert government authority". There are some cool other things you can do, like web of trust stuff, but the vast majority of the market is in the "subvert government authority" in one way or another, or is an outright scam.
You use blockchain if you have one very specific type of bad actor, and know for sure that they won't try bad things
Might change your opinion of it.
I didn't make any judgment about doing so.
I will concede international transfers is not a very large use case, and definitely doesn't justify the market capitalization of the blockchain base currencies FWIW
For amounts under ~$500, cryptocurrency off-ramps are often less convenient and more expensive than an international cash-to-cash remittance with Western Union or Moneygram.
If you think they're more expensive to use than centralized providers, you're probably using ethereum or bitcoin. I can send USDC on Algorand in any quantity for less than a cent
I imagine folks receiving remittances in Manila, Mexico City, Nairobi, Delhi etc. would have difficulty using stablecoins (whether backed or algorithmic) to buy food and other necessities.
For example: https://www.bbc.com/news/business-60912789
These articles all follow a common pattern.
1. The trigger – Inflation/distrust in government/bank withdrawal restrictions/paypal freezes your funds/country is at war/etc
2. The response – People gravitate towards a system that is resilient to whatever failure mode they experienced
Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. Meanwhile in places that are smaller/less stable/not economically self-sufficient/on the fringe, people are increasingly turning to it as the best alternative.
https://www.coindesk.com/markets/2020/06/16/venezuela-is-a-t...
tldr; either the crypto itself is traded like real money, or a l2 or even centralized unconnected layer is - either way on/off ramps that currently exist (p2p and centralized) continue to exist and thrive.
> But a major part of Venezuela's crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.
> "Nobody is going to tell you 'every night when we do the books, we convert bolivars into bitcoin,' but yes, this is happening."
You pay fees for every single transaction: chain storage, gas, if you want to deposit or withdraw or exchange to another currency, etc; it's slow to go through and at peak times you get gassed out and it doesn't go through at all.
The value fluctuates wildly at all times of day, so your transaction might lose a significant percent of value before you've had a chance to even access it let alone trade it for a more stable currency or asset. Oh, and you have zero safety net for if something is entered wrong, a key is lost, if you end up not receiving the item you purchased, you're outta luck and there's no bank or credit card agency you can petition for a chargeback. Plus you lose ALL your money with no recourse if you can't keep track of a non human memorizable secret key, or if it gets in any way intercepted or stolen from your computer, or if you accept the wrong transaction...
For real, every time I try to answer my I do crypto, often people just don't understand. They just don't. They just don't understand why I don't trust entities.
If you don't understand this, then you don't understand crypto. Period. There is no other debate necessary. Period. Full stop. We go on our own way.
Full stop.
I understand that you are saying you were burned by a central authority. But the truth is that the only way to get everything to work is with a central authority. The article gives examples of crypto being fully reliant on central authorities, for instance.
Everything being done by crypto today could be done better by trusted companies putting together a semi-open peering arrangement that both doesn't waste pointless electricity and that doesn't allow just any potentially hostile actor join the group of authorized peers.
And for me it is at the moment the crypto side. I don't trust exchanges and I can't be bothered to do local transactions. So central government "approved" system is easier for my life.
In fact, given that ownership is fundamentally a mutually agreed upon social norm, and not any sort of real truth - Even if you trust the central authority of your locality less, they are likely a much better resource regardless.
I really think crypto advocates just don't actually understand how power works. Power is not the number in the ledger, it's the number of people who will step up to enforce it for you.
It turns out that number is very, very tiny for crypto. Much, much larger for your local currency - even if it's not as large as you'd like it to be, or "fair" as you think it should be.
Crypto companies with legal exposure? Yes can be censored.
Open source crypto protocols? As long as raspberry pi’s and digital comms exist, it’s akin to saying the govt can shut down Linux. This is the censorship resistance that matters. It’s not perfect (some ungodly amount of nodes are in AWS and the Trail of Bits report did a good write up as well).
The central authority here is open source software. The author spent a lot of words demonstrating they didn’t know this at all.
There's this fantasy that crypto can replace money, and that you would therefore never need to trade it for real dollars. That's not going to happen, for reasons outlined in the article and because no medium of exchange that's deflationary can ever be a currency.
If it goes up in value over time, it's an investment and people won't spend it.
Will the open source be free forever? Sure. Whatever. Can people run nodes that burn electricity? Yup. Does that matter? In no way that's relevant to the general public.
Worse, even the crypto networks themselves are subject to issues with their authority: Enough bad actors who join can steal the value of a large percentage of the network.
When we're looking at potential theft of billions of dollars, you better bet that someone will invest the hundreds of millions required to rewrite the chain and take control of a large number of coins.
Then what? Then everyone will need to get together and act like a central authority to either rewrite the chain back to its state before the attack, in which case you do need to rely on a central authority, or you need to admit that _allowing untrusted nodes into a financial network is a Bad Idea._
"Censorship resistance" is irrelevant too, by the way.
Bitcoin, an open source crypto protocol, launched without the existence of crypto companies.
Mt Gox, instead of helping btc, almost set it back years due to the hack.
Bitcoin grew adoption and scale on tor/DNMs and localbitcoins, both of which had organic, non-exchange economic activity which kept accounting in pure crypto vs returning to fiat/needing an exchange.
The attack you’re describing is a 51% attack, and it had yet to happen due to protocol design on the main chains. If it does, I suppose you’d be right.
But I generally think you don’t understand how the tech works and what proof of concepts exist to disprove your opinions, or at least strongly counter your opinions. and without addressing why they’re wrong you have a weak argument.
Your assertions are the ones that are extraordinary, so yours is the side that requires proof. You're effectively claiming that a distributed peer database with a somewhat secure history has some kind of intrinsic value. I'm calling that BS.
Where is the money? Where is the _value_?
The fact that a few people were trading Bitcoins doesn't mean it can ever go mainstream. Something that's a niche hobby isn't going to change the world. If you want to use Bitcoin as a hobby barter medium, then have fun, but that doesn't imply value outside of a tiny community.
Prove me wrong. A "proof of concept" is in the technology domain. For crypto to work outside of a community of crypto-libertarians, it needs to be usable by regular people. Libertarians are famous for not actually being able to design social systems that work in the real world; last time they tried they were chased away by bears. [1]
And as the article pointed out (did you read it?), most apps that support crypto rely on a centralized server since the chain can't be downloaded to mobile devices. How useful is a medium of exchange that requires you to bring a laptop with you everywhere?
[1] https://www.vox.com/policy-and-politics/21534416/free-state-...
Ah, or your assertions are akin in a technical sense to saying “the internet is a complex series of tubes, prove me otherwise!” Your criticism is based on a pretty clearly patchy technical understanding.
also, perhaps the cause of people not understanding you is not some kind of lack of mental faculties on their part, but your - what I would describe as - extremely obnoxious style of communication
But I think you're absolutely bonkers if you think that any crypto today is actually a real solution to your lack of trust.
Here's my take:
You think that by using crypto, you're avoiding trust in governmental and financial institutions - and in some (incredibly limited - aka drug/gun) markets you are, but the exchange that you are making (intentionally or not) is not trivial, and not acceptable for most people most of the time.
What you are giving up is the power of the governmental institutions to enforce any sort of agreement or contract you make using crypto. Not their currency, not their problem. It's now your problem to resolve scams and fraud, and you have to do it using your limited powers.
And to be clear - you have really, REALLY fucking limited powers here. Unless you are so wealthy that those "entities" that you so dislike are mere nuisances dealt with by the law firm you have on retainer, or you can fund your own black-ops team, you're living in lala land if you think you can personally enforce the contracts you make. You can't. You don't have the oomph. Full Fucking Stop.
---
So I understand your lack of trust, but hate to break it to ya, bud - crypto is not solving your problem.
Simple example: You hire a contractor to remodel your bathroom, and you pay him in crypto (and we'll ignore for a moment just how laughably absurd the chances of this actually happening are...). You agree to pay 20K for the remodel, with 10K up front. He runs off with your 10k. Now fucking what?
Now all you need is connected oracle that can judge completion percentage of a bathroom and communicate with the blockchain! /s
You are out the labor and materials with no payment and no recourse. It's not beautiful for the contractor why would he agree to this with no arbiter between the two of you. And as soon as you introduce an arbiter you are back to someone else enforcing the agreement not the blockchain. The blockchain adds nothing here that a standard court of arbitration doesn't.
I personally think Bitcoin is a terrible currency for non speculative trading due to scaling problems and it's volatility.
Your own way is a deadend. There is nothing there. A currency is about relationships and trust. You can't own those things, you can at best only enforce them against people's will if they don't maintain them voluntarily.
Some data points to support this:
- most major algorithmic hedge funds, market makers, etc are significantly involved. Not the janky crypto native one, the lethal ones from NY.
- Microstrategy had to convince a whole slew of board members and legal to convert their treasury to btc (“wealthy/elite”). Saylor is on record as saying that all but 1 of them where already on the space and fine with it, or something to that effect.
- this is old days btc lore, but there is a famous known event of Wences Cesares and I want to say Reid Hoffman having a SV get together with a few other who’s-who and sending a couple mil in btc around their phones while sitting in a living room. This And related Got most of the early day big tech people who are in it now to invest. This was years ago. Peter Thiel is the most public of this group today.
- CIA had the btc core lead Dev visit to explain the tech in 2011 (Gavin Andresen/spelling).
- Go to a digital assets event in DC that gets actual DC people to attend, and you’ll have notable elected officials discussing its use as a covert tool
- US has paid foreign fighters in it
- Bank of International Settlements is allowing member banks to hold a % of btc in reserves
- Fidelity has mined btc since early 2010s and is notably involved today.
There are a lot of examples like this out there. It’s a large wealth transfer currently benefiting really top crust people/orgs and the tinfoil hat crowd. Everyone else is reading Paul Krugman opeds and calling it a day, or missing the key so-what of the tech that’s worth committing to.
With Naira the currency being as stable as a pendulum gets on a windy day, many middle class fellows seek to store their money in some form of stable assets. Crypto seems to be the easiest to acquire for the common folks while the politicians prefer and have access to US Dollars.
The fact is there is no reason to believe holding crypto would retain value if the united states went through an country-ending economic crisis; it more likely that your crypto would also just become equally worthless and also crash in value. Treating the United States as a "future Argentina" makes no sense, especially when it's the US-based VC investors who are indirectly backing the value of Argentinian purchased bitcoin. If you end up in a situation where the USD worthless, then there is no wealthy counter party to prop up the value of your cryptocoin.
It makes no sense to look at third world countries with relatively tiny economies and believe that crypto will retain its value if the US went through a similar situation.
I mean, I'll happily concede that cryptocurrency was something that was actually stable in value, was widely accepted and understood in local markets in the global south so you could buy food, save for your kids education and bribe the border guard with it, then it would be even better than gold earrings, black market banknote swaps, hawala or trusting you would be able to access your offshore account in future. But it isn't, the fact that some people would dearly like it to be that way doesn't make it that way (especially not the "stable in value" part), and there isn't an obvious route for it to be that way.
Experienced hyperinflation, experienced civil war, experienced buying bread with 200,000 dinars one year and 2,000,000 next year etc. Experienced scary people with guns knocking at your door. My family and their ancestors all lost all their money and possessions numerous times over the last 100 years, including in the mid-90's.
And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like, who think Crypto will somehow solve such problems based on their theoretical envisioning of only a specific part of dystopian future. I still believe Crypto, like anything else, survives at the mercy of your local government. It has a tremendous set of requirements, complexity, and telltale signs, to be helpful against hostile government which can and will knock at your door with a gun, or criminalize all crypto use/mining/exchange, etc.
The tech is the easy part. If you're conducting illicit transactions in some kind of attempt to dodge regulations - however your (potentially) corrupt regime defines "illicit" and whether the "regulations" are just - then obfuscation isn't going to help you for very long.
The ability to use the internet at all is a function of the willingness of the people in charge of a government to 1) allow usage of the Internet by anybody and 2) the willingness of the people in charge to allow you in particular to use the Internet.
A lot of the arguments in this thread could apply to free speech as well. Pretty scary how many HNers feel that way.
In developed nations, populations who are unbanked/underbanked typically have much bigger fish to fry. In developing nations, they typically already have a solution to the banking problem... and also bigger fish to fry.
You'll notice that every article hyping up cryptocurrency as a solution for these things refers to "early adopters". The adopters are no longer early; they're now a perpetually fringe sub-population. (They're also presently experiencing inflation in crypto for the first time.)
>If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
If the wasteful people doing non-crime activities on the blockchain weren't there it'd be incredibly easy for the authorities to crack down. In other words, if the only legitimate use cases of crypto is facilitating crime, it can only even achieve that goal as long as many people are using crypto for the other stuff you think is wasteful.
In Vietnam, the government does capital control by limiting what bank can do with my money (I can’t request them to send 20k to the US unless I have an approved list of reasons). However, it is not illegal for me to send the money abroad, providing I can do it legally myself. So bitcoin is useful to me
You also forget 5) Outright scams, like rugpulls or boiler room-style scams.
I do think the whole event has dredged up some interesting ideas and desires that were being ignored, but of lot of those "cool promise here" ideas could probably work without a blockchain.
Use a different company and hope another few million doesn't get locked up? That seems like the only alternative and I'm not sure many people would think that's a viable alternative.
I am sure countries will want to censor it, but I don't believe they will be able to, as such the only risk to bitcoins long term viability is the markets demand. There are numerous examples of illicit goods that governments have proven incapable of reducing the demand for, e.g. drugs. So I don't think bitcoin is going anywhere.
I think bitcoin will take a different censorable form and we'll start seeing companies on top of the blockchain that can do things like refund unauthorized transactions and things of that nature, but the base layer will remain uncensorable and thus bitcoin could become both convenient enough (although not better, in my opinion) for rich countries to use as currency while holding the characteristic of providing tremendous benefits to citizens in oppressed poor countries.
Want a $5000 loan from crypto? Better have at least $20000 in crypto assets.
How anyone is expected to get credit funding from this strange system is unclear.
Also the no custodian part is especially strange considering that most people who have crypto keep it on some exchangebank
Yup. That's potentially useful for speculators to earn expected gains from one cryptocurrency whilst also trading with another one.
But it's utterly useless for the common cases to borrow money (i.e. you don't have enough of it to buy what you need to buy)
This is in addition to the arbitrary Tether-eth printing that you ought to be well aware of.
https://nosafebets.com/2020/06/05/legos-the-new-gold-standar...
I thought their crypto payments were tracked (open ledger) and basically nixxed? I.e. this was the grand counter-example of crypto use case :-<
We can discuss our personal opinion on the Canadian protests of Winter of 2022, but I strongly believe that for average citizen, Crypto payments leave a HUGE exposure / attack surface. YES, there's going to be a Hacker News person who can figure out how to safely transfer crypto, and maybe even do something practical with it, in duress situations; but I feel that would end up complex enough to be achievable effectively with other crypto-less, equal-complexity methods. Meanwhile, average citizen's ability to safely and anonymously and SAFELY use crypto under duress is extremely limited.
https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bi...
There were technically superior and more anonymous ways to do that kind of particular transaction of course. But we may differ as to what "average person" is and what their technical competence will be in the near to medium future. I believe average person still has tremendous phishing and scam risk with a regular, regulated, fairly static, designed for ease of use, documented, go-to-branch-and-we'll-guide-you-through-it electronic banking. I am skeptical of our ability to create a safe path for the average person through the dynamic, unregulated, ever-changing, technically complex, myriad-clients-and-zillion-methods-and-gazillion-exchanges all chock-full of scammers world of crypto.
There is no need for crypto for money laundering when it can be done at scale at Deutsche Bank.
The anonymous use cases are a chicken/egg problem because you still need on/off ramps. but the other issues make global crypto currency a no go.
I don't think "censorship resistance" is the correct term. I think what you're really describing is "law enforcement resistance" (e.g. your activities are illegal).
And even in those cases, unless cryptocurrency is circulating as actual currency in the economy (which it isn't), most of the law-enforcement resistance is fatally compromised by the need for onramps and offramps.
In other words, it just so happens that the exact situations where crypto is useful, are the same situations where it is very hard for capitalists to earn a good return on their capital. Unstable places or illegal markets.
It's not that the existence of crypto doesn't make sense. It's that investing in it makes no sense, because it will only be successful in scenarios where "investing in things" at all is a lost cause.
A specific example is committing crimes: buying or selling drugs, money laundering, tax evasion, etc.. but maybe its building a nest egg to help escape an abusive relationship or God knows what. Hiding money from some sort of extortion.
Most "crypto" isn't hidden, it isn't crypto. It's gimmicky marketing. Not currency either.
Fully fungible (all units equal) crypto (hidden) currency (means of exchange, store of value) is incredibly useful. Everyone understands why untraceable money that you can send cheaply, globally and securely in an instant is useful.
Monero, maybe not the best or final ideal tech, but it has real utility.
> end users always want a way to get money out of crypto and back into fiat currency. And this desire hands governments all the tools they need to starve the crypto ecosystem at will, by cutting off access to inflows and outflows if participants don’t follow the rules. When a reasonably competent and powerful government cares enough about stopping something from happening, it is very difficult, if not impossible, to continue doing business as usual. And this reality continues to take the hand-wavily libertarian crowd of crypto enthusiasts by surprise.
> The persistent requirement for fiat on- and off-ramps is why virtually every anti-censorship technique that crypto comes up with instantly suffers from the same Achilles heel.
Giant long article and only one small mention of DeFi (which I'd argue is a great use case, despite all the hacks going on) and it isn't even accurate. DeFi isn't about betting.
A good example of the value of DeFi is a project like AAVE [1]. It isn't about asset appreciation, it is about creating a frictionless lending/borrowing market based on collateral that anyone can participate in.
If I have some crypto and I want to take a loan out against it for something else, I can do so without having to go to a bank, ask for permission, KYC, or anything. The protocol itself is fully decentralized and no single entity can shut it down (or even modify it). It literally happens in a single transaction. It is global. It is 24/7. It is transparent and on-chain. Oh and the rates are actually pretty decent (no middleman).
People might ask 'why' one would want to do that and it really is just an answer of something that happens every day in TradFi markets as it is. It may not be helpful for you, but it certainly has value. Sure, people can use this for speculation, drugs or whatever. But I personally see this as extremely empowering for a variety of my own reasons.
After spending the last year+ very deep into DeFi, I've seen my fair share of scams and hacks. But my eyes have also been opened to the potential of what is out there. DeFi is the first real use case of crypto that I've seen that has value.
[1] https://aave.com/
Before Bitcoin it was practically impossible to do this without a bank as an intermediary and even then would require large fees, talking with people, lots of hang ups, just to manage your own money.
With crypto I can move money directly A to C at 4am on a weekend, any amount, without talking to anyone for a tiny fee.
Or if I want to move it into my wallet and hold it personally I can do that do. Before Bitcoin that was literally impossible without physically walking into a bank.
Instead of having to move money from wallet to bank to stock exchange, money can move directly from wallet to exchange and vice versa, no bank.
You can send it back and forth between wallets all day, doesn't make it into money.
To actually use it as money, you need to some kind of centralised service to cash out.
1. Crypto is being designed by smart engineers who fully understand the financial system. Specifically they don’t understand why it is the way it is. It didn’t just magically appear this way full of obvious flaws. It grew over thousands of years; and
2. Most of the people pushing crypto are honestly just trying to get rich quick. Most missed out on the Bitcoin wealth transfer so they are eager to jump on or create the next Bitcoin. And pretty much all of them have a vested interest in convincing you.
That's just an argument in defense of status quo. It's actually pretty common for industry outsiders to disrupt old industries. Think Uber/Airbnb/Facebook/Tesla, etc. Thousand year old industries get disrupted all the time.
They really don't. The fundamentals of banking as an industry haven't changed in hundreds if not thousands of years. Real estate, etc.
Want to get and move Bitcoin easily? You are going through an exchange, which will absolutely be regulated at some point.
Not going through an exchange? Well, I suppose you can try and find a local person who already has some Bitcoin to sell you and work out some sort of shady transfer and hope neither of you get scammed.
Now you have some "currency", and it's relatively easy (but not free) to move it to someone else's wallet. The value may have doubled or halved since you acquired it. So you want to move it quick. Except it's not quick. But you get the transfer done.
Now the person who receives it has to convert it into usable currency - no one is buying food or energy with Bitcoin. To be free from meddling, they too need to find and meet with someone who will give them cash for their coins.
But wait, that's not all! Most folks interacting with the coin are using exchanges. And they come from well regulated places. So the laws and financial planners of those countries will indirectly impact the price of the coin. If coins suddenly get taxed heavily, out a local fiat gets strong, or whatever, that will impact the value of existing coins as people either flee to or from the coins as a store of value. So even if countries don't directly regulate coins, they'll still be impacting them.
1) The fact that Bitcoin mining traffic is detectable by ISPs (similar to torrents), so if a country prohibits it, the ISPs could simply detect that traffic trivially and get you arrested. Or simply block downloads of the client, etc
2) The centralization (or lack of democratization) of mining. A few huge pools, mining rig operations instead of individuals running software on their computers. SHA-256 ASICs and lack of blockchain pruning caused this.
3) The overreliance on exchanges - not your keys, not your coins etc
4) Every transaction is trackable, no real anonymity
5) The -even daily- value fluctuations
6) Hard to understand for layman people
That said even with all of these drawbacks people do use it in real life for its original intended purpose (remove the middleman), specifically in third world countries. But I think it would be great to go back to 2009 with all of the current knowledge and redesign these bits
I think that inevitably, it will be banned at some point in the future due to 1) and 2).
Just to answer the author concerns about point #2. There are coins with entire Blockchain that can fit in my OnePlus 7. I am from Algeria (a country without a financial system), LTC and XMR are the coins that brought me out of poverty, not because of gambling but they allowed me to do software development consulting online without begging services like Wise to not ban my account for random suspicions.
The author somehow talks about Crypto currency but somehow keeps pointing to flaws in exchangers with KYC.. Again, a lot of progress has been made here, exchangers without KYC emerged (check out Bisq net)...
I just wish people would point out more honest reviews of the such technologies so we can improve together as a society.. Cryptocurrency might not add a lot to your life, but there are many people having access to instant, cheap and secure transactions is a game changer.. I don't care about the legality of it as those broken laws are probably not protecting the average citizen.
I'm from Nigeria. The Central Bank makes all sorts of policies around inflows and outflows.
E.g. DigitalOcean just has warned me that they will block my account. I checked and realised that the MasterCard issued by my bank has stopped honouring any payment denominated in dollars.
You could pay for this few months ago. But now nothing. I don't even know how to go about it. My friend had run around just to pay for Figma. Sometimes you have to even call friends in diaspora to make payments for you on International sites and just pay them back via crypto.
Inflow here is such a hustle.
I've used wise.com a lot and do like their services but they no longer support Nigeria.
As such it’s not a crypto specific benefit.
The frustrating truth is, the solution to corruption is: justice and accountability. Not just blindly throwing out democratic principles and bypassing the law.
[1] https://www.psychologicalscience.org/news/releases/high-weal...
Unless you want a repeat of this [2] or this [3] with .io or someone on the other end changing the domain or address from one to another whenever they want to.
[0] https://ens.domains
[1] https://handshake.org
[2] https://news.ycombinator.com/item?id=21611677
[3] https://thehackerblog.com/the-io-error-taking-control-of-all...
1. Transferring funds
I can transfer crypto faster and a lot cheaper than any money transfer. Hell I can receive and withdraw same day.
2. Earning interest
By parking my money in a stable coin and dropping it into an AMM like uniswap I can earn 10x-50x more interest than just parking it in my bank account. No volatility. Only risk is hacker risk.
Re: 2), uhh, yeah. I think that's what Celsius users believed too.
Not really.
One can do that with either XRP, Stellar, or Algorand blockchains with has virtually little to no fees, much faster and far cheaper than a wire transfer, all worldwide.
Perhaps is that why Moneygram realised that Stellar was a great use-case for their service? [0]
[0] https://stellar.org/moneygram
So when I use crypto I have a product that when compared to the current methods is faster, easier, cheaper with no transaction size or geography restrictions.
2) a centralized company taking deposits is not the same as a smart contract.
The earning interest is like picking up pennies in front of a bulldozer. You'll be OK 99% of the time but then you'll get flattened. You'll earn maybe 10% interest per annum, but be at risk of losing 100% of your deposit at any moment. Your deposit is completely uninsured. If you have no solid guarantee that you'll get your money out, use the precautionary principle to conclude that you won't.
Also, for 10% of something to be more than pocket change, you need to deposit much more than pocket change. If you're depositing pocket change into these services, you're not really investing. If you're depositing more than pocket change, you're running a big risk.
I recommend you get your money out now.
Are you comparing this to the abysmal US banking system, or the systems that exist in most of the rest of the world?
Because I can do that in GBP right now from all of my banks (both with old firms and the challenger banks) for free.
I’ve found crypto a great method when buying small apps and companies off people. Saves me $75 and a trip to the bank.
Essentially my deposit goes into a pool of two currencies. Let’s use USDC and EUROC for example.
The pool is used to facilitate people trading from USDC to EUROC and vice versa. To trade through the pool you’re charged a small fee. 0.01% to 0.3% in most cases.
Those fees are then distributed to all the people who deposited in the pool. Proportional to their share of the deposits.
I like to think of it as breaking up the fees charged by (now) unnecessary forex brokers and agents and distributing it back to the people.
If you think it has no use case, don't use it.
If you think it does have a use case and you need that, use it.
- They are always pushing their ideology into the spaces I frequent, forcing me to engage in some way, and
- They vent their mining CO2 to the same planet where I happen to live.
Personally, I think that's the right mindset to take here: I don't see the point, but people are allowed to do things I don't see the point of so <shrugs>
Of course, if you believe that governments are good stewards of money, you will probably not find a use case.
There is nothing preventing someone from accepting it and providing the services you need.
plus every time I sell or transfer, it's a taxable event, which makes use as a currency incredibly onerous
Indeed, but that's regulation. Regulation can be changed which is where we're heading with greater adoption and mass support. Even if not for the regulation, it'll make Bitcoin the store of value backing currencies in time (this one's my opinion, you don't have to agree)
Everything has an upside and a downside. But in the regulated system, you at least have a chance at some sort of recourse if something goes sideways.
> Things like being able to stop or reverse mistaken or fraudulent transfers, protections from fraud, protections from whoever is handling your money for you (with crypto, someone is still handling your money for you) going out of business, etc.
That's only true when you do on-chain transactions, or in the case of fiat, when you pay with cash. If you worry about dispute arbitration, you could use the same dispute arbitration services that exist for fiat. For example, I don't see a reason why payment networks like Visa or Mastercard couldn't add support for Bitcoin eventually. You'd still get a currency that can't be arbitrarily debased and that you can easily transfer on and off the payment network.
As a side note, a lot of Bitcoiners would hate me for saying the above. A large chunk of the community believes that everything needs to be decentralized and it has probably hindered adoption.
And anyway, they don't actually need to run any new nodes, just compromise communication between them until all the blockchain records on the individual nodes are bunk.
The truth of the matter is, both of these extreme camps are going to be very disappointed in the future.
I agree with many of the crypto critics that the answer after this tedious search is that there exists no legitimate usecase in this industry and there never will be.
https://www.businessinsider.com/5th-ave-1900-vs-1913-2011-3?...
The iPhone and smartphone revolution clearly did the same, last decade.
We're now 14 years into Bitcoin. Is it ever likely to change the world the same way?
This currency was made by a bloke on computer 14 years ago, and has revolutionised the way we view ownership, freedoms and money.
Benz made the first car in 1886, which in your analogy means today is 1900.
I will be curious to see how crypto holds up in recession or under monetary crisis.
One of the reasons it was created hasn't really been tested, since the economy in the west hasn't faced a major crisis since its invention.
It seems plausible (if unlikely) that external events could push crypto adoption into more "normal" use cases. E.g. Israel's recent ban on cash transactions points to one way more things may become untenable in traditional finance.
I don't actually have strong opinions on what will happen - I do find your analogy fun to think about though!
Yes, I'm aware the dates of invention don't quite align, and the time window is cherry-picked for dramatic effect. But it's food for thought.
Nobody was debating the utility of cars and phones 14 years later. With crypto, it's like we're still looking for something as fundamental as an essential use case.
That's still a big deal, but it's far short of the impact-for-everyone promised by some folks in the industry.
I don't know if I think cryptocurrency will be as transformative as the internet or the mobile phone, but I think it will be within a level or two of that scale. It makes good on its promise year after year. NFTs just became popular in the last few years, and that is only one example of many. Are you going to bet against NFTs in the long run? I certainly wouldn't. We don't even know all the technologies crypto is going to enable yet.
The typical flow of information, effort and money goes like this: the sponsor (me) creates the investment opportunity under Regulation D of the SEC ruleset with the help of some securities attorneys, a managing broker dealer (SEC compliance) signs off on it and circulates it to broker-dealers via selling agreements, then, wealth advisors who are registered with those broker-dealers can sell our offering to their clients, those clients then fill out a subscription agreement and send their money to a third party called a transfer agent, the transfer agent takes in the agreements and cash, logs all the details about the investor and manages the payment of distributions with a mixture of direct deposit and paper checks, and generates tax documents via mail, these distributions and tax documents then go to the financial custodian of the asset for each investor.
This process involves 8 to 10 different parties, multiple financial institutions and reams of paperwork. The cost of capital is approximately 11% using this method.
I dream of the day that I can offer a tokenized security on the blockchain, that is held by the investors themselves in their wallet, with distributions paid with USDC directly to their wallets. The reduction in cost would be incredible--all we need is the legal framework to allow it.
Suppose that blockchain did not exist but that securities law did not require you to consult securities attorneys to "create the investment opportunity". You would have an efficiency gain by cutting out the attorneys.
In particular I think about your "dream": you dream that in lieu of paying people with a mixture of direct deposit and paper checks, you could pay them with an electronic currency; but presumably at least some of the people being paid with paper checks want to be paid with paper checks (if not, you'd presumably pay them all with direct deposit) and while securities law probably doesn't let you disburse via Paypal or Venmo or any other electronic account transfer, if it did, doing so would be approximately the same as USDC, right?
It seems to me to make a sustainable case for blockchain, you need to basically say assuming the exact same regulatory posture and the exact same degree of technical laziness in terms of automating steps not currently automated, would blockchain make it better?
Have these people writing these kind of articles ever downloaded a browser wallet and played around with Defi? The amount of ignorance here is staggering. How is it on HN? HN is supposed to be a place for people who are tech savvy and are able to think about the future and imagine it different from yesterday.
It seems as though, the majority of HN users haven't invested any time into understanding it. So they just label it bad.
I wasted a year of my life working for a crypto company, I've actually committed code to Ethereum through the Geth project. I learned it's all a casino of completely useless money moving schemes.
What makes even ENS cool tech? The sole purpose of those .eth domains is to receive crypto, ohh and make the founders extremely wealthy. Why did they need to launch an ENS coin, other than to dump on the public when it was 5x the current price.
You don't even need to go that broad. I'm working in the cloud infrastructure field (think Kubernetes and such). Just following all developments in that narrow space is such a mind-boggingly huge task that it's physically impossible for a single person to follow all of it (except at extreme surface level). And that's before we consider other areas of tech. Or other areas of interest (politics, science, culture).
To make the task of navigating the world even somewhat tractable, we all have to rely on outside authorities whom we trust for a lot of our information diet. Hence why I am very grateful for known figures like Moxie Marlinspike to examine this topic and provide me with a succinct summary of their impression through writing. That's not to say that I take everything Moxie says as gospel, but I know enough about him to judge which of his statements can be trusted and which need to be taken with a grain of salt.
Looks like another polished scam to take advantage of ignorant users, or 'degens' in crypto vernacular.
* PoolTogether: that's literally a lottery. Hardly an innovation.
* Aave: oh, _another_ crypto lending platform. Aside from the fact that most of these are Ponzi/scams that have collapsed in spectacular fashion recently (see Anchor, Celsius, etc), this is another app that only exists within crypto to earn more crypto.
Those 3 examples illustrate the problem of "dApps". There may be a vibrant ecosystem of idea and apps, but when you try to unwind them you realize most of them are entirely self-referential within the crypto ecosystem and there's no utility connecting them to the real world. That's because the few apps that do try to connect to the real world quickly realize that the space of problems that can actually be solved by crypto there is ridiculously small.
Currently we have more than 0 staff who have been displaced by a war and do not have good access to local banking, so we pay them in dollar stablecoins. This does not cost ~15% and does not have a latency of days to a month.
> we've hired people through a global outsourcing company
> we have staff who have been displaced by a war
Using numbers in this fashion is a way of specifying the perfect condition while simultaneously letting the listener/reader know that the situation is either less or more than ideal.
Plus, it adds a subtle comical effect. Puts some supererogatory emphasis on things, so to speak :)
Combo x3!
The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
None of the cost savings are related to local taxes and insurance since they still need to pay for these things. ~15% is what's charged collectively by the outsourcing company, their bank, and their local partner. I agree that they provide a valuable service, but it's not clear to me that the service is worth 15% of the otherwise-gross cost of employing someone. One thing they could do to convince me it is worth more would be to transmit the funds promptly to the recipient.
> The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
Some centralized crypto exchanges currently have pretty competitive forex rates. You'd basically have to go to IBKR to do better.
There are lots of others. My own company has spent 3 years building way more applications that you can see here https://intercoin.org/applications
They're open source, and fully documented, try to use them! We're currently building interfaces to power them:https://www.youtube.com/watch?v=ySi-wOB28y0
We also have an Intercoin Show every week where I interview some well-known people in the space. Some examples:
Ian Clarke, founder of Freenet, about decentralized systems: https://www.youtube.com/watch?v=JWrRqUkJpMQ
Sara Hanks, author of Regulation S, about regulations: https://community.intercoin.org/t/interview-with-sara-hanks-...
Thomas Greco, community currency economics: https://community.intercoin.org/t/interview-with-thomas-h-gr...
This is what we are working to accomplish: https://intercoin.org/proposal.pdf
And that is a perfect metaphor for 99% of crypto "usecases"
IPFS can be used like s3 with a third party shim for between free and 400x cheaper.
[1] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
Also, the number of people who accept Euro is definitely larger than those who accept any cryptocurrency combined.
still, the fact that I haven't heard of the counterexample, suggests that indeed TradFi isn't close in the US
sorry to move goalposts again ;-)
But the other cool thing about crypto is that it's programmable, so you can arrange 100s of transactions between parties. Micro finance loans, royalties and distribution, etc etc
Yes, I like paying by card. No, I don't like it making everything I do traceable.
I do want to live in a sovereign nation. Probate court and criminal court orders are important. But make it generally really hard for governments to interfere legally, and prevent technically the casual inspection of data.
Filecoin looks good too.
Industries like porn should also profit from a system that doesn't allow for chargebacks. Porn was a huge driver in the past.