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Comment by yalogin | Hacker News Reader

So far I haven’t seen a usecase that absolutely needs a blockchain either. I mean one that can only be addressed by a blockchain and will fall apart without it. But many people have used it as a general enough hammer to hit every nail they can find with it. As last it as people make money on it, even hypothetical money, it’s going to stay popular.

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Buying drugs/murders on the darknet and getting untraceable ransoms from your cryptolocker malware are at least two solid use cases. One could argue evading currency controls is a 3rd.

The problem is that there's been no new uses found for blockchain after the initial uses discovered.

Blockchain isn't completely anonymous though. Bitcoin, for instance, can be and has been deanonymized to catch criminals. The entire concept of a blockchain is create an extended ledger, which isn't exactly an idea focused on privacy.

It's an idea focussed on.... what exactly?

It seems like a solution in search for an actual problem.

That's not an inherit limitation of a blockchain. Monero exists. It actually delivers on privacy where bitcoin couldn't.

Monero is private and has taken over as the far better option for the few real use-cases

In that vein, I really like this book:

http://www.americankingpin.com/

About the rise and fall of The Silk Road

To those taking this comment as a joke - it is not a joke.

Regardless of the morality/legality of a use, the fact that those are real use cases for the currency do give actual value to bitcoin as a currency.

Now it's worth noting that "digital gold (speculation)" seems to far surpass ransom+online drugs as the reason for bitcoin to have value.

> Now it's worth noting that "digital gold (speculation)" seems to far surpass ransom+online drugs as the reason for bitcoin to have value.

That's not really value, nothing is created. It only seems a game of musical chairs, with some ending up with 'lambo money' and the rest just lost money.

Terms like ponzi scheme or piramid scheme (it seems to contain elements of both) do apply.

> Terms like ponzi scheme or piramid scheme (it seems to contain elements of both) do apply.

How so? Bitcoin doesn't pay people out of the proceeds of other people buying in. Its value is solely a function of demand and scarcity.

Sure compare it to beanie babies, tulips or gold. Speculation may be stupid, and it may very well end up with most people losing their money when the bubble collapses. But it doesn't have very much in common with pyramid schemes or ponzi schemes.

Most cryptocurrency investment schemes basically work like this. Someone creates a cryptocurrency. The creators premine the cryptocurrency and sell the currency at a fixed price for pennies. The early investors try to "shill" their cryptocurrency and market it to as many people as possible. There is an influx of cash and the currency is valued at a few dollars. Early investors sell and late investors sit on a worthless cryptocurrency and the only way for them earn their money back is by marketing the cryptocurrency to even more people and selling it to them. Rinse and repeat.

Sure, i agree that many of the non-bitcoin altcoins are pump-and-dump schemes.

Although lots of financial fraud has similar elements, this seems very much not a ponzi scheme (users arent paid with other users investment and not a pyramid scheme (users aren't explicitly encouraged to recruit new people nor do they get an explicit cut of newbies). Pump and dump seems like an appropriate description of what you are describing.

I also don't think that applies to bitcoin, which was the cryptocurrency we were talking about.

It's the other way around. Bitcoin pays miners who keep the network running. It does so by creating bitcoins. Its not peoples money that is used to pay them its indirectly trough inflation. No one cares about that because price gains have been way higher than inflation loses. Also the upper hard cap of 21MM makes people think inflation doesn't exist. Yet it of course exists until the block reward is actually zero. In other words the price has to go up forever doubling at lest every 4 years on average to cover its own running cost with the simultaneously halving reward. It's obviously a scheme that will collapse, it's just designed to possibly last many decades.

I think those are all basically the same use case - they're all about routing money of nontrivial value around governments. Much like Tor, it is not 100% unblockable, but it is quite difficult to block if you keep the internet flowing at all.

And like Tor, it can be used for both moral good and moral bad. (In fairness, you can decide that the good outweighs the bad for Tor but not for cryptocurrency; you can also believe that the good doesn't outweigh other harms like the computational/energy cost of running a secure blockchain, which necessarily needs a nontrivial fraction of the world's purchaseable computing power.)

Number 4: Having a highly volatile, non regulated investment option with a low barrier of entry that is probably controlled by a handful of bitcoin heavyweights.

A blockchain decentralizes trust, you can always solve the same problem a blockchain tackles by introducing a central point of trust. The question is if this choice is acceptable, more resilient, cheaper...

I think the case is made by Bruce that the whole concept of decentralised trust is an oxymoron.

In the end you do trust the code, a computer running the code or some currency exchange.

You trust a decentralized network of computers running code, not just a single one, that's the main point.

There's both centralized and decentralized exchanges available.

A bank is not a single entity, it's made of people converging after reaching consensus

There are a lot of banks, with different interests that usually compete with each other and work under regulations that have been discussed and approved after reaching consensus

There are several different central banks, that work together under regulations discussed and approved because they reached consensus

The "decentralised" exchange already exists

I think that making money part is due to a game of musical chairs. No actual value is generated.

> No actual value is generated.

I actually (unfortunately) don't think this is true in a financial sense.

The only people with an incentive to use a semi-anonymous "currency" with extremely high transactions fees are criminals. You can argue that not all crimes are harmful or immoral, and you'd be right, but that's outside the scope of my comment.

The more crypto is used as a payment for crime, the more value it has. It becomes an investment vehicle for crime. If you think global crime will increase (and increasingly use crypto), then you can invest in it using Monero or whatever people think offers the best combination of liquidity and privacy these days.

I think you are right in a narrow sense. But from the perspective of a society, it seems to create 'negative' value.

I have a few words to say on that.

https://louwrentius.com/cryptocurrencies-are-detrimental-to-...

Facilitating transactions is a valuable service.

That tech already exists with a fraction of the transactional cost, in the far majority of situations.

That's a different claim than you started out with. Additionally, remittence gets a lot harder internationally. Some of those services charge very hefty fees.

Being the best at something is different than not doing something at all. You don't have to be the very best at something to generate value doing it.

Shitcoins can be fun. Fun can be valuable.

No, when the flow of money is constrained it interupts actual labor. The great depression is the classic instance where if money had been made work would have been done and everyone would have been better off.

What does "generating value" mean in this context. Aren't most transactions just shifting resources around?

If i have a bunch of cookies and my friend has a bunch of cup-cakes, and i trade some cookies for some cupcakes, what abstract value was created? The total number of cupcakes and cookies stayed the same, they just shifted around (like musical chairs). Neither me nor my friend are any richer, although we may be happier. Was this transaction useless?

Here's a usecase:

Blockchain can be used to issue something like Apple stocks in a decentralized manner which achieves million times more scale and lower cost than what's possible now.

Obviously a centralized entity like New York Stock Exchange could also copy the technology of using Merkle hashes and possibly achieve much bigger scale, at the end of the day it would still be the coordination issue for a single organization.

At the end of the day blockchain solves the coordination problem in a low trust environment in a definitive manner. As it turns out that the cost required to solve this coordination problem is really high when you compare it to the high trust, but low scale environment. but blockchain manages to achieve planetary scale throughput (obviously not right now because this is the foundation layer, things need to be built up).

It's like cash versus Visa. Cash is possibly billion times more scalable than Visa because Visa needs to reconcile a single database but cash transactions do not, as long as the recipients locally verify that they're receiving a real bill.

So far I haven’t seen a usecase that absolutely needs an Array either. I mean one that can only be addressed by an Array and will fall apart without it. But many people have used it as a general enough hammer to hit every nail they can find with it. As last it as people make money on it, even hypothetical money, it’s going to stay popular.

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