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Comment by colordrops | Hacker News Reader

How is there still so much of ignorance over cryptocurrency this far along after its inception?

Just because you buy and sell gold with major currencies doesn't mean gold is regulated. Crypto isn't much different. If you can get it anonymously, you can move it anywhere you want as long as you stay on the blockchain. Once you leave the blockchain, you aren't dealing with crypto anymore. Once you sell gold you aren't dealing with gold anymore.

I don't know about Diem in particular, but a state or corporate issued currency is not a general indictment of cryptocurrency.

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You're talking about a commodity, not a currency. No one walks around with gold nuggets (or jugs of milk, or bales of wheat) in their pocket because our economy doesn't use the barter system.

The difference between cryptocurrencies and other commodities is that other commodities have intrinsic worth. You can drink milk, you can eat wheat. You can't do anything with cryptocurrency, it's just a long, meaningless number.

It’s just a long number with no intrinsic worth. Like money.

Money is backed by a central bank that is accountable to a government body. Crypto is backed by speculation and tech bros (shorthand for the hyper technocratic libertarian).

Shared speculation is pretty powerful.

Accountable to a government body with opaque motives and capture over its citizens. Crypto has inspectable source code and miners and coin holders can jump ship if shenanigans are perceived

How’d that Ethereum DAO attack go? Some folks just decided to hard fork the chain. Much trust, such governance.

I’d elect for a suboptimal government over such mechanisms any day, which seems to be a global consensus when you observe the lack of volatility in reserve currency values.

Then the market decided that the new chain was more valuable than the original. Still decentralized. Forks are fair game.

Hence why crypto can't be taken seriously as a currency. Imagine explaining to a non tech family member or friend why their dollars have zero value now because they’re on the wrong chain.

That's not how forks work.

If they had sold some items for Eth just before the fork, they will never recover the Eth, and they may be unable to recover the items either. So yes, in a fork people lose money.

forks set their genesis state as a snapshot of a block on the original chain. if anything you now have twice as much money since your account has funds on the old chain and the new one

Let's say you just sent someone 1000 dollars in exchange for 1 Eth, sometime close to the fork. Before the transaction, you have 1000 USD and 0 Eth. In the old block chain, the transaction goes through, your wallet has 1 Eth, and theirs has 0. In the forked block chain, their wallet has 1 Eth, your has 0. However, regardless of which block chain you choose to believe in, they have the 1000 dollars.

So if the forked chain becomes accepted, then they have 1000 USD and 1 Eth, while you have 0 dollars and 0 Eth, and you're never going to make the mistake of trusting a cryptocurrency ever again.

Crypto is nascent and I would expect finger burning as part of the path to long term stability. I'm not personally wedded to any of the current implementations in their current versions, but long term the concept of crypto currency supplants governmental fiat money

Crypto is backed by immense amounts of power (electricity), and more specifically, computing power (which is scarce)

Money (at least in the US) is backed by the "full faith of the US Government" for whatever that is worth.

https://seekingalpha.com/article/145722-what-really-backs-th...

a lot of people like that crypto isn't backed by a gov, but i'd like to believe that most people would agree that the government has some intrinsic worth.

It is literally worth trillions ($27t)! The credit-worthiness of the USD is so good we've sold trillions of them. It's just such an inarguable stat haha.

If the US or EU (etc.) valued their goods and services in BTC, banked in BTC, built monetary and foreign policy around BTC then you would be correct. It is all meaningless, and that's the definition of fiat.

What distinguishes one fiat from another is "do important people believe in it". There may come a day when that's true for cryptocurrencies, but that day is not today.

Further, I doubt it ever will come, because cryptocurrency's core scarcity hamstrings monetary policy. No competent government would ever accept such restrictions. This is a feature for cryptocurrency enthusiasts (digital gold bugs) but a huge shortcoming for everyone else.

I agree with the argument that it doesn’t make sense for the United States. Other countries using USD already don’t have control over monetary policy.

Oh yeah, totally fair and an interesting difference between Diem and other cryptocurrencies. I still think volatility and transaction latency/costs are an issue, but assuming we fix those (and stipulating they can be fixed) it doesn't seem unwise for smaller countries to use cryptocurrencies. It would more or less be gold standard monetary policy in a box, and while that system has drawbacks, a nice thing about it is it's pretty hard to corrupt. It would be harder (not impossible, but meaningfully harder) to manipulate currency and politically choose winners and losers via monetary policy, which is a big deal especially for growing or newly stable countries.

But for those countries, it really seems like choosing Diem is the worst of both worlds. You're still pinned to the Dollar, you're still at the whim of unaccountable controlling stakeholders, and you have all the downsides of cryptocurrency on top of it. I struggle to think of a group outside of Facebook that Diem is at all good for, honestly.

Also agreed on Diem. My best guess is it’s a way to legally get around the legacy financial system to some end. Which end I don’t know yet.

Being able to pay your taxes with it gives it some more worth than just numbers.

Paying US taxes doesn’t count. That’s like saying I can pay gas fees with ETH.

This is not specific to the US. You pay Japanese taxes in Yen.

Well, its a long number that satisfies a simple predicate, set by fiat, that makes this class of numbers rare. It is the ultimate "artificial scarcity"! It's too bad there can't be a better way to add new values into the system that scales better with, say, how much the system is used, or how much utility it gives to people, instead of how much oil you can afford to burn to get one.

You changed the subject completely. What does your comment have to do with it being regulated or not?

You're trying to make a semantic argument and say that cryptocurrencies aren't regulated until you sell them for other currencies that are. My counterargument--where admittedly I skipped some steps and didn't explain very well--is that that turns cryptocurrencies into a commodity, not a currency, and that cryptocurrencies are particularly valueless commodities.

FWIW, you're saying that while cryptocurrency stays on the blockchain it's not regulated. That's definitely not true in the US--people have gone to jail for not complying with financial regulation and reporting laws [1]--and is likely soon to be even less true [2].

[1]: https://digitalcommons.nyls.edu/cgi/viewcontent.cgi?article=...

[2]: https://news.bitcoin.com/cryptocurrency-act-of-2020/

Gold and crypto are hardly comparable. Start by factoring in all the crime & scams being done via crypto and you've got a general public practically begging for government intervention for cryptocurrencies.

compared with all the crime and scams done with fiat currencies

Well, one is a new phenonenom and other is established.

Ok, but that doesn't alter my point.

10 years of debatable so-called-crimes with crypto VS at least 5000 years of wars, crimes and corruption with gold and government money...which side are we supposed to be on?

You have to remember 99% of the general public do not think in this manner. Same dilemma as alcohol vs weed/psychedelics.

If you ever try to cross any border custom with more than a certain amount of gold, you'd realize that it's more regulated than you think it is.

That is obvious, but that is not something especially unique to gold - pretty much everything physical is regulated at the border. Yours is more of a statement about border security than gold. To bring it back to crypto, you can easily cross a border without your crypto being touched.

> If you can get it anonymously, you can move it anywhere you want as long as you stay on the blockchain

Q: Is this fundamentally different to having a suitcase full of cash?

A suitcase full of cash is much more difficult to transport risk-free compared to bitcoin.

yet infinitely easier to spend.

Not really, and that is precisely one of the point for crypto advocates. To be used as "virtual" (just non physical) cash, easier to manage.

I’ve heard it’s easier to travel conspicuously and less risky than traveling with suitcases of cash.

No, but only if your suitcase will only open if unlocked by a cryptographically secure key and no one can open it through other methods. They can't steal the suitcase itself either. And you can instantly teleport the contents of your suitcase to an equivalent suitcase held by any other individual on the planet. And third parties can't arbitrarily devalue the contents of your suitcase by printing more of it.

The last part of this almost certainly doesn't apply to "Diem".

I'd argue none of the above apply to Diem actually. I'm definitely referring to traditional, actual blockchains

> [..] no one can open it through other methods

... other than https://xkcd.com/538/ ?

That still counts as using the key to open it :)

> Q: Is this fundamentally different to having a suitcase full of cash?

Yes, government can't print bitcoin. If you store cash - in the long term you will lose buying power. If bitcoin gets adopted as a store of value - nobody will be able to print it at will.

It's very hard to take a suitcase full of cash across a border. It's very easy to take a private key for a wallet-account full of cryptocurrency across a border.

It's very hard to take a suitcase full of cash across a border.

Depends on the border.

As long as you declare the cash to the authorities, there are many borders you can cross with great flipping wads of cash. Some industries operate mostly on cash (restaurants, for example), and "suitcases full of cash" isn't just for mobsters and movie villains.

Where is that? In most of the west it's roughly $10k US (+/- 30%).

He's right about roasting the planet though. Scarcity without computational (and literal) power is necessary.

Maybe if we could use the inherent incalculability of the three-body problem as the basis for a cryptocurrency. You'd need to observe the universe to "find" astrocoins.

It would be Astrology on steroids.

Of course that leaves out verifiability, encryption, anonymous identity yet ownership.

What if you (somehow) knew both parts of the quantum uncertainty portions of a particle because you initiated the system. Then you could demonstrate ownership by being able to predict the location or the momentum at any time based on that.

But it would be fun to hold cryptocoins called Heisenbergs

But that is an actual physical particle.

https://primecoin.io/ to compute Prime Numbers

> He's right about roasting the planet though.

...no? Diem/Libra is built on Cosmos, which is a proof-of-stake system, not a proof-of-work system. Validator nodes in a proof-of-stake system do not compete to work ever harder to mine the same resources.

There are a rather large number of such validator nodes (100+ at minimum), but that's also true of banks when you translate their Highly-Available mainframe stacks into equivalent Highly-Available commodity-PC stacks. (I.e. they're not spending any more electricity per tx than the ACH system is.)

I'll cop to hand-waving and painting cryptocurrencies w/ a broad brush here. But it seems like Diem hasn't really figured out what its system is gonna be: https://en.wikipedia.org/wiki/Diem_(digital_currency)#Implem.... Looking at their docs and such, it seems like it'll be centralized under the stakeholders until they implement proof of stake, which IMO makes it just another reserve bank.

Gold markets are most definitely regulated, especially if you’re doing any meaningful FX volume. And since we’re talking about crypto, it’s worth adding the gold mining tends to be too, perhaps more so.

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