Hacker News Reader

Comment by lazzlazzlazz | Hacker News Reader

The Hacker News community has long been anti-crypto, and as someone deeply involved in the space, these long threads of complaints and diatribes are difficult to handle. Everyone is missing so much context.

Ethereum gas prices are astronomical because there's unprecedented demand to use the network: NFT art and collectibles are exploding (NBA TopShot, Foundation, SuperRare, Rarible, OpenSea, etc.) at the same time DeFi applications (Uniswap, Compound, Maker, Aave, Balancer, etc.) are at all time highs.

This is the time, in my mind, that it's most exciting to work in crypto, and on Ethereum: demand has been proven and has been sustained (every block full for 1+ year).

The naysayers who think this is all for a quick buck are missing the pattern and listening too much to the (admittedly, insanely loud and annoying) shills.

View on HN

I feel like the general tendency on HN (and my personal feeling about the subject) is one of interest in the tech and applications, but a feeling that the hype is bigger than the truth.

The ideas that Ethereum is innovative, that there are lots of possibilities in cryptocurrencies/blockchain, that at the moment the scene has major environmental issues, and that the current high valuations are unjustified, to my mind can all be true at the same time.

The key innovation and premise behind Ethereum was to use a virtual machine to enable smart contracts on blockchains. Now virtual machine interpreters for blockchains is common if not standard. Tough to imagine Ethereum failing any promises based on that premise.

Blockchain dapps can potentially threaten HN jobs so its not exactly a hit on here.

> The naysayers who think this is all for a quick buck are missing the pattern and listening too much to the (admittedly, insanely loud and annoying) shills.

I'm part of a community that's currently being overtaken by the crypto art craze, and I'm still convinced it's "all for a quick buck".

The crypto art economy seems to be driven by "collectors" who will drop thousands of dollars on anyone who can get them more exposure. People who have no followers and aren't tweeting about NFTs every day generally don't get their art bought. Some of these kids who made $10,000 off a png then feel some social pressure to put some of that money back into the community, so they purchase more crypto art with the proceeds.

Some collectors openly advertise their ongoing bids on social media. They want people to see that they're dropping big money on art. If it was a true art collector, wouldn't they not want to be outbid? Wouldn't they be hoping that there were as few people in the auction as possible? None of it smells right to me.

https://en.wikipedia.org/wiki/Veblen_good

A lot of people buy art not because they like looking at it, but because they want everyone to know that they have lots of money to drop on worthless art purchases. This motivation is reinforced if a.) everybody knows how much money they're dropping on art purchases and b.) the price keeps going up, yet they still win the bid. They want the price to go up, since a higher price just signifies how baller they are.

How does anyone know that they aren't already connected to the seller, and just passing 10,000 dollars from one wallet address they own, to another they also own, to create the appearance of a sale?

You get the same veblen bragging rights, the artist (assuming they are not simply your own alter ego) gets a visibility boost and nobody is going to be motivated enough to go digging around the custody trail to prove this was a sham.

This sleight of hand (in a slightly modified form) is standard operating procedure for inflating the value of ICO offerings (and by extension, crypto as a whole); I don't see why people wouldn't do it for NFTs, with the same motivations at work.

If that's the case, why hide behind a pseudonym that seems like it was created purely for buying crypto art? I'm looking at one right now -- their Twitter says they're a "rare digital art collector", and links to their pages on SuperRare and MakersPlace, but doesn't have any tweets, and there's otherwise no identifiable information.

They've succeeded in demonstrating their wealth, but no one has any idea who they are, which seems to poke a hole in that theory.

Probably still just a big money laundering/tax evasion operation, like much of the real art world...

As an outsider missing context, what are the answers to the following? They are all valid questions that come up every time, and aren't well answered, given my research into them.

- Is the long term alternatives to PoW actually viable, given the huge power consumption of cryptocurrency currently?

- Are the valid use cases (other than drugs, ransomware and speculation) worth the valuation?

- If Tether collapses, due to the reports of its sketchiness, what will the shock to cryptocurrency, broadly speaking, be?

1. https://www.investopedia.com/terms/p/proof-stake-pos.asp Yes, proof of stake is exactly that. 2. Read the above comment and search some of those companies 3. Binance props Tether up, so the largest Centralized exchange may suffer dramatically, but a Tether collapse would likely drive users into better stablecoin projects like USDC and DAI, being generally good for the space

- Is there anything actually wrong with PoW? It's fun to say it's "wasted" electricity, but we "waste" more power, resources, and man-hours in other trivialities (eg. video games) without really caring.

- Read the whitepaper of whichever crypto you're asking about. The answer is "it depends", because each one exists to fill a different niche.

- Nobody really cares about Tether, so probably nothing.

A failure of tether would certainly cause a ton of market volatility, but there's enough tether substitutes for the markets to adjust pretty quickly. Sure, the failure might freeze a lot of funds and depress market caps a bit in the process.

Personally I doubt it. Look at the market volumes -- everyone who wants to trade shitcoins just does it with BTC pairs, and most of the big boy exchanges support USD-BTC directly.. tether was a good idea when exchanges didn't want to mess with USD but that's not really the case anymore.

I think for many people it's still hard to temporarily and quickly exit a long BTC or long ETH position, but daytraders want to do this with great frequency.

This is doubly true for people outside the US, not to mention people who are trying to skirt capgain taxes. Of course, an argument could also be made that a tether failure would cause people to flee to BTC or ETH and paradoxically cause prices to rise.

If actual, real consumers and professionals can't buy gear because it's being hoarded by miners, yeah, that's pretty wasteful (as in, a thing that consumes vast resources without benefiting very many people).

Heaven forbid the manufacturers actually, you know, increase production to meet the demand for their hardware.

Haha. That doesn't always work.

The present demand is spurred by the boom phase of a potential boom-bust cycle (similar to oil). You have two (actually more) sources of demand: crypto, conventional buyers (retail and industry customers). If they adjust production upward (which requires an investment of capital) to meet the present demand then they reduce their profit, prices will go up (at least a bit) to compensate. But they also face another risk: what if there's a bust? If the crypto demand for hardware bottoms out (whether because of a change in crypto or having satisfied the demand) they will be left with excess capacity and potentially excess inventory. The increased production capacity may be able to be redirected to other productive endeavors, or it may just end up idle. And the excess inventory has to be sold off at a potential loss as the hardware becomes worth less and less as each day passes (plus holding inventory costs money).

Instead, if they leave production as is (or only increase it slightly) they can virtually guarantee their products will sell out and increase the prices because they know people will continue to buy it. Obviously, the retail and industry customers get screwed because they have less profit to make (if any) directly off the hardware purchase, but the miners will continue to buy almost without regard to the price because their profits (presently) justify the investment.

Agreed. ASICs have really destroyed the spirit of mining, and may hint that the Bitcoin style PoW algorithms are in fact not a senible type of proof.

Memory-hard PoW algorithms, rather than computational ones, might be one way to reduce the amount of energy. Memory is expensive regardless of whether you make ASICs or use regular PCs.

> Is there anything actually wrong with PoW?

There’s more wrong with PoW besides just environmental effects. PoW creates different incentives for a blockchain’s miners than for its users. Often these are conflicting, and have a tendency to gridlock the protocol development. This is especially pronounced today in Ethereum where the majority of users are in favor of certain protocol upgrades that would scale throughput, but miners are opposed to it because it comes at an economic cost to them.

There’s no inherent reason for this dichotomy between users and miners: if it’s the same people using the protocol as securing it, you’d expect to have better outcomes for everyone. PoS makes it so that the users are also the ones securing the protocol. It’s not _perfect_ alignment, but it is much more aligned than the miner/user split in POW.

1. This has been resolved for years. See Celo and NEAR as examples of fully-programmable Proof of Stake blockchains that are live.

2. Yes.

3. It'll be a significant issue for decentralized exchanges and liquidity pools, but far from existential. The seasonal Tether FUD is generally overstated. (I have done a detailed analysis of this, but it exceeds the scope of this conversation.)

> 2. Yes.

This is sadly a non-answer to the question posed.

I am asked this question all the time by people I know, and the best I can come up with is illegal activities, super niche tech applications (e.g., DNS name reg), and libertarian fantasies.

You have an audience here at HN who is more than willing to advocate for cryptocurrencies if they/we can be shown a compelling use case.

“Yes” is not an obvious compelling use case.

Please elaborate.

I have this discussion at least once a week. What would you build if you could deploy an uninterruptible, transparently verifiable, fully autonomous software application? I promise you that we can discuss many examples (any kind of marketplace or platform but with community governance and no rents, decentralized exchanges, global-by-default payments, highly interoperable and efficient financial infrastructure), but what would you build?

That's the answer to your question.

I will be sure to relay this answer to my non-tech friends who ask about cryptocurrencies.

I’m sure this answer will send them running to buy.

All joking aside, for a conversation you say you have weekly, this is a really lame answer due to the abstractness of it.

My guess is the reason you don’t give concrete answers is because either tech already exists for that use case or non-crypto tech could be easily developed if it doesn’t already exist.

Please, please, prove me wrong. I want to be a crypto fan, but vague answers like the ones you provided above are the reason a lot of people think crypto is smoke and mirrors and/or snake oil salesmen.

GP is incredibly "concrete":

>...any kind of marketplace or platform but with community governance and no rents, decentralized exchanges, global-by-default payments, highly interoperable and efficient financial infrastructure...

As seen in various forms here: https://ethereum.org/en/dapps/

I can only guess that you are not familiar with the technical jargon.

Your pleading strikes me as potentially disingenuous, but I will speak earnestly in spite of that.

You will or (will not) be a "crypto fan" after you've absorbed enough technical literature to make your own judgement about what is happening. If you have the time, I recommend starting with the Bitcoin and Ethereum whitepapers.

I have read the white papers.

I am familiar with the jargon.

The list that was provided was of abstract ideas without stating a specific market — any market.

The ethereum apps you linked to might be interesting from a technological standpoint, but they don’t really add value — they just are [banking function] or [payment function] with cryptocurrency.

The most generous example that I can come up with is that crypto makes it possible to displace PayPal and similar payment processing middlemen, but I’m not sure most people (outside of a few legal outliers) actually want those middlemen replaced. So even then, the issue isn’t that crypto is so great, it’s just that the fiat currency system is slightly inefficient while being incredibly fixable.

I guess I just don’t see the demand in the marketplace for what crypto is providing the supply for (other than as a tool for speculation... it’s really good at that).

Check out UniSwap and Aave if you haven't before. If those aren't compelling use cases, tell your friends to stay away.

I showed them to two of my non-tech friends.

They both said some variation of “why would I want to use that?”

The product of crypto does a crappy job of selling itself.

It's sort of a chain letter. You already have to be in the game pretty deep to think these are revolutionary.

I will offer some criticisms:

Aave - Earning interest on a speculative asset with counter party risk seems a bit silly. Most of the risk is bundled in the asset itself. If you invested $1,000 in a token as a small percentage of your retirement portfolio you're probably hoping the return is 20x. In this incredibly logical scenario 2% is meaningless.

Uniswap - It's cool if you trade tokens because it skips the extra step of sending the asset to a centralized exchange, trading it, and withdrawing it. The centralized scenario might actually be cheaper. Either way it's only impressive if trading tokens is impressive. And at this point it's not.

> - Is the long term alternatives to PoW actually viable, given the huge power consumption of cryptocurrency currently?

PoS and derived schemes like DPoS have been sound on paper. Their drawbacks have largely been accepted by the community as a good tradeoff for most usage models. However, it can take years of "production" usage to get a good feeling about the long term macro economics, so I wouldn't expect a straight answer to this. The good news is that there will be plenty of big tier networks like ETH2 and EOS experimenting with different variants.

> - Are the valid use cases (other than drugs, ransomware and speculation) worth the valuation?

I think it's fair to say that the current valuation of cryptocurrencies have nothing to do with their tech or use cases. These markets have the same signs as the dot com bubble. However, there are valid use cases if you're willing to search for them. One of them is decentralized DNS name registration without third parties like GoDaddy or ICANN (https://handshake.org/), though this is a market, not a currency per say.

That reminds me of Namecoin

I kind of agree with what I interpret the article as saying - It was fun to work in the Ethereum space when people where there to have fun and there wasn’t so much money involved.

It’s certainly not fun to contribute to Geth nowadays when every bug can have huge consequences, and the community constantly demands more performance so they can have lower costs. Peter was very clear about the burnout this causes.

You can simplify that to - It’s fun to work on things when there isn’t pressure to work on them.

I’ve run into this multiple times in my life, including in the blockchain space, but it isn’t really anything specific to Ethereum. Though I do feel like the author has a limited view and is attributing this to be something Ethereum specific.

Not really something to be disappointed by, considering that money would eventually have to be involved in fintech?

I'm going to agree

https://news.ycombinator.com/item?id=599852

The only surprise is that HN is still a terrible place to discuss crypto. Not many posters or commenters seem to have much knowledge, which is strange for HN

Maybe somehow they simultaneously have plenty of knowledge and don't agree with you.

So in the spirit of education - what amazing things are there about ethereum or Bitcoin that will change my mind about their intrinsic value that I don't already know? (My current opinion is that the intrinsic value of PoW systems is negative due to low actual utility and very high cost.)

What's the intrinsic value of USD? It's a garbage pre-mined token that's continually debased at the behest of a cabal of rich bankers so they can purchase real assets and consolidate the world's wealth. The petrodollar isn't exactly efficient either, considering the costs of the military industrial complex.

Every year the USD is worth less. Every year BTC is worth more.

Hope that helps.

Nope. That's the sort of argument that makes your position weaker. You see, USD has a government that asserts it is legal tender for all debts within its borders and military power to back up those assertions.

These are the sort of real-world constraints that you can't just ignore. Attempting to do so makes me less charitable towards other assertions you might make. You come across as an idealist talking about their perfect dream world, not someone describing reality. Now don't get me wrong - it's important to have a perfect dream world. If you aren't working towards something, what are you doing?

But at the same time, you have to accept that "this system is perfect, if you also change these thousand other things" is not compelling to someone who doesn't share your idea of utopia. To convince someone like me, you have to explain how the system improves the world as it exists now.

> These are the sort of real-world constraints that you can't just ignore.

These constraints were drafted by a handful of rich white bankers in a secret meeting. I have no problem ignoring their constraints. It seems you do.

Can you imagine all the hot-takes HN would generate if email were invented today?

"You can't just encroach on the sovereignty of USPS like that" "Electronic Mail doesn't do anything the pony-express can't do" "If we allow Electron Mail then how do we attach a postage stamp"

Email adoption, like Crypto doesn't require convincing the entire population. The laggards will join eventually.

While it's tempting to conflate the beneficiaries of our problems with those who created them, reality is not that simple. Blaming things on an all-powerful cabal of bankers is nearing QAnon levels of seeking a small number of people to blame for systemic issues. That sort of reductionism isn't useful. Action taken based on it is going to never touch any real problem. At most it'll change who benefits from them.

I think we can do better.

(As for your email counterfactual... Why? Do you find it an effective rhetorical tactic to imagine what people might do instead of looking at what people have done?)

"I believe that banking institutions are more dangerous to our liberties than standing armies," Jefferson wrote. "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around(these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

This Jeff guy, what a radical. Probably will never amount to anything.

That is not even a real Thomas Jefferson quote.

I remember when email became a thing.

No one said those things. Why would they?

That is just boring...

I like seeing things that have deep criticism of crypto and not just cheerleader blog posts. There are few on HN, the only notable ones aside from this post is the Tether fiasco. Most commenters did not seem very familiar with either subject vs others on HN. Maybe it's my imagination?

It's true there hasn't been a lot interesting going on. Though I'd argue the Dark Forest articles on Ethereum recovery were quite fascinating for illuminating a possibility I hadn't predicted and doing so quite lucidly. Of course, the message I took from the series as a whole was that this is a world full of people out to exploit your mistakes and the way to get around them is to have private connections external to the blockchain, so... It didn't shine a positive light, either.

But really, it kind of feels like the Tether investigation is the only thing shaking up the ecosystem in an interesting way, and it's doing so at a glacial pace. There really isn't much else new to say.

I tend to agree with your point of view that the utility (non-bitcoin) cryptocurrencies are something people who don't fully understand are really excited about, but that some experts dismiss.

For me in my daily work, this manifests itself as companies that want to use more obscure currencies as a transaction method in games. I say: "That currency is not on a lot of servers, how will you protect against 51% attacks?" They say: "All transactions are also verified by trusted servers.." So does the person understand what they are talking about, or are they used to talking to people (investors / business partners) who don't have a great understanding. Doubts raised.

However: There are times when experts dismiss new things and are wrong. So I try to keep an open mind.

Not strange at all!

HN seems wildly pro crypto compared to most places. It’s like Tesla which isn’t universally supported, but still gets a lot more coverage than Ford.

People do bring up quite reasonable objections like environmental costs, but it stories get a lot of upvotes and suggesting many people are strong supporters.

Re environmental costs, I have yet to hear anyone make an analysis of the environmental cost of the banking system or an equivalent; that is, how much to warm all the offices, the computers and servers, the transportation costs of cars & planes for all the employees.

Also, proof of stake will reduce 99% of the environmental cost.

The banking system _exists_. It's what powers all our daily transactions. It's what has been tried and tested for hundreds of years, and got regulated. Even if Ethereum or coin-of-the-week takes off, this existing banking system will not go away. What you're doing is a well known crypto-lover tactic to distract from the fact that cryptocurrencies are an ecological catastrophe.

Meanwhile, we're burning coal to produce bitcoin whose only value is that number gets green and goes up. Eth is slightly better on that point, but still wasted multiple TWh of electricity while it was in PoW mode, and it still is today.

I strongly disagree with this loaded characterization of mining as "waste". Converting power into value is the opposite of waste, and that's not even addressing the network security that it provides. Mining provides useful work. If you don't like cryptocurrency, fine, but don't pretend that no value is being created or that no purpose exists.

Waste would be an incandescent bulb that throws away the majority of its energy generating heat that isn't used for any purpose.

The issue isn’t the useful product of light or a functional crypto system, the issue is the amount of waste heat produced by the light bulb or data center.

This should be obvious when you consider proof of work systems that generate less waste heat by using a memory bound rather than a computationally bound algorithm. They both operate on the principle of wealth destruction as all proof of work algorithms do, but you get different externalities.

Interestingly, if you found something really useful to do with the waste heat of crypto then the systems would become roughly equivalent.

PS: The idea of a memory bound algorithm is 1 million dollars of RAM consumes less energy than 1 million dollars of ASIC’s.

the issue is the amount of waste heat produced by the light bulb or data center.

..which in the case of the average crypto, is overshadowed many times over. One block mined equates to $333K worth BTC generated alone, and that's not counting the value of every transaction included in that block. A block happens every 10 minutes give or take, so in an hour, that's about 2 million worth of coin generated and 13K transactions.

There's no way on earth every bitcoin miner, combined, is using $2M+ worth of electricity every hour, even factoring in negative environmental externalities (which in the case of crypto mining, will be lower than most people think given their proximity to renewable, hence cheap, energy.)

It is, objectively speaking, not a waste.

Coal power plants generate more value in the from of electricity than they lose value as waste heat. Otherwise they wouldn’t operate. But, clearly the creation of value is independent of something being wasted as you can have more or less efficient power plants that generate the same value using more or less fuel and thus more or less waste heat.

Similarly, as I just pointed out different algorithms would use more or less energy and therefore be more or less efficient. Thus the heat produced is a waste byproduct mining, and electricity is the fuel. A more efficient process simply uses less fuel though it may have higher capital costs.

The same is true of say cars, you’re burning gas because driving is useful. But, increasing efficiency means less fuel while creating identical value etc etc.

But that heat you speak of applies to any kind of long-running computation. Whether that be render farms, ML model training, distributed computing like BOINC, or anything else with similar properties.

It seems to me that crypto is being unfairly singled out. Things that are digital have meaningful existence.

Increasing efficiency is a huge aspect of every other field in computing with companies literally spend 10’s of billions of dollars increasing efficiency of software and hardware every year.

It’s directly offensive to many people in the field that an inefficient first implementation is maintained because people’s investments in hardware are considered more valuable than anything else. Not latency, not transactions per second, not environmental costs, just maximize the value of their hardware investments.

Completely understandable, yet still horrific.

It's a complete waste. It turns energy into nothing at all.

The banking system does a lot of other things than transaction processing. Mortgages, loans commercial banking, trade finance, acquisition financing etc are 95% of what banks do, and cryptocoins won't replace them in any way.

Of course even if you count all that, the power consumption per transaction will be at least five orders of magnitude lower than the 0.6MWh per transaction in BTC.

Comparing the banking sector to crypto is wildly optimistic. Crypto is still smaller than just the Gold market both in number of transactions and total stored value of 9.4 trillion. Gold transactions, mining, and storage still produces significantly less CO2 while also being useful in industry.

That’s not meant as an attack, it’s simply a ballpark comparison. For those pro crypto take it a sign of possible future growth.

This whataboutism ignores the logic of the question: the banking system is not incentivized to burn power. You would expect each node to try to minimize their input costs to maximize returns. For a given unit of compute, putting in more energy does not increase profits for any participant in the traditional banking system. This isn’t the case for cryptocurrencies, so they are asked a fair question.

This isn't the case for Proof of Work cryptocurrencies. Many newer networks are moving away from the POW model.

There might be an answer to the original question. I was pointing out, “But what about banks!?” is simply not a good one, and why it isn’t.

> I have yet to hear anyone make an analysis of the environmental cost of the banking system

I immediately found this: https://www.bloomberg.com/opinion/articles/2021-01-26/is-bit...

"One Bitcoin transaction would generate the CO2 equivalent to 706,765 swipes of a Visa credit card,"

Another way to look at it:

Bitcoin uses over 0.5% of the world's electricity: https://interestingengineering.com/why-bitcoin-mining-consum...

With that, Bitcoin does about 300,000 transactions a day. https://www.statista.com/statistics/730806/daily-number-of-b...

But there are over a billion daily credit card transactions alone - 3000 times as much.

So if each credit card transaction were replaced by a Bitcoin transaction, we'd use 30 times as much electricity as the entire planet produces.

---

These numbers are so grossly lopsided and so widely bandied about that when I hear someone say, "I have yet to hear anyone make an analysis of the environmental cost" I think, "Perhaps you don't want to hear it."

What do you see as the killer use case for crypto currency/blockchain/smart contracts, etc.? I mined a few Eth in the very early days, and hung onto it until selling recently. I sold because I couldn't convince myself they had any value not based on the "greater fool theory". Was I wrong?

One, IMO, is a provably fair casino (Blackjack, Poker, etc.) that is decentralized and unregulatable.

I have the same question too. Beyond speculation/greed, what are real world use cases of blockchain that can't be done with existing/mature tech? Nano seems nice for instant fee-less transfer. Other than that?

Take for instance, my cousin's husband in India, who currently holds a bunch of black money in either INR or in gold, can buy stablecoins such as DAI, then park it in various DeFi solutions to earn a nice return on it. So not only he is gaining an exposure in Dollar instead of a highly inflationary currency like INR, he is also able to make it work instead of burying it in a bag until he needs it.

Before you start with the morality of the situation, just ignore that. You wanted to see a real use case, and I am telling you about it.

As it turns out, not everyone shares your moral code, or lives in the similar legal system which allows them the similar property rights.

Replace that person with a Venezuelan whose currency is completely destroyed and Venezuelan Americans are trying to provide their families with money.

Ok, that makes sense. I need to read up on DeFi, don't know much about it.

Borrowing, lending, decentralized exchanges, innovations like flash loans that are just not possible in current financial system.

The sky is the limit in terms of innovations possible, it's literally some code running on the global computer that is Ethereum.

Not only are all those things possible (other than decentralized, because that has a high cost and no tangible benefit) in the normal banking system but there's apps for them already. And they are from regulated companies and you have legal protections.

Flash loans aren't really; nobody will lend you money against zero collateral that you pay back instantaneously after a transaction, because in the traditional banking system there's always a risk of default and a transaction cost for enforcing your rights in case of default. With a flash loan the whole transaction fails if at the end of the transaction you don't have sufficient funds to pay it back, while you're guaranteed payback if it succeeds.

A flash loan is a loan you pay back immediately...

So you're right, this isn't a thing that exists today outside of crypto because it's not needed outside of crypto. Someone who can pay a loan back as part of the same transaction in which the loan is issued is not a default risk, and in the real world you just don't bother with the loan: you just pay for the underlying transaction directly.

Maybe people are tired of getting an anal probe just to open an account and move money/ complete financial transactions today?

How does borrowing work in an automated, trustless environment? Doesn’t someone have to decide whether you’re likely to pay back the loan with money you haven’t earned yet?

It's over-collaterized, so you put more crypto than the loan value.

You might say "why the hell would I do that?", in order of importance: 1) you hold on to your asset's appreciation, 2) access the liquidity, 3) avoid capital gains tax.

Okay, but that seems like a pretty small niche? Most people don’t borrow just to save money on taxes on their cryptocurrency gains.

They might borrow to hold on to their asset's appreciation.

You could lock in the gain by selling at the current price, so that still sounds like tax avoidance. Or possibly leverage, if you think the price will go up more?

Yes, you could leverage, you could hedge yourself by buying stocks. Or you could just spend the money on whatever else you want.

So the killer use case is a scheme to avoid capital gains taxes? Sounds about right.

You realize elites are already doing this with USD. It's not unique to crypto.

I think in the past someone mentioned about under-collaterized loan. It's based on your reputation. The idea is you use your Ethereum account to do activities. Based on these activities, people could give you a loan. Such activities can be something like answering questions (imagine Stackoverflow but the authentication runs on Ethereum).

Okay, but it seems like the reputation evaluation isn’t automated, so this is more like fundraising?

You can do loans with no collateral at all if you use flash loans.

You have to put down collateral. Same idea as reverse mortgages on houses, or taking out an RSP-backed LOC.

Look up Aave it’s Open Source, I was surprised at first but it seems to work. Also flash loans are an interesting new financial tool previously not available for individuals.

>The Hacker News community has long been anti-crypto

Are we really allowing blockchains to annex the word "crypto"? "Crypto" is "cryptography". HN is not "anti-crypto", it is staunchly pro-encryption.

Help me understand the appeal of NFT art. I love digital art, but I don't see the appeal of spending money to get the token certifying you as the owner. The image/work is still out there and can be viewed/downloaded by other people. You don't even control it, unless the artist agrees to send you all of the files and delete them on his or her system. Your name doesn't even appear next to the piece when people look at it.

Sure, usually the tokens come with a print, and you support the artist, but those are things you can do via other means. What is the NFT adding? It seems only slightly more authentic than "buying" a star from a star registry.

Why do people buy originals rather than prints, often at a 10x markup? Why do they get certified dog breeds rather than mutts from the animal shelter? Why do people pay for skins and unique items in video games? Why will people spend $300K on a college degree when the coursework itself is available for free on the Internet?

A lot of times, people just want a limited-supply token from a third-party saying "yes, I paid for this, and that distinguishes me from the hoi polloi who got it for free".

A digital mcguffin doesn't have the properties of a unique painting on a canvas.

NFTs are not easy to understand, but sit within the intersection of these two questions:

1. What is the value of art?

2. What is the value of money?

When we look for analogues, they're of the industrial era, things about intellectual property, branding, merchandise etc. This is a way of directly speculating on an idea. Is it a good idea? If so, then other people will want it, right? Then, the token must have value. There are no gatekeepers or enforcers to say otherwise.

We have barely begun to grasp what that means.

NFT art seems like the dumbest/faddiest/scammiest idea to come out of the crypto sure yet, and not just because the art market is super faddy and maybe scammy already.

I know artists that think this is going to be their ticket. But it was never the lack of crypto that kept them from making money. It was the lack of any consumer value to their art.

There are two ways to make money as an artist: you either make a few, huge pieces that sell to very rich people (making your yearly bank on one or two pieces), or you make a huge number of easily reproduceable pieces that sell to the general populace. The difficulty in both is not the creation of the pieces. It's the marketing and sales pipeline. Both rely on selling a purchaser a narrative on what the art will mean to them. Exclusivity in the former, worldliness in the latter.

If you can't crack that marketing problem, you're going to ask equally zero pieces as NFT than as any other medium. And if you can crack that marketing problem, selling it as NFT does nothing for you as the artist.

It creates artificial scarcity for a digital product

It's been ten years. The killer app for crypto is just one thing - crime. Money laundering, tax evasion, purchasing contraband.

And yes, people have made a lot of money on pure speculation too. That's not an application.

Until we see some actual real-world uses for crypto - full-time, serious uses, not someone buying a pizza as a demo - that aren't crime, we have every logical reason to be desperately skeptical of this overhyped technology.

If you joined the Ethereum community in 2014-2016, topics like DeFi and NFT were not in the discussions. These things are pure speculative bullshit imported wholesale from the established financial system.

The point of Ethereum was to build an open world computer, to decentralize power, to build collective intelligence, and to supersede the corrupt global financial system with non-speculative economic models that served the needs of humanity and the planet.

Yep, this is it. There has been a graduation from toy to tool. And...there is also rising demand for lower overheads to get the same functionality, which means there is serious competition for good tech now. If BTC and ETH are examples of "worse is better", there are some Right Things just around the corner.

Tech has major entrenched interests in maintening the financial status quo

HN doesnt like blockchain because its disrupting their jobs.

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