I think this shows how truly powerful the network effect, and being first to market is. Because without those things, Bitcoin would be nothing.
None of them are actually money, like in the paper-or-gold-coin sense. They're all ledgers.
The thing about money is that I can hand it to someone. Possession of the money is possession of the money and third parties don't need to get involved in every transaction. I can hand someone dollars and take a sandwich and walk away, transaction done.
The problem with a digital currency, of course, is that when you hand someone a sequence of bits, they don't go away from you, so you can hand that same sequence of bits to another person.
The "solution" people came up with to this problem was to not solve the problem, and instead solve a different problem, how to have a distributed ledger.
Which is like, neat and all. But also infuriating. We don't have crypto-currencies, we just have crypto-banks.
Fundamentally, what folks are trying to get to with crypto is a trust-less system, one that can operate regardless of whether or not there are bad actors involved (including and most commonly as the central authority, aka banks). Historically, it's been a lot easier to build systems that don't account for bad actors, and it's been continually problematic for society because that assumption is so obviously and blatantly false.
Maybe crypto, as we know it, isn't the solution, and certainly proof-of-work has serious negative drawbacks. However, with the advent of automated computational devices, the possibility of evolving past our many-thousand year old system of bartering is too enticing to just ignore. We know there's a better way, and the odds we'll nail it on the first try are nearly zero, so I personally welcome any attempts that lurch us forward in the meantime, even if they're not the end destination.
I sold most of my crypto because it's too risky/sketchy for me now.
"Crypto is 'backed' by the value of the sunk cost of the energy used to mine it."
...which is to say: nothing.
But for as long as collective agreement persists, there is volatility. And where there's volatility, there are profitable trades.
The natural question becomes "Why does, and for how long will, the collective agreement persist?".
For that, I have no answer. :)
If the moment you stopped mining gold, it began to sink into the earth again, would the amount of mining you did in the past have value in the future?
Turns out, virtually nil, because it's been around for 8 years and nobody is using it, because there is no real-world use case for contracts written as software.
The only people using smart-contracts are enthusiasts and proof-of-concept startups that have no traction in the market because smart contracts don't offer any advantage over any other computing system.
That's laughably wrong, go look up how much revenue the Ethereum network is bringing in with smart contract fees.
- Speculators buying ETH to ride the bubble
- A revolving door of Proof-of-concept startups with backing from starry-eyed VCs and no viable business plans that pop up, use a bunch of compute, and then fail, every couple of months.
Ethereum mining conglomerates don't even use Smart Contracts, they just cite "a long history of successful payouts", trust, and old-fashioned promises written in vernacular English.
A few other use cases: DeFi (mainly crypto backed loans), NFTs (so far not too interesting to me), distributed ETH2 staking pools, distributed betting markets (the coolest one in my opinion).
DeFi is used almost exclusively as margin for speculation. Since smart contracts have no legal force, the only way lenders can be guaranteed their money back is by demanding collateral that is greater than the value of the loan. When is the last time you needed a loan of $10,000, for which you were happy to put up $15,000 of your own dollars in escrow as collateral, other than securities gambling?
NFTs are just cryptokitties by another name, ETH2 staking pools are just private equity firms but without security because millions of dollars are stolen out of them every year, and crypto distributed betting markets are patently illegal.
Which brings us right back to where these conversations always end: the only things blockchain has or will ever be useful for are speculation and obscuring criminal activity.
Those are two wildly different claims but I'll bite anyway:
Your argument against DeFi could be made about Schwab, or any brokerage providing margin so I don't find it very compelling. Is selling margin to gamblers not a "competitively successful commercial activity"? Your original claim was that there were no users.
> crypto distributed betting markets are patently illegal
That's like saying self driving cars are patently illegal. Of course they are (more illegal than grey market sports betting), but it's a nascent technology and it's not obvious that it will stay illegal.
> semantics
Every competent English speaker knows that the phrase "nobody uses X" is never meant to be taken literally. When I say "nobody uses PowerPC", I mean that its market share is miniscule and the industry has moved on, I am not claiming that there does not exist some nerd somewhere who maintains a 20 year old imac as a hobby, and finding that nerd is not a disproof.
> margin trading
Margin accounts are not commercial activity. When you buy or trade securities, whether on margin or otherwise, no new value is being created, no workers are being paid, no commodities are being traded, no products are being consumed.
The entire market could vanish overnight and nobody would notice, because it isn't doing anything, it's just making increasingly complicated guesses at what other people will do.
> betting is like self-driving cars
Self driving cars are new technology. Online betting is not, it has been around since the beginning of the internet. Blockchain is doing nothing but helping the illegal gamblers to hide from law enforcement.
Well that's bad analogy, because unlike PowerPC there are more users of Ethereum than ever before, and Ethereum is generating more revenue than ever before.
> Self driving cars are new technology. Online betting is not, it has been around since the beginning of the internet. Blockchain is doing nothing but helping the illegal gamblers to hide from law enforcement.
I think you're being obtuse. Ethereum is the new technology here, that enables a distributed betting platform that was previously not possible. Self driving cars are a new technology that enable a type of transportation (existing market, like betting) that previously wasn't possible.
Nobody is using the compute power, though. Can you point to what they are using it for, if you have an example?
Having trouble finding the total smart contract revenue, but this article has examples of the top few, and gives an idea of their usage patterns: https://medium.com/@vikati/ranking-ethereum-smart-contracts-...
Crypto ain't even backed by that.
Usually, we commonly agree by coming to consensus on what to do and not to. But here the consensus, sometimes, can get hijacked by the third parties which lot of people don't understand how it happens (read historical events). 2008 banks bailouts is a good example to begin with.
As Satoshi mentioned, in the OG Bitcoin paper, that cryptocurrencies will be attractive to Libertarians. That's a fair assumption as one would start to notice a lot of activities involved in being part of cryptocurrency, atleast currently, requires lot of individual responsibilities, especially maintaining the wallet's credentials. Not to say that they can't be automated away.
Coming to terms with taking individual responsibilities in general is very hard. Most people want others (Government) to do it.
Honestly don’t know if you’re trolling or just old.
I used paper money once last year. To buy weed. Because the federal government has determined I am not responsible enough to use or own weed.
No one I know uses physical cash anymore. We’re moving away from physical items where possible, not toward it. I would rather have my currency on a public DLT than controlled by the government.
No need to be ageist. It's a fair perspective. There is a quality of independence and agency that comes from being able to purchase things with cash.
Ironically, your weed transaction is a perfect example of that. I am a little confused by your argument though. Are you saying that you used cash because you couldn't pay legally with a debit/credit card or something? How come you didn't you use crypto? That aside, even with cash you were able to come to an independent accord (without the gov) and trade value for value. You could almost call it a barter, if you really consider cash to be a relic.
Despite having laws against this, society is mostly okay with some gray area around "off the books" transactions - which is why you can brag about it online and no one really cares, much like jaywalking.
More options for independent transactions don't necessarily hurt, but they do muddy the waters. The thing about cash is, since it is so commonly used, people generally understand what it is worth.
If I sell a TV for $100 on Craigslist, I take my $100 and I have a good idea of what I can buy at the grocery store with that. Offer to trade me 0.0020 BTC (~$100 right now) and I'm less likely to engage in the transaction because I don't understand its inherent value. You could even offer me 0.0022 BTC ($110) and I'd pass. How much gas can I buy with 0.0022 BTC? Do any gas stations around me take BTC? Do I need to convert it? I don't know. Add even more cryptos and it becomes even less clear...
I'm not against more options. More crypto options = more ability to barter. You and your dealer can decide to transact in Pokémon cards and no one's going care. But I do not see it being some sort of fix-all for the downsides to cash.
* If I want to get payed quickly for a quick job, cash is the preferred payment method.
* If I immigrate to a country where I am not allowed to work legally, cash would be my preferred payment method.
* If I’m buying something illegal (including labor from a person not allowed to work in my country) cash is the preferred payment method.
* I can use cash to pay for products in the farmstand across the street without any transaction fees or 3rd party apps.
* I can use cash during a week long blackout.
* I can use cash without an internet access.
Parent might not personally use cash. But for many people around the world cash is by far the most convenient payment method. And for many less privileged people cash is the only payment method.
I’m sure there are ways to use cryptocurrency to do the same.
Lets say for the sake of argument that you are right, and the no. 1 use case of cash is to evade taxes. Then the people getting payed for their tax-free labor will need to use this cash somehow. The easiest (and cheapest) is simply to circulate the money while buying regular goods and services. So buying of regular goods and services would rise to be at least as popular use case of cash as tax evasion is.
Also note that there are plenty of people willing to pay tax for their transaction, but the transaction is made illegal by their government and hence they cannot. Then the reason to use cash is not tax evasion, but illegal transaction, (note that this includes paying and receiving salaries for people not allowed to work because of immigration status). Tax evasion then becomes a happy byproduct of the no. 1 reason for using cash, illegal transaction.
But I honestly doubt that either illegal transactions, nor tax evasion comes even close to why most people use cash. Convenience. Though I could be persuaded if I saw some data pointing to the opposite.
The fact that lots of people in India have had serious issues because they were unbanked does seem to indicate that there's a sizable population of people using cash for everything*. I'm curious if there's any research into whether that's for tax-evasion reasons or for some other reason.
My personal belief is that the number one use is for money laundering, and that people who are using it that way would be willing to pay taxes on the money they are laundering from some other illegal activity. For instance, there are all-cash drug dealers who pay taxes on their drug money. I'm sure Al Capone wishes in retrospect that he'd paid taxes...
Have you ever experienced a natural disaster? One thing you realize quite quickly is that your debit card is useless. That doesn’t mean transactions stop, people are still buying and selling, those with cash at least. If there’s runs on banks, infrastructure outages, etc, those relying entirely on debit and other payment cards won’t be buying food!
That's like $1.2 trillion in boring, normal, law-abiding cash transactions each year.
Also, for the record, I have been in and responded to a number of natural disasters in the "first world". With the exception of a few hours here and there, using cards was never a problem. If the infrastructure is so wrecked that cards don't work, food/water is coming from people in high-vis vests.
Try a hurricane, or something serious enough to be registered as a natural disaster.
This is the same misleading argument as when people claim that BTC is in practice equivalent to USD as most people just keep it on exchanges (same as USD in banks). Yes, but BTC/crypto also gives you one new option, i.e. not keepign money on an exchange ("being your own bank"). You're free to take that option, or not - but it exists.
Moving to America I was horrified to learn that in order to get applicable for loans (including home loans) I had to “work up my credit”, which includes maxing out on credit cards and then paying it back. As a teenager I made it my philosophy (experiencing second hand stress from the people around me) never to get a credit card. Now if I want to have a realistic opportunity to buy a house here I’m forced to abandon this philosophy and to the thing that kept my mom in constant state of stress. This credit system ought to be abolished.
From my personal perspective, credit cards are a systematic way to bamboozle the working class into over-consuming and keep them in constant state of dept. And to reward the wealthy for the same behavior, which only serves to shove it in the face of poor folks that the rich get away with everything. This system ought to be abolished.
My understanding is that Europe has strict limits on credit card fees, and as such, most cards in Europe don't have rewards.
When I hand cash over to someone, I know how much is leaving and coming back right then and there. When I fill out a payment form with my card details I'm handing over my entire balance into the ether. I could be sleeping and quietly money is leaving my bank account, which happened. So cash is king still.
Plus it's generational. If I said walkman's are the best I would guess you have a different response, more digital based I imagine.
But here is my PIN **
It's also hard to have silverfish eat your bank account balance, or have your credit card account catch fire and disappear.
https://pestrepublic.com/do-silverfish-eat-money-how-to-keep...
But physical cash should always be an option. You can't have a truly free society without it. Some intermediary could always have control over your transactions.
I think arguing that control over crypto transactions is more likely than the devaluing of physical currencies is a little far-fetched since we've seen plenty of the former without much of an example of any centralized power being able to control users actions on the internet.
Just think of all the wealth changing hands on the internet today against the will of governments.
https://www.npr.org/2020/02/06/803003343/some-businesses-are...
Besides, even without cash, you're still going to get robbed. They'll just take merchandise instead of cash.
Crypto-currencies don't provide a way to transfer value peer-to-peer, online, just a third party that is (hopefully) neutral.
And that's why plenty of businesses still only take cash. Casinos want cash for chips. Peter Luger's still only takes cash. When you buy something like a dog from a breeder, it will be in cash. Any transaction where person on the other end has little recourse if your payment didn't go through will be in cash. Or if the business is popular enough to force it (in the case of Luger's).
That's only true if you discount the US government as the third party (at least for USD$) who are involved in every transaction, by virtue of them needing to exist for the $ to have any value or for the seller to accept the $ in the first place i.e for them to know it will still be worth something in 3 weeks when they want to spend it.
This seems like a strange guarantee, I think it's incorrect, and I would have absolutely no way in a zombie apocalypse to hold you to the guarantee. Which is, inherently, why I think it's incorrect.
What resources does Bitcoin allocate? Isn't Bitcoin merely glorifying the concept of currencies but without anything to justify its existence? Since when did we ever talk about the USD (or any other currency) as being an end in itself rather than a means to an end?
What good is selling food for dollars if you can't spend those dollars next week? Better to swap the food for another good which can be used or exchanged.
https://www.investopedia.com/terms/1/51-attack.asp
Kinda like you waking up to a brand-new bank account, with proof! The only thing stopping 51% on BitCoin is the cost of mounting one: were it a smaller crypto currency, it would be at risk. (I'm pretty sure I got that right, but I'll be corrected if I didn't!)
> The "solution" people came up with to this problem was to not solve the problem, and instead solve a different problem, how to have a distributed ledger.
And what would be, at least intuitively, a solution to the "you can copy bits, give them away but also keep a valid copy for yourself" problem which is a problem for currency but also the default way digital information work?
If you had access to a near-perfect money printing machine, you would have just the same problem, we are just "saved" by the implementation difficulty. Just the same as with the ledger approach.
Many of the other comments have pointed out how money doesn't have this quality either. This comparison is a wash: buy gold if that's your goal (at least until we find/mine a gold-laden asteroid).
The other comparison is who you have to trust to insure the value of that currency. In the case of cash, it is your government/Treasury. In the case of cryptocurrency, it is mathematics. I am originally from Zimbabwe and have much to say about trusting the government with insuring the value of cash...
That's why I have a small clutch of proof-of-stake.
Have you ever thought about how to boost the economy and thus the ability to exchange zimbabwean dollars for more services and goods? Because that is what is necessary to get the zimbabwean dollar back in order.
Anything whose price is going up is scare and its domestic production must be expanded.
My main point is that fiat currency implies trust in some entity. Zimbabwean vendors have chosen to trust the South African and US governments.
Fiat is also moving in this direction. Credit cards, are just exchanging bits, and in Asia, with Alipay and WeChat pay you are just scanning QR codes. At least with (good) crypto currencies is you can remove the third-party from the equation.
There still remains the problem of having your transaction broadcast to the entire network, but I think that is also a solvable problem.
With crypto all of this is taken care of by the network, and with the truly decentralized networks (not all of them are) anyone can be part of the network. No one "owns" the ledger. In my mind this has successfully created something that is more free (as in speech) than any previous form of "money" other than gold.
The double spending problem is not a problem; it was solved already with BTC. You can always have your crypto on a physical drive, which kinda makes it like cash in the sense that you can have it in your hands like cash.
This is the same when people's net worth is discussed though. To the average individual that hears a net worth it almost feels like they think it's cash money. But it's on paper, as in sell all the shares of businesses and assets to cash it in.
Perception is the mother of all great products and marketing.
Alice has never given Bob her bank account, more like created another account just for Bob
There's a similar problem with handing someone the private key to a wallet with a pre-set amount of money as an offline transaction. Besides not being able to verify the amount in the wallet without checking with the central ledger, you also don't know that the other party isn't handing out the same private key to multiple people.
Paper money or even metal money can be counterfeited, sure, but in low-counterfeiting environments individuals transacting can verify the authenticity of the script locally with reasonable confidence, without consulting a (distributed, decentralized) third-party to verify.
Why do you even need physical cash? I can carry my countries currency around with me easily enough but i generally don't bother as i don't ever need to.
Take an example of burning $100 bill. You aren't destroying more than the piece of paper, because the destroyed value is instantly shared between every other unit of currency.
there are many problems with bitcoin but this really isn't one of them. most dollars aren't real either. dollar transactions bounce all the time.
and there will always be some kind of cash counterpart to any electronic payment system. how else would people buy contraband or work under the table?
I mean, you're not wrong, but this is where the cryptographic elements actually take place.
“If I had asked people what they wanted, they would have said faster horses.”
This is why it will be very handy for African countries where no-one has a bank account but they do have cell-phones.
only because the US Gov didn't classify it as money for tax purposes...
Historically the events that caused this mode of exchange to be locked in were out of the hands of anyone but key economic players - world leaders and top advisors and the like. Some of them are still alive and have vested stake in the continuance of their own power.
The reset away from this depends on the incompetence and failure of institutions that otherwise permeate every aspect of modern civilization. Financial capitalism's fall will be a very big problem in its own right.
There are only two kinds of languages: the ones people complain about and the ones nobody uses.
In the case of cryptocurrencies, as soon as a cryptocurrency has any important percentage of use, these transactions are not confirmed in seconds anymore, and transaction fees starts to grow up. No one is really using PoS right now, so let's wait and see if this solution actually works when Ethereum officially switches.
Lightning Network is similar. It's been perpetually 6 months away for years.
Frankly, I'll be impressed if the current power structure within PoW cryptos doesn't find any way to hamstring PoS, mostly because they have a vested interest in keeping everything the way it is now.
But until then, we can't really say that Ethereum is 100% PoS, although one pre-alpha project is.
I use C++ everyday and I am still shocked about how user-hostile it is. I don't buy the usual "backwards compatible" and zero-cost abstraction canned arguments. I identified a lot of missed opportunities for simplification... I wonder how much energy we wasted by trial and error while writing/compiling useless C++ programs /s
As a side-bar, a major role of money is to allow the government to easily collect taxes from their citizens and so governments have to be careful here as they must ensure that there are no challengers to their primary form of taxation payment. Bitcoin was very carefully crafted to survive government attack and finally the government accepted it by considering it a taxable commodity. While the early crypto-is-cash people are annoyed by this, it was the only possible outcome in a match between the government and crypto currency that doesn't end in outright warfare on crypto.
Now that digital currencies have moved from theoretical to a proven model people can move on to solving newer problems rather than just getting it off the ground. Now we have privacy coins which attempt to solve the problems of getting anonymous transactions among other desirable features. But wait there's more, now that we don't have to prove that electronic cash is a workable system we have decentralized finance coins now. If people thought the government hated bitcoin, just wait until the banking system realizes defi is coming.
Why do they have to be careful? Are they going to magically going to have to start accepting Bitcoin instead of dollars?
> Bitcoin was very carefully crafted to survive government attack and finally the government accepted it by considering it a taxable commodity.
They still doesn't mean you can pay taxes with it.
The second one is gone because control of money supply is gone and as far as the first one the govt can trace funds in your bank accounts but it's going to have a really hard time if someone holds crypto currency and is intent on not disclosing their real wealth.
There is zero chance bitcoin with it's current network is every going to be used as money. What might happen however is that more and more transactions could move towards other networks like nano or various stablecoins that are built on top of smart contract platforms.
If governments end up issuing a currency that is only useful for tax payments then they have effectively lost control of the monetary policy. And in any case banning crypto will only help towards redirecting monetary flow towards other countries. So in many ways governments' hands are tied in this.
EDIT: The wikipedia article is easy to find[1]. However it is really short, looks incomplete, and has a lot of “citation needed” after each point. So I would rather ask on HN.
Proof-of-work works (very broadly) by computers solving harder and harder math problems to create value. Eventually, these get so hard that solving one requires either joining a pool or a huge investment in electricity and mining rigs - which is where we're at now. This isn't good for the environment.
Proof-of-stake works by individuals "staking" some of their own coins to be more likely to be randomly chosen to "validate" a transaction (which earns them a reward, similar to hashing). Validating a transaction is trivial and uses very little electricity, but the rest of the network also checking the transaction keeps the validator honest.
While proof-of-work and proof-of-stake are both a kind of "the rich get richer" game, to get more coins in proof-of-stake all that's required is a greater investment into the network, as opposed to the mining rigs and large amounts of electricity that are required by proof-of-work.
I found this video to be helpful in visualizing the networking parts of proof-of-stake.
Blockchains that allow protocol changes via votes are an option, and how you quantify votes is a parameter, but PoS is not tied to being a government token, and 'votes' on forks (its really not a vote as both protocols exist after a fork) are made by large and small holders alike. It has nothing to do with amount of currency owned.
Staking better aligns incentives when compared to mining and most other alternatives.
Compared to PoS where the biggest incentive is to be nice.
If a validator approves a fraudulent transaction (as determined by other validators), they lose their stake.
But how does in know which copy is the real one and not one cooked up by someone like me showing I own half the coins?
With proof of work you can choose the one with the most work in it and that's hard to fake as the real bitcoin blockchain has billions of dollars worth of computer work in.
With proof of stake it's hard. If there is no real cost, fakers can make thousands or millions of fake chains and how do you know which is the 'real' one?
There are potential solutions but it's tricky. Like if you have www.stake-coin.com point to the real one, what if someone manages to take over the domain?
Im kinda at a loss about what other vectors of attack possible, hard to find any digestible info, and pos protocol designs are really complex.
Here is one link, and you can find several more.
https://download.wpsoftware.net/bitcoin/pos.pdf
Now, that is a PDF, and I do not recommend blindly opening PDFs. This is by Andrew Poelstra, who is a mathematician at Blockstream.
Every project has its own strengths and weaknesses, but it's hard to argue that Bitcoin isn't the best on many of those measures. It's all about which of them you as an individual value most.
- transaction times
- energy consumption
- scalability (BTC currently does 7tx/s)
- security (BTC is getting more centralized over time, increasing the risk of a majority takeover.)
- fewer fees as possible (ideally 0)
BTC only has first mover advantage, and security...for now.
Other coins might sound good on paper -- adding new features but introducing serious design errors that have yet to be discovered because they're not a big enough target.
Monero is exclusively private and ZCash is opt-in private.
"Payment Freedom" and "Choose your own fees" are both things that no longer apply to Bitcoin.
The reality is that if your fee isn't high enough, it stays in the mempool until it expires, never being sent.
Seems pretty easy to me. What is Bitcoin best at apart from having the largest market cap?
* Largest network by nodes.
* Largest network hashrate / Most energy consumed.
* Simple Satoshi Codebase.
* Most accessible - blockchain delivered via satellite!
* One can run a node on a RPi. Requires 351G storage for full chain. Eth is TB's (and growing), requires SSD, fast CPU, etc.
You are not running ETH nodes at home.
* Most decentralized
* Most reliable
I'm a fan of Bitcoin, and I'm not sure why the random need to criticize Ethereum here. Bitcoin has enough reasons to be useful, no need to be insecure about other projects being useful too.
Are your running a full archival ETH node on a RPI with a 3TB+ SSD attached?
You gain nothing from using a system that's 12 year old over one that's 6 years old. Also more nodes just dont add any usefulness anymore at some point, it just more not better.
Reliable is useless without comparing it to something else. BTC had unintentional forks and many small possible double spends and all that stuff in the last 12 years. Its overall reliable, sure but at what metric. Incidents per time? incidents per Tx? Or just the fact that it didn't die in the last 12 years?
Regarding proof-of-stake for example, I'll defer to this comment: https://news.ycombinator.com/item?id=25007874
For example, you can sell roughly 5 million USD worth of litecoin on the Bitfinex exchange until you push down the price by 0.5%, but for Bitcoin this figure is roughly 500 million USD (~100 times greater).
The greater the liquidity of a currency the less value is lost when exchanging back and forth between it and e.g. USD.
So you just demonstrated the problem that the OP was talking about.
I'm just someone who sees the failed promises made by Bitcoin (fast, cheap transactions) against the horrendous damage it is causing the environment.
There has to be a better way.
Fast and cheap transactions have been around since long before Bitcoin. Bitcoin's innovation was to make those possible without a trusted centralized intermediary. Therefore, decentralization and security are arguably the most important properties when evaluating cryptocurrencies. And Bitcoin is king on that front. Cryptocurrencies that promise faster, cheaper or "more energy efficient" transactions pretty much always have to compromise on that.
But as an end user, you probably wouldn't know that. That's why I'm frustrated with people who authoritatively claim things like "there are so many better crypto-currencies" while not disclosing that they're merely commenting from a "user experience" point of view.
That's its usage.
Every one of those "apps" is usage on Ethereum, everything from trading (Uniswap, think of it as a Coinbase competitor), loans (Maker), to mutual fund like assets (Yearn).
It's hard to convey in a few words how much better buying a house using Maker/Eth was compared to going to a bank. Everything about the process smashes the traditional system.
https://www.ft.com/content/8553aba7-8beb-4b48-9287-be6a08065...
https://twitter.com/VitalikButerin/status/133392262085774540...
It's pretty bad that Bitcoin still hasn't started working on it.
Yes, Ethereum has been working towards several long-tail projects for years. I think it's more important to distinguish that nothing good or important has come of Ethereum though, and that it is NOT money, and it is not a safe currency. The blockchain is fraught with front-ran txs, the mining is very centralized, and all projects atop ETH suffer dependency on it's success. The blockchain is growing very large which leads to further centralization on very expensive customized equipment. DeFi is a buzzword that means little but "super alpha experimental money leveraging tools" and financial instruments on the cutting edge. Ethereum is Dave & Busters tokens in comparison to Bitcoin being real money.
I mean, Ethereum has the second largest marketcap of all cryptocurrencies and it feels like 80% of the research & development either comes from Ethereum directly or close-by ecosystems.
To say that Ethereum is Dave & Busters tokens when compared to Bitcoin is funny, since every single cryptocurrency is magic internet money anyway.
They would like to switch to proof of stake and plan to do so next year.
Without this and usage for criminal purposes bitcoin would be worth a fraction of it's current worth and as such likely not worth mining for.
This also means IMHO that Bitcoin as currency not just already failed, but did so pretty hard.
As a non currency speculative investment/mony parking product it didn't fail. But it wasn't meant to be such a think.
Furthermore the massive environmental problems it introduce by having a high such a absurd high need of energy and other economical problems (drain of currently limited chips without producing "general" economic benefits, usage for criminal activities if combined with mixers etc.) makes it a highly flawed product.
It should be noted that this is Bitcoin specific. Other cryptocurrencies have this problem much less by neither having absurd high energy costs, nor having absurd high purely speculation/money parking based prices.
Sure there will always be some drain of energy and some drain of chips and some usage for criminal activity. It's just that for Bitcoin thinks have gotten out of balance and besides availability through the network effect there is no reason to use Bitcoins for normal (legal) payments. It's just too costly, slow and price unstable (due to speculative investments always forming a bubble) to be used for normal payments IMHO.
Exceptions can be countries with a "broken" economy, but even then other crypto currencies would be normally preferable as far as I know.
Is there anything definitive on this? I've heard/read that less than 3% of bitcoin was used for illegal purposes but I don't know if they include tax evasion in that.
Like really - did your friend owe you $200 and you wanted to make sure he couldn't pay you something over square and then call his credit company and say his card was lost?
Like are you a shop online and you wanted to make sure ALL of your customers are paying in Bitcoin so they can't claim someone stole their card?
Are you a party to a lawsuit and the judge decided to oversee the other party pay you (the fictitious plaintiff in this scenario) $50000 with a check and you're worried he's calling his bank afterward and cancel the check?
None of these scenarios would be made better with Bitcoin:
Transaction costs
Some online stores ARE scams and it's better to have a real money trail - especially the ones involving bitcoin
The last scenario is easily solved because the judge would be able to provide much harsher realities for the check canceller.
From a practicality standpoint every time someone talks about irreversible transactions I just eyeroll at the actual logistics of that working in our world of 7B people.
The first line of the whitepaper[0] is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another"
In practice some "third" party (bank, paypal, square, venmo, etc) will still be involved in most transactions because of the scenarios you have described. But this would be because they are helpful and add value not because they are necessary.
When you notice that multi billion dollar transactions of Bitcoin are made every blue moon you might not be scoffing at what its security protocol is providing it.
Do you mean to tell me you just cannot understand why some people want money with total finality to use with anonymous people across a network? I mean, at this point I have no argument with you I just can't understand your line of thinking. Cryptocurrency, or digital cash, digital money was an idea for a decade+ before Bitcoin finally solved the problem. It's an obvious money with many obvious use cases. Many thousands of folks around the world are using Bitcoin on a daily basis. It's like the phony fees story people spread about Bitcoin, while those of us using Bitcoin daily can send any amounts of money we like for payments to folks around the internet for a couple dollars.
Let me be totally blunt with you since you are acting clueless as to how people use money on the internets.
I pay people ALL THE TIME, in Bitcoin, for codebase work that they perform. I do not want banks involved, I do not want to know their real life identity, I do not want them to know my identity, etc. Therefore, do the work, I pay you. We have a Web-of-Trust (Something folks here in general just seem ENTIRELY clueless about) and we trust eachother just as far as the Web of Trust and our online chat history and trust level allows. Do people get ripped off at times with payments? Sure. You lost $50 bucks, or whatever. Maybe you'll learn not to trust that party again. It's very simple. You don't need to act clueless. It's money, and if you use it correctly it just works. It's not reversible. If I were paying someone who ran off with my cash, it's the same shit.
Nearly every other bitcoin fork can suffer a 50% attack because the network is sufficiently small that one can rent enough hashing power to attack it (see Bitcoin Gold).
Alternate coins absolutely need some other mechanism to secure their chain that doesn't require a critical mass.
The reality is that consensus only requires people to agree on something. It does not require burning tons of energy or military action.
Prisoner's dilemma is only a thing if you consider finite games, ie. played for your immediate benefit. If you consider an infinite game (for example the good and survival of humanity in perpetuity), it can be clearly shown that there is better solution and it is for people to grow up and just agree on a protocol that does not require burning energy or military action.
Do you think people will cheat each other given chance? That may be true when there is good chance of not getting punished for it. But if you ever lived in a small community where people rely on each other for survival (ie. infinite game), you would notice people will not cheat each other when they know they will have to rely on the community until death.
Now, what you experience isn't necessity.
Think why you decided to write you only trust "select few"? Aren't these the people you plan on interacting with for a long time like family, friends or coworkers?
That's because when you plan to work with somebody for a long time, your game changes from finite to infinite. It suddenly makes other than altruistic sense to invest actual resources into fostering the relationship and avoid damaging this relationship by cheating.
PoS also offers something PoW does not: absolute finality, https://medium.com/mechanism-labs/finality-in-blockchain-con...
Additionally, PoS attackers can have their stake slashed, so they may never attack again. However, you can't slash PoW attackers, once attacked, they will just keep on coming back (no matter how many times you change the hashing algorithm)
Bitcoin did not have a fair launch either, there was a lot of information asymmetry between the project insiders and the public. Satoshi's stealth-mine of ~1 million BTC for example.
Picture bitcoin in its final state, where central banks trade in and out of Bitcoin to weaken or strengthen their respective currencies. Bitcoin is the only solution, and other cryptocurrency is fit for the task.
As mining complexity grows, surely this problem is only exasperated, since you need a bigger investment to be able to mine effectively, which would presumably result in an even smaller group of more powerful miners?
+ offline transactions should be possible (allowing sync with the chain whenever), but also I do not think any have that.
A good crypto-currency is like cash, with a nice physical gauge theory (allowing offline transactions) guaranteeing security + any transaction processing rate.
Every single cryptocurrency now is still a research project first.
If you have a good idea here, it might be possible to implement as a second layer on a chain with smart contracts.
describing offline transactions.
Taken from a Q&A with nano's creator[1] around a question of why doesn't nano implement smart contracts:
> Smart contracts can’t cause side effects to happen. They can’t move property and they can’t negotiate unforeseen disputes. When you carefully look at it, all smart contracts take the form of a prepayment and slow release of locked-up funds. People haven’t and won’t use this for multiple reasons. Economically the opportunity cost of locked-up funds means they can’t be used elsewhere while locked up. From a practical standpoint, something simple like a rental smart contract could mean you’d have to lock up your year’s rent to slowly trickle out to your landlord. People simply don’t have this much money to lock up. Smart contracts can’t sample unforeseen circumstances, something like a judge ruling in contradiction to a smart contract means it will continue to operate incorrectly given the new situation. Oracles in smart contracts will very quickly become infeasible. Consider writing a contract about a building in a remote town, who is the person that’s going to go on location, make the determination, and feed the input into the system? How are we sure they aren’t coerced to lie?
[1] https://changenow-io.medium.com/ama-with-nanos-founder-colin...
However, so far it doesn't have users other than the stakers themselves. It's not all that hard to transition everything over, it's just that it's a live $200 billion economy and they're being really careful about it. Should happen next year though.
Bonus points for it being overseen by a Swiss non-profit, they fund development efforts and encourage adoption.
Who knows what the end result it, but I think the ideas there make it favorable compared to BTC and ETH. Not to mention lower transaction fees :).
Moreover, those "better" solutions are mostly operated and promoted by founders with questionable profit incentives, they also control the rules of those crypto-currencies.
Bitcoin shines due to its fixed Rules, unknown founder, best incentive structure.
Bitcoin value is that it is extremely hard to change, especially when it comes to fundamental properties, like 21m hard cap.
You can actually rely on Bitcoin's monetary policy to be fixed forever.
I think Monero failed at the name. Bitcoin's name is self defining to some degree which I think helped make it gain a lot of popularity. It's also impersonal, bits and coins, there's no real branding there to get twisted up with. When people first hear "bitcoin" they already have constructs in their head about bits and coins and it elicits free advertisement as the imagination tries to create a working theory on what a bitcoin is.
Monero makes me think of some kind of failed sports car nobody has ever heard of. I'm not counting it out, but if it's really better on the technical side then it needs some prominent evangelists spreading its use.
PoW can be as simple as checking a hash (in addition to the basic block rules). PoS has a lot more rules, for example Eth has a lot of PoS rules and includes features like slashing which improve economic securities. https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/proof-o...
When rules aren't by implemented correctly it causes situations like Bitcoin's 2013 fork https://bitcoin.org/en/alert/2013-03-11-chain-fork