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Comment by graeme | Hacker News Reader

Reminds me of the Paperclip Maximizer thought experiment. An AI which destroys the universe by turning it into paperclips, as its goal is to make more paperclips.

First crypto took marginal GPU and energy capacity. Now it is taking SSDs.

It has so far produced nothing except higher values measured in fiat. And the higher the values go the more resources needed for the computer networks.

Of course crypto is not an AI so it can only get fed more resources if it converts believers to feed it more. More GPUs, more SSDs, more coal, to run calculations.

So this should be self limiting at some point. Or maybe I’m wrong and some practical use will come of it but it’s been 12 years without any so far.

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Someone a while ago imagined a future humanity where we had constructed a Dyson shell entirely devoted to cryptocurrency generation and were now a species of conmen and zealots desperately trying to convince alien civilizations that it is valuable.

There is some overlap here with the plot of a science fiction book Accelerando. I guess the singularity is here but it's not what we expected.

Ah yes-- I remember reading that around the time it was released and couldn't really wrap my head around was "economics 2.0" was actually supposed to be. 16 years later I'm starting to understand.

> science fiction book Accelerando

For those who haven't read it yet, it's available for free on the author's website: http://www.antipope.org/charlie/blog-static/fiction/accelera...

That's one smart book

That comment makes me miss Douglas Adams.

This reminds me of my sci-fi dystopia idea:

An intergalactic network of wormholes enables rapid travel and communication between worlds, but the collective energy output of the universe's stars is devoted entirely to bitcoin mining, ultimately accelerating the heat death of the universe.

Stars burn whether the energy they produce is used or not, so this doesn't accelerate the heat death of the universe. You'd have to merge stars for that (because larger, heavier stars have a higher rate of fusion).

Not to mention if you could get total conversion of mass to energy going, you could just scare all the stars into inert hydrogen icebergs and use the hydrogen to fuel your total conversion reactors. Much more efficient than fusion.

Technically if you wanted to maximize energy production you would split every star apart into dwarf stars that lived 100s of billions of years. You don't want them burning at all. Then you would take their matter and dump it in a black hole and capture that energy.

That's the premise of Xeelee Sequence novels :)

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

Another thought, an advanced bitcoin miner type thing uses new physics where the environmental destruction used to power it is basically to increase the progress of the Big Rip (perhaps only locally though), but maybe the reason we always thought expansion of space was always happening is because older aliens were already doing the same thing for their blockchains.

"But we spent all this energy to prove that the work done by our distributed mining networks could be trusted. It's trusted!

Aliens: "Um, so... yeah, we were more interested in trading novel technologies and refueling our ships. But seeing as you all look like you're starving to death and have destroyed your system's resources, how about we just donate a few universal constructors and a bunch of feed stock for them. We've got enough fuel to make it to Proxima Centauri, so we're good for now. Oh-- we're hard coding the universal constructors to "food" only though because your life choices have been... well never mind that, our philosophy is not to judge."

Uninvited additional aliens: “hey guys, sorry to interrupt, you should try protomolecule-chain. It solves the problem of boot-strapping an interstellar proof-of-work ledger. There’s some problems with inter dimensional dragon environmentalists, but that’s neither here nor there.”

Don't worry, long before then we'll pass the Crypo Event Horizon, when it becomes uneconomical to compute anything but crypto, and civilization will gratefully collapse. Our descendents will curse the blockchain and evolve other means for exchange of value.

Precious metals are reasonably compact, easy to store and have inherent value due to their relative rarity.

Bring back the gold standard, and enjoy your popcorn as the entire solar system rushes to build supermassive particle accelerators that bombard base metals with all sorts of stuff until they turn into gold. It really is the same principle as brute-forcing meaningless hashes until you get a predetermined prefix. Only in this case the desired prefix has 79 protons.

Black hole accretion disks are more efficient for that:

https://www.orionsarm.com/eg-article/464790d2497de

Things only have value for their utility. Anything else is a consensual hallucination.

Right now a non-trivial chunk of compute power, storage and engineering effort is spent on advertising and marketing. I'd rather take crypto, at least it's easier to ignore.

Marketing doesn't inflate hardware prices by 500 %.

That's debatable, and really depends on what hardware you count.

I can only recommend Accelerando from Charles Stross.

I wish he’d start writing science based speculative fiction again.

The Laundry Files are pretty entertaining.

That they are! But Accelerando and many of his other earlier books were mind-blowing.

Sometimes I need to take a break from the singularity, you know?

Sure, but it's almost been a decade!

There is a practical use: evading China's currency controls. Buy mining hardware and electricity with renminbi. Sell the resulting coins in the free world for fiat hard currency.

Does this theory predict China will eventually clamp down on crypto? If so, why haven’t they already?

They endorse Bitcoin openly to their citizens as a good investment.

Why wouldn't they want to dethrone USD as the reserve currency?

Okay so that’s a competing theory to the parent I was replying to, to be clear, though it does seem a better fit for available evidence to my unsophisticated self.

I don't think they're mutually exclusive. If China wants bitcoin to succeed, they would do well to turn a blind eye to people evading currency controls, in order to maximize incentive for their citizens to mine and use it.

That makes sense, but it seems like an unstable temporary situation? If what you say is true there’s a tension- crypto can help unseat USD as the global reserve currency, but a huge part of crypto’s value is because... Chinese oligarchs can use it to transmute their renminbi into USD? What am I missing?

I'm on pretty shaky ground hypothesizing further, but if it were the case, they must believe whatever they cede through allowing the circumvention is worth the outcome. Would trading Chinese-mined BTC (on equipment largely produced in China) for USD necessarily be good for the dollar?

The value of Bitcoin comes from the fact it can provide strong property rights to anyone in the world.

There are many countries where the governments have failed to secure property rights appropriately, mismanage their currencies, embezzle public funds, and abuse their citizens in so many other ways. It's disgusting.

Citizens of those countries can opt-in and benefit from Bitcoin and security guarantees it provides.

Billions, quite literally billions, of such people live in such situation today. They have no economic security. No property rights. Even the land they live on gets confiscated every now and then.

....how is granting strong property rights to the less fortunate of the world is not one of the most valuable things in the world?

Bitcoin is a freedom technology, disguised as get-rich-quick scheme.

This is the best pro-bitcoin argument I’ve heard in a long time! One big question I have is why bitcoin specifically has the value and not other cryptocurrencies. Others provide the same technical security guarantees. Bitcoin has a lot of hash power, which is nice, but that doesn’t seem to provide much additional security compared to other major cryptos, especially if the government of China can ruin it at any time. Why not Etherium, which has a lot of additional useful features? Or some other crypto with lower fees and a higher transaction capacity? One that’s carbon-neutral? I buy that bitcoin is important (I do own some), but I don’t see why the value should go up, or that it should end up being worth a big proportion of the benefit that cryptocurrency brings to humanity.

Bitcoin is the #1 SoV because:

1) it was launched fairly by a person who uniquely had no reasonable expectation of profit when doing so,

2) it was launched first, giving it first-mover advantage, and

3) its proprietors made the very wise choice from 2015-2017 of censoring their populist opponents pushing for Bitcoin to become PayPal 2.0, and instead euphemistically refering to Bitcoin as “digital gold” — the speculative store of value to end all speculative stores of value

The very fact you’ve asked this question in full knowledge of owning both BTC and altcoins whilst also alluding to altcoins being more valuable, and the fact readers can only possibly act on your narrative by investing in the coins to which you allude — obviously only as a speculative store of value — just goes to show why Bitcoin is #1. Cryptocurrencies are simply nothing more than speculative stores of value, there are no exceptions.

Bitcoin provides literally no property rights. All bitcoin does is say this address has that many bitcoins (in this particular blockchain).

It doesn't provide any property rights? Well then, why don't you go ahead and help yourself with some billions in Bitcoin from Musk's personal holdings? Should be easy, according to you.

I think you'll find that it's much much easier to repossess a house, rather than repossess a bitcoin address with billions.

Here's a detailed analysis by a law professor from a reputable law school on Bitcoin as a property rights system: https://scholarship.shu.edu/cgi/viewcontent.cgi?article=1676...

> Well then, why don't you go ahead and help yourself with some billions in Bitcoin from Musk's personal holdings?

Give me a rubber hose and $5 wrench and I'll start working on it:

* https://xkcd.com/538/

Once it's transferred what recourse does he have to revert it?

> Here's a detailed analysis by a law professor from a reputable law school

Ah yes, the William & Mary Law School. The same law school that birthed the idea that the US Second Amendment was an individual right…

What are your thoughts on "United States v. Cruikshank, 92 U.S. 542 (1876)"?

The mythical land where it is easy to safeguard crypto keys than physical properties while people still haven't learned to safeguard their passwords.

If the govt knows about your properties than they would also know about your digital activities as well.

Bitcoin is only freedom for the oppressors in this scenario since only they are allowed to move unchecked and will use it to get out when they realize their days in their country is numbered.

I was just about to say that. China has an economic system where it is politically feasible for the state to own significant assets and portion of the economic capital. The West doesn't, we have a (mostly neoliberal) system based heavily on finance and private ownership, and nationalization of assets is an impossible policy.

You can destabilize the finance system by creating free money, in fact, according to exogenous money theories, it was always possible to create money out of thin air. But until cca 1980s, the creation of new money was confined to financial institutions (not just government) and heavily regulated.

The regulation was gradually lost (that's why we are having these asset bubbles and financial crises), and Bitcoin democratized the money creation even more.

But regardless whether you believe or not that Bitcoin can destabilize financial system, ultimately, if things go south, China can actually react and pull the plug on the financial industry, limit its power in the economy at large, because it owns big chunk of it (or can make sure it owns it). In the West, however, this is a political issue, and governments can only watch the financial system fail and cause another big recession (or at least, huge misallocation of resources, for example in real estate).

So why would China care? Geopolitically, they have the upper hand. We should care, though!

> They endorse Bitcoin openly to their citizens as a good investment.

The Chinese government is not usually in the business of recommending specific investments. (However, they might discourage people from investing into known scams.)

The source of this claim seem to be remarks on cryptocurrency that the People's Bank of China's vice president, Li Bo, made at the Boao Forum for Asia: http://www.cs.com.cn/yh/04/202104/t20210419_6158938.html

Specifically, he said that stablecoins would have to subject themselves to the same strict regulations as banks if they want to become widely used payment channels, and that cryptocurrencies aren't per se currencies, but a different kind of investment, and that, like other countries, they're currently investigating how to regulate them to manage the associated risks.

How that turned into an "endorsement" I don't know for sure, but I suspect hype factories trying to sell bitcoin using whatever story works.

last I read china owns 60-70% of bitcoins hash power?

https://www.bloomberg.com/news/articles/2021-04-07/peter-thi...

China's digital yuan and accumulation of bitcoin hashing power could lead to their dominance in the online dark/gray markets

Which is a theory that predicts China WON’T clamp down, and further that the parent I replied to is wrong about the principal motivation?

China is not a singular monolithic entity though, and RMB -> USD conversion is heavily restricted, so both things can be true. The principle motivation for Chinese Bitcoin miners is to get USD/non-RMB fiat, while at the same time, the CCP doesn't crack down on Bitcoin mining as tacit approval of using Bitcoin as a long shot to dethrone USD globally.

Cool. But still, under this theory, should it become sufficiently clear crypto won’t dethrone USD, and crypto becomes enough of a way for wealth to leak out of China in a way that makes the CCP grumpy, would THAT predict a CCP clamp down on crypto? And if so, what might the thresholds and parameters be?

Ridiculous. China currently owns the main Bitcoin blockchain.

how does this not terrify the community?

Because anyone still holding Bitcoin is in too deep to entertain the possibility that they’re wrong

(Try telling a Bitcoin maximalist that software has bugs...)

Let's find out what mainland china people use as a local or slang term for bitcoin and start using that term instead of bitcoin.

> Buy mining hardware and electricity with renminbi. Sell the resulting coins in the free world for fiat hard currency.

That's the way it keeps getting described to me.

However, where does the hard currency come from? Who is providing the USD for ChiaCoin, and why?

This applies to any other of the cryptocurrencies that pop every day. Mining alone is about as useless as owning a printing press for your own currency $FOO. Unless someone is willing to give you hard currency for $FOO, it's just worthless strips of paper.

Who's trading hard USD for every new fad coin?

> Who is providing the USD for ChiaCoin, and why

unfortunate souls who are speculating on it since they don't know better.

Also a huge % is probably held by a small amount of early adopters who whale that coin up so it seems more valuable and has more perceived trading traffic

> unfortunate souls who are speculating on it since they don't know better.

Yes, but its seems that every day, it's some other coin. At some point, the money has to run out.

> Also a huge % is probably held by a small amount of early adopters who whale that coin up so it seems more valuable and has more perceived trading traffic

This sounds far more likely.

>"At some point, the money has to run out"

That only applies to usefull things, like infrastructure and industry. When it comes to speculative s financial assets, oyr capacity to fund them is virtually unlimited

I don't think you can buy Chia yet. I hear people are using their spare storage space to farm it. I imaging lots of torrented movies have been sent to the recycle bin recently.

I’m in a machine learning telegram channel. There was one guy recently who came in to ask which new crypto is going to take off. I think there’re many people trying to find the next big thing. Most of them probably waste money.

https://www.decisionproblem.com/paperclips/

Warning: will waste your time like few other things if you're the sort to get addicted to clicker games.

+1, it's a good one. And as a bonus: it has an end! So you won't sink a ton of time into it.

I honestly don't know why people even try clicker games. They sound awful.

I wish I knew why they tickle my fancy so much! I've spent far too much time on them.

Personal theory: they're like juggling. Satisfying but ultimately useless.

Many clicker games are perpetually-changing resource-balancing and short-vs-long-term-tradeoff games under the hood. Do you spend your [_] on something linear and replace it soon, or exponential but you'll be waiting longer for the next thing? Do you spend [#] to support more passive styles, or do you go full [%] and spend 30m micro-optimizing by hand to save hours later?

That same kind of thing exists in the core of lots of games. E.g. look at StarCraft - Zergling rush, or get more resource gatherers? Early and mid game is super heavily focused on this, and the players and community spend incredible amounts of effort micro-optimize their setup to get even one more unit in a time window. Through this lens, the combat is primarily evidence of your superior resource management, and whether you investigated your opponent's plans well enough.

---

They're of course not all homogeneous, but if I had to pick one thing they overwhelmingly share in common, it's this resource-balancing aspect. And they go a heck of a lot further in it than most other kinds of games do.

Love this game. It indeed was an inspiration for my comment. I won’t spoil anything but there is one moment in particular..,,

«It has so far produced nothing»

Censorship resistance. Digital money that does not require constant "authorizations" from incompetent, flaky, slow, or even sometimes corrupt payment processors or other financial entities. Money that works even where traditional systems fail. No denied transactions. No limits. No "account" to open. Works for the underbanked. Send it truly anytime anywhere. No other system does this.

In other words, money created by people for the people.

This reads like a wish list.

In all seriousness, the entire concept of money has always been created by people.

IMO, cryptocurrency seems like a religion. I’m seeing a lot of belief of what said religion will do for you.

This reads like a person who has never used cryptocurrency or defi in any manner whatsoever. If I want to right now, I can get a multimillion dollar loan, no questions asked, against most any crypto I own for an interest rate lower than credit cards or scammy payday loans will charge. I can be a market maker for trades without being an institution and with no barrier to entry, I can liquidated overleveraged loans, I can trade derivatives otherwise not allowed to me by my country, and I mint and trade synthetic assets, the list goes on and on.

You're the one who sounds like they are subscribing to a religion and haven't actually even attempted to understand what financial freedoms are suddenly afforded to you when you use cryptocurrency.

One of the best comments in the thread, actually describing the utility of crypto and the power of DeFi, and you're getting downvoted to oblivion.

Could be the tone, when removed it does make a good argument.

Strange because I intentionally matched the tone of the comment I replied to. Comparing cryptocurrency to religion is incredibly ignorant at best, and trolling or FUDing at worst.

Its close (oh and I’m absolutely on your side here). It’s not a religion (this would require it be not-math and not-physics), but it is a very virulent meme, like religion. It might even be the greatest meme - that is, energy based PoW 21 million coin sha256^2/ripemd/ecdsa with 10 min blocks just as our savior Satoshi commanded. As another commenter said, it actually delivers unlike religion.

There’s definitely some reasons for real value in defi but cheap loans is not one of them. With millions in collateral you can get ~1% APR from several places right now. That’s way lower than any crypto loan I know of. One way is to sign up for an IBKR account from several countries, and wire them assets, completely without human interaction.

I wasn't aware of this. What kind of collateralization ratio is required and what sort of assets are needed for this? Also signing up for an account from many countries sounds irritating and possibly illegal

I think they mean ibkr is available in several countries

As the sibling comment says, I mean you can access them from several countries.

Collateral requirements vary by asset and account country according to national law. Generally it’s 50% LTV on equity collateral but leverage can be higher depending on the case.

I paid for a house with their margin to avoid triggering gains on long term positions, while waiting for some locked up options to liquidate.

Is this a constructive argument?

Financial freedom is an interesting topic, and one that I don’t have much expertise in.

What is cryptocurrency freeing you from? You listed several opportunities that cryptocurrency could provide you, but I don’t exactly see the correlation with financial freedom.

What is freedom if not the ability to take advantage of opportunities?

Again, the correlation is obvious to anyone who actually uses this stuff. If I want to trade on margin on Fidelity, I need to sign some forms, go through a lengthy application process which may or may not actually be accepted to finally be able to trade with high interest rates and non-transparent margin requirements (my fidelity margin requirements change out from under me nearly every single day) routed through rent seeking, too-big-to-fail hedge funds and dark pools with T+2 order execution and restrictions on when during the day I can trade (only during day trading hours). Oh and don't accidentally trip up a "good faith" violation and have your account suspended from margin trading for a month even though you've done nothing wrong, and their antiquated systems simply aren't able to account for the fact that you weren't, in fact, trading money you didn't have.

Just let me do what I want with my money, it's pretty simple. Sure maybe there are negative externalities that come with that, but freedom isn't free.

> "What is freedom if not the ability to take advantage of opportunities?"

We probably have differing perspectives of what freedom means. Financial freedom to me means dedicating my time to doing things that enrich my lived experience.

> "Again, the correlation is obvious to anyone who actually uses this stuff"

I don't know if it is your intention, but I find that to be dismissive and unnecessary. I would appreciate the opportunity to discuss opposing viewpoints with civility.

> If I want to right now, I can get a multimillion dollar loan, no questions asked, against most any crypto I own for an interest rate lower than credit cards or scammy payday loans will charge

Giving people loans with "no questions asked" has lead to significant amount of problems in the past.

I see your point but they are collateralized. Let's put it this way, my friend just bought his house and spent 2 weeks with mortgage agents and brokers. Meanwhile I deposit some ETH-USDC LP into maker and in 2 minutes get a no questions asked loan at 3.5%. Sure it's lower leverage when compared to most mortgages but I think my point still stands.

What happens when the price of BTC/ETH falls by 50%? I don't see how would lending at 3.5% (unless it's very short term) would make sense considering the risk.

And what happens if you can't pay back this loan? And what happens if thousands or even millions of people can't pay back their loans?

The current systems may not be perfect, but they do exist for a reason. Chesterton's Fence and all.

But it's an objective fact that you don't need to open an account with a financial institution to start using Bitcoin. That was always the case. Unlike religion, it actually delivers.

How do you buy bitcoins without it touching some financial institution at some point? You can buy bitcoin with cash, yes, but if it has to go through a financial institution or other regulated entity at any point then it is not delivering on any promise of independence from those institutions.

Why do you need to "buy" Bitcoin? Do some work for someone, sell them some produce you grew or something you made, have them pay you in BTC. Go to a vendor who also is happy to take Bitcoin, buy stuff you need in turn.

Yes, I know it's not happening much. Bitcoin has failed (so far) as a payment/exchange system, and that's cause for sadness to me, but also a good way to look at the history and ask the questions about why it has failed and how to go about creating a better "King-proof Money".

You're not going further in the chain: The person you work for has to buy bitcoins then. Or the next link in backwards has to. At some point, people will need to convert current assets into bitcoin. You're arguing from a point of view that requires bitcoin to already be an established currency. I'm saying that there is no practical way to get to that point without that sanction of governments to use traditional financial institutions along the way.

Further, even if you got there, governments could simply ban bitcoin. It then becomes extremely hard to use as a common medium of exchange because literally no legal business could accept it without risking the business and their life outside of prison.

It would also render useless the scenario of fleeing a despot country with hard currency assets intact because wherever your destination, those assets are still illegal to use.

All of this means that, at any point, governments could reduce bitcoin to-- at best-- another side of shadow banking, like how drugs can be a medium of exchange in the criminal world. That does not allow room for common usage by the masses.

Bitcoin & other crypto exist because nation states allow them to exist.

You don't need to open an account to trade pogs either.

Besides, it would be naive to take pog trading advice from boosters who are holding a hundred million Alf pogs.

> IMO, cryptocurrency seems like a religion.

That implies a sincerity in their beliefs.

While it's difficult to figure out what people's true motivations are, the promotion of new cryptocurrencies, the "get in early" rhetoric, leads me to believe most cryptocurrencies are little more than pyramid schemes. The ability to mint/mine/farm currency without paying in directly doesn't really negate that since it is intended to become more difficult as time progresses. The actual value comes from speculative investments from a growing number of people.

The spike in Dogecoin led to people talking about regretting not getting in on it. Feeling like they missed out on their chance. The motivations are clear. They wanted easy money. If it was about having a decentralized financial system then it wouldn't matter that they didn't get in early.

You could more concisely say that it is useful for completing transactions that are illegal, which encompasses nearly your entire list but I guess doesn't sound as nice.

Any technology can be used to facilitate illegal activities. Vehicles, weapons, phones, computers... Nothing new here. Cryptocurrency is no different.

Crypto-currency’s _only_ use case today, other than speculation, is illegal payments. For almost everything else the traditional banking system is faster, cheaper, and safer.

It’s Saturday now in many places in the world. Can you move a few thousand USD between your two primary accounts at different traditional banks before Monday?

... yes? Faster Payments for my GBP balances and Prompt Pay for my THB ones tend to take a few seconds and be free?

Added bonus: both will confirm the recipient name, and if I truly, actually fuck up the payment, I can get the money back again rather than it disappearing into the ether.

Finally: the money I have transferred is now available to actually spend on things straight away, without needing to then reconvert it to real people money with a sizeable cost.

Don’t know, I’ve never had any need to do that. But I can pay a merchant $50 by credit card without spending $30 in transaction fees or waiting 30-60 minutes for confirmations.

Bitcoin Cash is the original and confirms in the next block for pennies.

«[Problem x] with cryptocurrency will be fixed by [new alt-coin] that’s just around the corner!»

Just because the US has (comparatively) bad banking infrastructure doesn't mean most places do, most of Europe can do this and has been able to for years (though probably in EUR). This includes some cross-border payments.

Instant payments should be coming to the US in 2023. See https://www.federalreserve.gov/paymentsystems/fednow_faq.htm

And when you say "for years", it's really decades that this has been the norm for. In my experience it is the same in the more developed Asian countries, or really any high HDI country that is not the US.

Ok, but you're not denying the fact that it's a use case. Why should I have to suffer because the US financial infrastructure is stuck in the 1930s?

All technology becomes outdated at some point, if cryptocurrency is useful to me right now to perform basic financial operations how is that not a use case?

But you’re not moving spendable USD between your own accounts when you’re transferring Bitcoin, so it’s hard to see how this is related to your use case?

It's trivial to do that in Australia. Is this still a significant challenge in the US?

Our two major bank-to-bank payment rails are the Automated Clearing House (ACH) and Wire Transfer. Both are "closed" on weekends for some reason. One could probably use something with debit cards like Venmo or purchase and hand off a cashier's check.

Yes: Many banks, at least in the US, are now open for limited times on Saturdays & Sundays. I can walk into one bank, get a cashiers check, and bring it to another bank, all with zero transaction costs. And possibly faster than Bitcoin, depending on the transaction fee I was willing to pay.

To help people in the US: Zelle can do this I think? PayPal probably too.

The nice thing is that if your account is closed on the weekend, the thing you need to buy probably is too.

Here in Australia I can transfer up to $10,000 between traditional banks faster than I can with bitcoin, any day of the week.

Yes, and it’s also illegal to spend over $10k in cash in Australia. And there ain’t no government that can stop a person from sending infinity via bitcoin any day of the week. Even the ones that believes that the laws of math don’t apply there.

Update; this was cancelled in Dec 2020. Got very close, a jurisdiction banning cash tx’s. And that is why Cryptocurrency, non state money is important.

Nowhere did I disagree with what you've said, except for your final sentence. The interesting thing about cryptocurrency is not that it facilitates illegal activities, but that it does very little else - and that is in fact quite different from the rest of your list.

> The interesting thing about cryptocurrency is not that it facilitates illegal activities, but that it does very little else - and that is in fact quite different from the rest of your list.

How can the same people who make this argument turn around and in the same breath decry Bitcoin for being nothing more than a speculative store of value? You can’t have it both ways.

No one buys Bitcoin to spend it. This much is abundantly clear. And Bitcoin, as an inflation-proof global currency of fixed supply controlled by computer algorithms, never had to do anything other than sit there as an idle speculation to fulfill its primary role as safest safe haven asset. That’s what makes it such a powerful idea.

Do you support all Chinese government laws? How about all US laws? Do you support all laws of all governments?

Many here are fairly libertarian, at least regarding drugs. Do you agree with every classification of every drug in US law and that all punishment for them is perfectly appropriate?

In the past you’d be denied banking for the color of your skin or treated differently based on genitalia.

Illegal is only defined by imperfect governments. So yes, it allows for illegal things, that’s a great thing.

It also means you won’t have an account closed for thoughtcrime, or cheering the wrong political party. It means an authoritarian government can’t keep you locked there. And it means you can avoid myriad kafka-esque dystopic mishaps of “the system”, nightmarish AI flagging slip ups that close your account or prevent you from sending money to a relative in need in another county because it’s Sunday or you forgot to renew you drivers license.

Not to mention you can now use code to manipulate your money, give early users real equity in your company and design fully digital co-ops, avoid some of the burden of blatant classist laws like accredited investors, and design incentive mechanisms for your startup that are guaranteed in code.

There’s a technology out that you might like as a libertarian. The tech is untraceable, doesn’t have a built in chain of ownership logged on the internet, and everyone measures the value of their latest blockchain based off of it. It’s called cash.

Not a libertarian just a guy who doesn’t agree with every law everywhere.

Monero and other privacy coins don’t have a traceable ledger.

Now clear this up for me... how do you send a ton of cash anywhere in the world in minutes without risk? Is it easy to smuggle out of an authoritarian gov? Can you manipulate it with code?

Cash is a great way to pick up bitcoin anonymously though, you make a good point.

Maybe if someone can't remember to renew a license that asserts their competency in operating lethally dangerous machinery then they should also not be trusted with financial transactions until they resolve that situation.

Interesting that all of the pro-cryptocurrency folks read this as an attack. I quite carefully did not place value, positive or negative, on it. Perhaps the fact that you read it that way reveals your true thoughts on the matter.

No, I don't support all laws in pretty much any regime. But I do believe that the ability to enforce laws is important. The only thing that consistently works more poorly than having rules is not having any rules at all.

You are of course welcome to move to a lawless state if this is really what you want, but I suspect you would not find it to be the utopia you dream of.

> I guess doesn't sound as nice.

How is this anything but dismissive? Your whole post was insinuating it’s only utility is for illegal things, in context implying that’s what makes it non-valuable. If you weren’t making that claim, then there’s no point to your post. Don’t hide from your own claim and act coy now. It was obviously dismissive, and now just looks like you’re backsliding. Not to mention the straw man turning “some laws are bad and you should be able to resist them” into “live in a lawless state”. Or that you ignore the litany of non-illegal uses I added.

In fact, I’m skeptical of 99% of the field, I believe without PoS it should fail and isn’t worth the cost, and I was a harder skeptic until recently and changed my mind because I honestly believe I’ve seen some truly interesting uses now outside of being a freer currency.

Get outside of “pro” or “anti” box and think in terms of utilities and specifics, and if you reply reply to my specific claims.

So every contract can become backdoored and confirmations happen by chinese miners for 65%.

Thanks, but no thanks.

It’s so weird to see this argument on HN. It rings eerily similar to the “I got nothing to hide” argument in the discussion about surveillance.

I'm very curious how you got there. I certainly don't hold that belief. I do however hold the apparently very controversial view that we should have laws, and that they are pointless if they aren't enforceable. I think the only thing that really pins down about me is that I'm not an anarchist.

> Money that works even where traditional systems fail.

Just playing devils advocate, but isn’t it’s usage reliant on traditional systems like electricity, ISPs, hardware makers, software makers, mining operations, etc?

Say you were in California during rolling blackouts, or Florida post hurricane that knocks the power out for weeks, or an authoritative country that has historically turned the internet off on its citizens during protests/uprisings. How would it all work?

I believe cell towers in hurricane threatened places like Florida plan for generator backups and flood countermeasures etc. That said I'm sure throughput is squeezed, but I don't think anyone really plans for a catastrophic scenario where large numbers of US residents lose all internet.

Kind of like saying "what good is Bitcoin during a hurricane Katrina scenario" but by that point its survival, not money you're worried about.

People often buy things with money to survive.

Surely enough, the people at Disaster Radio [0] are passionately working on this very problem.

[0] https://disaster.radio/

Well, you need very little to use Bitcoin - basically, just internet access. And, potentially, you only need to smuggle as little as 250 bytes.

Banking systems has more choke points. If money is on your bank account and it gets blocked, that's it, nothing can be done about it.

With Bitcoin, even if internet in the entire country is blocked, you still have options: you can transmit data by phone. There are many ways to smuggle 250 bytes out of a country.

You can also just memorize the mnemonic phrase (so-called brainwallet) and move yourself out. They won't find your bitcoins even if they strip-search you. (But if they know you have them, wrench attack might work, no defense against that if your privacy is compromised.)

All the other things are not necessary for using cryptocurrency, they just need to happen somewhere. So the system can route around the damage. Mining is not possible in your country? That's OK, it will work as long as there's at least one country where mining is possible.

So Bitcoin resilience is not about working when power is out, obviously. It is about giving people options to route around the damage. If your bank blocks you, you can't go to another bank to get money on your account, since that money resides within a particular bank. But Bitcoin is global - you can access your funds from any computer in any country, as long as you have a private key.

Banking systems has more choke points

Those banking systems are the primary method of turning fiat into bitcoin & vice versa, so those banking choke points are defacto choke points for bitcoin as well.

Assuming you always have to flow back to fiat?

At some point we will have CBDCs which crypto exchanges and banks will support, so legacy bank chokepoints should disappear altogether.

Doesn't have to flow back, but it does have to flow in to begin with, and banks are the choke point in either direction.

I don't know how many people want to get paid in crypto yet. I'm sure someone is fine with it.

In prague we have bitcoin can machines and I paid for a beer with it in like 2016. Not that beer is worth more than it's wieght in gold

Transactions are very small and can be even sent via HAM radio, or weak satellite link.

There are also devices for offline transactions.

Not to counter the point you're making, because it's valid. Just tossing in some info:

> sent via HAM radio

You probably want to transmit your private key in a secure manner. HAM radio is not a good way to do this: http://www.arrl.org/news/fcc-dismisses-encryption-petition

You don't transmit your private key.

what's being transmitted is a signed transaction, they are not encrypted. They can be safely transmitted on a postcard.

You are correct in that technically HAM does not allow for encrypted communications, but that's not an issue here, and probably would be very low on the list of concerns in a situation where your only comms channel is HAM.

Sure, but The point was how Bitcoin and crypto would “work” when traditional legacy systems fail.

Relying on HAM radios and satellite links are both legacy systems and we can’t pretend any significant percentage of the global populace could conduct Bitcoin transactions without centralized 3rd party services subject to the same regulations as the banks, much less use HAM radios, especially the poor and unbanked who always seem to be the goto demographic the proponents of cryptocurrency point to as the people benefiting greatly from cryptocurrency.

It’s on par with saying when supply chains fail we have farming, hunting and gathering. Very few people are capable of getting fresh water much less living off the fat of the land.

I like the technology and do see it as still in the early stages of adoption, but I liked the freedom of the early internet, unfortunately that didn’t stop SV and VC money from putting a strangle hold on it, making it the shit-hole sandboxes it is today, exploiting people and farming their attention and data for advertising dollars.

The US could shut bitcoin almost completely any time it wanted simply by saying that no US bank is allowed to deal with it, and no US bank is allowed to deal with any foreign bank that deals with it. On/Off ramps to actually buy things with bitcoin would dry up, and its lack of practical use as a day-to-day currency would mean it had practically no value. Legal business that tried to accept it would essentially have to become money launderers to do so.

It is not censorship resistant, the entire system could be censored. Heck, FinCEN is already moving forward with regulations that require regulatory reporting on crypto transactions touching US institutions in a similar way to CTR reports. Bitcoin exists only because it is not a threat to governmental monetary control, and could be squashed the moment that changes.

If that is so easy, why was the war on drugs never won?

The government can deliver serious blows to BTC but I’m not sure it can be totally destroyed.

Are people as addicted to BTC as they are to drugs?

Moar addictive. I just can’t get enough. I keep putting more dollars in, and keep getting less and less bitcoin back every year. Addicted.

Because drugs were not a digital abstraction that required buyers & sellers to go through traditional financial institutions to convert their fiat cash into physical drugs.

Banning bitcoins as I described would mean the vast majority of all banks in the world would not be able to act as on/off ramps to crypto so it could never hit mainstream as a medium of exchange. It would also be worthless as a store of value because you wouldn't be able to get that value anywhere useful. It might live on as some part of the existing shadow banking networks, but it would never deliver on the promise of currency available to the masses & disconnected from arbitrary nation-state monetary policy.

I'd like to be clear in my viewpoint though: I am not anti-crypto. I think there are many improvements it can bring to the existing global financial infrastructure. I just don't have any faith that it can deliver on promises of freedom from government regulations & control. If it exists, it will always exist because of government forbearance in killing it, not despite government antipathy.

Because drugs is a commodity people want. There are numerous examples throughout history where different forms of currencies get shut down by the ruling body. There is of course an argument to be made about Bitcoin being a commodity. But I think we can easily agree that the consumer demand for Bitcoin isn’t going to rival that of drugs.

I think the real joker is the black market. Modern drug organisations are Apple sized businesses that also have their own enforcement of violence and justice systems, and so on, making them effective non-geographic states.

I live in Denmark, we’re a rather small country, we frankly have less authority behind the Danish Krone than some drug organisations would have behind whatever crypto currency they fancy.

Gonna go out on a limb here, no one prosecuting the war on drugs actually wanted to get rid of them, they just wanted to criminalize their political opponents.

Wouldn't money created by chinese miners be more correct?

Don't "the people" want money that's stable in value and works at the grocery store?

Oh just wait, someone will come up with cryptocurrency that benefits from usage of higher bandwidth over longer links and then we're all truly fucked.

It’s a cancer metastasizing in all components of value and scarcity. Why this type of operation is not banned globally, but coexist with climate change worry, is a perfect indicator of mass delusion.

Is there a link between cryptocurrency speculation and artificially low, centrally planned interest rates?

Roko's Basilisk is constructing itself

Hah, interesting. Lends new meaning to “have fun staying poor”. A phrase intended to chastise those who didn’t help raise crypto’s hash rate.

You might like https://www.decisionproblem.com/paperclips/

The author qntm was just tweeting about that in relation to cryptocurrencies today: https://twitter.com/qntm/status/1388301328716378112

There is a game about turning the universe into paper clips: https://www.decisionproblem.com/paperclips/

It has one of the most beautiful endings in my opinion

> It has so far produced nothing except higher values measured in fiat

Not true. All kinds of blockchain development is happening in hundreds of fields.

The most important development so far is deflationary capped currencies independent of any single government. Currencies that almost anyone in the world can use, which helps the poor in the countries like Venezuela, Argentina, Sudan, Lebanon, Iran.

I feel like all the practical use standards are unfalsifable and there is no use that will satisfy it

Is it a lack of awareness due to disinterest, or objective reasoning, we’ll never know!

You can comment hundreds of times all the use cases for crypto and there is always a reason why MySQL is better...

but you can’t transfer the rights to whatever you did with mysql, in a way the administrators can’t arbitrarily reverse or be compelled to reverse

the market has been saying “hey this is useful in some circumstances” for over a decade

The Ethereum Swarm project uses the blockchain and smart contracts to offer completely anonymous and decentralized file storage space, for which the node operators are rewarded with crypto. It's still in beta and actively developed, though. But I hope it will overtake Chia because it is actually useful.

Someone should write a book about an AI that is developed as a new cryptocurrency, with PoW providing it insane amounts of compute power to its AI algorithm instead of performing dumb hashing races and proof of space providing insane amounts of fast storage. And us humans feeding it more and more of both out of pure greed, until it eventually becomes self-aware.

> It has so far produced nothing except higher values measured in fiat. And the higher the values go the more resources needed for the computer networks.

That isn’t strictly true. Before the advent of Bitcoin, there was no global currency of fixed supply controlled by computer algorithms. That simple academic experiment was quickly infiltrated by profiteers, however. Most people never cared to cultivate an understanding of Bitcoin beyond the barest of surface level understandings, and these same people are now able to finger point at blatantly self-serving get-rich-quick ICO projects — like Ethereum and Chia — which have clearly achieved nothing in spite of endlessly promising investors “innovation”.

The only thing innovative that has ever come out of the Bitcoin space is Bitcoin itself: a speculative store of value. Every national currency is similarly speculative, and people who “missed” Bitcoin are loathe to admit the same thing that happened to gold’s market capitalization prior to its ubiquitous use as money, is now happening to Bitcoin.

> there was no global currency of fixed supply controlled by computer algorithms

That is not good in itself.

> That simple academic experiment

Original description by its author intended it as a replacement for a payment system and currencies, not as an academic experiment or as a store of value useless for normal transactions

Every aspect of cryptocurrency save for one either fails to solve any societal issue, exascerbates existing ones, or is otherwise hype entrepreneurship.

But the deflationary global economic system Bitcoin facilitates disincentivizes mass consumerism — mass consumerism which is destroying the world’s natural ecosystems. This is only possible via a global currency of fixed supply controlled by computer algorithms. Bitcoin’s creator invented this. It is an innovation, in every sense.

Deflationary economics discourages capital investment, because it rewards saving — i.e. “hoarding” — not spending or investing. Assuming a Bitcoin-based economic system, as the pace of technological advancement continues to quicken, and more products and services hit the market, absolute BTC-denominated prices will have to decrease. More products and services on the market, with a fixed supply of money, equals lower absolute prices.

In addition, global adoption of a free-market money like Bitcoin would eliminate the ability of governments to fund weapons of war and public works projects by printing their own money. That would no longer be possible.

Bitcoin throttles humanity, and with it humanity’s ecological destructiveness could be kept at bay. No other aspect of cryptocurrency is of societal value in any way.

Crypto is valuable only if we believe it is. Once we discover a way to transmit money that has benefits over crypto, we'll gradually move to that, the same way transactions that felt limited by fiat moved to crypto.

ALL money is only money if we believe in it. Money only has value to the extent that I believe that you believe in its value.

Isn't it possible to create a crypto currency where mining it computes something useful? Like larger and larger prime numbers or digits of pi or protein folding or something like that.

Yes, but a useful proof-of-work leads to a less secure block chain. Bitcoin is secure because you know that an attacker that wants to change the second to last block has to spend X million on computational peer to do that. But if those computations are useful outside mining itself, then the attack might become much chapter or almost free

Like David Brin's messengers in Existence.

Humanity must not allow technology that marries self reinforcing emergent AI with a blockchain.

Bitcoin has tremendous value. Not as a currency or financial processing network. Those are pipe dreams. But in bringing the power of cryptographic and blockchain technologies to prominence.

Is it really worth the energy production of a small country to raise awareness?

Now if only blockchains were good for anything.

isn't the paperclip maximizer a metaphor for the profit motive anyway? at least that's the way i understood it

Not quite. The key of the profit motive is it generally produces at least some useful output. For example, if you mine oil, you have externalities of course, but at least someone finds the end product useful and humans get a benefit. And you can create a framework of laws and rules to capture the externalities. (We haven’t, but we could, and are starting to)

A paperclip maximizer is incentives gone wrong. People wants profits so they can do something with them. But the AI wants paperclips because it is programmed to want paperclips, and it does so to the detriments of any other goals. It would devour the child of the AI designer to turn her into an input for paperclip production.

> It has so far produced nothing except higher values measured in fiat.

I don't get how people keep bringing this up.

So it's all pure speculation is what you're saying?

So what are some of the reasons people want crypto?

1. As a store of value. Fiat currencies lose purchasing power over time by design. Especially now that interest rates are funny. If people/businesses (Tesla) want to preserve the buying power of their income/capital, they can not just keep their USD or EUR on RMB in their bank account. Traditionally gold fulfilled this function, but gold has limitations being bulky and all. Furthermore the COMEX where the gold price is decided is completely dysfunctional due to institutionalized deeply rooted corruption. Example: https://www.nasdaq.com/articles/jpmorgan-to-pay-%24920-mln-f... (note that this manipulation is ongoing and the fine was a fraction of what JP Morgan made on these spoofing trades).

People are turning to something that cannot centrally be corrupted as easily by a few governments and bankers. People and society as we know it NEED a store of value. So they're turning to one of the few options left: crypto.

2. As a safe haven from a corrupted US/international financial system. See point 1. Metals price manipulations are just a small fraction of the corruption that goes on. There's a reason why Elon Musk Tweeted something along the lines of "Bitcoin, in retrospect it will be inevitable." Tesla stock got naked shorted into oblivion by hedge funds while the SEC did nothing. Coincidence? US companies get deliberately shorted into bankruptcy by hedge funds (case in point: GameStop where this strategy failed). And then there's the share rehypothecation scam with perpetual failures to deliver on institutional trading positions and so on. Example: https://web.archive.org/web/20060421085925if_/http://www.rgm...

Does it still seem like a silly nerdy gamble now that Tesla converts some of it's cash into BTC? Not to me anyway.

3. As a free bank account with upgraded features like almost instant tranfers and total privacy (in case of ZEC and MNR). Ever tried to transfer money to a foreign bank account, thereby losing a significant percentage to currency conversion fees and other fees? Or over the weekend with a national holiday on Friday? You'd be lucky if the money gets into the other account within 4 days. It's infuriating IMO. And now it's also unnecessary, because: crypto.

4. Democratization of the cloud computing market. Example: decentralized yet commercial file transfers: https://skynet-send.hns.siasky.net/ There are other applications like coins that allow you to render Blender projects in exchange for a tiny fee.

So... Can anybody explain to me how all of the above is "nothing" and how the alternatives are somehow clearly more energy efficient and less damaging to the environment (lol: gold mining)? The down voting is not really doing it.

> It obviously has value to people and businesses, otherwise the prices wouldn't be going up for 10+ years expressed in fiat currency, now would they?

Useful concepts and events: speculation, economic bubble, tulip mania.

Sure, that's why I wrote the rest of the text. Thanks for the comment, just upgraded the post to be more to the point.

Your understanding of money is seriously flawed. Fiat currencies don't lose purchasing power over time by design. Central banks have a public mandate to maintain price stability and to create a low level of inflation, and that's what central banks do. The rate of inflation/deflation isn't an intrinsic characteristic of any currency (including cryptocurrencies) but the result of a particular monetary policy. For example, a country could instruct its central bank to reduce the increase in the money supply at a constant rate, like bitcoin does, instead of maintaining price stability. Nobody does this because it's thought to be a terrible monetary policy (would be pro-cyclical, leading to large price swings and deeper boom-bust cycles), not because it can't be done.

> Fiat currencies don't lose purchasing power over time by design. and to create a low level of inflation.

Inflation of fiat currency = loss of purchasing power of fiat currency. So these two sentences contradict each other.

And I get the point that the idea is that this inflation should be constant and there's nothing wrong with it in theory. Sure. Fine.

But that doesn't change the fact that keeping x USD on a bank account for x years decreases the purchasing power of that amount of money. And that that decrease in purchasing power is not desirable. So people try to maintain that purchasing power by converting those USD into something else. We used to have saving accounts, but yeah... those ceased to function due to negative interest rates.

And that's all without going into the scenario where the central banks are failing at their mission to maintain price stability. Which arguably is happening right now and is arguably the reason why people are dumping fiat currency in exchange for anything else that can better preserve buying power.

Am I wrong here so far?

Am I arguing that crypto is inherently and permanently a better currency than fiat? No. Not at all. Am I arguing that fiat currencies are currently not a great store of value: absolutely. And in that situation to preserve your buying power, you buy things you think will retain purchasing power better. I personally (and obviously many others) believe crypto could serve as protection as well as other assets that "can't be printed by governments and central banks". Is it speculation? yes, of course. But so is keeping fiat cash as fiat cash.

Keeping cash balances is undesirable because of the opportunity cost not because of inflation. In other words, even if inflation was at -10% you still would want to keep as little cash as possible and invest the rest at the risk-free rate.

And I don't agree that central banks are failing to maintain price stability. Inflation data indicates otherwise [1] [2]. If anything, central banks are failing to create enough inflation to meet their inflation targets.

[1] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA

[2] https://www.ecb.europa.eu/stats/macroeconomic_and_sectoral/h...

> Keeping cash balances is undesirable because of the opportunity cost not because of inflation.

I don't get this statement. IMO it's undesirable for both reasons.

From the point of view of holding USD on a savings account -10% inflation (aka: 10 deflation) is the same as 2% inflation with savings accounts that reek in 12% interest rates. You're arguing that nobody in the world should want to have such a savings account? Everybody should invest it in something at a risk-free rate? You mean a risk-free investment? I'm not sure what that means.

> And I don't agree that central banks are failing to maintain price stability.

I'm talking 2020 - 2021, as in: right now. The data you link goes until 2019 pre-corona, pre-helicopter-money times.

Here in Europe there's without a single doubt in my mind stagflation going on right now (prices that rise faster than the average income).

Holding cash in a bank account is IMO a guaranteed significant loss of purchasing power right now. If you take 1 look at past year's commodity prices, you'll see that the market agrees with me.

Year over year examples: lumber spot price up 300% up, silver 74% up, gold (the gold standard for measuring inflation) 5% up, housing prices 10 - 30% up, wheat price 25% up, and so on and so forth.

Does this mean all these things have all of a sudden become more desirable? No. Does it mean the USD/EUR/etc have lost buying power? IMO very big yes.

The opportunity cost of cash is the return that you would have earned if you had invested in a risk-free asset instead of keeping the cash. By keeping cash you incur such a cost, whether there is inflation of not, and this means you should always keep as little cash as possible regardless of inflation. For example, if the inflation rate is -10% and the return on a (risk-free) savings account is 1%, then you are incurring an opportunity cost of 1% annually by keeping cash balances. If the inflation rate is 10%, you are incurring the same exact cost. So while cash balances can absolutely depreciate as a result of inflation, cash balances should represent a small fraction of a household's net worth anyway, since it's not optimal to hold large amounts of cash. Therefore a modest rate of inflation, such as we observe in developed nations, is never going to have a significant impact on household balance sheets, compared to other forms of depreciation such as the normal depreciation of physical capital (e.g. houses and cars).

It has produced poor people easily to be able to store their wealth something that they can both afford and isn't constantly being debased. Something they can trade without an intermediary, that can't be trivially censored or confiscated. Something that doesn't require taking great risks and effort in transporting like physical gold. I think that's definitely worth something.

Crypto only needs resources as much as it needs security and throughput. More efficient cryptos will win as they are cheaper.

Yes, poor people, those who we all know have savings to protect (and definitely don't have a negative net worth /s)

There are people who benefit from having strong stores of values with deflationary pressure, and it ain't the poorest among us.

> It has produced poor people easily to be able to store their wealth something that they can both afford and isn't constantly being debased

I can't get excited about people too poor to have access to banking putting their money into something as severely volatile as crypto currency.

There is room for new financial companies supporting mobile banking and banking in the developing world, but I don't see why crypto needs to be involved.

> I don't see why crypto needs to be involved

But others can and that’s the important point here.

Except that’s not how value works in a human, emotional sense . Without agreements (maybe some crypto’s have that implicitly? Idk) the value will plummet, scale, inflate, deflate without reason or sometimes apparent cause.

There might be countries where there are advantages to crypto (say Turkey who was in the news) where it’s a better short term alternative, but crypto in my book is as speculative as ever, and I have seen nothing that changes my mind.

I’ve heard (don’t know how true it is) there also there are also some big players who have big hoards of a coin and can dump or pump a value at their wim.

> poor people easily to be able to store their wealth

Listen to yourself here.

The debasement argument is irrelevant when the purchasing power can vary by 10% on a daily basis.

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