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Comment by meowkit | Hacker News Reader

> I'm pretty sure it's nothing but a pyramid scheme, but I always gave the enthusiasts the benefit of the doubt.

So go find out? I’m quoting you here for the “pretty sure” part. Do a deep dive. I’be done deep dives on Bitcoin, Ethereum, Cardano, Monero, Nano, Iota, Hyperledger, BSC, Uniswap, Tether, Chainlink and cursory glances at dozens of other coins/tokens.

I’m a tech guy. I work on an operating system/embedded systems. Nothing about blockchains, DLTs, crypto, at its core is a scam to me. The author saying the “silent majority tech people” know its a scam is such nonsense to my experience. Every tech person I know thinks either A) its neat/super cool, or B) they don’t know anything about it besides memes.

Sure there are tons of misinformation, scams, and bullshit going on. That’s everywhere and is not special to crypto.

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Why can't the tech be neat/super cool and primarily be used to run a scam?

I mean bittorrent is neat tech as well but it's still primarily used for piracy. Doing a deep dive into how bittorrent works doesn't suddenly change the fact that 99.9% of torrents out there are violating somebody's intellectual property.

All I'm saying is, there's lots of super neat tech out there that's primarily used for not-so-super-neat stuff.

(sidenote, I actually think piracy is pretty neat, but it was too good an analogy to pass up)

I disagree with the characterization that the primary use is a scam. That’s like saying the primary use of email is to receive ads and phishing mail.

Are there numbers on what the primary uses of cryptocurrency are? I would guess remittances, purchasing illegal things, purchasing legal things, and ransomware - but I'm not sure in what order.

I think it also depends on what you count as "use". The #1 function of Bitcoin is as a speculative asset.

I am not sure remittance counts as a "use", especially if it is only useful for remitting money because it is also actually "used" for settling ransomware payouts or buying cocaine.

I have a lot of digital artist friends who used to rely on live performances and installations for their money, now they're seriously killing it selling NFTs

Some of them opt out of more environmentally unfriendly stuff like Ethereum for sure

Personally I've developed systems for paying for everyday things like your bus fare or phone bill using crypto in a country where there's a hell of a lot less confidence in fiat (Brazil) -- hell check out the history of the Brazilian Real if you want an idea of what real candycorn money looks like

Personally I just feel a hell of a lot of privileged bullshit out of people arguing that crypto is some good for nothing shit. Yeah sure great try living in a country where your government is fucked. We truly don't live in some francis fukuyama neoliberal fantasy world where we can trust stuff like traditional financial markets which have gone and failed us in the non english speaking world time and time again. I welcome any and all alternatives

TL;DR [CITATION NEEDED] ;-)

Wow, you can actually pay your bus fare and phone bills in Brazil with crypto? That sounds either very impressive or totally unbelievable.

I could not find anything on Google, so if someone could you link/cite to some actually used examples (I guess apps or utility website?) that would be very helpful. Sincere thanks.

As with anything cryptocurrency related, it's safe to assume that the justification is contrived and the actual use case is niche, at best.

My experience as a Brazilian is that I've never seen anyone using cryptocurrencies in real life. On the other hand, the government's new instant payments system (Pix), allows anyone with a mobile phone to easily make small payments. In less than one year since launch it's already ubiquitous.

yeah i mean not like a condescending tone is going to covince me to try and convince you to give away PII on this one i mean this account is linked to my name you can do your thing

by the way you try searching in portuguese?

https://www.google.com/search?hl=en&q=comprar%20passagem%20d...

plenty of options now wow so hard to find

I think the interesting use is more in the blockchain than the currency. Public, verifiable, tied to an identity, decentralized statements that can be used as public records or provide an audit trail. Cryptographically & blockchain secured bodycams is an example that I've been looking into recently

The problem is that the distributed consensus in a blockchain is only possible if that blockchain is also used as a currency. If you remove the currency aspect, it's no better than a Git repository, which also has a merkle tree ( but no way to say which repo is the canonical one).

Aren't those things also purchased with usd, euro, yen, won, rmb, etc?

Yes, though (to their benefit) traditional currencies don't work as well for ransomware. Possibly the same for illegal purchases.

Remittances seems like one of the true benefits of cryptocurrency... but that's why I'd like to know what amount of usage is actually that and what is, let's say non-beneficial.

Ah I see what you're getting at now. Understandable.

The primary use of cryptocurrency is in its name - a currency.

So... What do people use the currency for, mostly? That's what I'm asking.

Transactions, investment, store of value. Just like any other currency.

Yes, take a look at this article by Coinbase for some well-sourced numbers: https://blog.coinbase.com/fact-check-crypto-is-increasingly-...

Absolutely.

And of course new sectors that are not established can seem like snake oil, simply because they are new industries.

The internet has steamrollered many industries and fundamentally changed the way they work.

Manufacturing, Music, Politics and now The final big boss, money.

It will take another ten years for this industry to mature. But in amongst the sham and drudgery we have the first non-violent system of currencies.

lighting the earth's natural resources literally on fire to create currency is pretty violent towards human life.

> Manufacturing, Music, Politics and now The final big boss, money.

Isn't that a "they laughed at Galileo" argument?

They thought the Internet was snake oil. They thought Napster was snake oil. They thought BitTorrent was snake oil. ... but they also thought Pixelon was snake oil.

Considering that almost all legitimate users have been priced out of the market due to ever-increasing transaction fees and increasingly draconian regulations (often stricter than for non-cryptocurrency) and the resulting interoperability issues...

Yeah, I think it's safe to say that the primary use of cryptocurrency nowadays is as either casino chips or a money laundering mechanism. The economics no longer make any sense for anyone else.

Is it so worthless that no one uses it, or so useful that only the highest-value transactors are willing to pay the fee?

It’s like arguing the most popular restaurant is so crowded, no one goes there anymore.

Plenty of crypto has low transaction fees these days.

it depends on how you count. if you measure "primary use of email" by number of emails, then yes spam wins out, but that's only because a tiny fraction of human users are sending out tens of millions of spams. if you measure "primary use of email" in terms of users, the vast majority of people who use email use it for useful, non spammy purposes. The same can't necessarily be said for cryptocurrencies, as far as trying to prove that cryptocurency has a large userbase that is not there just for speculation/inflation and/or illicit use cases.

Because email has no value except as a means of communication. Bitcoin and other cryptocurrencies are massive speculation scams. It's popular because everyone wants to hold one in the hopes it goes up in value. There's no reason for it to go up in value except that other people think it will go up in value and want to buy one too.

You're buying a number on a blockchain somewhere in the hope someone else will want it for more money, that's it.

I’m curious if it is actually such a large scam with too many people that they can’t let it fail.

there is no such thing. Too big to fail is another coded way to describe political allies and backers who get influence in the government through their contributions. The size of the problem isn't the issue, it's who has the problem that is.

Good point. Slightly conspiratorial but probably fairly accurate.

which may even be technically true - if measured in quantitative terms :-)

I wouldn't agree that piracy is the same thing as a scam, so the analogy doesn't really works. When people download a bittorrent client, most of the time they know exactly what they're doing and that's what they're going to get. No scam here. The thing is that bittorrent moves information, and crypto moves money, and there's a bigger chance of things being a scam when it's about money. Maybe something like religions and sects would be a good analogy? Religions will bring you lots of information you may not care about, and sects will try to scam you of your money. But some religions have mandatory donations so the analogy isn't perfect.

Don't gnu/linux ISO images make up a considerable proportion of bittorrent traffic nowadays?

You should check out the amount of crap on Rarbg or say even Rutracker. And those are just the public ones.

That's actually the best analogy I've heard, and I'm a crypto believer!!!

But it doesn't negate the value of the technology. Yes, piracy is neat and useful, but illegal. But was the benefit of piracy that you got free stuff? Or was it that it was an easier system than any other at the time?

I like your analogy. I'll add another. VHS. The early adopter to VHS tapes was the porn industry. No longer did people have to watch porn in a seedy movie theater, they could do it privately at home.

So, yeh, early adopters may often be driven by the seedy side of culture.

For how long though? Cryptocurrency is almost a decade old, yet the fundamentals of them don't look good (IMO).

> The author saying the “silent majority tech people” know its a scam is such nonsense to my experience. Every tech person I know thinks either A) its neat/super cool, or B) they don’t know anything about it besides memes.

Counterpoint: most "tech people" I know — including people who have worked in crypto — both know about it and also think it's a scam.

That’s the real point. For the author, me, or you to claim what most tech people think is ridiculous.

I think you’re being too literal. There are lots of tech people who quietly feel this way — just look at the comments here. The point is that they shouldn’t be so quiet about it.

If someone only knows crypto from stories in mainstream press or cable news, they’d probably incorrectly assume “tech people” are almost universally for it.

Well, I work in the field and I think there’s both. Scams and real technology advances that would blow anybody’s mind if they would spend a bit of time to look into it. I promise there is more than Bitcoin and dogecoin.

> Nothing about blockchains, DLTs, crypto, at its core is a scam to me.

I think everyone is talking past each other, because no one's exactly defining what the "scam" is, so you're talking about different things.

I don't think anyone's suggesting that, say, deep in the BitCoin code there is some algorithm giving Satoshi Nakamoto a dollar for evert transaction.

On the other hand, I believe that the vast majority of buyers are buying simply because they hope that someone else will buy at a higher price tomorrow, or next year.

This causes everyone to cheer-lead about how everyone else needs to buy or HODL, because they simply want to drive the price up.

For me, personally, I'd say this is what I'd call a "scam," in the sense that a MLM company is a "scam": that the motivation of the majority of people extolling the virtues of buying crypto tends to be simply personal enrichment.

Yeah. And I think some people see that and think, “okay I can get in on that too!” while others think, “this whole thing smells and can’t be sustainable.”

I fall into the latter camp. I don’t begrudge the former. I just don’t think it’ll last and have little taste for speculating.

The bit that is a scam is a social phenomenon, not a technical phenomenon. It's tulips, Beanie Babies, housing market bubbles; not technical. Assets rising in price are chased by people who want to surf the rise.

What is interesting about distributed ledger consensus via proof of work only remains interesting when there's a disconnect between the economy and good government. If your government is corrupt, or your economy is corrupt, you want the two to be disconnected. The problem is that the latter - corrupt economies - dominate over the former.

If you have a functioning government, you can use the legal system to enforce contracts, and then ledgers don't need to use proof of work. If you don't have a functioning government, or you can't let the legal system look at your contracts, then blockchain starts to look interesting.

I'm a tech guy. I've spent years experimenting with crypto and it isn't fit for any legitimate purpose.

You're not very good at experimenting then. I first bought BTC in 2013 because of a legitimate purpose: to pay for online goods (legal software) to a seller who wanted to completely eliminate any risk of chargebacks.

And 8 years later the fees no longer make it viable for even that niche use case.

Surely you recognize that this is a bad faith argument? The average transaction fee today is around $8 USD. That's a small price to pay for knowing that a transaction is set in stone.

It's a pretty high price to pay for donuts though. Especially since it's kind of hard to reverse a donut transaction after you've eaten them.

What fee? Are you talking about a specific currency or all currencies? In Celo currently fees are 0.1 cent per transaction, for example.

I've never heard of a single physical item being sold for any other cryptocurrency, only Bitcoin.

How would a merchant of physical goods even know about something like Celo, whatever that is?

Adoption takes time.

Completely eliminating any risk of chargebacks mostly shifts risk back onto the customer; I don't think it's a net benefit. Some businesses seem to intrinsically have sky-high chargeback rates but I'd prefer that those businesses simply not exist rather than put up with the existence of crypto.

I once bought donuts from a food truck with BTC and the donuts were good but the payment process was really slow.

I own a small online business selling custom-configured RPIs and chargebacks are terrible. Businesses build reputations but expect their customers to be anonymous every time. It would be far better if chargebacks were eliminated and customers could review the merchants to reduce fraud. Putting all the risk on the merchants is backwards.

The merchant is the one who has more capital and more information about the product he's selling. I think it's fair that the merchant bears most of the risk.

Credit Card/Chargebacks are not a silver bullet. Countries like India have alternative payment methods without chargebacks and some Merchants insist on them.

Stablecoins like USDC, if everything around it is legit, can be viewed as a programmable dollar... circumventing everything and anything bank-related to do the same work. That's pretty legit IMO.

I notice that you say "can be viewed as" not "are used for"... USDC is just used as a lubricant for crypto speculation. Payment or remittance providers don't use USDC because it isn't actually better. Sure, now you have a programmable dollar; why isn't anyone programming anything good with it?

That’s a big if. People are offering 10+% interest for USDC, but not for USD. This implies massive risk, as those interest rates are much higher than junk bonds.

Two economists are walking down the street and see a $20 bill lying on the sidewalk.

The first economist says, "Look at that $20 bill."

The second says, "That can't really be a $20 bill lying there, because if it were, someone would have picked it up already."

They walk on.

> if everything around it is legit

Ha ha ha. That would only be possible with a government issued digital currency. Any private company running a "stablecoin" is guaranteed fraudulent. Can't be legit.

https://twitter.com/Bitfinexed/status/1398722723543760897

Blockchain as a technology is definitely innovative. The problem is that, in practice, the way that it solves certain problems come with tradeoffs. This isn't a technical problem per-se, just that it doesn't (IMHO) solve any real problems better (given the tradeoffs) than other, more "traditional" solutions. That's not to say that you can't make money with blockchain tech (just like you can make money playing blackjack).

How doesn’t it? Do you know how slow traditional solutions are? Or prone to error?

How have you done a deep dive on Tether and not seen it as deeply troubling?

Did I say I did not find it deeply troubling?

You said

> Nothing about blockchains, DLTs, crypto, at its core is a scam to me

Which I took as an implication that you didn’t see Tether as a deeply troubling or a scam

Tether is an application, not a core technology. Stablecoins would fit that quote.

Tethers management is the problem - obfuscation and using other crypto as collateral instead of just USD.

Please don't cherry pick the worst example and apply it for the whole population.

Tether is one stablecoin, and arguably the worst example since it is literally the one coin every coiner will agree with you is a bad stablecoin. Do a deep dive on MakerDAO's DAI instead.

When tether implodes a lot is going down with it.

It's not that the tech itself is a scam per se (although there are plenty of cryptocurrencies that were started with the express purpose of being a ponzi scheme or a pre-mined vehicle for a pump and dump).

It's just that widely available, totally unregulated financial instruments will always be primarily used to run ponzi schemes, pump and dumps and meaningless speculation (meaningless in that speculators are largely just speculating based on what other speculators might do).

Ah yes, Iota, which uses ternary internally because it's the "superior technological solution" and "the future of computing".

https://iota.stackexchange.com/questions/8/why-does-iota-use...

Have you read this? https://crypto-anonymous-2021.medium.com/the-bit-short-insid...

Tether smells extremely fishy and seems to be used for a huge amount of trade volume on BTC and other cryptocurrencies.

> B) they don’t know anything about it besides memes.

Hi there. I've published a few papers in top conferences on BTC and ETH. I don't own a cent of crypto and believe that a lot of it is a very bad idea.

I find it endlessly frustrating when people insist that the only way to disagree with enthusiasts is to be ignorant.

> Nothing about blockchains, DLTs, crypto, at its core is a scam to me

No, the scam part is the idea that crypto is going replace fiat and as such will be worth many times more in the future than it is now.

I'd also be very, very surprised if there wasn't price manipulation going on with crypto trading.

Yeah, U.S. household net worth is near all-time lows in Fed balance sheet terms and people think crypto is the scam: https://mobile.twitter.com/RaoulGMI/status/13987339019132641...

What does “in Fed balance sheet terms” mean?

I think they're referring to the ratio of household wealth to total value of the fed balance sheet. Which is a number easy to calculate and his claim is factually true (mostly because the fed balance sheet has never been bigger).

But while his claim is true, in a Boolean sense, I don't know what exactly we're supposed to conclude about the world based on it. This isn't a ratio I've ever seen talked about before.

I'm guessing they're insinuating that the size of the feds balance sheet is somehow related to inflation, which it is only in a fairly loose sense.

Some analysts joke that the first thing you’re shown when you arrive in hell in a chart of the S&P divided by the Fed balance sheet

What's the joke I don't get it

That US household net worth is falling despite the fact that real estate prices and stock prices are near all time highs.

Something being wrong with the economy doesn’t preclude Bitcoin from being a scam. That’s a false dilemma you’re proposing.

It's actually a whataboutism but otherwise I agree.

This, this is a scam: https://fred.stlouisfed.org/series/M1SL Notice the 5x supply increase without a corresponding 5x in economic efficiency. Bitcoin is what it is. It's worth what people think it's worth. Just like gold. Gold has minimal practical use in real life but it was used as a type of money off and on for 5000 years.

All money is worth what people think it's worth. Next question.

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