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Comment by BenoitEssiambre | Hacker News Reader

Move the hands on the crypto doomsday clock a bit closer to midnight I suppose. Douglas Adams tried to warn us: "[to] revalue the leaf, we are about to embark on a massive defoliation campaign, and ...er, burn down all the forests." https://benoitessiambre.com/specter.html

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The article you linked has a poor understanding of what cryptocurrencies are. First, understand that cryptocurrencies are not just money or currencies. Crypto-assets are programmable and allow many different applications, it's not just limited to purchasing transactions. Realize that there may be many different types of crypto-assets. Some will allow voting & governance, some will have price-stabilizing incentives built in, some will be inflating and mimc fiat, while others will be programmed to mimic gold, some will be interest bearing, some will be non-fungible, some will be a mixture of various properties and incentives.

The term "cryptocurrencies" is really misleading.

I don’t understand the analogy you are trying to make.

Yeah, the “defoliation” analogy seems the opposite to what is actually happening. The creation of many cryptocurrencies is akin to money supply inflation, not deflation.

Well as long as the ecosystem is constantly creating new tokens in proportion to the growing economy sure, things should be fine. A deflationary coin becoming mainstream and dominant is what should raise red flags. I don't see a lot of crypto people working to prevent it from happening.

Note that the main insight of this blog post, that recessions are caused by a society-wide preference for hoarding money rather than goods, is an insight that dates back to Karl Marx in the early 19th c. Earlier economic theorists had thought that recessions characterized by a general lack of demand were impossible in capitalism because every exchange supposedly involves items of equal value, but that fails to account for the asymmetric demand for money, due to its liquidity (and therefore relative lack of demand for goods/services).

yeah, it's liquidity and network effects from people using it as an intermediate asset in every other transactions (instead of bartering directly). I didn't know Marx saw it that way. My inspiration comes from market monetarists of the Milton Friedman tradition.

There's a lot of good stuff in Marx, whatever people say (and downvote). Whether or not you agree with the solutions he proposes.

Crypto has evolved far beyond buying and holding digital gold. Decentralized Finance is here and it's about replacing the slow, opaque existing financial system with open, transparent, internet-native protocols. Not to mention DAO's, NFT's etc. This is what a16z is so excited about.

Could you point me to a defi project that lets me borrow some crypto even if I have none in the first place?

if you are a (lending) business in an emerging market (and make near $500k in loans now), you can reach out to https://goldfinch.finance/

if you are run crypto trading company you can reach out to https://truefi.io/ and https://www.maple.finance/

https://www.l2p.finance/ is seeking to aggregate all the uncollateralized lending platforms in defi now.

Has it, really, though? What percentage of worldwide crypto traffic represents paying for goods and services (or doing some kind of meaningful product interaction for non-financial applications) and how much of it is just trading?

This is kind of like being on the internet in 1996 and asking what percentage of the internet is used for e-commerce and how much of it is just hobbyists making their "under construction" Geocities websites.

We are still in very early stages. What most likely will happen is that crypto will start to become the "backend" of the financial systems and the regular people will be using it without even knowing it, similar to the way they use Linux powered phones now. Crypto has applications beyond finance too, some things that may end up being disrupted are art and DNS (for example)

Or someone wakes up and fixes the current fiat system. People thought of solutions 80 years ago.

We can't even know the exact total amount of USD in circulation and we cannot verify ourselves how much is being printed unless we trust the few people in power. I think if we fixed that, we would already be making great strides!

On the blockchain, these trivial questions are resolved with a simple database query.

> We are still in very early stages.

Bitcoin is 12 years old. Comparing cryptocurrencies to the early days of internet and the web is beyond ridiculous. There's still zero evidence of what will most likely happen, except for more of what we've seen so far: speculation, extortion, money laundering.

Did I say bitcoin? Forget about bitcoin! It's going to be a tiny part of crypto in the future. Bitcoin is 12 years old, but that's the reason why things haven't progressed as much in the last decade. We're slowly getting over speculation & wild-west phaze and moving to the next phase, and discovering many new uses along the way, which I've listed in my parent post.

Why I say it's still early?

Currently most of the projects are infrastructure and protocol development - kind of like when the internet was still developing. We're still on something like HTTP 1.0 and HTML 2.0 when it comes to crypto. The internet wasn't built in a single decade. It took multiple decades to get to where it is now, this is exactly the same thing playing out now. The amount of building and development is only intensifying.

I'd urge you to take a look at what a16a has been investing in https://a16z.com/crypto/

> We're still on something like HTTP 1.0 and HTML 2.0 when it comes to crypto.

I agree, and even though avalanche (one of a16z investments in ava-labs works on this) seems to have solved the consensus problem, I have yet to see an l1 tackle the state growth issues similarly.

I think it will require some novel ways of information compression, mapping and/or storage/revival, and I suspect at least one l1 way will be related to the the DAG approach with avalanche however with the relationship between prior blocks (if you consider a block a matrix related to it block size limit at max) a series of transformations such that block x_n = sum of block transformations from 0 to n (this will be heavily reliant upon group theory) so instead of storing blocks themselves, you store the transformation matrices mapped to the hashes (sacrificing some compute for less storage).

[0] https://thecontrol.co/state-growth-a-look-at-the-problem-and...

Bitcoin != DeFi. If you don't know that, why even comment?

I kinda like NFT's actually, they're not dangerous to the economy like crypto tokens used as currencies. They're more like digitally autographed pieces, a nice way to reward artists. They do seem to sometimes be weirdly overpriced for autographs though. De-Fi is dangerous nonsense.

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA256

Hi Tim,

I'm a nobody who has been "investing" in and around the crypto ecosystem officially since the date on this gpg sig. Just saying thanks. Long before these markets existed and trust was difficult to define, reputation on internet relay chat was where this ecosystem was birthed.

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