Decentralized Woo Hoo | Hacker News Reader

Decentralized Woo Hoo

stephendiehl.com

233 pointsamin291 comments

> Yet if we value these assets in terms of traditional valuation models we find they should be worth absolutely nothing.

This is the core tenet that these skeptics get lost with - the premise that there is no real central value to blockchain technology. It is a lost and shallow view made by people who have chosen not to engage or understand what they espouse on. Maybe this person just has too much to lose from change to the status quo, or they choose not to educate themselves (try it) - neither is really valid response if you want to write coherently about something.

> We have systems like BitTorrent and Tor which are decentralized networks and whose responsibility is to blindly distribute data according to a set of prescribed rules and algorithms.

This is a great line because they clearly appreciate some decentralized tech. It is not such a cognitive leap to see that blockchain based smart contracts (Ethereum) are vehicles to build more legitimate decentralized protocols. Perhaps it's just too much. Because the landscape is now too large it is too difficult for the writer to point out specific valuable aspects, they get confused, and out of laziness paint a broad brush of "woo" all over it all.

I've been a huge skeptic myself until a friend almost forced me into going down the rabbit hole.

I have since been wondering why we tech people are so unbelievably critical. "There is no use-case." and "It's a technology looking for a problem" are common phrases.

I have no answer.

Just a thought: for someone living in the 90s, wouldn't something like Facebook have been also very difficult to conceive? "What's the value of having friends I see daily online?". I think it's very difficult to imagine value of technology that is not mainstream yet.

Not everyone got the web, chat, or social networks, but loads of people did and people from all backgrounds. Things like Geocities, AIM, MySpace, early Facebook, early search engines, etc. had millions of users very rapidly. They penetrated beyond the tech-savvy early adopters within years. Cryptocurrency is more than 10 years old and hasn't seen anything like this.

The vast majority of what I see in cryptocurrency is just speculation. It all seems like a giant very complex over-engineered online casino app.

Yes there are use cases outside of that but they seem much more niche. The people saying "there is no use case" are over-arguing their position, but I think the actual non-gambling use case is small.

I strongly suggest doing a comparison of O(log n)-style adoption curves between Bitcoin, and say- cell phones, computer networking, or really any innovation that became ubiquitous and for which we have the data... I think you'd be surprised at the similarities.

Have any such graphs to share?

Where we measure adoption by cups of coffee purchase with bitcoin.

[1] https://math.stackexchange.com/questions/1322925/is-there-pr...

If I look at the adoption curves of cell phones or computer networking, I see a steady increase.

If I look at the adoption curve of Bitcoin as means for payment, the peak was multiple years ago when many companies in my area experimented with accepting it as payment - I could order a pizza with Bitcoin, I could buy an airline ticket, etc; but now those companies have stopped accepting them. There are multiple niches of business which do accept Bitcoin, but overall there has been a significant decrease at least in practical use - there has been some upsurge in digital asset related transactions, but in any case the adoption is certainly not growing exponentially like for other growing technologies, if we look at transaction rates at e.g. https://blockchair.com/bitcoin/charts/transactions-per-secon... then we're at the same level as of 2017, and below the peak.

There are huge regulatory and societal roadblocks for crypto to be used as envisioned not as present during those other cases of wide technological adoption.

For crypto to be valuable, merchants need to use it. Transactions need to be cheaper. A stable decentralized financial system needs to emerge.

The use case is a world without central banks and central currency manipulation.

People who don’t see the use case don’t understand the scope of what direct exchange of currency without central management entails.

There are arguments against that world and in favor of central currencies. The roadblocks are enormous, maybe insurmountable. And perhaps that world would be worse or lead to more authoritarian control rather than less. But I don’t think anyone who believes in the potential denies crypto will take time to have a lot of mainstream use simply because the main use case is so large.

I think the major roadblock is the fact that bitcoin was conceived as anarcho-capitalist money, and for it to succeed anarcho-capitalism would have to succeed. And that's not going to happen, because anarcho-capitalism is not viable way of organising a society. It should be obvious to anyone who has delved into the literature.

Gold was the world reserve currency for millennia and acted similarly to bitcoin and other crypto currencies. You can still have emergent government structures many of the bitcoin people would hate on top of a base store of value which is not centrally produced by governments.

I agree. But the promises that bitcoin makes can only become reality if anarcho-capitalism itself becomes a reality. Otherwise, if the government continues to tax you, and banks continue to hold fractional reserves, what is the point of using something so anti-economical and impractical as bitcoin, when you can just use a more convenient currency?

If the supply of money is distributed it becomes more difficult to manipulate.

Fractional reserves in a world backed by bitcoin can’t be bailed out if banks screw up. If people want to exchange whatever government backed medium might sit on top of it to actual bitcoin the banks wouldn’t be able to if they spread themselves too thin.

It would create more accountability.

That's not what I meant. The majority of money in circulation is not issued by central banks, but instead is money that is created out of thin air by commercial banks that operate under fractional reserve banking. In other words, fractional reserve banking expands the money supply. This means that if bitcoin became money, the supply of bitcoins would not be fixed at all, contrary to what many of its advocates believe, because fractional reserve banking would create a colossal amount of new bitcoins, just like now it creates colossal amounts of new dollars. So the promise of a fixed supply of money cannot happen, unless a world-wide ban on fractional reserve banking occurs first, somehow.

Bitcoin and fractional reserve banking are compatible. And a fractional reserve system based on bitcoin would be different than what we have now. It’d be similar to what we had before nixon took us off the gold standard.

Banks depend on reserves and rules issued by the fed, and those reserves and rules are subject to arbitrary supply changes.

It is impossible for a non sanctioned bank to get reserve notes or have authorization to create notes banks lend out representative of that (dollars).

In a world where fractional reserve banking still exists, but is backed by bitcoin, you’d have lots of “bitcoin notes” being created, NOT bitcoin. No one would be creating new bitcoin apart from miners.

The faith in a “bitcoin note” would be tied to it’s ability to be exchanged for actual bitcoin in a wallet address.

The benefit (or downside, depending on your perspective) is that a central government would not have complete and total control over the supply of reserves that the banks get, and if banks lent poorly, they couldn’t get new emergency reserves from thin air. They’d have to get bitcoin from someone or go under.

There would be a fixed supply of the underlying reserve that people pass around iou’s for.

> In a world where fractional reserve banking still exists, but is backed by bitcoin, you’d have lots of “bitcoin notes” being created, NOT bitcoin. No one would be creating new bitcoin apart from miners.

No, this is a misunderstanding of how fractional reserve banking works. Bank deposits are money, despite the fact that they might be only partially backed with reserves. Bank deposits are not IOUs. And the same is true of bitcoin deposits held by the public at crypto-exchanges. Theses bitcoin balances are bitcoins, despite the fact that they might be only partially backed with reserves. These are not a "bitcoin notes", but actual bitcoins. And therefore more bitcoins can be created by exchanges simply by lowering their reserve ratio.

> the same is true of bitcoin deposits held by the public at crypto-exchanges. These bitcoin balances are bitcoin

No, those balances are not bitcoin.

If it is not a balance assigned in the distributed ledger, it is not bitcoin.

I understand that the ious in the dollar system are the money. You are misunderstanding the difference in how the reserves would be generated in a world backed by bitcoin. Saying bitcoin is the same as an iou not on chain is an egregious misrepresentation.

Bitcoin in a world with “bitcoin notes” backed by fractional reserve banking would be very similar to gold when dollars used to be exchangeable for a set amount of gold. It is not the dollar in that comparison, it is the gold. But it has the added property that it is easily transportable and could also act as a direct form of payment.

It is not practical to buy a sandwich with the equivalent dollar amount of gold, even when there was a static exchange rate between the two when we were on the gold standard.

It would, however, be practical to ALSO directly exchange bitcoin, in addition to exchanging “bitcoin notes”. Direct exchange is the original vision of crypto, but a world where people primarily exchange “bitcoin notes” instead of bitcoin still benefits from the fixed supply of what the note can be exchanged for.

> The use case is a world without central banks and central currency manipulation.

> People who don’t see the use case don’t understand the scope of what direct exchange of currency without central management entails.

People who see that as a feature don't understand how credit works nor its importance in modern financial capitalism.

Credit and hard crypto currencies are not incompatible. The main difference is crypto sets hard limits on underlying denominator of value and distinguishes it from credit.

There are potential liquidity problems and endless debates about whether having everything backed by crypto like bitcoin would be a net positive. I don’t have the background to get into all the economic implications and I’m not entirely sold on this alternative crypto based future I’m presenting being a good thing, even if possible. Rather than dismiss these types of arguments, though, I’d like to see more central bank advocates explain why creditors which accumulate bitcoin would not be able to act similarly to current issuers of credit, but more checked and decentralized because none would have control over the production of the underlying value representation that’s borrowed against.

>What's the value of having friends I see daily online?

None. The value is in having people want to watch ads in order to see what their friends are up to.

The only monetization scheme for the blockchain so far seems to build pyramid schemes or making fees from running off-chain, centralized exchanges.

That’s exactly my point. Who would have thought about that?

So true. Every technology revolution seems like a toy at first. Consider the personal computer, the spreadsheet, the internet, the smart phone.

Only time will tell if cryptocurrencies will join this list.

All those things became mainstream in a matter of a few years from the time they became affordable and available to most people.

Crypto currencies have existed for well over a decade now, have been available to anyone who wants in for a long time, but still, all we see them being used for is market speculation. I would've loved to use digital money to buy stuff, but it simply isn't a serious option today in most online shops as far as I can see... even if it was, I currently see zero reason to use that instead of my credit card (which has almost no interest, very low fees, and the guarantee of my bank that fraud will be reverted).

Given that, why the hell people still believe it might eventually take over the world??? It just won't! It's pretty clear IMHO that it is, and will remain for probably a long time, a ponzi scheme of sorts, or to be a bit more generous, a gambling platform.

> all we see them being used for is market speculation.

And crime. Don't forget crime.

We tech people see a lot of ideas. Most of them are superficially exciting. For example, a way of detecting when counterfeit parts with substandard specs are used in farming equipment. Maybe a music-centered social network for users of a particular music player.

Many of them go on to be either wastes of time or much, much worse. Suddenly detecting substandard parts is DRM for John Deere tractors and the social network is iTunes Ping.

Most ideas fail. This doesn't make them bad ideas or the people creating them bad people. It just means we've collectively learned that most ideas will fail and there are some fairly common reasons for this.

Part of the problem is that much of the cryptocurrency hype, some might even say most, actually is just a bunch of scams and pump and dump nonsense. The people who are in it for a get rich quick scheme are the enemy, and most of the people who expect to get rich quick will end up on the bottom of the pyramid.

But that isn't to say that there's nothing there. It's like saying that the internet is worthless and should be destroyed because it has pornography and copyright infringement. It's not that it doesn't; it's that there are still things it's good for even though it does.

> the internet is worthless and should be destroyed because it has pornography and copyright infringement.

Tangential to the topic, but pornography is not a crime like copyright infrigement, or even something intrinsically bad as you seem to imply, for whatever reason! There's a lot of good taste porn out there. It has a high value of entertainment to a lot of people... I would compare it to something like gaming or sports rather than copyright infrigement.

> Just a thought: for someone living in the 90s, wouldn't Facebook have been also very difficult to conceive?

No, it would have been obviously cool. Those of us who were online already had IRC and newsgroups, and later instant messaging, home pages on GeoCities, etc. A service which rolled all of that up together and made it easy to use would have been rad as hell.

as someone that was on IRC at the time, no it wasn't obviously cool, it was and remains worse in every aspect to irc. FB succeeded because it ignored the internet as it existed and conquered it for normies.

> wouldn't something like Facebook have been also very difficult to conceive?

Nah. It was obvious to me from my first encounter with text-based internet that this was going to be a social phenomenon that would link the world together. BBS, forums, myspace were all incremental improvements. Facebook just caught the wave with the right timing and did friend recommendations effectively.

I think the analogy of cryptocurrency's position to the 90's internet is the wrong one to pick, because it describes an environment with some maturity and acceptance in its base technologies, primed for waves of consumer commerce to take hold. The proper example to pick is personal computing circa 1982. When you look at the envisioned uses of personal computing, the advertisements really reach: it helps your child learn. You can store recipes on it. Balance your checkbook. Write documents. And (whispers) play games.

As well, one can occasionally find reassurances in the literature that the computer is your friend, not the back-office monster that billed you incorrectly last month. Would you feel convinced? Many people saw no use for computers in their lives. And the reality of personal computing at that point was that it was mostly a nerd hobby, with a few niches where it could have immediate, direct impact(white collar information work). Professional graphic design functions, audio and video were all still years away, far out of reach on the consumer platforms. It all cost too much - the computers, accessories, the networking options.

But it's also a representative inflection point: microprocessors as a product category had only been available for a little over a decade, and it only took about a decade from there for the embrace of all things digital to kick into high gear with the onset of commodity PC clones, the Wintel monopoly, and then the Internet. Cryptocurrency is seeing a trajectory like that - we're nearing 12 years in and, like early personal computing, it's understood by few, often advertised deceptively, and seeing massive amounts of growth and capital investment. The applications are gradually appearing, and industry incumbents are hopping onto the bandwagon, but it's sneered at by experienced code jockeys: they work with much bigger and fancier hardware than these toys. Nobody is sure of the business model to use. Prices are all over the map.

> The proper example to pick is personal computing circa 1982. When you look at the envisioned uses of personal computing, the advertisements really reach: it helps your child learn. You can store recipes on it. Balance your checkbook. Write documents. And (whispers) play games.

Okay so what is the "play games" of crypto today? It seems like the only equivalent is "criminal activity." Unless you count speculation on crypto itself, but that isn't a "use." Computer users in 1982 were not buying IBM PCs, leaving them boxed in their closet, and then re-selling them for 10 or 100x the price in a year or two.

Interestingly gaming is as old as computers: https://en.wikipedia.org/wiki/OXO_%28video_game%29 https://videogamehistorian.wordpress.com/2014/01/22/the-prie...

Wow this is exactly the example I use. Explaining crypto use-cases is like explaining the use-cases for the internet in the 90s.

"But I can just write a check or hand someone cash, why would I need to send money over the internet?"

"Amazon? But I can go buy what I need down the street. Seems like a lot of work just to save a few minutes."

> "But I can just write a check or hand someone cash, why would I need to send money over the internet?"

But today, I can just use my credit card to pay for anything instantly, anywhere in the world... who the fuck still uses checks??

Why would I want to use crypto and lose all the protections I have from my card company, while having to wait minutes for transactions to be confirmed instead of milli-seconds?? And with the risk of my "wallet" being hacked in an instant and losing everything, without a chance for appealing to anyone for the funds to be returned?? Do you seriously consider that an attractive option to anyone, in the way that the Internet or Amazon (actually, online shops in general!) were?? Seems completely delusional to me.

That quote was from the perspective of someone learning about the internet in the 90s. My point is it's hard for people to imagine the implications of a technology.

> Why would I want to use crypto and lose all the protections I have from my card company

The current system is kinda crazy if you think about it. We give out our credit card numbers all the time and don't think twice about it. These protections you speak of are mostly a bandaid on a flawed system.

Additionally, we give all the power to a central authority which is ok until it isn't. My buddy does freelance work and has gotten screwed because these "protections" were used by shitty clients to get their money back after he handed over the project.

Finally, crypto has other protections like smart wallets that implement a sort of password recovery feature. The difference is you have control over how you want to use it.

> while having to wait minutes for transactions to be confirmed instead of milli-seconds

Crypto transactions appear almost instantly. Do you really need to wait minutes to fully confirm a taco bell transaction? Besides, Ethereum Layer 2 will help out with this quite a bit by boosting performance. Blockchain scaling is still in its infancy.

> And with the risk of my "wallet" being hacked in an instant and losing everything

Then use a savings wallet and a checking wallet. Or have 100 wallets. It's up to you how you want to structure it. Also people get hacked all the time due to poor passwords. How is this any different than, say, someone finding your bank account password? Or a phishing email?

I imagine over time services will crop up from trusted providers that will smooth over the UX here. For example, walking you through setting up your wallet.

Also smart wallets like I mentioned above.

> without a chance for appealing to anyone for the funds to be returned

If that really worries you then there will be centralized services for you to use with systems in place to prevent this. Wallets are just a lego brick that you can use to build many different kinds of services and systems.

> Do you seriously consider that an attractive option to anyone, in the way that the Internet or Amazon

Yes. We are just starting to see the implications of the technology and it's inspiring IMO.

> How is this any different than, say, someone finding your bank account password? Or a phishing email?

It's different because you have recourse to your bank when someone steals your credit card/bank account info (credit card and ACH transactions can be reversed), and because banks have processes in place to protect their clients (locking accounts, additional scrutiny on large transactions, etc.)

> If that really worries you then there will be centralized services for you to use with systems in place to prevent this.

Those services are called banks, and they already exist for regular money. So why do I need or want crypto again?

Smart contracts are really really really cool!

I was able to write a contract to take out a loan, distribute funds to various pools and pull the funds out. Having that sort of atomic control over financial transactions or data is simply amazing. Anyone with the knowledge can do it. Just understand the vulnerabilities and caveats with the languages/apis that interact with the various blockchains.

After you pass a certain threshold, it makes zero sense to trust your assets to code that _you, personally_ haven't 100% authoritatively verified to be bug-free. Traditional financial institutions don't work like this; if there's an obvious "bug" in bank logic that lets someone take all of your assets, it gets rolled back. Doing away with this protection is fine, but the big bucks will stay away.

Of course not, the dao hack is a case in point.

I am happy the ecosystem is spurring growth in formal verification.

It's still the wild west and I encourage anyone interested to swing a lasso.

Facebook is less a technology than an application. Blockchain and stuff is technology, maybe there are good applications.

The media has been conducting a half decade hit job on crypto and people bought it.

To quote someone smarter than me on Twitter - the world was FUDded out of the biggest investment opportunity in their lifetime.

> Just a thought: for someone living in the 90s, wouldn't something like Facebook have been also very difficult to conceive? "What's the value of having friends I see daily online?".

It's probably easy to say with hindsight, but I honestly don't think so. The stereotype of teenagers (especially girls) spending too much time on the phone is older than personal computers, let alone Facebook. AIM and ICQ were quite successful in the 90s, and LiveJournal launched in 1999.

I think for me the problem is splitting people into binary camps of skeptic or supporter. Personally, I have my strongest reactions of skepticism when people seem to declare blockchains as a god, an inevitable coming of blissful revolution. I have a similar, altho less extreme reaction, when people tell me there is absolutely no value or future and that the whole space is pure bs and fraud.

I wish we didn't see the world as so us/them, for/against, good/bad. I think I mostly fight against those perspectives and this space seems to have a lot of 100% yes and 100% no attitudes.

> "There is no use-case." and "It's a technology looking for a problem" are common phrases.

> I have no answer.

The answer is: ten years into it, there isn't a use case except crime.

And I was working in the field writing code, code that's still in use in XRP, in 2014. I'm not ignorant.

Doesn't it make you stop and think that you weren't able to come up with a use case?

----

> Just a thought: for someone living in the 90s, wouldn't something like Facebook have been also very difficult to conceive?

Oh, I can answer this question because I've been using computers since the 1970s!

The first time I saw email I was so blown away I couldn't believe it. Sending messages to people anywhere in the world, in an instant, for free?

The web, same thing.

YouTube, same thing.

Friendster, MySpace - same thing. I can hang with my friends, and maybe get laid!

Skype - free video conferencing? I was blown awawy!

----

But if you had told me in 2001 that in 2021, I could buy one of 7400 different currencies, issued by anonymous individuals, with absolutely no legal guarantees or safeguards, relying on computer code that even experts have trouble validating, with no market makers, no assets, no cash flows, no liquidation value, I would have asked, "Why would anyone do this?"

Crime. The only application for cryptocurrency is crime - tax evasion, money laundering, drugs, weapons, bribery.

> This is the core tenet that these skeptics get lost with - the premise that there is no real central value to blockchain technology. It is a lost and shallow view made by people who have chosen not to engage or understand what they espouse on. Maybe this person just has too much to lose from change to the status quo, or they choose not to educate themselves (try it) - neither is really valid response if you want to write coherently about something.

The claim you are referring to here doesn't say that the technology is valueless. It says that the individual assets - the NFTs, the Bitcoins - are valueless.

This is a meaningful distinction, because the premise that a global decentralized unit of exchange is valuable doesn't connect at all with what value the individual coins in that exchange system should have.

Fiat currency, in essence, is equally valueless. It only has inherent value because enough people agree that it does.

Bitcoin is no different (and in fact has several advantages over fiat, giving it further value).

Well, not quite. It has inherent value since fiat is guaranteed to be backed by the full faith and credit of the backing nation. That is, by holding fiat, you trust that the country issuing that fiat doesn't default (and will hence guarantee that value). I don't see a similar parallel with crypto, though I'd love to be corrected.

When currency inflation gets out of control, there is often not much the issuing country can do to stop it.

Central banks can always stop inflation. How do you suggest they wouldn't be able to stop it?

> Central banks can always stop inflation

The central banks of Austria, Bolivia, Brazil, China, France, Germany, Greece, Hungary, Peru, Poland, Venezuela, and Zimbabwe have all failed to stop hyperinflation.

Are you sure? What did they try to stop it that didn't work?

What could the central bank of zimbabwe have done to stop inflation? I agree that central banks can almost always stop inflation...as long as they are controlling a reserve currency that actually has international value. Otherwise there is actually very little a central bank can do when your currency isn't used for imports, exports, international trade etc and foreign dollars/euros/RNB are needed to do almost any economical meaningful transaction.

They could have stopped flooding the country with Zimbabwean dollars and hyperinflation would have stopped immediately. Of course, the central bank of Zimbabwe was never independent from the government, but that doesn't change the fact that whoever was in charge of the monetary policy could have stopped hyperinflation at any time, had they wanted to.

You're conflating the ability to do something with actually doing that something. Also, what's your point with regards to inflation and fiat currency? That seems tangential to the parent comment.

The conflation is appropriate as the original clam is that fiat currency is backed by trust that the nation won't default. If the nation defaults in both cases, they are equivalent.

> The central banks of Austria, Bolivia, Brazil, China, France, Germany, Greece, Hungary, Peru, Poland, Venezuela, and Zimbabwe have all failed to stop hyperinflation.

Which of those were central banks of nations where debts including both private and public debt were denominated principally in fiat whose monetary policy was controlled by the central bank?

Some of them were pre-fiat (gold standard), and some were dealing with situations were obligations were largely in externally-controlled fiat (e.g., USD.)

Hyperinflation is caused by very limited supply. If there is not enough food around people will give everything for it. It doesn't matter what the currency is and how much you print or not.

> you trust that the country issuing that fiat doesn't default

Doesn't default on what? A dollar isn't a claim on a percentage of the productive output of the USA, it's just a dollar. If dollars aren't worth anything, it's not worth anything.

Dollars do have inherent value, because I need them to keep the government from throwing me in prison for tax evasion. That is a very useful property.

This is such a stupid argument that keeps being repeated on HN.

People are not obliged to be paid in dollars. This means people could decide to be paid exclusively in some cryptocurrency.

So government collects taxes in dollars... what are they going to buy with that?

If the argument keeps being repeated it must have inherent value.

That's not inherent value, that's a social contract.

Since I can't exchange a dollar for a piece of faith and credit, it's not really backed in the traditional sense of being a backed asset.

Neither is it backed by the US military or the ability to pay taxes.

The fact that the dollar is in widespread use in a country that has a track record of stability, a well-managed economy, trusted institutions and a strong military all mean that if you want to put your faith into an arbitrary and made up asset, the US dollar is an excellent choice; but its value is a collective illusion nontheless.

Not sure why you’re getting downvoted. This is an accurate and realistic observation.

Also, you can pay taxes with fiat currency.

And use it to participate in the economy to obtain little things such as housing and food. Not to mention a computer and an internet connection.

Intrinsic value in this context would mean something's value outside of its exchange value. Both fiat and Bitcoin have arguably very little to no intrinsic value within that definition.

I was talking about its utility, not value. The whole point of a currency is being useful, not in being valuable.

You must pay taxes with fiat currency.

Taxes and especially paying loans back starting from banks, businesses to mortgages.

Crypto is backed by the strength of the network and the algorithms that run the network.

As far as real-world value, all that's needed is for the value to be "bootstrapped" if you will. When ethereum was first released all it took was for someone to say "I'll buy your 1 Eth for X dollars" and boom the value of Eth is bootstrapped because we can attach the value of an Eth coin to a real world item.

After that bootstrapping, the value of today's Eth is governed by supply/demand and the value it had yesterday.

You know, I wish that there were a requirement for people to read just one book on economics before blathering about cryptocurrencies.

The idea that the US government's power to tax all of American commerce is "valueless" shows that you simply haven't thought for even a few seconds about anything in the field.

> You know, I wish that there were a requirement for people to read just one book on economics before blathering about cryptocurrencies

Well you’ll be pleased to hear I’ve read plenty of books on economics, and hey — I even hold a qualification in it!

Just like the “value” inherent in fiat currencies, we grant “power” to the government because enough people agree to do so. This is real value, but nonetheless arbitrarily granted. Hence why I qualified my statement by saying “in essence” — just a bit of vital nuance you happened to miss.

Thanks for the chuckle though, I did laugh at the notion that after 9 years in crypto, I “haven’t thought for even a few seconds” about it :)

you are stuck on NFTs and Bitcoin then. many would agree that these don't hold fundamental value and worth debate. but does usdc on Ethereum have value - probably if you pay taxes. does a token representing a share of a house, or a leverage protocol that's making bank? the token that makes that all possible (ETH), does it now have value because it enables things of value? yes!

anyone can publish a website or a blog post but not all the websites or blog posts are valuable. this does not invalidate the web. the signal/noise simply changes because now it is permissionless and low cost.

USDC only has value because it's pegged to a non crypto asset. Is there a crypto asset with its own clear valuation?

And Eth - it is easy to say that it should have value. But what value should it have? What's my investment model for eth? As I said in my original comment, the value of the whole Ethereum system doesn't necessarily make Eth valuable. Beachfront property is extremely valuable, but that doesn't make sand a good investment.

in the last 24hrs i,

- funded an Afghan refugee friend in Turkey with ETH. they have no bank account.

- joined a dao to bid on the last privately held copy of the US Constitution.

- claimed an airdrop representing some control of a protocol i had used

- borrowed stables against volatile collateral

- repaid loans, shored up collateral (market went down)

- many token swaps (stable <-> stable, volatile <-> stable)

the hn crowd should be leading discussion on the ethical implications of the technology but it is stuck where it was like 10 years ago. it is very strange. but i guess this happened to slashdot too.

- funded an Afghan refugee friend in Turkey with ETH. they have no bank account.

If they have no bank account, how do they convert ETH into something actually useful to them (presumably Turkish Lira)?

Sell it to a neighbor for cash?

Yeah no, the Turkish Lira is no longer useful.

"The Turkish lira hit its weakest ever level against the US dollar on August 7, trading at 7.36 at one point, having lost nearly 20% of its value since the beginning of the year....The lira has been on life support for the past two years and the economy has continually struggled."

https://theconversation.com/turkeys-collapsing-lira-governme...

> Yeah no, the Turkish Lira is no longer useful.

Yeah, no, it actually is.

The USDTRY rate doesn't matter nearly as much if you actually live in Turkey, for hopefully obviously reasons.

And if your argument is that realized volatility makes a currency useless, then I'm afraid I have some very bad news about cryptocurrency.

I was being a bit facetious. Obviously people still use it. But it's not in a great place right now.

Volatility based on speculation, price discovery, and early adoption is different than volatility because of high inflation. The former just means you might lose your investments. The latter means your government could collapse.

Man, my national currency lost 50% of value vs USD throughout last 12 or so years. It regularly goes up and down 10-25% (it usually takes several months). Life goes on and prices of goods are very stable. It's not much of a problem. It's just a healthy mechanism. I live in Poland, most people aren't aware of PLN/USD fluctuations at all.

they use https://localcryptos.com

HN has decided to completely fail at crypto collectively. They are missing out on the entirety of the Next Big Thing .

If it is your intention to convince people on HN that you're not running a scam, refraining from FOMO-based tactics would be a good start.

I wasn’t using FOMO at all, just saying that when you get deep into decentralised applications, it’s hard to understand why folks don’t see the huge opportunity. I’m also “not running” crypto since that’s impossible ?

It's not that there's no value, it's that the intrinsic value is unknown and can't be derived from investor speculation.

When investors get over-enthusiastic it usually ends when the fundamentals don't turn out the way they hoped. Nothing like that seems to be going on here. Prices seem to be essentially indeterminate and disconnected from non-financial use cases.

(When people do talk about use cases they are typically "inside the casino," essentially another game for investors to play.)

Casinos and gaming are big businesses so clearly there is some value. But normally there's a way to calculate the value of a gaming business that's independent of the quirks of the in-game economy. Not so here.

So your answer to the statement that most blockchain technology is exploitation of verbal ambiguity and appeal to emotion is... verbal ambiguity and appeal to emotion?

The claim is that there is no traditional valuation model that assigns any value to cryptocurrencies. The only way to refute it is to show that yes, such a valuation model exists.

Until then, it's Goop but for tech.

Cryptocurrency (dumb term) just means token - it is a very broad concept. Tokens can have stable value pegged to a fiat, or represent share of a company, or a non-fungible item like a house, or a fungible share of a house, or claim on profits from a financial protocol, or memecoin, or a way to pay for transactions. Of course traditional valuation models can be assigned - it just depends on the characteristics of the token in question.

Exactly this. I see so many people conflating NFTs with “expensive JPEGs”… No, an NFT is a cryptographically-secured representation of ownership of an economic asset.

Yes… It also happens that there’s a ton of money being ploughed into weird, niche, expensive digital art. But this has now created an economic market in a space where previously one was not possible, by virtue of the fact you could never prove something was original, unique, or “yours”.

Except most digital art lacks provenance in the first place, so you paid for a cryptographically-secured link to a bunch of bits somebody claims are original. (It turns out an https link on a domain you own does the same work)

The lack of provable provenance means that a good chunk of NFT "art" is actually stolen from the artists who do the work.

Bored Ape demonstrated that the theft of NFT art is easy, and the supposed ironclad ownership can easily be changed by the sites listing the art work - because they can just decide that those ironclad bits you hold aren't really yours. At which point you have a central authority arbitrating ownership, which is even worse than what the art world has right now.

It's certainly a lovely place for all sorts of cons, but as economic asset or cryptographic representation of ownership it is an utter and complete failure. You still can't prove something's original, unique, or yours. It just has a thin veneer of technobabble to hide that fact.

> The only way to refute it is to show that yes, such a valuation model exists.

Ah, a rational person. Yes, I thought that argument would be unbeatable, but the counter-argument goes like this:

"Valuation models are worthless because all money is imaginary anyway."

It's really hard to refute someone who says that, like it's hard to refute someone who believes the world is entirely imaginary.

If we didn’t have currency, our only means of exchange would be through bartering: I have food, you have clothes. I need clothes, and you need food.

I’ll swap you 5 bags of corn for 3 pairs of socks.

Do we have a deal?

>> The only way to refute it is to show that yes, such a valuation model exists.

It’s complex and inconvenient to barter all day long. So, “we” (society) created a “token” (e.g. USD) to represent the value of our economic goods.

I believe 5 bags of corn is worth about $10. You believe 3 pairs of socks is also worth about $10. Now we have a deal, unambiguously, because we have a mutually-agreed asset from which we can both continue to derive value in other markets.

So, both statements are true: “all money is imaginary” — because it has no inherent value (OK… I guess I can wipe my ass with it, or light a fire… but I can’t feed or clothe myself with a $10 bill).

But, at the same time, it’s not worthless — as we mutually agree to assign it worth, on the basis that others are willing to do so too.

> It's really hard to refute someone who says that

There’s a good reason it’s hard to refute this… because it’s a fundamental economic principle! As more and more people “agree” that Bitcoin has value, its value grows.

A mutually-agreed representation of value (i.e. a “valuation model”), therefore, exists.

> It is a lost and shallow view made by people who have chosen not to engage or understand what they espouse on.

Translation: "I have no argument for why my Dunning-Krugerands should be worth anything, so instead I'll just be insulting and superior."

I think this is a fair criticism to a limited extent, the crypto world is full of useless memecoins that don't have value beyond serving as gambling games.

However some people interested in and working on blockchain and related technologies are pursuing ambitious goals that could reshape the economy and politics in ways that makes them more open to participation and "strongly typed"/formalized. Achieving these goals is not the same as "decentralization" but more about a concept where you start from a decentralized and open base (blockchain) and build structures atop that base that are appropriately balanced between centralized and decentralized.

This is all very ambitious and may fail utterly and completely. But if it does succeed there will be a period where people have wild ambitious visions about what could be while the technology progresses to actualize those visions at what appears to be a slow pace.

To provide a specific ambitious vision: you could have a world where appropriate taxation of a transaction is built into a smart contract and everything from deciding on how to spend that tax money to the project management for the efforts those tax dollars fund is conducted in the open by people who have achieved various types of stakeholder status. Actually creating a system that allows for this and doesn't have tons of other problems will take time.

zkRollups, (specifically Loopring!), should replace our COBOL banking systems, and WILL replace our stock exchange.

I have no idea if this is parody.

> However some people interested in and working on blockchain and related technologies are pursuing ambitious goals that could reshape the economy and politics in ways that makes them more open to participation

I hear this all of the time, but the people and projects “reshaping the economy and politics” are rarely ever named. When it comes to blockchain and cryptocurrency, we’re supposed to believe the “good ones” are out there, somewhere, while ignoring the fact that the blockchain/crypto space is absolutely drowning in meme tokens and obvious cash grabs.

The superiority of blockchain solutions seems to be assumed for many believers, so it’s natural to assume that superior solutions will eventually arise from this superior blockchain technology.

But the superiority of blockchain isn’t obvious for most problems. Moreover, if someone does build a superior solution on top of a blockchain, what’s stopping a centralized player from duplicating the benefits of that superior solution at a lower cost in a centralized platform?

This is the conundrum of blockchain and token projects: For them to be superior to the consumer they must eventually have lower fees and costs. Yet blockchain is inherently more expensive than equivalent centralized solutions and, even worse, the token investors expect astronomical (to the moon) returns on their investments, which necessitates extracting a lot of money from the users after the speculative frenzy has died off. At least currently, most blockchain/crypto/token schemes are built with the assumption that the consumer is the person they will sell the tokens to as a speculative investment, not the person who will actually use the service itself.

Decentralized solutions actually have a lot of problems that proponents avoid talking about. For example, DAOs are promoted as ways of decentralizing ownership, but we're supposed to ignore the fact that a well-capitalized player could simply spend their way into controlling a DAO by purchasing up enough tokens. And unlike with real-world companies, the ownership can be purchased anonymously in a way that makes it appear to come from a lot of organic traction. A well-funded company could simply spend their way into controlling a DAO and neither regulators, users, nor consumers would even know. We're supposed to believe this model is a boon for decentralization, but it's a dream come true for surreptitious takeovers.

> I hear this all of the time, but the people and projects “reshaping the economy and politics” are rarely ever named.

I know very little about this space, but I get a very strong "real deal" feel from Charles Hoskinson.

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

https://twitter.com/IOHK_Charles

https://roadmap.cardano.org/en/

I am most optimistic about blockchain based innovation with respect to direct/liquid/etc democracy.

https://cardano.org/governance/

@mistermann: "I am most optimistic about blockchain based innovation with respect to direct/liquid/etc democracy."

Please stop pushing this snakeoil!

Name the criteria by which Cardano fits into the snakeoil category.

That user account has only made two comments on all of HN, and they're both in this thread. Not worth wasting your time.

I'm curious why you consider these ideas to be snake oil.

The projects reshaping the economy are named. The good ones are Ethereum and L2s. Their goal is to become planetary infrastructure for the global economy.

There's such an abundance of VC money that funding isn't scarce. Developer talent is however.

Doesn't the thought of "something that is supposedly/hypothetically going to change the fundamental economic system of the planet" built on back of VC money (I realize not all of crypto started from VC funding) seem to likely have some fundamental flaws? That and quality developer talent is rare that the final products shipped are going to be poor?

I really don't see how this thing shakes out well for humanity (not even including carbon costs)

@delaaxe: "Their goal is to become planetary infrastructure for the global economy."

Seeing as this "planetary infrastructure" will consume more energy than it produces. A better description would be "planetary snakeoil". The economic equivalent of a perpetual motion machine.

I don't know what point you're trying to make here. Tons of things consume more energy than they produce. Humans for one. I don't even know what 'energy' you're thinking crypto produces here, or that dollars produce in comparison (The only electricity I've seen dollars generate is static electricity). I'm guessing you're being metaphoric here, but your comment is too vague to be useful.

Tezos will be a big competitor. Its self amending mechanism allows developers to inject proposals on which the bakers are invited to vote on. Every ~3 months improvements are made. Its language allows formal verification. But the most important of all it upgrades itself without forks. It is liquid PoS since the beginning. Transactions or contract calls cost below 1 cent, due to steady implemented gas fee optimizations. This month 30M contract calls will be reached whereof almost all were done this year. More and more serious businesses are joining. https://tezos.com/ https://techcrunch.com/2021/11/15/entrepreneur-first-launche...

> but we're supposed to ignore the fact that a well-capitalized player could simply spend their way into controlling a DAO

Is it a problem, though? Not according to the protocol.

Asserting that it is a problem is a political statement.

"what’s stopping a centralized player from duplicating the benefits of that superior solution at a lower cost in a centralized platform?" - This has been my strategy as of late. There are some real cool concepts being built. But once you factor in gas/technology costs and the idea that they don't rely on anonymous p2p transactions, a centralized concept makes sense.

> I hear this all of the time, but the people and projects “reshaping the economy and politics” are rarely ever named.

There are two good reasons for that:

1) The culture around careful discussion of crypto currencies does well to keep seperated financial advice and claims about economics, incentives and technology (or in the crypto space you call of these 'the protocol' or something else to refer to the complete package a distributed ledger technology aims to achieve) - these claims can quickly get mixed up with lies to make money using buzzwords. You don't want this discussion to turn into people shilling what they personally own, trust me, and refraining from naming good projects when off the metaphorical sale's floor is simply good manners.

2) Crypto is still very nascent. Smart contract platforms that are fast and cheap are only starting to be rolled out and stress tested - without that most of the auxiliary functions people envision are only aspirations. If that's where basic smart contracts are right now, then more advanced protocols you can easily tell are much less far along. Because of the lack of industry proven protocols to do what believers pretty much know will happen someday, recommending any means imparting risk on people like you who expect others to tell you "what's up." Its not that fun giving someone risky investment advice when they refuse to look into it themselves and shoulder that risk.

> I hear this all of the time, but the people and projects “reshaping the economy and politics” are rarely ever named.

I don't know about politics, but there are definitely coins reshaping the economy. Hell, bitcoin by itself is reshaping the economy, being considered by many major institutions to officially be a new asset class now[1]. It doesn't mean a total replacement of the economy, if that's what you're thinking, but it's definitely reshaping it.

DeFi is already taking a nice chunk out of central banks' lunch. Celsius, USDC, BlockFi, etc, are able to credibly offer 6% or higher yield[2], whereas banks can only offer, at best 0.6%, nowhere close to beating inflation.

That's just two use cases, and if I had more time this morning I could go into more (didn't even touch on smart contracts at all). Wouldn't be surprised if you'll dismiss them out of hand as bad projects according to whatever internal criteria you have, and if so, I don't think you'll ever be able to convinced that anything a good project.

It just gets annoying to hear people dismiss the entire space all the time without spending more than a few minutes looking into it, and/or assuming that the space never evolved from 4-5 years ago, where you could safely make those claims.

[1]: https://ca.finance.yahoo.com/news/bitcoin-is-officially-a-ne...

[2]: https://defirate.com/usdc/

Your last point (everything in smart contracts) I just can't understand. I personally wouldn't want to live in a world where the "computer says no", and even if a court and Jury disagrees, it's impossible to change.

Similarly (and it's already happened several times), what happens when someone finds a loophole and drains the entire GDP of a country into their account? Do we say "Oh, well that's what the smart contract said, so bye bye country?"

I agree, you wouldn't want a world where either of those two scenarios you mention are possible. But are those examples inescapable risks inherent to having smart contracts? Or does the design of current smart contracts lack maturity in such a way that allows for problems similar to the ones you mention? Maybe better smart contract design could arise that prevents these issues.

I think the case that they are inescapable risks is pretty strong. I think the history of formal design and software engineering is pretty clear that the designing a foolproof system is effectively and practically speaking impossible except for extremely small, extremely isolated problem spaces.

I don't think smart contracts are in that space and I don't think any level of maturity is going to get you there.

The smart contracts you are seeing now are relatively simple programs and are woefully insufficient for nation-state level use.

Imagine a future with multiple levels of smart contracts that allow for court intervention and arbitration. It starts to resemble the checks and balances we have in place now, but the rules are public and codified.

But, if there is a "court intervention" clause that just lets you say "Transfer X money from Y to Z", then why bother with full blockchain/crypto? You have effectively central control.

I agree that would be a useless smart contract. If that is your intention, then don't use a smart contract.

If, however, there are a limited number of known possible outcomes, then smart contracts offer advantages over court-based settlements.

Can you give a concrete example? I can't think of anything where you wouldn't need a fallback "human takes control".

> but the rules are public and codified.

You mean like, say, the current system of laws we have? (:

Sure, laws are strange and arcane and require expertise to translate them into understandable terms, but any form of code has the exact same problem.

No. Better than the current system of laws we have.

Currently, the current system requires lengthy court intervention with interpretation done after the fact.

Smart contracts can allow for a fixed number of resolutions with a timeframe defined up front. Smart contracts won't work for everything, but they might be a better fit for some things.

One thing I've realized is that it's best to think about crypto and smart contracts as a foundation to build upon. They're tools in our toolbox. What we build is up to us.

In the future, I don't think we'll see many monolithic contracts like you're describing (no USA smart contract). Instead I think we'll have a bunch of small, simple, and battle tested smart contracts that we can fit together like lego bricks.

I agree, but that's assuming the whole concept survives to maturity and engenders public trust. At this point, I have my doubts.

This is what people said about objects in the context of object-oriented programming and it never really happened. Currently software doesn't really feel like lego bricks, it feels more like the mix of legos, mega blocks, duplos, kaplas and playmobiles that I played with when I was younger. You can build lots of stuff with it, and they can kind of go together, but not as easily as things from the same brand.

Have you checked your npm_modules folder lately?

Yes, and it's full of little packages that are made to make sure one package will work with the other. In my example, this would be duplo to lego connectors, duplo to mega blocks connectors, lego to mega blocks connectors, etc. I also often write myself glue code between two packages.

A lot of people live in a world where the courts, police and politicians are corrupt. Using smart contracts is a tradeoff for lack of rule of law.

Its essentially people thinking "we're not getting a fair shake here from human law, let's try robot law".

Presumably those corrupt people will be the ones in charge of writing smart contracts as well if you're living somewhere so deeply corrupt.

In Kim Stanley Robinsons Ministry for the Future carbon coins seem to act in this way kinda sorta without depending on a complete decentralization of society or anything particularly revolutionary. They become popular as an investment opportunity because they act like 100 year high yield bonds and then they make tax avoision more difficult because of the record of the blockchain. Anyway its all dependent on the support of national banks in the book but it comes to mind reading this in any case. I just finished the book finally so Im still figuring out what I think of the whole thing...

This is why I support crypto. I view it as a laboratory where we can experiment with ideas around finance and governance.

Many of the currently accepted ideas around these topics came from a pre-internet world. However, myself and others think that certain technologies have changed the game.

Maybe we need government or maybe we don't. Maybe we need a centralized currency, maybe we don't. The thing is we won't really know what we need until we run the experiments.

Personally I think these experiments are too important to silence them.

Your laboratory has run for 12 years and is currently consuming 0.5% of the world energy output and 20% of new GPUs.

All of that without a popular usecase yet. Except for financial speculation, finance-of-last-resort, and crime.

I would say that laboratory is not using the research grants well.

Algorand is carbon negative: https://www.youtube.com/watch?v=NykZ-ZSKkxM

Yes, the laboratory would be fine if it weren't for BTC and ETH.

Experiment away! But not with mega-scale proof-of-work projects that consume ungodly resource as a byproduct of securing the network (which is a financial problem in any case)

> Experiment away! But not with mega-scale proof-of-work projects

Are you familiar with any methods to achieve the same characteristics of Bitcoin but without PoW? Perhaps the energy is not the issue, perhaps it's your view to the importance of it.

You could say "finance of last resort" or you could call it a new paradigm of finance. You are simply dismissing something that you have no personal connection to.

When you can't open a bank account, are discriminated against by institutions, live in highly authoritarian environments etc. This type of finance is not a "last resort" it's your first resort.

The reason it's not "popular" however you want to define it is simply a matter of time and not function.

Ethereum is moving to a new algorithm that will reduce energy consumption by 99.95%. This is happening in a matter of months.

Asking about use-cases for crypto is like asking for use-cases for the internet in the 90s. It's so general purpose that there isn't a specific use-case to sell you on but instead a set of smaller use-cases that add up to a large use-case.

For example, I would love for charities to be built on crypto. Many of the larger charities only use a small percentage of their funds on the problem they're trying to solve. I'd love to see exactly what my charitable donation is being used for. Luckily crypto is public and therefore publicly auditable.

I could list off similar use-cases and each one doesn't seem to be a big deal. But put together it's a huge change in how we view the world.

And as for your other arguments like crime, these don't match up with actual data. Crypto being public is a large turn-off for criminals so they tend to prefer cash instead.

Ethereum has been moving to proof of stake for the past 4 years. Everytime these threads come up people bring up that ETH is *just about* to move to PoS, but it never happens.

You're presumably in software, you should know major software upgrades take years and always longer than expected. Doubly so when it's already being used for millions of transactions daily. Triply so when you're altering the fundamental nature of the underlying protocol.

They have already released the first of three phases. It's live now. I currently have some ETH on the new Proof of Stake chain. Second phase (where they merge it with the rest of the network) got pushed back a few months recently, but it's still expected Q1/Q2 2022[1].

I see and expect this argument from people who aren't in software, who expect everything to happen perfectly and instantly. But you should have been involved in enough projects to know you can't just Thanos snap a major software upgrade into existence.

https://ethereum.org/en/eth2/merge/

Game developers: "We need to push back the release date"

Gamers: "No problem. Take the time you need to make it good."

Crypto developers (who are responsible for billions of dollars): "We need to push back the release date"

Techies: "How dare you. I'm going to imply you're incompetent even though I don't follow the development process at all."

That's great! Could you provide some details on what these projects might be and how they aim to reshape political and economic life to be more open, formal, and participatory?

As others have noted, and indeed the author might point to, this kind of response is sort of a quantum woo dodge. It asserts that some of the quantum woo is genuinely helpful and useful and functional with clear mechanisms, but by coincidence fails to point to any in particular or specify mechanisms.

Here's a random one I stumbled on the other day: https://venturebeat.com/2021/02/10/project-starling-uses-tec...

Look up Turing award winner Silvio Micali.

Can you point me to something more specific? It looks like he was part of some major cryptographic advances before sailing off into snowballscheme land.

https://www.youtube.com/watch?v=NykZ-ZSKkxM

One example is https://www.proofofhumanity.id . Their token is also an UBI implementation.

One idea is that whatever you build on top of a platform like Ethereum will persist; if you build on top of Facebook or IOS your app can be removed without recourse.

Bankless | 90 - 5 Mental Models for Web3 | Chris Dixon https://www.youtube.com/watch?v=jezH_7qEk50

The idea of non-deletion seems to keep coming up again and again in technology. From Usenet spam to abusive Facebook apps, I find myself wondering if being forever saddled with every abusive smart contract someone ever wrote is really a desirable trait in a long-term planetary-scale system.

Remember the 1990s and early 2000s when there were tons of easily discoverable forums? Moderation was less of an issue -- each forum was someone's fiefdom, but there was an abundance of choices and communities available at each choice.

The solution to censorship definitely isn't non-deletion. Usenet died for a reason and 4chan is fringe for a reason. The solution to censorship is a healthy choice of venues, good discoverability, and low/no switching costs. Basically, modern phpbb forums or discord but searchable.

If you have to limit the extent then it's inaccurate to characterize it as fair.

I am actually a rare breed excited about the potential about cryptocurrency here on HN. That said, when I go through your example, I don’t see much difference from the current system despite the illusion that it’s different.

> appropriate taxation of a transaction is built into a smart contract

So, like sales tax. Which we have uniform and open laws for. Or income tax. Which we have uniform and open laws for.

> everything from deciding on how to spend that tax money to the project management for the efforts those tax dollars fund is conducted in the open

Tax laws are public knowledge. So are spending decisions. For example, the infrastructure bill that just passed. Anyone can see exactly the allocation of funds to where.

> by people who have achieved various types of stakeholder status

So, senators. Which we have already. Or direct democracy without senators, which the founding fathers (US-specific) agreed was bad because most people do not understand how taxes and budgeting work.

I want to be convinced that this is somehow different from the current system, but any example I see is either the same (but looks very different) or worse (this part is arguable, but I don’t think proportional voting on tax law would end well. Most people would certainly just end taxes if given the choice with little regard to the long-term consequences of this.)

"So, like sales tax. Which we have uniform and open laws for. Or income tax. Which we have uniform and open laws for."

Laws are not mechanisms, proof of transaction, records etc..

'Smart Contracts' as something unassailable in courts are ridiculous obviously.

But 'smart contracts' that facilitate micro-transactions, every day purchases, and flow through the system without human interaction seem like a good idea.

Imagine when you buy that thing on your Business Visa, and the 'smart contract' is signed, sent to head office, sent to your accounting software, balanced, money in your bank account immediately etc.. All with a series of signed elements.

I understand that's not exactly what it's supposed to look like, but that's the kind of thing I see happening.

While you could say 'there should be a standard for that' it might be that the standards are not nimble enough, and a more generic 'start contract' system could work to tie it all together.

And maybe importantly: to skip VISA and classical banks while we're at it.

> Laws are not mechanisms

This part is interesting, the idea that enforcement and legislation are one in the same. However, for taxes, this would only just prevent tax fraud, right? There’s not really “mechanisms” for taxes. Congress passes the laws. You follow them when you file your taxes, or you may be audited later and fined/jailed.

> to skip VISA and classical banks while we’re at it

Loan pools and such are interesting, basically community lending. I’m not sure how much we could skip VISA. It’s a payment processor. You need someone to submit your transactions to nodes. In reality, they are of course going to charge a fee because they can make money. Just like VISA. One advantage is I guess they won’t have VISA’s prudish objections to certain kinds of transactions.

> Imagine when you buy that thing on your Business Visa, and the 'smart contract' is signed, sent to head office, sent to your accounting software, balanced, money in your bank account immediately etc.. All with a series of signed elements.

This already happens at every company I've ever worked for, modulo the "in your bank account immediately" part. But that's down to how cash flow works, which is fundamental to most businesses/industries and can't be solved by anything other than time travel or teleportation. No amount of crypto is going to change the fact that the restaurant needs to sell a completed before it can pay the cook for their prep work. Even if bank transactions were immediate, most people would have to wait until their next paycheck to get reimbursements.

The underlying technology is a 90s relational database, some html/javascript/php, a bunch of java, and probably some cobol somewhere.

> And maybe importantly: to skip VISA and classical banks while we're at it.

As much as I hate the privacy invasion of cc companies and banks knowing everything I buy, the idea of my entire financial life being published on a public chain is waaay more creepy. Like most normal humans, I am mildly creeped out by big companies knowing things about me but would be seriously angry if my manager, pastor, or mother-in-law knew those same things.

'The way it works today' is a bit cludgy and there's actually no reason you couldn't have the reimbursement instantly. The 'non tech' reason would be related to internal approvals, but with the right tech, it would be streamlined.

It's also possible that the government could get some of their taxes right away. Obviously not in call cases due to varying accounting issues, but it could work.

FYI there's no reason for 'all your transactions to be on the blockchain' - that's just the way it works today but that can change.

> actually no reason you couldn't have the reimbursement instantly

Out in the Real Economy there's a thing called cash flow. You can't pay your employees before your customers pay you.

> FYI there's no reason for 'all your transactions to be on the blockchain' - that's just the way it works today but that can change.

You're right. There's no reason.

Regular expenses are generally not burdened by cash flow. You get your regular expenses at the 'end of the month' as a matter of process, not because the company is waiting for customers to pay for stuff, so they can pay you.

As an employee, you're not there to provide working capital for your company, so if you're buying something really that the company should be paying for, they should be able to pay for it immediately.

> Regular expenses are generally not burdened by cash flow. You get your regular expenses at the 'end of the month' as a matter of process, not because the company is waiting for customers to pay for stuff, so they can pay you.

Again, this may be true in Corporate America, but it's far less true in small businesses (which are a huge fraction of any economy).

> As an employee, you're not there to provide working capital for your company

No, that's the role of my credit card company (and what's more, they pay me for the pleasure & my only real expense is divulging my employer's spend).

> Or direct democracy without senators, which the founding fathers (US-specific) agreed was bad because most people do not understand how taxes and budgeting work.

To be fair, people were MUCH dumber back then, and the capability to access information was a modicum of what it is today. Direct democracy was also impossible back then given the slow speed of communication and population distributed across vast territory. Today, I don't think it's fair to paternalize the general public as such - we have the system we have due to legacy and inertia, not its merits.

People were NOT dumber in the past.

This is very obviously the case if you take time to read old books.

A lot of the supposedly dumb things that people believed in the past were actually quite well supported and derived theories with the information they could get at the time.

Of course there were a lot of people who believed dumb things on blind faith, but this is just as true today as it was then.

Govt won’t likely allow that because who needs government if people look to governing tokens?

Mark my words, Tech people believing they can solve political problems with technology will doom us all.

Operations Research already solves a huge number of problems which, in its absence, would be political problems.

This is true. But your statement applies to Big Tech more so than independent builders who are working out how to redistribute their power.

Here I thought politicians pretending like they can solve political problems is dooming us all.

this tech will present many challenges. it could make many political problems much worse. but it is also unstoppable.

> the crypto world is full of useless memecoins

This criticism should really end - yes, it misleads many people!

Creating a decentralised app, or a token, is permisssionless! Yes, anyone anywhere can do it. Much like publishing a website, or writing a blog article, the costs are negligible. The fact that there are a lot of useless websites and blog articles does not invalidate the usefulness of the web!

The existence of shitcoins means absolutely nothing.

Maybe the title should be updated. It doesn't have anything to do with decentralization per se, but about cryptocurrencies, which is just a technology that happens to use decentralization as a technology.

I actually thought the article was gonna be about decentralization (as in P2P technology, like BitTorrent), but instead it's about the authors distaste for cryptocurrencies.

Edit: Maybe it's just me, but the article feels less and less honest the more I look into it. "Stephen Diehl" (the author) apparently founded a company that has the following tagline on GitHub "Adjoint digitises cash and settlement processes for multinational corporates." (https://github.com/adjoint-io) but I didn't find this disclosed in the post. There is a clear conflict of interest, but it's not highlighted for some reason.

> clear conflict of interest

That's not a conflict of interest.

The company (Adjoint, Inc) is described as "digitises cash and settlement processes", something that cryptocurrencies aim to do as well. His company clearly doesn't use decentralization (since why would he make a post against it?), which cryptocurrencies do. How is that not a conflict of interest in this specific blogpost?

Reading the post it seems like he has no stake in the outcome of what people think about cryptocurrencies and decentralization, but that's not true, as a founder he has a huge stake in the outcome.

"Conflict of interest" here would require that he's in a position that gives him some special power over whether people continue to invest in crypto (or "decentralization" generally). Writing a blog post is something anyone can do. The fact that he's put a financial stake in his views doesn't make it unethical to express them the same way as everyone else.

It's not that he shouldn't express his views in a blog. The part that feels shifty here is that he's not disclosing his position in the space in his articles. I think most people are at least somewhat susceptible to "It is difficult to get a man to understand something, when his salary depends on his not understanding it." so a disclosure of interest is useful to frame thoughts on a topic.

I didn't know about any of this until @capableweb brought it up. It explains a lot more about this series of blog posts.

The repo/company you linked is about utilizing zero knowledge proofs which is literally the best we've got in regards to decentralization.

If anything, that gives him credentials to talk about it?

All you'd have to do to look at their website and see that they offer a product to banks, it has nothing to do with decentralization. http://adjoint.io/

The article is about how the term decentralization has become a generic buzzword for good and in fact could describe a range of technologies that are either good or bad, hence we should be immediately skeptical whenever we see the term decentralized used to describe something as good and innovative and look more closely at the details.

It’s about the authors distaste for decentralized woo given human society literally falls apart without centralization.

Why do we need a literal Matrix running 24/7 when humans themselves can fill in the network gaps SMS doesn’t?

It’s about uneconomical, fantasy driven technology creation by a minority who seek to monopolize it for their social goals.

Shut the computers off and the power of the system is none. It’s not real unless we spend a lot of effort on it. Who is that empowering?

I’d like you to divulge any crypto holdings, crypto business associates, profits, you might have, since you seem to believe full disclosure is a requirement of every post online. I need to know if you have skin the game, leading you to question others motives.

Edit: to down voters; I don’t care. It’s such an impotent flex. “Oh look it me click button get dopamine carrot. I have stabilized reality!” Internet culture is sad af

Normally when we use the phrase "conflict of interest," we use it to imply a conflict between parties. One of the parties in your account is the blog author and/or their company; who is the other? The cryptocurrency community? They aren't a party in the traditional sense, and the concept weakens further when we consider the press campaign among cryptocurrency fans to rebrand their schemes as transaction substrates.

Framed as such, this seems more like an impassioned technical rebuke from an informed individual than a "conflict of interest."

Rather than argue semantics, I'm just going to thank you for pointing out this person has other motivations for their position. I'd wondered why they go on such long anti-crypto rants.

I have been participating in the Ethereum community for many years and I agree that there is a widespread belief that decentralized tech and economies run on smart contracts can substantively address social problems. Additionally, in the wider crypto community there is a widespread belief that these networks are a way to restore fair money.

In most cases I don't think that these beliefs are post-hoc rationalization. Rather, it is simply motivating to think this way. "woo" is a longstanding feature of any new human endeavor because most of us are psychologically wired to think that what we work on is going to be helpful, and we build a little religion with each other in order to cohere and quickly get the work done.

Regarding the question whether decentralized tech will make the world "better": it can and will in some cases -- for very specific reasons -- but IMO widespread adoption of platforms like Bitcoin and Ethereum will also lead to many new and terrible social problems.

As is the case for every major technology unleashed on our world.

Focusing on the over-positive views of enthusiasts won't stop them, and certainly won't stop the progression of the tech. People will keep building on something new when it can be built, when it is wildly interesting, and when the endeavor is sustainable.

What we need to put more attention on is what to do with the outcomes. It is our responsibility to do so! How to replace the services the tech will disrupt with options that have qualities we desire: more fair, less expensive, more secure, less arbitrarily alterable, etc.

And we need to put more attention on the ways it could all go wrong and bring widespread harm.

> but IMO widespread adoption of platforms like Bitcoin and Ethereum will also lead to many new and terrible social problems

So glad you said this - I've also been in the Ethereum community for a while and have significant trepidation about the impact of this technology. But also I see it as unstoppable so we have a duty to participate and try to ensure the positive outweighs the negative.

> but IMO widespread adoption of platforms like Bitcoin and Ethereum will also lead to many new and terrible social problems

I suspect this as well. Would be curious to see your list of possible issues.

I think the best examples of Decentralized Woo Hoo is the phrase "ownership over your data". When most people hear this they think of facebook selling their data to third parties, using it for targeted advertising, etc. But in the context of blockchains, owning data only means that you own writes to the data. From a read standpoint, all data is essentially open source. I have sole discretion to send you an NFT, but facebook is still free to use that sale data to sell me things.

This distinction appears to be lost on a lot of people who are new to the space, and leads to a lot of marketing fluff around projects that make no sense.

> But in the context of blockchains, owning data only means that you own writes to the data.

I disagree in parts. In e.g. an app on Ethereum you own your and the app's data more than e.g. you do on Facebook. It's because there are no gatekeepers that'd stop you from creating an interoperable app using the original data or straight up downloading the data. There's sufficient historical precedence of FAANG platform risk.

But then also "just owning the right to writes" may sell the concept cheap considering that in the realm of "owning data," there isn't many concepts besides "reading", "writing" and "accessing". "Owning the write" may be as good as it gets?

We tend to look at data from a materialistic view and represent it in our heads as .zip files or csvs. But data really isn't that. Data is continuous and owning "the right to write" is pretty cool IMO.

I think we're on the same page. That's kind of what I was saying about how you're essentially open sourcing the "read" on data.

Also, I'm not trying to sell the write side short! Owning writes is the major value proposition of a blockchain. I just feel like people conflate the two when talking about on chain ownership

ok fair enough. I'm glad we hashed it out and arrived on the same page :)

> From a read standpoint, all data is essentially open source

Unless you encrypt things you put on blockchain. Or use clever ways to hide information from others. There are cryptocurrencies like Monero.

This is true! But it's also hard to think of a situation in which you would need to store that encrypted data on chain. Why not store it on a central server? Or, encrypted on a p2p network? And if order of events is important, you could just store a hash of the data on chain.

Criticisms here are correct: Look, decentralized here doesn't mean "decentralized" in the slightest. I think for - not just the people he's critcizing, but ALSO FOR HIM, "decentralized" really means "centralized differently."

True "decentralization" means letting go of (at least some) exclusivity and ownership; and the current flavor of the crypto craze can't even conceive of it. Ironic, since a lot of it is built on free/open source (which is true decentralization).

(Which is to say, cryptocurrency isn't valueless, bills gotta get paid and I think fungible crypto can help. But trying to leverage to create new forms of ownership, which is centralization, is exactly backward.)

> decentralized here doesn't mean "decentralized" in the slightest.

That's a bit much. There is a bunch of weird crypto hype surrounding web3, but when I can use a website without having to create a login, and my data that its showing doesn't exist on their servers, that's fundamentally a different Internet than the one we've come to know.

But not fundamentally different from the one we had 20 years ago! Maybe that's my issue here. So many of these Web3 clowns are promising slightly worse versions of the web we already had a while ago (which, fair, might be necessary) -- but while pretending it's something new and, perhaps this is the worst part, apparently aggressively ignoring the extent to which "Information wants to be free"/ GNU Manifesto/etc" type ideas are at least PARTLY true.

Same thing happened when VPS hosting started being branded as this brand new thing called the cloud and now look at where we are with that. Go figure out how and where smart contracts get executed, and how web3 does decentralize things via a wallet, and tell me there isn't something there, hidden behind all of the marketing fluff of crypto conmen.

> True "decentralization" means letting go of (at least some) exclusivity and ownership; and the current flavor of the crypto craze can't even conceive of it.

"True" decentralization is a voluntary framework where both exclusivity and ownership can coexist with other (less capitalist) ideologies. What I find interesting is that there is an emerging global sandbox for people to experiment with novel technologies and try out new ideas that were simply not possible before.

It's certainly a fair criticism that the most popular (and most profitable) projects are lacking in creativity and disproportionately rewarded for questionable utility, but that is a criticism of the people who are building (and paying) with this technology.

Crazes come and go, and after this current Cambrian explosion winds down and all the NFT hype, DeFi scams, and almost-ponzi schemes implode, I believe that the truly interesting (and useful) projects will not only remain, but continue to grow and evolve over time.

I agree, though I think the current one or ones being hyped now is far less interesting that the projects that have already done much of the same pre-Crypto. They ALL seem like "stuff we've done before but lets add on more payments."

See e.g. Deviant Art, Wikipedia, Roblox, Minecraft, Second Life, the list goes on.

I've heard Vitalik Buterin (Ethereum creator) make the distinction between logical, architectural, and governance decentralization. Crypto projects tend to achieve the second, but not the first or third.[1]

A blockchain tends to require centralized logic/code/data structures so that agents can communicate with the same protocol.

Architectural means servers. As the OP mentions, this is really the only way in which blockchains are currently decentralized.

Governance is about how the rules and decisions are made. I guess fairly linked to the logical/code layer. Also heavily centralized in the blockchain world.

[1] https://youtu.be/LKbOPYnUlXs?t=369

And they never will the third. Never. Once again, this is thinking you can make humans act like robot computer code. You can't. So-called "smart contracts" (which are neither) will never helpfully substitute for humans doing dispute resolution by talking to each other.

> I've heard Vitalik Buterin (Ethereum creator) make the distinction between logical, architectural, and governance decentralization. Crypto projects tend to achieve the second, but not the first or third.

This is even worse than it sounds. Crypto projects like DAOs actually make hidden centralization a breeze for well-funded adversaries.

If someone has enough money, they can simply take over a DAO by buying enough tokens to swing the votes in the direction they want. Thanks to the way most blockchain solutions are implemented, they can even accumulate all of these tokens in ways that appear decentralized across many unique wallets that are nevertheless controlled by a central party.

Big players can acquire centralized control of decentralized projects in ways that consumers and regulators wouldn't even be able to detect.

Decentralized, tokenized ownership structures are definitely not "power to the people" structures. They are "power to the money" structures, where whoever can spend the most money is guaranteed to win and all of the participants have given up their ability to ever even know when it's happening.

This is true, but at some point the community will figure out what's going on, and either leave to a more promising and uncompromised project, or find a way to limit the voting power of the attacker. You can see this happening now with the Curve Wars.

DAO just means decentralised organisation. Like token, also a very generic term, it can come in many forms. There is nothing inherent about a DAO that even includes tokens, let alone tokens that are fungible or even acquirable.

I think it's wrong to say that technology can't affect societal problems. Isn't all encryption technology a workaround for the societal problem of maintaining privacy? As another specific (but admittedly contentious) example, consider how Uber supplanted the taxi monopoly with a technological workaround.

Mirrors my feelings on the crypto-craze. As "decentralized" as some may want crypto currency to be, there are some inherently "central" activities (exchanges being one of them) that tend to be skirted around by proponents.

Also, Decentralized Woo Hoo sounds like a great band name. Or something naughty from The Sims.

That centralized exchanges exists doesn't somehow make decentralized cryptocurrencies less decentralized. Just like how centralized social media doesn't make decentralized social media less decentralized.

Crytocurrencies are effectively useless without centralized exchanges. Change my mind.

Social media doesn't need to interop between centralized and decentralized, but currencies do if they want to be useable. At the end of the day, someone will want to actually _buy_ something, and unfortunately I can't go to Petco and use my Dogecoin to buy dogfood.

I will add my own: cryptocurrencies are useless without a legal framework, which requires a central entity with power ensuring that there is fairness, i.e. the government. Change my mind.

P.S. Banking will also still be needed.

In any case, these are social issues and Decentralized Woo Hoo is a great name for it, as decentralization does not solve any of these issues. There is value to "digital cash", but not in the capacity that all these projects claim.

Yup, because if shit hits the fan and you're up against a tyrannical government you have a lot more problems to worry about than exchanging goods for money via a physical crypto wallet (because they'll have already blocked communications by the time they're after you on the ground).

Right now that is obviously true. If I want to pay for something, I need Euros here in Germany. But if I can pay with crypto that could change.

DAI and MIM are some examples of decentralized stable coins that could be used for payment.

Yes, you can.

https://www.bitrefill.com/buy/petco-usa/?hl=en

They don't have it at the payment terminal directly yet, because of the stigma you and others still have against cryptocurrency.

But after this cycle, the news will have normalized it enough that you WILL pay for your dog food and Taco Bell with Dogecoin — I'd bet 10 DOGE on it.

You're correct, I am opposed to crytocurrencies as implemented today. I'm horrified that we spend tons of resources and energy doing effectively useless work. Maybe a Folding at Home coin would be more palatable.

I'd also argue that bitrefill is, yet again, centralization being needed to make it useful. Once defi is accepted everywhere, suddenly people will want the law and central authorities to perform chargebacks, and end up reinventing our exact same system.

> Crytocurrencies are effectively useless without centralized exchanges. Change my mind.

https://99bitcoins.com/bitcoin/who-accepts/

> use my Dogecoin to buy dogfood.

https://bitcoinist.com/doge-for-dogs-burger-king-brazil-now-...

https://imgur.com/kR1aNcP

...

Maybe not "Change my mind", but definitely a "Prove me wrong"

Exchanges giving promotional bonuses in Tether (USDT).

That was the "follow the money" moment, for me.

I have no idea what you're talking about -- Woo Hoo in The Sims is good clean centralized fun!

"Yep, this house is gonna be Woohoo Central."

http://jenba.net/sims2/?p=185

"I tried to woohoo everyone in The Sims 4"

https://www.youtube.com/watch?v=3oibAXV3vlo

"Missing Information: This article is missing information about How to initiate WooHoo. You can help The Sims Wiki by adding it."

"Sims usually desire to do a public WooHoo. Doing a public WooHoo will grant a special memory for the engaging Sims or a special moodlet and stride."

https://sims.fandom.com/wiki/WooHoo

History replays itself every new invention or enlightment humans have. Over the past centuries many have been persecuted for studying chemistry, astronomy, physics and even biology. Think of Galileo who was persecuted for advaing the theory that the Earth was round.

Crypto embodies a new paradigm whereby rules can be programmed and enforced by computers. Instead of relying on centralized human authorities to measure, control and enforce, the rule of "law" is coded into the protocol. No one can cheat. The only way to change the "law" is for every player to agree to change the protocol. Through concensus.

For example Bitcoin with its fixed supply of 21M coins which prevents dillution and debasement. No human can change that unless, there is a concensus to change the protocol. You see humans still have control, but only if we all agree.

We are living a unique human experiment with Crypto. I really wish people would stop bashing the industry and instead join in the experiment.

Remember that evolution and innovation is innevitable. The financial system currently controlled by humans will get disrupted by technology. Crypto turns finance onto its head. Fascinating.

You guys started by comparing yourselves to the great people of history, before you'd done anything.

You guys have been saying the same thing for a decade. This kind of mindset and argument sounds remarkably ignorant about how power works (you'll never, never divorce the monetary system from outside, get real), and is ignorant about the value of law being something that changes over time.

This is the problem with building the world with 20 year old men. You don't know what you don't know.

> but only if we all agree.

"we all" in this case refers to the top single-digit percent of holders [1]. It's no small feat to get consensus there! But it's also not very decentralized/democratized and sounds a lot like our existing financial (or societal) systems.

[1] https://news.bitcoin.com/analysis-shows-bitcoin-whales-are-s... -- which optimistically states that only 71% of BTC is held by the top 2%.

That is false. If some small subset of Bitcoin users wanted to or were coerced to change the rules, all they would do is fork themselves into their own copy of the Blockchain. Everyone else would continue using it as they had been previously.

> I really wish people would stop bashing the industry and instead join in the experiment.

... so that steady supply of greater fools would never end? No, thanks.

Persecuted? Are cryptocultists hiding in basements for fear of the nocoin police? Tortured in backrooms to have them recant the holy blockchain?

Blockchain is shilled everywhere, you can find ads for it in the subway.

>I really wish people would stop bashing the industry and instead join in the experiment.

I'm absolutely ok with experimenting. I'm not ok running trillion dollar ponzi schemes that use a mindbending amount of resources in order to make a proof of concept. That's ridiculous.

>For example Bitcoin with its fixed supply of 21M coins which prevents dillution and debasement.

Except, you know, for all the bitcoin forks out there.

The rule of law is NOT "coded into the protocol", and you absolutely can cheat the system. In fact, it's far easier to cheat crypto "law" than real law, for several reasons:

1. Real law is not executed by a computer, but by a highly educated judge that can actually interpret the law and contracts, and reject attempts to exploit them. Smart contracts are easily exploited. 2. Real law has a process called "discovery", which is how the legal system gets to determine the facts of the case. This works specifically because of coercive force[0]. Crypto "law" is entirely at the mercy of trusted oracles to inject facts onto the blockchain so that smart contracts can execute correctly. 3. Impersonation is far harder in real law than crypto. In the crypto world, your identity is merely a collection of private keys. These are easily copied[1], and it is common practice for criminals to automate the theft of cryptocurrency because crypto identity is so fragile. 4. Crypto "law" is immutable, which means that if it gets things wrong (very likely because of the above), there is no recourse to change things[2]. In real law, transactions can be reversed and bad rulings appealed, at least for a little while.

Until you can make crypto law that can actually do the above things, I will continue to consider it untrustworthy, if not outright unethical to promote. You may have noticed that a lot of those things run counter to the spirit of decentralization... to which I say, that is the point. The financial system evolved to be a centralized one because centralization is more efficient. Central authorities can prosecute frauds that decentralized crowds cannot.

For example, Bitcoin has no protection against someone making their own fork of the software and minting another 21M coins. This has happened many times over; some of those forks are even branded the same way as Bitcoin[3]. You may argue that this constitutes some kind of fraud, but... you can't really stop it with crypto law; and people fall for them all the time. Hell, some of those altcoins are actually somewhat viable. How is this not a form of dilution or debasement?

[0] Specifically, an escalating scale of sanctions and punishments that make refusing to participate in discovery a very bad idea.

[1] I am aware of the existence of hardware intended to prevent the theft of shining keys. I personally find it offensive that the best argument for using crypto is "lock up your keys with the same DRM shit copyright maximalists use and you'll be fine".

[2] The closest thing we've seen to crypto actually adjudicating crime was the DAO hack, which more or less only worked specifically because crypto is NOT actually decentralized - the developers still dictate the protocol.

[3] Examples: Bitcoin Cash, Bitcoin Gold, Bitconnect, Bitcoin SV.

> Think of Galileo who was persecuted for advaing the theory that the Earth was round.

FYI, Galileo showed that Earth and the other planets go around the sun. That the earth was round was already known.

Seen many people conclude the low hanging fruit of technology has all been obtained, and there's little left to build. But with web3 we're only getting started. There's so much you can do with it.

PS: Is it not `woo woo` instead of `woo hoo`?

https://www.urbandictionary.com/define.php?term=woo-woo

The argument that "observer" as used in physics is misunderstood by laypeople makes sense. He then argues the same is happening with the word "decentralized" which makes no sense because laypeople don't know that word. I guess he's arguing that people see "decentralized" and read "democratized," but he fails to make that argument.

He makes more an analogy of quantum woo and decentralization woo, and i kind of agree with that. Honestly, this idea that you can pinpoint 1 similarity in a very humanly important thing and a technincal complicated, precise and solvable problem (like the consciousness and quantum or like social issues and decentralization (as he writes here) also, human intelligence and AI comes to mind) and then blow that similarity way out of proportion is a very interesting thing to think about and a thought this article presents quite well.

Yes, I certainly agree that there's woo going on in both, and enthusiastic misunderstanding of technical things is a powerful and problematic phenomenon.

I watched a video by a surf instructor the other day who kept talking about the Bernoulli Principle breathlessly and it was clear that the instructor had no idea what it was (he was actually talking about cohesion / adhesion of water)... and I'm sure most of his audience just ate it up and will be repeating it.

> The essence of decentralized woo, and why it’s such a pernicious form of sophistry, is that it’s simply a proxy meme of the more dangerous idea that technology can fix social problems.

That's a strong wording. Technology can actually "fix" some social problems. The problem is that we don't know, which of them. Also, we know very little about the tradeoffs.

In the 90s I was part of the cypherpunks movement and a total devotee of the idea that decentralized currency, unbreakable cryptography, mix-nets, etc was going to make it impossible for state power to govern cyberspace, and John Perry Barlow's Declaration of Independence for Cyberspace would be made real.

But this turned out to be the high naïveté of a young person. First of all, the physical world is the ultimate gatekeeper, and so unless you are uploaded into the matrix, you're going to need access to stuff in the real world, and those off ramps and real world requirements can still easily come under the control of governments.

Secondly, a lot of "decentralized" stuff becomes centralized rapidly because it turns out there are still efficiency gains from centralization, and a lot of people don't want to include costs to upkeep these systems. As you saw with miners, eventually the folks who had cheap access to energy, and capital resources to buy large farms of equipment, could tend to monopolize a significant amount of hashing power. And when you look at technologies like IPFS, again, people are much more interesting in consuming files than letting their computer resources be used to provide part of the network. I suppose BitTorrent is a counter example since enough people seem to be seeders, but I'm not convinced it'll scale to replace the entire Web.

Look at SMTP/IMAP. Decentralized and federated, one of the oldest protocols on the net. Yet, almost all of humanity gets their email from a few big providers handling billions of addresses. Hardly anyone runs an SMTP server at home.

A decentralized protocol today becomes a centralized protocol tomorrow if there is any net economic/efficiency benefit to centralizing. That means eventually there will be a power asymmetry and all of the vaunt claims of a flat, non-hierarchal, or democratic system go out the window. Eventually, a few entities will end up in control in a way that gives them significant power that individuals do not.

But unlike the real world systems we have today, where governments can intervene when the distortions become too onerous, the current crop of defi stuff has no regulatory system to restore a kind of homeostasis when it becomes unbalanced. There is also nothing to be done if a critical security flaw is found (e.g. SHA found to be 'broken').

Thus the idea of basing a significant part of the world finance and information systems on top of blockchain to me seems both hideously wasteful and potentially catastrophic for society.

With El Salvadors requirement that businesses accept Bitcoin, I have come to believe that just about every 3rd world nation without significant military will eventually do the same. Why? Because having your countries currency pegged to the bitcoin is better than being pegged to the dollar. Pegged to the dollar allows the US and allies to devalue your currency to nothing almost immediately. Bitcoin is more risilient than this.

Disclaimer: I hate bitcoin and own none of it, having "missed the boat". But once I have visited a developing nation who's currency is constantly beat up by the dollar, and witnessing the people work 4x harder for 1/10 the standard of living, it really does make sense.

Then why have all countries abandoned the gold standard? What makes bitcoin more suitable than gold for this purpose?

> having "missed the boat"

The boat is still going, likely to hit $100K in the next few months.

The sentence in the second last paragraph reads "They all have their idea about how to “make the world a better place” and to do it they need you to tithe and purchase their ponzicoin today to buy a stake in a better tomorrow." and is the anthem of this video I saw posted on reddit.com/r/bitcoin called "Bitcoin is Generational Wealth" https://www.youtube.com/watch?v=3Rnqst5qCgA A lot of fluff and no details regarding the implementation of the ideal future except that one must get on the Bitcoin train now to be part of it.

I think there needs to be a new discipline in the cryptosphere similar to what a hacker is to technology. Maybe it's just that hackers need to gain more influence.

Anyways, what's necessary is that the crypto space needs a stronger internal critical voice. It can't just all be about owning tokens and shilling them to others.

We need due diligence too.

I find this type of manifesto quite cool: https://criticalengineering.org/en

Maybe decentralized needs to be valued against the (possibly negative) value of centralized authority?

Similar to how air quality, other natural resources are frequently not taken into account during the manufacturing of goods or services, so we may end up with a Tragedy of the Commons situation; If proportional effective causes and their constituent values are not taken into account, then the value cannot be correctly ascertained.

> If you see tech monopolies as a fundamental societal problem … you’ll find an answer in decentralization. If you see income inequality as a fundamental societal problem … you’ll find an answer in decentralization. If you see government overreach as a fundamental societal problem … you’ll find an answer in decentralization. If you see monetary policy as a fundamental societal problem, you’ll find an answer in decentralization. There is no meme that you won’t find an answer for because how someone sees decentralization is like a Rorschach for their fears and tragic flaws.

This is sort of true, but also there are lots of problems that on their face don't make sense with decentralisation (e.g. the problem of how hard it is to disseminate expert information, which is enabled in part by decentralisation). This is just a list of problems that decentralisation could actually help with.

The exposition on quantum woo was lovely, but the analogy to decentralization falls flat. The difference is that when lay people talk about decentralization, they seem to have a pretty decent - though often imperfect - idea what they're talking about.

I think most folks who throw around the word "decentralized" use the term as a stand-in for some degree of "censorship resistance". Which is reasonably true! They might not understand the social consequences of this, or they might not care; maybe having free (as in speech) transactions between disparate people is worth the social cost of somewhat increased ransomware.

There are fair criticisms of people who talk about decentralization - I notice there are a lot of (facebook-hating, mostly) people who seem to think decentralization will bring privacy or control of your data - but overall I think most people use the word decentralization correctly.

The big two, India and China account for 3B people would never need Crypto at all. Their own mobile payment systems are thriving.

India's system which was launched in 2016 clocks in 4B+ transcations per month, grows 100% YOY.

A lot of developing countries have their mobile systems which are far better than Crypto.

Another half billion or more in Africa have been happily using mobile payment systems such as M-Pesa for years now as well, sending more money than the Bitcoin "market cap" each year.

Critically fails to distinguish between decentralization technologies (a wider category) and cryptocurrency. Does not understand the term he is criticizing.

There is another deeper primary failure here shared by much of the HN community. That is the inability, despite so much evidence, to comprehend that technology IS an ally to society. In fact, it has always been a core part of progress in human society.

But the above, and the article, are just laying out worldviews, which is not constructive since beliefs are very broad and quite difficult to change. What IS possible to discuss are specific types of problems and technological or non-technological solutions to them. The article provides nothing specific to discuss. It is simply idealogical flamebait and should be removed.

Most of HN is aware and mature enough to comprehend that Ayn Rand is NOT an ally of society.

Do you have a browser extension that replaces the word "technology" with "Ayn Rand"? Have no idea what you are talking about.

I was a fan of Ayn Rand when I read her as a kid. At this point I am close to the opposite of an Ayn Rand fan. Again, don't see how you possibly brought Ayn Rand into my comment.

To me, crypto is just another miracle diet, except it's not weight loss you're after, but 'fixing the finance industry', or getting rich, or whatever.

It's all the same and it's all rather boring.

I don't know what Stephen's motivation is for harping on this topic for so long. Does he expect people to abandon their love for lottery tickets, or their tendency to want to be part of a cult to give their life meaning?

It's just what humans do, among other stupidities such as open offices and having clueless people managing people who know how to do the work.

It's stupidity all the way down. Maybe it hasn't hit home yet - most things are stupid, including a whole lot of what you do, including spending all this time worrying about crypto-pocalypse :)

Some good points here. If the author is reading the comments, I spotted the following typos:

1) "that tries to rationalize their existence by appeals to either" should probably say "that tries to rationalize their existence by appealing to either"

2) "like that that quantum mechanics and consciousness" should probably say "like that quantum mechanics and consciousness"

> If you see government overreach as a fundamental societal problem … you’ll find an answer in decentralization.

I do not really get this. Decentralization in government just moves the power from one level of government to another (so overreach is the same), and usually the local government is less accountable, as most public scrutiny is focused on the central government.

> We have systems like BitTorrent and Tor which are decentralized networks and whose responsibility is to blindly distribute data according to a set of prescribed rules and algorithms.

Imagine you could sell and buy things on these distributed networks, that would be a game changer! Only problem is that you need some kind of central payment processor :(.

...oh wait...

Trustless is another word that gets the same rhetorical slight of hand and IMO is more dangerous in terms of individuals getting scammed. All these terms specific in context get sold as general in application when crypto is marketed. Same thing with other rallying cries like removing middlemen.

> Advocates of these assets claim crypto platforms will make things trustless, transparent, open, immutable, secure and decentralized.

Perhaps those who have disproportionately consumed libertarian ideology, but those who've studied the longer arc of history know that power abhors a vaccum, and understand destruction and decentralization of institutions as a step on the path to setting different centralized institutions that prioritize a different vision of the world, whether that is ethno-nationalist, theocratic, communist, whatever.

The pure crypto enthusiasts are just helping them along, greasing the skids if you will. Once the increased social entropy weakens institutions enough to reveal a takeover opportunity, all ideas of decentralization will be cast aside because centralized power is too effective.

This attack on existing institutions in order to pave the way for replacement institutions one prefers is omnipresent in history, including the American Revolution and the Bolshevik revolution, both of which fought against the centralized monarchical authority.

The current one is instead fighting against globalist institutions and the multiculturalism and economic leveling they have brought on, which have had very distinct sets of winners and losers.

Value is in whatever two parties agree is valuable, in lots of cases requiring the expectation of being valuable to someone else too. A tulip was enormously valuable at one place and time. Who’s to say where it goes, people are funny.

When honest articles draw ire, it is a tell-tale sign.

Like Walter from The Big Lebowski, crypto fans claim "Calmer than you" while internally seething at The Dude's honest callout of their inconsistencies.

Maybe rather than coming at the author from every possible angle to somehow discredit his observations, stop and consider he's making an extremely valid analogy: all of us have encountered at least one "quantium woo" acolyte in our lifetime, and realizing that you might be that person but with a different woo is upsetting, but important.

The most potent statement of the article: "There is no meme that you won’t find an answer for because how someone sees decentralization is like a Rorschach for their fears and tragic flaws."

> Or similarly they suggest misguided equivalences, like that that quantum mechanics and consciousness are both weird and therefore equivelent [sic] without a reference to a mechanism.

Similarly this article connects bad article about quantum mechanics to bad articles about cryptocurrencies without reference to a mechanism that might explain why these would be the same effect.

> it's simply a proxy meme of the more dangerous idea that technology can fix social problems

Technology literally has fixed social problems. Look at the printing press, for instance in its effects on the protestant reformation. Printing, and printing "dangerous ideas" no less, has been an essential part of social change.

Stephen Diehl has been colossally wrong for YEARS on crypto.

If you look at ALL of his articles, they are ALL about one topic only, how crypto is a scam. I'm for one very glad he exists. He'll either end up being able to say "told you!", or, more likely, as a great quote in some article in 2032, when people will write about early response to crypto.

>The Dirac equation has nothing to say about the phenomenon of mind except to describe the chemistry that gives rise to it.

On the contrary, the question of mind is precisely what is at stake in our investigation of the particle-wave nature of the electron.

"From the point of view of wave mechanics, the infinite array of possible point paths would be merely fictitious, none of them would have the prerogative over the others of being that really traveled in an individual case. I have, however, already mentioned that we have yet really observed such individual particle paths in some cases. The wave theory can represent this, either not at all or only very imperfectly. We find it confoundedly difficult to interpret the traces we see as nothing more than narrow bundles of equally possible paths between which the wave surfaces establish cross-connections. Yet, these cross-connections are necessary for an understanding of the diffraction and interference phenomena which can be demonstrated for the same particle with the same plausibility -- and that on a large scale, not just as a consequence of the theoretical ideas about the interior of the atom, which we mentioned earlier. Conditions are admittedly such that we can always manage to make do in each concrete individual case without the two different aspects leading to different expectations as to the result of certain experiments. We cannot, however, manage to make do with such old, familiar, and seemingly indispensable terms as "real" or "only possible"; we are never in a position to say what really is or what really happens, but we can only say what will be observed in any concrete individual case. Will we have to be permanently satisfied with this...? On principle, yes. On principle, there is nothing new in the postulate that in the end exact science should aim at nothing more than the description of what can really be observed. The question is only whether from now on we shall have to refrain from tying description to a clear hypothesis about the real nature of the world. There are many who wish to pronounce such abdication even today. But I believe that this means making things a little too easy for oneself."

The Fundamental Idea of Wave Mechanics (Schrodinger 1923)

There's a lot less woo around decentralization than around crypto.

The cryto woo I can't stand, but I don't mind at least a bit of decentralization woo. Within reason.

OP seems to have no idea about DeFI. You can lend and borrow on compound.finance, aave. You can play no-loss lotteries like PoolTogether. You can bet on your beliefs and hedge your investments on markets platforms like Polymarket. You can gamble. More on: https://ethereum.org/en/dapps/. All of this without any arbitrary restrictions imposed by governments or companies, you just need an internet connection. How can you look at it and not be in awe? Especially if you're into technology.

Because that is an ideological argument (government controlling currency is bad) masquerading as a technogical argument: https://www.stephendiehl.com/blog/crypto-absurd.html

In all of the protocols I mentioned you can use stable coins such as USDC.

The interesting technical feature isn't that it's a separate currency, it's permissionless transactions.

We're heading to a world where authoritarian governments want to eliminate cash. Handing the Stasi the ability to prevent people from so much as buying food from a grocer without their permission is catastrophic, much less the impact from such a comprehensive level of surveillance as takes place when every purchase made by everyone goes into a central database.

We need a digital technology that preserves the autonomy and anonymity people have always had since the beginning with cash. (And before the obligatory pedant comes in to say that everything on a blockchain is public, they're still not attached to your identity, and there are technical solutions to preserving anonymity there too.)

Well, permissionless transactions is the exact thing that is not going to happen in scale. With cash, you are required to deanonymize transactions unless they're small (<10k USD), and with the recently passed infrastructure bill changes to 6050I, the same would apply to cryptocurrencies.

In effect there would be a bifurcation - you can either have permissionless transactions, or you can interact with the real world; since all the legitimate businesses and law-abiding people would have to avoid the "permissionless" system unless they can break the anonymity of the transaction and verify that any required filters have been applied.

> With cash, you are required to deanonymize transactions unless they're small (<10k USD)

Nearly all transactions are that small, and the ones that aren't (predominantly vehicles and real estate) are already not anonymous for independent reasons.

It generally doesn't cost >$10,000 to buy a sandwich or a book.

In DeFi, most of the yield comes from speculators who are using your money as leverage to bet which cryptocurrencies will go up.

It's not like a regular loan, whereby a company uses your money to expand, innovate, hire and train new employees, to build and sell something people want.

So? You still earn way way more than what banks offer and you can withdraw at any point. It's been working very well for quite some time now.

1. If you think about it, there is no reason why banks should always offer free money to cash hoarders in the form of interest. During a recession, central banks lower interest rates to incentivize spending and productive investment, which benefits the rest of society.

2. DeFi yield relies on Greater Fools essentially gambling their money on cryptocurrency pairs. It might not last forever. I'd rather have 5% yield in corporate bonds, denominated in a currency that I can pay rent and groceries with, than 20% in a shitcoin which might be worthless tomorrow.

You can lend stablecoins such as USDC and have 3-10% APR returns.

You can withdraw at any point, until suddenly you can't anymore. That is the very core of investing: being rewarded for taking the risk of not receiving your money back at all. In particular, the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull. This is clearly a risk that most investors deem quite likely, because if it was a very low risk then the interest rate on DeFi products would not need to be quite that high.

$27,000,000,000 is deposited in AAVE's protocol alone. It's been working pretty well for quite a while now.

> the mechanisms most DeFi tools use are vulnerable to the contract being hacked and/or the devs doing a rug-pull

Wouldn't this mean that most DeFi would be hacked or rug-pulled by now? Seems the opposite is true, as only a small percentage of DeFi sees hacks and/or rug-pulls.

Could you make the same argument you generally make towards banks as well? Seems like you could, and in that case you're just making an argument against investing in general, not against cryptocurrencies.

No, more like an argument that you'll see the exact same problems that got regulated with the banking industry. Like. You could make this argument.. in a history book. This has already happened.

Stephen seems to be a perfect example of how being an expert on one subject doesn't mean that someone has any kind of deeper insight or experience about unrelated areas. If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position.

> If you look at the history of his blog, for the entire last year his mind has seemingly only been filled with hatred for crypto - the man seems to have a serious ideological hatred of the technology and obstinately refuses to ever reconsider his position.

If you take a look at what company he currently works at (and founded), it's pretty obvious where his hate for cryptocurrencies come from.

> All of this without any arbitrary restrictions imposed by governments or companies

Is that true? Is gambling now legal in jurisdictions where it wasn't before because it's being facilitated by unlicensed entities? Can I do an end-run against money-lending regulations in my country because I'm doing it online?

To me it simply seems that enforcement hasn't (yet) caught up.

Many of the laws against things like gambling apply to the gambling establishment rather than the participant.

When the internet was new, people set up offshore gambling sites and people used them. Then the government started harassing payment processors to prevent people from transferring money there. Which doesn't work if there is no payment intermediary to pressure to cut them off, so now they're back.

Whether this is illegal or not depends on which law and jurisdiction you're talking about, but the whole concept is kind of ridiculous. If you can go to Las Vegas and legally place bets, you should be able to place bets at a Las Vegas casino over the internet from anywhere. The ability to do this is a feature of the internet, not a problem to be "solved" with more authoritarian control over everything.

It's only true if you don't get caught.

There's no free lunch. Just because regulators haven't caught up with things, that doesn't mean it will stay that way.

Here's how it's going to go down, like it always does:

1. Gov. tries to regulate and restrict usage

2. If that fails, they will go after bank accounts tied to brokerage accounts etc. Hell, in some countries it's extremely hard to use money made from crypto as a down payment for mortgage, auto loans, and what not - because how hard it is to prove that the money has been earned legally.

Some banks won't even touch crypto customers with a 10 feet pole, because all the regulatory uncertainty.

3. If that fails, they will start to lay down the law with even more drastic measures.

I love technology, I really do - but there's this extremely naïve and arrogant attitude in the community, that if you just power through in the name of technology, and ask for forgiveness later, then it's OK - it rarely if ever works that way. Regulators do not suddenly give in, and abolish "arbitrary" laws / regulations because someone found ways to circumvent or skirt them.

FWIW, I'm not saying that the technology is a dud - only that trying to circumvent regulations by "doing it with crypto" / "decentralized" is a flawed way to go on about things.

https://en.wikipedia.org/wiki/Zero-knowledge_proof

Why does hn love this fud so much? I haven't read anything that wasn't completely intellectually dishonest from him.

He has some good points, I am also very suspicious of crypto but also a fan of IPFS, I guess I am conflicted.

The solution crypto assets propose is creating incentives for collaboration. Items on IPFS only remain lively as long as someone is willing to pin a particular bit of content and is ultimately doing so on a charitable basis. That's not nothing, but you can't scale to the whole internet that way.

If you can create incentives to collaborate and participate in the storing and caching of those bits, now you've got a mechanism to scale far beyond what you could achieve on benevolence alone.

I've used "magical decentralization fallacy" to get at something similar[1], but I appreciate how much more concise this is!

[1] https://aviv.medium.com/the-magical-decentralization-fallacy... "the mistaken belief that decentralization on its own can address governance problems. What do I mean by governance problems? Things like misinformation and

"WooHoo" ... I thought it was about The Sims...

> ... But crypto assets come with an attached narrative economics that tries to rationalize their existence by appeals to either libertarian politics or technology. If we venture down the technology arguments, at this point the discussion of intrinsic value of crypto assets reduces down to a rhetorical word salad of decentralized woo making all manner of appeals to alleged ideals of decentralization and networks, yet like with quantum woo, without a reference to a mechanism.

Decentralization by itself has no value. In fact, it has negative value because decentralized systems by their nature tend to be less efficient and more complicated than their centralized counterparts.

Bitcoin's value proposition rests not on decentralization, but on censorship resistance. Censorship resistance means that in Bitcoin, it's difficult to impose rules designed to prevent specific groups or individuals from transacting. This approach is the polar opposite of the one taken by most of the world's governments.

This is the point that zooms over the heads of just about every Bitcoin critic. They either don't grasp the value of censorship resistance or reject it because they've lived a life of financial and/or political privilege. Their world view tells them that censorship only happens to those who deserve it. By definition, only criminals and evil-doers seek censorship resistance.

Financial repression and censorship are on the rise. The worlds governments now have not only the motive but the means for large-scale control by selectively shutting off access to financial services. Those who don't subscribe to this view are some of the harshest critics of Bitcoin.

I don't think critics don't "get it", it's just that money exists in meatspace and if you're goal is to stop people with guns then you're gonna have a rough time unless you also have guns.

All that would be needed to completely destroy Bitcoin's censorship resistance is, say the US for example, creating and mandating the use of a blacklist of addresses (that updates on xfers). So if you found yourself on it no above-board business would legally be able to transact with you and no individual would dare touch you because their wallet would get poisoned, and your coins would be stuck in limbo. You couldn't send your coins to another wallet because that would be immediately blacklisted as well.

Money you can't spend anywhere except black markets is basically the same as having your assets frozen for basically everyone.

Edit: You could destroy it even more with KYC requirements.

> a blacklist of addresses (that updates on xfers)

Impossible with bitcoin's latest updates.

This is on point. I've been saying for years that while decentralization is good in many contexts, it's not necessarily good in every context. This is why I'm bullish on Matrix and Mastodon but remain skeptical of cryptocurrency, NFTs, etc. The former seems like real power transfer to the people from centralized platform owners. The latter seems more like a speed run to teach Libertarians why we got all our financial regulations.

The libertarians have been going full speed ahead, and their system has not crashed yet. You can regulate the margins and the connections to tradfi but many teams and projects are anonymous, and cannot be stopped easily. The experiment is happening right now.

Can't wait for the day when crypto becomes a footnote in history and the Deepak Chopras of this world are resigned to obscurity where they belong.

Read the first paragraph, thought, interesting, I hear this type of thing in conversations with fellow scientists but instead it's "blockchain woo". Then read on...

this guy automatically associates for me with crypto-fudster and of course the very next post of his i see is more "criticism" of crypto.

not that there's nothing to criticize crypto projects for, but this particular argument is very meh. projects that advertise as being decentralized but aren't will eventually collapse. projects that advertise as decentralized and do attempt to be decentralized - are solving some truly hard problems, both technically and socially. something to learn from, not dismiss hand-wavingly.

I liked the Haskell content on his blog, I'm not sure about his new political line against crypto. This started a bit more than a year ago with this post https://www.stephendiehl.com/posts/crypto.html, which ends on a bizarre claim about a link between crypto and right-wing extremism:

> David Golumbia’s excellent book The Politics of Bitcoin: Software as Right-Wing Extremism outlines the rabbit-hole effect that this ecosystem is having on software engineers onboarding them into deeper forms of right-wing extremism.

This is not crypto-specific, I'd rather read software blogs than political blogs in general. In the spirit of Drew DeVault (https://drewdevault.com/2021/04/26/Cryptocurrency-is-a-disas...), I'll disclose my stake in cryptocurrency: I currently own ~1000€ in Bitcoin, that I bought for something like 800€ earlier in the year. Those ~200€ are the only profit I made on crypto. I use Monero from time to time for stuff where Monero is useful.

Reply on news.ycombinator.com