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Comment by gambiting | Hacker News Reader

I think there's a fundamental issue here that prevents us from reaching an understanding.

ANYTHING can be used as money. The systems that we currently have in place have lots of big problems, but "we" decided to use them and that's why they are popular. We could also decide to use a cryptocurrency as money, and it would be equally valid, and it would become our "money" - that bit is fine and I'm not arguing with it.

What I am commenting on, and what I am calling bullshit, is the cold hard reality of crypto - there hasn't been a coin invented yet that is anything but a ponzi scheme. Everything from bitcoin to ETH to dogecoin is just a scam to make some people rich, even if it started with good intentions(and I believe Bitcoin really was started with the intention to become a currency).

The second this changes, and we have a cryptocurrency that is actually used as money and not a plaything, I'll happily stop complaining about it.

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I hold a decent chunk of change in stable coins most of which I lend out to earn interest. Sometimes I top up a VISA card with those stables and then buy groceries.

You might reply "you're just using a proxy of USD the original currency, its not new".

That's true my reply to that would be:

Having the USD be on chain allows very efficient lending. For eg. I can use a lending aggregator that is constantly polling many lending sources and moves my money to the best source of yield regularly. How would you do this with traditional banking?

I expect over time for the volatility to smooth out as more of the expectations are realised and we figure out a widely agreed fair price for most cryptos (for many this will be zero).

Yes, efficiency matters, permissionlessness matters. Future us will be talking about today as the early days of robotic money.

Yield is meaningless without knowing risk. What is the expected default rate under adverse economic conditions? Are borrower credit ratings available from independent sources? What is the counterparty risk for the lending aggregators and sources?

Chasing yield is a recipe for disaster.

> Yield is meaningless without knowing risk. What is the expected default rate under adverse economic conditions? Are borrower credit ratings available from independent sources? What is the counterparty risk for the lending aggregators and sources?

100% agree, I hope my comment didn't paint it as if there is no risk. In terms of default, virtually all borrow lend dApps currently are overcollatoralized so if the borrower defaults, they are liquidated and I will be made whole.

> Chasing yield is a recipe for disaster.

Kind of a bizarre and baseless statement? Why should people not earn yield on their capital? We are all constantly losing purchasing power to inflation, it makes absolute sense to earn yield to negate this.

> use a lending aggregator that is constantly polling many lending sources and moves my money to the best source of yield regularly

If you live somewhere where cryptocurrency gains are taxed as income, how do you handle the reporting of this at tax time? It seems like it would be tedious to keep track of every transaction across multiple defi platforms.

> If you live somewhere where cryptocurrency gains are taxed as income, how do you handle the reporting of this at tax time? It seems like it would be tedious to keep track of every transaction across multiple defi platforms.

It's so country by country right now due to how early we are. Tax rules will be more clearly defined assuming Web3 and DeFi continue to be adopted over time.

> The second this changes, and we have a cryptocurrency that is actually used as money and not a plaything, I'll happily stop complaining about it.

I won't: we still have proof-of-work to get rid of (and generally, the unreasonable energy consumption and chip usage).

Is there any other unreasonable use of energy consumption than proof of work? Solana (using proof of stake) uses similar energy as hosting a website. If this tiny energy usage is also problematic then we would need to start also shaming people for uploading Youtube videos or scrolling through Instagram.

If this low energy consumption confirms itself at scale, that will be a huge progress. Possibly not quite there (there’s still the Ponzi problem to contend with), but at least that’d get rid of most of the externalities.

Now we need to nuke the Bitcoin farms. (Half serious: I wonder whether launching tactical nukes on those farms would generate less pollution in the long term than letting those farms be.)

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