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Comment by ethbr0 | Hacker News Reader

The irony is that much of the criticism against the missing physical link / utility of crypto was surely levelled against the idea of money in its earliest days.

"Coins? Why would I want those instead of food? I can't eat coins."

To which the killer adoption feature was governments saying "Well, you have to pay taxes in coins, so you need some" to bootstrap & put a floor in under the system's value.

Crypto doesn't appear to have had a "tax" moment yet.

Is there anything I can only do with Bitcoin, Ethereum, etc? Which is to say, if the value of both absolutely collapse (to some fraction of a cent), who would still be buying, and to do what?

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Money predates governments, though, and there are many examples of successful money that did not require a government to prop it up. Consider e.g. https://en.wikipedia.org/wiki/Shell_money or https://en.wikipedia.org/wiki/Rai_stones.

Note that in the latter case, the physical money doesn't even change hands - it's all in a ledger, but the ledger is in people's heads. In fact, you could say it's a proof-of-work system, since making the stones is expensive in terms of amount of effort spent, even though they don't have any utility as such.

Point! But I'd guess the velocity of information and rate adjustments in shell-based economies were slower.

E.g. If someone said "The value of the cowrie has crashed!", then how long did it take for everyone to find out & the cowrie economy to reprice itself?

I'd hazard we deal with much more sophisticated, capable, fast, and aggressively predatory market participants now.

No, there isn't. Money is useful because it is an abstraction of a physical process somewhere.

Cryptocurrency can never be an abstraction of some physical process.† Therefore, I would argue, it can never be useful to us.

† Well, technically, it actually is an abstraction of a physical process: a heat engine with 0% efficiency.

Well, commodity-based currency had non-zero value because it was an abstraction of a physical process somewhere. Proof of work. I have to spend time mining gold, so gold has value, so gold coins have value.

But that wasn't sufficient alone to give it utility. And without utility, there is no buyer of last resort, and no floor under value. Hence taxes.

Fiat currency removed the proof of work, and replaced it with proof of stake (-ish?), but retained taxes.

You could probably make the argument that "buy NFTs" or "run dApps" are the beginning of crypto's tax moment, but both seem a pretty small scale to base value on.

IMHO, that's the entire point behind dApps: a crypto-native version of taxes that puts a value floor under the cryptocurrency. If you have a solution that can only be solved by dApps, and you need cryptocurrency to run dApps, then there you go...

The difference, though, is that the proof of work is qualitatively — physically! — a different type of work.

The value of money is derived from moving against thermodynamic equilibrium. Cryptocurrency’s value comes from moving towards thermodynamic equilibrium. The conversion of work into heat — not heat into work!

I’m not talking about taxation or apps. Those are things built with the axioms of crypto-evangelism. I’m talking about the physical fundamentals underlying those axioms.

Burning electrical power is the most globally available version of burning universal value.

The thermodynamic direction is less important than the fact that people didn't want to do it.

But proof of work was always a transitory, bootstrapping phase. Even among the crypto evangelists, I can't believe anyone saw a long-term future in that.

Slinging double SHA256 til the heat death of the universe is my long term vision. POW as a bootstrap phase is ethereum pos wishful nonsense. Many see the long term future of PoW. Many believe it is the only way.

In your view, what's the long term solution between environmental efficiency vs attack resistance? The two seem mutually-exclusive in PoW.

Solar, geothermal, wind and nuclear power? Using energy doesn’t destroy the environment. Producing energy uncleanly does. Shouting at children using PlayStations or miners producing hashes doesn’t make the environment any better. Shouting at the coal lobby might.

Color me skeptical. The cost-security tradeoff of PoW fundamentally relies on using more energy until it becomes expensive (relative to crypto revenue). If energy is cheap ("), someone will consume additional capacity.

Solar, geothermal, wind, nuclear et al. are cleaner (from an energy production standpoint, and mostly from a generator production standpoint), but still have fundamental capacity limits.

"We're going to burn {currentWorldPower}+1, forever" isn't a viable end state.

We will use more and more energy every year as our species evolves. It is the trajectory of every civilization to generate and harness more energy. Cryptocurrency will use more and more energy, and we will seek out new ways to generate it. It is the drumbeat of human progress.

Building oligarchical proof of stake ponzi games is not progress. That is when we have given up and just want to stagnate.

The fact that we will scale energy usage does not make the scaling factor irrelevant.

Increasing at 1.5x vs 2x has very different implications for the planet, economy, and international politics.

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