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Comment by oblio | Hacker News Reader

The problem is, they have a fundamentally simple concept that solved the double spend and trust problems for a decentralized (sort of currency).

That part we kind of figured out, maybe it's ok, albeit super slow and power intensive, but let's put that aside for a while.

But is there a solid mathematical and cryptographical basis for everything else layered on top? I don't get that impression, it just looks like they're just plugging gaping holes because there's a gold rush to be continued!

If they're just rebuilding a crappier version of the global financial system, there's no point in the rest of us following them.

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The financial system cannot run on blockchain technology, even if the technology worked well. This is because "decentralisation" requires blockchain assets to be "unconfiscable", but financing is only feasible if the assets are "confiscable" (otherwise the borrower can walk away with the money and suffer no consequences).

That doesn't seem to make sense. Don't people usually borrow money to spend it (for example to buy a house or finance their startup)? So in most cases the borrowed money is also gone and at most you can confiscate the collateral (for example the house). That is still possible with crypto.

In decentralised finance the legal system, which in conventional finance has the power to seize the borrower's assets in the event of default, is replaced with "dumb contracts", but dumb contracts don't have such a power. Financing is basically impossible with decentralised finance.

Just because finance is decentralized doesn't mean the law doesn't still apply. I don't know where you get that idea from. Also not sure what you mean by "dumb contracts" - crypto contracts can contain code on top of text, whereas traditional contracts can only contain text. So obviously the crypto contracts are strictly superior.

The counter-party to both the borrower and the lender is a dumb contract. A dumb contract is not a legal person, and therefore it cannot initiate legal action, nor legal action can be initiated against it. Furthermore, there's no legal agreement between the dumb contract and its counter-parties, since, again, a dumb contract doesn't have a legal personality which is required to enter into legally-binding agreements.

Depends on the service, but I would think (ianal) if somebody publishes a smart contract and says "you can buy my house via this smart contract", then that person is the counter party, not the smart contract.

Of course you can burn your crypto and send it so some random contract. You can also take traditional money, go to the woods and burn it.

If the borrower and the lender sign a loan agreement with an intermediary, or among themselves, then sure, but this is conventional finance, not decentralised finance. In this situation the dumb contract becomes redundant. It doesn't do anything.

In the case of real estate, it replaces the solicitor. And it facilitates the money transfer, so it also replaces the bank.

No. A dumb contract doesn't replace a solicitor and it doesn't replace a bank. You're just saying things now.

That's why you use smart contracts. You are just unwilling to consider any possibility that crypto could be useful.

You use a dumb contract in a situation where otherwise you'd need a solicitor? Please, explain.

In my country at least, the government charges lots of money (several thousands) to change ownership of real estate in a government managed ledger. That obviously could be replaced by crypto, which (in its basic form) is a distributed ledger. Ownership can be proven via the blockchain.

> That obviously could be replaced by crypto

Could.

So far you've been using the present tense, "the [dumb] contract replaces the solicitor", or such.

Obviously it doesn't. Or could you tell me in which countries in the world you won't, at present, have to pay the government to register real estate ownership changes in its ledger just because you paid the seller in a crypto-"currency"?

> That obviously could be replaced by crypto

It's not obvious at all that it could be replaced by crypto.

I went to some workshops when Ethereum was developed (sadly I decided against investing in the ICO because some aspects didn't convince me or I didn't understand them well enough). Even back then the discussion was that they were trying to do too much and it would be difficult to make it work reliably. Bitcoin deliberately chose a more conservative approach. Bitcoin also actually has a scripting language and allows for smart contracts, but they were much slower with unlocking its features for real. (I don't know the current state of it).

Just to say, it really doesn't make sense to judge "crypto" by the state of Ethereum. There are different philosophies, different approaches, different people.

Domains where the basics are still being actively researched should never be part of the backbone of human society, though.

Maybe they'll find solutions. Cool, let them put those solutions in practice in 2040 when all the bugs have been worked out.

Frankly that is the best case scenario for crypto. It's similar to the dot com bubble in 1999 actually, it's 20 years later and the internet is finally somewhat useful and intergrated into our lives. Originally it was just a bubble inflated with ad revenue inflated with investor money

Yeah, but the web was instantly useful for a huge array of legitimate uses.

It was never a solution in search of a problem.

In 1999 the tech wasn't there but everyone could see where it was going, like all investments, it was a matter of timing.

Crypto is still at the fundamental research phase and we don't even have consensus that it does more good than bad, yet.

It does good when your bank accounts get shut down, as happened to Wikileaks for example.

That's a super niche application, not a mass market use.

And yes, I know about the supposed use for people in countries with unstable regimes but I'm not convinced at the moment. Plus that use case, being that of people generally having low disposable incomes (barring China) absolutely doesn't justify the market value of crypto at the moment.

Inflation hits the masses, or in general money supply manipulation schemes. In the last few weeks, markets tanked just because the FEDs announced they plan to increase interest rates. Is that really how we want to go on?

Cryptocurrencies are only used for speculation.

That's your best argument against regular currencies? That they're being manipulated, too? :-)

Bitcoin is not being manipulated. You may be confusing it with Bitcoin markets and Bitcoin trading. Nobody can conjure Bitcoin out of thin air or manipulate interest rates on it.

Bitcoin has been working pretty well for years now.

Working well for what? It's useless as currency.

Working well at letting people keep and transfer crypto coins.

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