Crypto is an unproductive bubble
alexkolchinski.com
alexkolchinski.com
But it’s not. Bitcoin is 13 years old. At that age, Windows was on >90% of the world’s computers. Java at age 13 had taken over enterprise software and was about to conquer mobile via Android. Cryptos are used by maybe 0.1% of computer users (if we’re very generous about what exactly constitutes usage). Considering the amount of investment they are an expensive failure by any normal metrics like monthly active users.
It’s not the early days. Rather these are the last days for VCs to sell you this tired old thing before the novelty wears off, and that’s why they are so frantic about pushing it via Hollywood celebrities and whoever else they can muster with money.
https://csrc.nist.gov/Projects/post-quantum-cryptography/rou...
"Formal complaint regarding 8 June 2021 incident - 2021.06.15, Daniel J. Bernstein
"Executive summary. A week ago Dr. Daniel Apon from NIST publicly accused me of professional misconduct. Specifically, he accused me of initiating private contact with NIST so as to provide false information to NIST regarding the timing of an upcoming announcement relevant to NIST’s ongoing decisions..."
The gist is that Shor's algorithm might not be strictly necessary with a quantum annealer.
https://www.forbes.com/sites/arthurherman/2021/06/07/q-day-i...
There is consensus on this question.
* ssh(1), sshd(8): add the sntrup761x25519-sha512@openssh.com hybrid
ECDH/x25519 + Streamlined NTRU Prime post-quantum KEX to the
default KEXAlgorithms list (after the ECDH methods but before the
prime-group DH ones). The next release of OpenSSH is likely to
make this key exchange the default method.
Decentralized systems by nature suffer for slow adoption (just look at decentralized networks like Mastodon which are objectively better than alternatives yet lag behind in adoption). Finally, bitcoin is a financial product, I really don't know any other financial systems that we're adopted quickly other than maybe payment processors. We still struggle to adopt centralized systems that come pre-enabled on our phones!
Crypto is just too big to be adopted quickly and one might argue that's actually a good thing.
If even the European Union moves faster than your cutting-edge decentralized system, maybe you have a problem.
Of course the two approaches will be different.
In contrast, I bought some cryptos five years ago and dabbled in Solidity too, but there was just nothing to do with it because it’s so clunky and wasteful. I don’t expect to ever touch that stuff again.
That’s obviously anecdotal, but it’s clear by now it’s nothing like the early Internet. That organic buy-in isn’t happening.
"It is really very important for everyone to notice the deadline for completing the cutover to IP/TCP and the elimination of NCP from use in the ARPANET." https://groups.google.com/g/fa.tcp-ip/c/HDoq18adT2Y/m/HwoFGx...
Maybe blockchains tech will graduate beyond coins, NFTs, speculation, and rug-pulls. I look forward to that day. However, over a decade in, everything about cryptocurrencies and blockchain tech, from development to application, deployment and function, feels clunky.
This also turned out to be total BS as Russian crypto accounts keep getting frozen. Funnily enough, I haven’t heard the “crypto community” make a single peep about this. Hilarious..
You do realize that their are capital controls self-imposed by the Ukrainian National Bank, right? And that Bitcoin has been legalized in Ukraine [0] after the influx of Bitcoin donations (and other alts) which were used to fund supplies, logistics, military efforts, as well as the formal Ukrainian Government to continue the war effort.
If anything I'd say it proves that what we have said all along was the case, Bitcoin isn't going to matter to functional economies in the developed World, but will excel most in crisis situations in mainly developed nations.
Lastly, the only one to 'restrict' accounts was the YC-backed Coinbase [1] (the bane of the Bitcoin community as they hold so much BTC despite being vocal opponents of it since Segwit).
So, all I have been able to gather from all of this is that YC/HN remains incredibly ignorant of what Bitcoin and crypto avails, and will draw conclusions based more on that ignorance then take the time to actually look into what is actually taking place.
0: https://www.yahoo.com/entertainment/ukraine-legalises-bitcoi...
1: https://www.bleepingcomputer.com/news/security/coinbase-bloc...
And yet, you people think crypto is seriously going to "catch on" for the average person? I'm sorry, but "you need a certain IQ to understand Rick and M- I mean crypto!" isn't going to magically make crypto useful at all. The fact that crypto people have to go into long tirades full of technical jargon just to answer the question "Why?" tells the whole story.
Personally speaking, I think Bitcoin won't get 'mass adoption' in the developed World until they are using it without actually realizing: think a GUI and UX similar to that of online banking, and unfortunately, custodial services and wallets.
The idealist crypto-nerd in me wished everyone would be running their own mainchain and LN node and would be securing their funds on hardware wallets, and only communicated over End to End or PgP encrypted platforms with keys they swapped in person: but after over 10 years in this space I have come to realize that the average person will gravitate towards convince in orders of magnitude much more than security.
It's a harsh reality that I have long accepted when it comes to the 'average user' and it helps explain the prevalence of why the leaks, hacks and data breaches using these leaky services continues.
Personally speaking, this isn't 2011, you don't need to learn how to use Linux to download the blockchain and synch up to the network using QT and create wallets in the terminal, thus the IQ factor isn't relevant anymore... all you need is a relatively modern smart phone and an internet connection (and when that is down a Blockstream satellite or access to Starlink as has been proven to be the case in Tonga and Ukraine this year) to plug into this inclusive financial system: it's very telling that 3G/4G availability is more prevalent in the developed World than running water is.
With nano, I do actually have instant, 0 fee, 24/7 money transfers.
Sorry, but your claim is just not true in practice.
Of course it isn't, but they clearly have an axe to grind against things they do not understand at all and they will remain oblivious to the the very obvious fact that SEPA is pretty broken--EU nations and non-Euro nations (within the EU) do not transfer directly or instantly either. It can take days and the expenses, transfer rates, and exchange rates are not 0 either.
But, hey... this is Hacker news, where if you repeat a lie enough times about something you do not like, it will become true enough to be accepted.
You're aware that SEPA is for the eurozone only, right? SEPA is slow-ish (2-3 days) and free, and now there's SEPA Instant, supported by many banks ( I don't think there are stats, but all of the 5 banks i use have it) which is fast and works 24/7, and usually free ( some old banks are trying to monetise it at 1€ per transaction). It's still better than in crypto land or the US. Of all similar cases, the only one I've heard of that is probably better is the Indian UPN(?).
Yes, I live there as a US citizen without access to EU banking, do you? It also worth noting that it is utilized by non EU member-nations, too. (See link below.)
I also happen to live in a country that hasn't adopted the Euro, it will soon but hasn't yet. I also pay my rent to somoene who lives and works in a Euro based country.
Thus direct transfer with Euro to non-Euro accounts (and vice-versa) requires fees, transfers, and conversion costs. And it doesn't operate 24/7, and they never have; weekends always have delays--I paid a friend from Switzerland in BTC to pay someone in a SEPA non-euro EU member nation for a deposit on an apartment before a flight on US time on a weekday (weekend in their time zone) and the funds arrived in less than 10 mins for 17 cents via BTC, the payment to arrive to from a Swiss bank account to a non-euro bank account took 3 days to arrive and clear. SEPA is what Switzerland uses, even though its not a EU nation [0]. And I used to live there when the CHF was pegged to the EUR and was accepted just like the CHF: there are payment rails that never changed as a result.
What I'm saying is things are more complex tan you are making it out to be when it comes to fintech and unless you work in it you will never truly understand that--what some deem edge cases are quite typical if you work in this Industry.
I think your POV is still based on the idea that things are working under ideal conditions (or near them), where as the Bitcoin network was designed to bypass and rout around all those inconsistencies and all the constraints when it doesn't operate as it should. Which is typical for the vast majority of the World's population.
I'm sure your measure of 'functional' vastly differs to someone who operates a legal and legitimate business, but because they are deemed someone who is either high risk or simply persona non-grata for working in an Industry the State doesn't like they cannot gain access to a bank account.
I think this is really the best 'check your privilege' moment we will ever have in the tech space, and most people on HN (mainly affluent tech workers) have as you expected failed in remarkable manner; instead of the woke BS that it's often used to explain people's insulated existence, this usecase clearly exposes how naive and coddled citizens of the developed World are to what are common and typical issues in the rest of the World, but since it has had almost no impact on their own day to day they not only ignore it but will go out of there way to criticize they have a glib understanding of at best.
I can make more sweeping generalizations, but I'm not sure it will be of any use.
Every time I look at a no fee platform in the cryptocurrency world, it turns out that it's subsidized somehow. If you want to make a fair comparison with e.g. SEPA transfers, you have to assess where this comes from. For a lot of these networks, it's just a way to gain adoption and it doesn't reflect whether it's sustainable for them in the longer-term.
The compromise I have to make as a user is to use their cryptocurrency with all the drawbacks it has. But it doesn't matter if it takes me no time to send $CRYPTO if I need to wait hours before I can convert it back to fiat money and actually use it. That will remain the case as long as these cryptocurrencies remain niche, it's a bootstrapping problem.
I don't see why that's self-evident. Decentralized applications get fast and wide adoption all the time, e.g. Napster.
Not really? I'm pretty happy with the Twitter UX as it is.
> ad free
Meh.. I don't really care one way or the other.
It was pretty damn big after it was 13 years old.
It took more than 20 years for a website to exist on the internet.
WeChat pay
No, we couldn't be. i mean, every time in these crypto threads cyptobros compare crypto to the Internet, and to cars, and to the wheel, and to..., and it's fine.
But when we compare it to something, it's apples to oranges? You don't say.
> Crypto is just too big to be adopted quickly
It's not big.
Social media is the last thing left in pushing this lottery brigade... Social platforms have already demonstrated that most frankly can't succeed in their large oceans of popularity and in competing with wealthy influencers, the same holds true for crypto. It is far too easily influenced by tweets, wealthy influence, and popularity to make everyone socially climb the ladder, and far too volatile for people who can't afford to risk money to play with...
Just like regular money.
What about Git, or Napster, or filesharing in general, or Tor?
Twitter hocking NFTs to everyone for their profile pics is like a Costa Concordia-level move, which pretty much serves as a huge sign that the ship is sinking...
It's a car accident in process to be honest, and only the people who read alt-news sources get the right dose of pessimism. On the flip side, I'm still confused but pleased that my email inbox is still only flooded with bank transfer scheme emails rather than crypto/NFT news and scams... Ahh... The quiet life... :P
The first operating system for real work is arguably in 1956 [1]. 13 years later we still didn't have the personal computer.
The internet was born in 1983. 13 years later it was around 36M users (1% global population) [2]
With "general purpose" crypto/decentralized apps really only getting going in 2015 w/ ethereum, it does seem like early days. The UX and infrastructure/tooling are still a ways away from being consumer ready.
[1] https://en.wikipedia.org/wiki/History_of_operating_systems [2] https://www.internetworldstats.com/emarketing.htm
It sounds like the author is describing crypto as a ponzi (rather than a bubble) and I'd agree too if crypto never ends up on delivering real value. But it already has in terms in efficiencies (e.g. money transfer and cutting out middlemen is a 10x improvement) and I definitely think we're starting to see more.
I think that crypto hasn't quite integrated with society yet (yet is the key word). Once it does, crypto will be operating less within its own sandbox and will have more impact on society. It needs to marry into our legal system and deal more with oracles bridging the real world into the crypto world.
When you say Bitcoin is 13 years old you're only looking at it from a technology standpoint. It's made a few strides in this time period, but I think we could also consider Bitcoin as a monetary good. From that lens, as something to think about, how long did it take for gold to be accepted as currency?
The rest of crypto is much less than 13 years old and I think we'll start seeing more of their impact in the next 5 years.
If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases.
If I purchase something and don't get what I paid for, I can contest it with customer service or my credit card company.
With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through.
With crypto, a xss attack or a misplaced password can cost me all of my coins.
With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0.
Bitcoin is simply digital property. And like real world property, you can mess up and lose it irrevocably.
If you give your gold to the wrong person or drop it to the bottom of the sea, you're probably not getting it back.
If you under fund your military, and someone else comes in and takes control of your land, you're probably not getting it back.
If you send your bitcoin to the wrong address, or mismanage your private keys such that they are stolen, you're probably not getting it back.
There is a reason nobody goes around trading tiny bits of gold for goods and services. It is useful to have an abstraction that makes transactions easier and helps mitigate risk.
Maybe some people were hyping it as a PayPal replacement back in the pre-2017 days, but that narrative has largely failed to gain followers and is now very out of favor.
The digital gold narrative and layer one of the new global, open, permisionless, and fair financial system narrative have been big and growing ever since I got involved in 2015ish.
In fact, it was only the emergence of the lightning network that proved the layered system approach that has made me consistently bullish for these past 7 years. If we had to scale payments on the base blockchain's 7tps limit, it would absolutely be an absurd, silly speculative bubble doomed to collapse.
Luckily, the layered approach is proving itself and winning.
Credit cards, paypal and all the rest existed before bitcoin. I mean it's nifty that I can do it without a single intermediary authority, but it's not that special.
I think the lack of revocation available to bitcoin is a (and I had myself for saying this) 'a feature'. If somebody sends me payment in bitcoin, I definitely know it can't be charged-back for example. It's like sending cash in the mail. Now that comes with the flip side, that they are putting all their trust in me.
The way I see it, people with money want to drive crypto adoption because it will tip the balance of power further in their favor. A fully unregulated currency and transaction system can be much more easily controlled by the people with the most capital without having to let that pesky democratic process getting in the way by letting the poors have a say.
This used to be the case years and years ago but it's been understood that without some additional layers this will never be the case. It is being billed as a value-store like gold by large institutions on and off of Wall Street though, so that's far more likely (and to be fair has proven to be fairly stable for a few years now).
I'm not saying that it's an impossible problem to solve, but our society and legal system aren't structured in a way that makes it easy.
Your base assumption of knowing or finding them is not strong
Crypto means you will always know who has your money and where it goes.
We can build systems around repercussions for crypto too.
I'm not starting a fight, I'm having a discussion, which I think is the point of HN.
> Crypto means you will always know who has your money and where it goes.
If a stranger in another country steals $500 from me I'm going to have a really hard time doing anything about it. And knowing their wallet doesn't mean I know who they actually are, as those aren't tied to an identity.
What about exit scams? How many people have gotten their money back in those situations, or had any justice? You can make the argument that these people are investing in something that may not pan out, but we have a ton of legal regulations around that with fiat - lawsuits, criminal charges. Elizabeth Holmes is going to jail for misrepresenting what people were investing in. Institutional investing is limited to high-net-worth individuals or accredited investors to keep uneducated people from getting fleeced.
So how is this different from Cash? Except you actually have an idea of where the money is going and can track it, e.g. if it goes to a CEX. This is way better than cash.
Which exit scam?
Don’t get involved in shady schemes and try to double your money.
I encourage you to put a tiny bit of fiat into the system and play with it. Low risk. Buy some Bitcoin. Make a wallet on your phone and transfer it. I think it’s something that needs to be seen to understand. Stop fearing what is designed not to happen.
I believe this is viewed as a feature in the blockchain / cryptocurrency world.
All laws and regulations necessarily take freedom away. That is the basis of the social contract: you aren’t free to harm others.
It is nakedly authoritarian for the government to restrict, at the point of a gun, consenting adults from choosing their own method of transaction.
This doesn’t check out. The existence of good laws doesn’t preclude the existence of (other) bad laws.
> It is nakedly authoritarian for the government to restrict, at the point of a gun, consenting adults from choosing their own method of transaction.
This doesn’t factor in negative externalities (e.g. climate impact).
Thats a bad case of framing. Contract implies willing participants and free choice. You have a story which with you justify forcing people around.
I repeat: that’s the definition of the social contract. You are forced, by threat of violence, not to engage in harmful activities.
1) Contract implies consenting parties. Using the word in another capacity is a frame. It being a popular one doesnt change that.
2) Your actions entailing a lot more then just your declared intentions. As in your definition of harmful being quite broad.
Or differently put, you have a story which with you justify forcing people around.
As an example, if you enter into a legal contract, that contract is backed up by the threat of litigation (and by extension, force). If it weren’t, there wouldn’t be any incentive to obey it.
And yes, I do believe that the consensus is that activities with an outsized climate impact are harmful.
And if it were consensus you wouldnt have to force it.
Both "contract" and "consensus" are nice frames for forcing people to do what you think is right. At least be honest about it.
If you instead hold the view that _every single individual_ should be able to opt out of the contract (i.e. should be able to choose not to be subject to the rule of law), then you go back to ‘anarchism is the only form of free government’, which is where we started this discussion 6 comments ago. QED.
For the individual there is no contract and no consensus, you just said so. For the individual its do as you are told at the threat of violence.
Differently put, you just repeated a story which with you justify forcing other individuals around.
You not liking this framing doesnt change that.
edit: I am not repeating myself for fun here. Once we agree that your "consensus based societal contract" is code for "forcing other individuals to do as you tell them at the threat of force", we can look at what anarchists actually say and how much better of a story they have.
How much better is "being born into an involuntary "contract" that dictates your actions at the threat of violence" described as slavery vs "consensual contract"?
All completely unrelated to the implications. Facts generally dont care for implications. You not wanting to hear them dont make them go away.
It seems that we are in agreement on this point?
If so, I'm really not sure on which point you're disagreeing with me (with a healthy amount of sneering, nonetheless, which I might remind you is against HN guidelines).
Is it that the term 'social contract' offends you? You may also replace 'contract' with 'flubbitz' in my argument; the argument still holds. I used the term 'social contract' because it's a well-understood term in the English language ('high school level' according to Dictionary.com).
You argument is that my assertion cant be true because it would mean Anarchism to be the only form of government.
I think this is intellectually dishonest, you dont end up at it as a logical conclusion, after all, there are some practical problems with Anarchism that dont just disappear. If i had to guess why you might think this, it might be caused by you wanting to look favorably on your worldview? (no offense intended, its an honest guess that might help to self reflect)
The description of reality is however absolutely unrelated to the implications drawn from it. Just because you think there is a logical conclusion doesnt change the basic facts and i think we should communicate them plainly. Because doing so might show errors in what conclusions you drew from it.
My initial statement is true unrelated to its implications. I tried getting away from the individual vocabulary to the meaning behind it so we dont get hung up on the wording.
What you describe here (yes i heard of societal contracts before) is the justification of why this is a good and necessary flubbitz. I point out that this is a bit dishonest, because on paper the Flubbitz you describe is a lot closer to slavery then to a consensual contract. You just think its necessary because of (story + implications) which makes your use a common but dishonest frame. You could make a good argument, that "Good and necessary type of slavery" is an equally fitting description, after all, you agree that it entails not giving individuals a choice and forcing them to comply by force. We by no means have to agree on it being slavery but think about the structure we exist in. So:
Statement 1, calling that a consensual contract is a frame aimed at making it more palpable because of (implications + intentions). It is still forcing individuals to do something they never had the chance to disagree with
Your answer to this is repeating the intentions and implications you see. You dont disagree over the basics, just argue that it is necessary.
All of the above might be seen as just an annoying attempt of smearing a righteous worldview. However, my argument is that this dishonesty has substantial implications. Namely
Statement 2, the wording of the contract being quite broad and exploitable. Not just are you stuck in a good Flubbitz, there exist a power structure that has the ability to redefine its terms how it sees fit.
Saying that this would would mean we had to start anarchism is no different then saying due to problems with capitalism we now have to start communism. The problems still exist and have to be dealt with them. Sugarcoating to feel better about a bad situation is counterproductive. Politics is an ugly business, maybe we should think about where the terms of the Flubbitz get interpreted to broadly, no? After all, its not as cuddly and innocent as it sounds.
Re: statement 1, if any single individual were able to disagree, a murderer could just say 'I don't consent with the social contract, because I believe it's within my rights to murder'. At that point, I don't see how you can describe it any other way than 'anarchism', as anybody can then choose the rules that apply to themselves without regard to other members of society.
Re: statement 2, the terms aren't set in stone, they can be changed by the people, i.e. via democratic processes or via revolution.
Anyway, we are going in circles here, and you are also continuing to call my attempt at a good-faith discussion 'dishonest', so this will be my last comment on the topic. Have a good day.
The rest of us probably actually want an anonymous, "like cash" crypto currency that is resilient against theft (which basically implies some sort of non-repudiation and compensating transactions).
But, such a currency probably wouldn't be great for speculation or black market transactions, which are the killer use cases for bitcoin.
> Chaum published the idea of anonymous electronic money in a 1983 paper;[1] eCash software on the user's local computer stored money in a digital format, cryptographically signed by a bank. The user could spend the digital money at any shop accepting eCash, without having to open an account with the vendor first, or transmitting credit card numbers. Security was ensured by public key digital signature schemes. The RSA blind signatures achieved unlinkability between withdrawal and spend transactions. Depending on the payment transactions, one distinguishes between on-line and off-line electronic cash: If the payee has to contact a third party (e.g., the bank or the credit-card company acting as an acquirer) before accepting a payment, the system is called an on-line system.[2] In 1990, Chaum together with Moni Naor proposed the first off-line e-cash system, which was also based on blind signatures.[3]
That's not how currency works, people have to want your coins for you to spend them. At best, having this perspective relegates Bitcoin to be nothing more than a speculative asset/investment. But if you want it to be more than that and you're just scoffing at normal people who point out why they don't want to transact with you, well then... surprise, they won't want to accept your currency for transactions.
Popularity actually matters for a currency.
If your perspective is that Bitcoin isn't going to be a ubiquitous alternative to the USD for general purchases until after the government collapses and no longer has the political power to prop up the dollar, then I have bad news for you about your currency's usefulness as an anti-authoritarian weapon/tool.
Before that, gold and silver were often used as lowest common denominators internationally. See The power of gold: the history of an obsession by Bernstein for that. However metals weren't used everywhere: e.g., China used paper currencies for many years, and giant rocks where used in Micronesia:
* https://en.wikipedia.org/wiki/Rai_stones
Money: the true story of a made-up thing by Goldstein has a good pop-history overview.
Power often didn't come into play for currency choice, and neither did things "implode" as opposed to a gradual shifting in preference amongst currency users.
Power comes into play as to dictating what currency people are forced to use. That the old coins had to be handed back in or dictating the adaptation. They implode when there is nothing backing it what so ever. At its core its Greshams law at work, with currencies or with other store of values.
If i am not mistaken Graeber has quite a few examples of this mechanism.
The year is 2011. Visa and Mastercard have denied everyone the ability to donate money to wikileaks, despite the fact that they were not charged with any crimes.
And yet, back then, I could still send them bitcoin.
So yes, actually, even though only a small subset of people actually used bitcoin (especially back then!), it provided a very real and immediate usecase, for people who wanted to achieve that usecase of sending money to a charity that broke no laws, that the credit card companies were block payments so.
Everything that you are saying, is immediately counteracted and proven wrong by actual real world examples of people using crypto currencies.
A point that's been raised multiple times elsewhere on this page is that Bitcoin has no backup strategy for when exchanges start getting targeted. It's not a good anti-authoritarian tool because the ability for it to be converted into a usable form exists at the pleasure of governments, who are increasingly looking at regulating exchanges.
Sure, you can send Bitcoin to people who want Bitcoin. Great. The question is, who is going to want Bitcoin under an authoritarian regime if it can't be easily converted into a spendable currency for real goods and services? Does Bitcoin survive when it has to be spendable on its own? Because at that point it's not just Wikileaks that has to accept it, the people/businesses that Wikileaks is buying from and transacting with have to accept it as well.
There's a difference between a currency and transfer mechanism. Bitcoin right now works (somewhat, kinda) as a transfer mechanism because exchanges exist and because people trust it as a transfer mechanism for other currencies.
Involuntary adaptation historically leads to drastic inflation with the trust in the purchasing power degrading. If you are forced to accept it despite low trust, you are motivated to exchange it for any other store of value. And are reluctant to produce stuff for which you have to accept a degrading currency. Both of which harms the actual economy.
Right, and the issue here is that Bitcoin is not spendable without first being converted to a better currency that normal merchants like your grocer will accept. That's Bitcoin's weak point, you clamp down on exchanges and suddenly it can't be used with most merchants.
> Involuntary adaptation historically leads to drastic inflation with the trust in the purchasing power degrading.
I don't mean to jump between threads here, but didn't you just finish telling me elsewhere that Bitcoin would be accepted once people had no better choice of other currencies to use, and that's why it didn't matter whether or not it was a currently attractive currency for my local grocer?
That sounds a lot like involuntary adoption to me.
To the other point, i described the mechanism of adaptation. If the current mechanism of transfer stops working people historically fall back to anything else that works. They have to use something, trade must go on so they choose the next best thing till something better emerges. The involuntary pressure on the value then starts over when that emerging currency is blocked by force again.
Its all just the description of peoples behavior. People dont like loosing money and will act to prevent it.
It's not completely clear to me that Bitcoin would even work for drugs or ransomware if those people weren't then converting Bitcoin into local currencies. This argument really undervalues the role that exchanges play in this process. I can earn a dollar, spend it on something, and the person I give it to as payment can spend that same dollar somewhere else. It never really needs to be converted. Sure I can convert that to other currencies if I want or if I'm trying to bridge the gap between economies in different countries, but importantly there's a rather large section of the economy that works just with dollars.
That's not really what's happening with Bitcoin even on the drug market. People pay Bitcoin for drugs, that gets mixed up to try and preserve anonymity, and then it gets cashed out into other currencies.
> To the other point, i described the mechanism of adaptation. If the current mechanism of transfer stops working people historically fall back to anything else that works.
It seems odd to simultaneously say that Bitcoin will be adopted because people won't have any other options (not because they like how it works), and also that people needing to use currencies that they don't trust leads to inflation and economic harm. Do you expect drastic inflation to happen if Bitcoin becomes the only viable currency for people to use?
It might boil down to the same in the big picture (people having to use it) but people react differently in the two described situations. One is somebody trying to tax you through inflation, one is using something that is tiresome to use. You will be a lot more motivated to find an alternative for the former then the later.
To the other point, bitcoin being exchanged into other currencies is caused in the expectation of what will in the future be exchangeable for goods and services. IE Adaption. At the end of the day its the transfer of credit. Me paying the supermarket in fiat doesnt speak for an intrinsic value in the pieces of paper, but the expectation, that i worked for those tokens in the past or promised to work for them in the future. Thats all currencies are, what we use is determined by force (government pressure), ease of use and adaption.
I hope we are not talking in circles here, i am trying to get across that its important to look at what actually drives peoples behavior.
1) Inflation is inflation expectation, which just means a loss of trust. You expect to get less for it in the future and if everyone does, it happens.
1a) No individual wants to hold their savings in devaluing stores of value. There is a fear of value loss that drives behavior and Greshams law sets in
1b) Nobody wants to produce for a loss. If you pay more then you can expect to get, you might not do it if you are not allowed to raise prices.
1c) Forcing people to accept it (ie price dictates) doesnt really work, see 1b.
2) You need some transfer medium. Our economy works by me having worked or having promised to work for what i buy in the supermarket. Just because one currencies is buged or exploited doesnt mean i no longer have to buy stuff. Adaption is then driven by market chains. I pay the supermarket in those tokens they pay their suppliers who they in turn can exchange for what they need. Those tokens are generally the ones the government wants for taxes and forces people to use, but if governments fuck up to badly, people still have to eat. Same story over and over again.
Currencies are a con game. They are the best thing we have to keep tab of who gets what in what we produce daily. If it gets exploited (me promising to work in the future every day in the supermarket while never doing it), people tend to realize that sooner or later. If you cant cut off the individual doing it the currency gets devalued over time which triggers psychological effects. Modern monetary theory is the assumption that while you cant force people to use it, it wont devalue if people have no other store of value to flee into. I think thats very optimistic if you look at stock prices (another store of value with even less practicality for daily exchange).
At the end of the day, all crypto needs to be is something any market chain can fall back on once the current one is broken so baldy that the chain halts. (Producers stopping to produce)
Governments trying to ban exchanges falls into the same category as dictating that a farmer has to accept fiat for his stuff. If its not profitable, the farmer will stop and i will still have to eat. Adoption of literally any other functioning store of value then gets forced Which leads us to the second theory behind modern monetary theory. That we are technologically far enough to prevent off book transactions. Which would however still trigger the dont produce for a loss part.
In short, printing money wont work forever, as it only works as long as people believe it to. That sets a mechanism in motion that requires another means of exchange. Who ever has something working will get the job to keep the economy running. All crypto have to be is less bad then trust people have in the governments ability to manage the currency.
You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity.
> They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases.
Certain DLTs allow you to secure your account with SSI/DPKI methods. You can create complex multi signature authorization and revocation schemes.
> With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
With time the UX of wallets and wallet integrations will improve. Many wallets already offer address books, where you give addresses names. Also, decentralized name service is being worked on (but still an unsolved problem).
> With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
Crypto isn't Bitcoin or Ethereum, crypto is much larger. The field is constantly evolving, and things like txn costs are non-issues for sophisticated architectures.
> I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation. I'll wait for crypto 2.0.
100% agree. This field is full of speculation. The version 2.0 however will absolutely find impact.
>> With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through.
>> With crypto, a xss attack or a misplaced password can cost me all of my coins.
>> With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
>> With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
> You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity.
In practice, who would you trust with such significant transactions as a company though? If you want to get anywhere close to the level of protection that you'd get in the "old" system, you'd need to thoroughly vet both the smart contract and the third party to be sure that there are no additional bugs in the contract (after all, it's just software like anything else, so there can be exploitable bugs) and that the third party won't screw you over. Some sort of neutral third party that both the buyer and seller can trust due to being known for such trusted transactions...like a bank. How is this any different than what we have, just with extra steps?
It's declarative. There's no vagueness about the state of the transaction, and settlement can be cryptographically proven. This creates transparency and accountability. It's also sovereign. Not every transaction NEEDS this level of customer protection. Paying in person at a restaurant or supermarket can be done with a simple transaction.
Also, some transactions like subscriptions (which are very common) need a cancel functionality that follows strict rules: perfect for a smart contract.
And finally, even your bank won't be able to protect you in many cases.
Not every transaction needs that level of customer protection, but it's very nice to have. Currently, banks that provide consumer protections are motivated to hunt down fraud, which helps everyone, not just credit card users. It keeps the level of fraud overall low.
And while I do agree some transparency would be gained through smart escrow contracts as opposed to credit card transactions, I disagree it's any more "sovereign". For the system you're describing to function, you need established third parties that both you and sellers trust. These third parties may choose to revoke your access, restrict your purchases, etc in the same way banks do now. In short, crypto still has not solved the trust problem.
(Also, while smart contracts do work for cancelable contracts, being able to "issue" a new credit card for each company as a consumer and then cancel it whenever solves it better and without any blockchain this or that)
What's to stop network effects from this just ending up with a bunch of centralized verifiers that in practice make it impossible not to use them for most daily things?
1. I can ALWAYS choose to transact on L1 with others. This option is non-existant in our current system.
2. Because payment provision and customer protection are now split, it means that there can be more competition. You don't need to be a payment provider at the same time.
And most importantly: have you ever had to deal with scams and chargebacks? These "verifiers" (paypal, visa) are often utterly useless, with lots of unclear rules.
It turns out that many people don't actually WANT this "protection". What people want is an efficient, global payment system with strong authentication methods. And maybe a way to lock their account (which is much easier to realize with DLTs)
There's also other things that even make it attractive for governments and financial institutions. E.g. you can use transaction fees as a form of consumption tax (especially valuable if you're the world's reserve currency or that of a major area). Through a country cryptocurrency you could set a federal consumption tax (providing a new and difficult to avoid revenue stream), give everyone free access to banking (wallets), make buying treasury bonds trivial, and other modern things that most of us take for granted but not everyone has access to (5.4% of Americans are unbanked). This would have the potential to simplify taxes but could equally complicate them. Hell, the Fed Reserve could pre-mine coins (for fast transactions and low environmental impact) and even offer interest on wallets through POS. These things could be beneficial.
Also one thing that makes it attractive to governments is that you have the ability to track every transaction, making it a data rich environment. This is an extreme authoritarian route although could make for simple return free filing and "stop terrorists and criminals" (I'm not bullish on that). Though personally I hope it doesn't go this route and we have ZKP transactions (i.e. anonymous like cash). Personally I don't think the gov should see that grandma gave me lunch money. Most cryptocurrencies aren't anonymous/private (not what the crypto stands for), despite what is common belief. I, unfortunately, think that this is a big reason large financial institutions and governments are interested.
But definitely agree on this being full of speculation and uncertainty. There are also plenty of people creating scams and abusing the systems. But just because a big part of the ecosystem is corrupt doesn't mean the underlying technology is useless. To determine that we'll have to wait and see, but there has been shown at least the potential for utility. I'm not trying to say that cryptocurrencies are going to be the future. I'm just also saying that there's reasons that smart people are attracted to the idea other than scams. But that also doesn't mean the ideas will work out.
A related thing that's bonkers to me is how much progress there has been in ZK cryptography.
But people just dismiss the field, saying "ZK existed since the 80s it's a fad", and post yet another Bruce Schneier article.
But also, to be clear, it is hard to separate the signal from the noise. Especially with hyped subjects like CC/BC.
Did you even look at why they are unbanked?
--- start quote [1] [2] ---
According to the Federal Reserve data, 14% of households making less than $40,000 are unbanked, compared to only 3% of households making more than that amount.
...
“Don’t have enough money to meet minimum balance requirements” was cited by 29.0 percent of unbanked households as the main reason for not having an account—the most cited main reason
--- end quote ---
But sure. Do tell me how magical crypto that expects you to pay wildly fluctuating fees for every single transaction is going to save the unbanked.
Cue in "not all cryptocurrencies in 3... 2... 1..."
[1] https://www.forbes.com/advisor/banking/costs-of-being-unbank...
The difference is that while allowing a (properly set up) crypto bank to transfer funds you may also at any point and for any reason take full custody over your coins. The private key which enables that should not be used for anything other than emergency (minimize attack surface) and keeping such a key secure is not all that difficult. With this combination you get all the benefits of a normal bank yet they are powerless without express authorization to do anything with your funds. You can withdraw at any point for any reason.
Services and practices securing your private key will need to be widespread before adoption seriously takes off. Storing a seed phrase in your sock drawer is not acceptable: Vitalik Buterin secured his billions via two physical pieces of paper which summed to his private key; surely a step in the right direction. An n of m scheme with each n being held by parties unlikely to collaborate is another solution.
This is all not even mentioning massive private banking and its relationship to the economy and bias towards the wealthy. Crypto is FOSS finance, it works for the people as stated and expected. As I said, you are correct - using your layer 1 sovereign access for everyday use is a security blunder - you now know where progress points.
A laughable statement in the face of crypto’s negative externalities. We’ll wreck the planet we all share, but at least we’ll have FOSS finance!
I’d be shocked if video games as an industry outranked crypto for energy use. Even if we assume all gamers run their GPU’s at 100% the entire time they play games, miners will quickly dwarf the energy usage because games don’t play 24/7.
Machine Learning is computationally expensive, but unlike crypto, is basically constantly trying to make their systems faster and more efficient all the time. Again-computation isn’t used as a gatekeeper here. There’s no “hash this pointlessly until enough work as been done so you can do x”, it’s just “do this work as quickly and efficiently as possible”. Things like TPU’s in ML aren’t a threat or arms race, they’re a net improvement.
Crypto gets targeted for its energy use because it uses an insane amount of energy for even the most rudimentary functions. Even if current payment processors use the same amount of energy right now as crypto does, you have to consider the relative scales: those payment processors handle the vast, vast majority of payments with that energy; scaling current crypto up to that levels would bring its energy use to astronomical levels.
Let this sink in: crypto is money that is backed by energy. Finally a money that is backed by some tangible thing. The systems providing it might be suboptimal, but the basic premise, that this is finally backed by a universally accepted thing, energy, is absolutely perfect.
Just like coal is concentrated sunlight, crypto money is concentrated energy.
Thassal.
That’s nice for you I guess?
> Have you heard of Chesterton's Fence?
I have, but this comes across as a slightly more sophisticated version of the fallback that’s often resorted to by defenders of crypto: if in doubt, claim that your opponents “simply don’t get it” or just proclaim “have fun being poor”. We understand crypto too, we’re just not convinced.
So you must now convince people why crypto does not bring value, which first requires coherently stating the argument for why it does - which most skeptics fail and which you have not attempted.
> I'd be shocked if video games as an industry outranked crypto for energy use
The point is that they use energy, and is that energy worth the benefit? No one brings that up when discussing climate - so an ignorance of the value crypto can bring must be the source rather than genuine bookkeeping on value vs. energy usage. If we are really cutting back than I don't see how most video games have any place in our electric grid.
> Machine Learning is computationally expensive, but unlike crypto, is basically constantly trying to make their systems faster and more efficient all the time.
Unlike crypto? This is why skeptics like you get ridiculed. Spending two days researching crypto will reveal that most of the market which isn't into simply holding Bitcoin and waiting or DeFi schemes is solely focused on making ledgers more efficient.
> scaling current crypto up to that levels would bring its energy use to astronomical levels.
Again raw ignorance of the technology, economics and logistics of it all drives your thinking. Layered, custodial approaches, PoS advancements and why that all works seem to be beyond what you understand about the space despite your persistent pontification about the direction it should be heading.
Bitcoin… do they even have any plans to move to PoS?
In short, I’ll believe it when I see it. I certainly hope you’re right, though.
maybe it will require pow regulation to change the risk-reward calculation for eth to finalize its transition to pos.
there are two way to do this currently- multisig wallets and shamir's secret sharing algorithm.
multisig wallet is more widely supported. Gnosis Safe is a popular implementation, but requires multiple transactions per final action.
shamir's secret sharing allows splitting the secret off-chain, which means you only pay gas once. it's hard to find a safe implementation and be confident that it works correctly.
I’ve written this elsewhere when this topic routinely comes up and crypto is dismissed, but the capability of self-custody is the thing to pay attention to.
Nothing else has this capability to the same extent.
Today we store most of our wealth in assets (market index funds, stocks, real estate, etc.) and some (typically very little, and rarely outside of a bank account) in cash.
Most of this is not actually controlled by you.
With BTC (and cryptocurrency more generally) you have the capability of having your private key in a hardware wallet under your control and retain the capability to transact independently of other institutions.
If you keep some percentage of your wealth here you retain certain advantages that you can't get elsewhere. The closest alternative would be having cash (in cash form), but it's hard to have that much, hard to travel with it (you can memorize your wallet seed words and recreate your wallet on the other side of a border), and cash is vulnerable to government stupidity (see: Russia).
I'm not sympathetic to the Canadian truck protests, but whether or not you care about what they're protesting - it's the capability wielded by the Canadian government over their private finances that's alarming.
All this is to say the focus on what crypto is worse at is kind of missing the forest for the trees.
The capability of a global self-custody capable store of value that can be trivially moved anywhere is a big deal and puts power back in the hands of individuals.
I don't pretend there are no risks with cryptocurrency. The security requirements are obviously harder, the UX is bad and even technical users fuck it up.
Some of this will be improved by tooling, some of it is just what's required for self-custody.
Still, the capability it provides is new and gives individuals more power even with these tradeoffs. That capability is valuable and shouldn't be dismissed imo. It's a lever against authoritarian control and increasing centralization of power.
They will if you didn't initiate the wire. If you typed the wrong account number then you are SOL, but that's true of BTC too.
Frankly banks also rarely help people scammed via other means (Venmo, Apple Pay, Zelle, etc.)
There are also courts etc to get involved, if someone sends you a million dollar wire and you keep it (for no services rendered), courts generally don't let you just have it (cross border caveats etc).
Oh dear.
I've found that when I wire a large amount of money to a new account, humans sanity check the transaction at both banks.
Also, I once did something weird (wire to same escrow firm a few days apart), and got a call of the form "What's going on? Did you buy two houses or something?"
It’s harder to control your transactions when you have self-custody. It requires a higher level of coordination.
Bitcoin is of no use if you can't exchange it for anything tangible.
Even so, it’d have to be a global restriction on all exchanges which is more challenging to coordinate.
The thing crypto gives you is the capability to get your wealth out intact (at least whatever you had moved into self-custody). If you have fiat in banks frozen by the Canadian government your wealth is trapped.
You’re right if Canada banned Bitcoin it could influence the value of the coin. Similar to governments refusing transactions in rubles. The difference in capability is in the ability to move your wealth and that short of global coordination a global store of value (controlled supply, non-government etc.) is more resilient. The fiat comparison would be having the entirety of your wealth in cash in your house - obviously not viable (and good luck trying to cross a border with it).
Crypto is also more resilient to government meddling in currency production (this is often over-stressed in US, but is a real problem in developing countries where kleptocrats devalue the currency to steal the wealth).
It’s more similar to buying gold and having it on you, but with crypto you don’t have to keep it on your person to maintain direct control of it. You just need to know the seed words.
The fiat equivalent would be moving money to an overseas account. Before you are sanctioned, doing so is just as easy as buying Bitcoin. After you are sanctioned, both are equally hard. The difference is that your Bitcoins can be demonetized, while your overseas assets can only be seized if the governments cooperate.
Say I'm an American, for example. I'd receive "sanctioned" bitcoins from a Canadian and then send them non-sanctioned bitcoins back to a different wallet address. There is no "exchange" being used in this process. I could then happily spend or transfer said coins in the 99% of the world that isn't Canada.
Your money on that account is still being trusted to some authority and your guarantees on it are limited.
The real fiat equivalent would be moving all your wealth into cash first (literally physical bills in your house), which is obviously worse and harder to move.
Your bitcoins cannot also be demonetized any differently than fiat. It’s similar to sanctions on rubles. Both types of value are vulnerable to government bans affecting the price. The difference is with crypto and self-custody you can transact privately despite that (similarly to if you held cash, but holding lots of cash is again harder and more vulnerable to a single government’s stupidity).
If your dollars in a bank are frozen you can’t transact at all. Your self-custody BTC can’t be frozen on the blockchain, you retain a lot more ability to transact globally.
With fiat in a bank, you don’t have a chance since it just gets frozen and you don’t actually have custody. With crypto it’s more likely you can continue to transact.
It’s a matter of degree.
What I'm arguing is that this impact doesn't cause the price to be zero, requires global coordination to have a big impact, and that even in this case, the self-custody capability of crypto is still something better than the alternative (no access to any funds or any ability to transact). We're also discussing an extreme worst case (and even in that case it's still better than frozen non-custodial fiat funds).
Flagging wallets to exchanges also requires targeting and many people wouldn't get hit by this. There are also a lot of cases that benefit from self-custody in a world that doesn't have this extreme global coordination to sanction crypto.
Imagine the case where you're a random Ukrainian citizen in Russian occupied territory trying to get your wealth out across a hostile border. Your crypto wallet is not likely to be flagged to exchanges (even if it was most exchanges wouldn't care). You can memorize the seed words and get out safely with the ability to recreate your wealth on the other side.
This has already happened at least once: https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-b...
This is probably why Chinese wealth leverages it to get around attempted controls by the ccp despite regulation.
Why? It is just as easy to regulate as any other tracked asset. Physical items are much harder to regulate.
China simply hasn't started enforcement.
Mostly because it’s harder to confiscate (more akin to a physical item in your possession)
Zoom out to the "all" range on https://www.bitcoinprice.com/ and try to tell me with a straight face that you're looking at a graph that belongs to a stable currency. Heck, even just look at the last two years.
Part of the problem with Bitcoin in specific among all of these cryptocurrencies is that the Bitcoin community in particular is completely divided on whether they want a speculative asset or a functional currency. You can not have both. A currency that is regularly spiking in value to the degree that Bitcoin spikes (even a currency that spikes upwards in value) is not suitable for everyday transactions. A currency that doubles or even triples its value in 2 years is not a good currency.
The bigger thing to understand is that it is impossible to fix this problem with Bitcoin, because a sizable portion of the Bitcoin community doesn't want Bitcoin to be a currency. They want a speculative asset. In my opinion, that portion of the community is significantly larger and has significantly more influence than the portion of the community trying to create a currency.
Bitcoin is more akin to a gold like store of value than a currency.
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> You just need to control the onramps and offramps.
> Bitcoin is of no use if you can't exchange it for anything tangible.
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> All that's required for people to exchange it for something tangible, is for people to start.
----
The need to move BTC over to a stable coin before you spend it was part of Nextgrid's criticism to begin with. It requires an off-ramp, a functional exchange that will accept Bitcoin and give you something spendable.
I guess to be charitable, maybe the argument you're making is that the stablecoin is the transactable part of all of this and the stablecoin will be accepted ubiquitously and that it will be harder to regulate those kinds of exchanges. However, it's worth asking in that world why anyone would be using Bitcoin for transactions if they're just going to transfer it over to a better cryptocurrency later to spend it? Why wouldn't they just use the stablecoin?
This is a good question and I think there’s a two part answer.
Part one is stable coins still have smart contract risk in the arbitrage style version, and fraud/authority risk in the custodial version.
Stable coins that peg a government currency are also vulnerable to all the same issues fiat currencies are vulnerable to.
Bitcoin is a better store of value than fiat (which is a bad store of value - we store wealth in assets primarily because of this).
So you’re better off storing value in BTC like gold and then moving pieces of it to transact in small amounts if you must. If you can’t (exchanges are locked) you’ll need to find someone willing to transact in BTC despite volatility (or someone willing to trade you fiat in person).
Is this optimal? No, but it’s about degrees of control. Wealth locked up in banks controlled by authoritarian governments give you fewer options.
This is the part I have an issue with when talking about Bitcoin as a currency. Forgive my oversimplification, but it really sounds like what you're saying to me is that Bitcoin is not a good currency, it's an investment asset, but for the moment it can be converted into other good currencies. However, it turns out that most of these stablecoins and other currencies have very similar properties to traditional government-issued currencies (risks of fraud, inflation through issuance, etc). These are all the things that Bitcoin is supposedly going to fix, but then it turns out that transacting with Bitcoin is largely reliant on keeping those types of currencies around.
The hope is that Bitcoin will continue to be convertible into good currencies, and to a certain extent that's a valid hope. There are scenarios where a government might censor traditional currencies before they regulate exchanges (see Wikileaks, for example). But that's also exactly what people are calling out here; we're questioning how reliable or censorship-resistant those exchanges actually are in the long run. I'm not sure that's a problem that can be glossed over, it's a big fundamental part of the disagreement.
Additionally, I would ask the question, how much of Bitcoin's current value as an asset store is tied up in the fact that exchanges are operational and relatively easy to use? I strongly suspect that if the US government ruled that exchanges were illegal tomorrow, the value of Bitcoin would plummet. And if that's the case, then we have a currency that not only needs some way of exchange with traditional currency in order to be spent, it's also kind of reliant on those exchanges being easy and operational in at least one or two wealthy countries in order for it to be used as an investment vehicle or store of value at all.
If those exchanges get shut down, and Bitcoin is hard to exchange but still valuable, then that's not the worst thing in the world for Bitcoin. It's pretty bad, but it's still a store of value in that scenario. However, if those exchanges get shut down and Bitcoin is both hard to exchange and the value is plummeting because ordinary/rich people aren't using it as an easy investment vehicle anymore, then that's an extremely bad outcome for Bitcoin.
> Wealth locked up in banks controlled by authoritarian governments give you fewer options.
Really, really important to clarify that we're mostly talking about theory here. In practice, wealth locked up in banks controlled even by authoritarian governments like China currently still give me exponentially more options than Bitcoin does for most purchases, with only a few minor exceptions. Could that change? Sure, absolutely. But it's not the current situation.
Even looking at something like Russia; I think depending on how this war continues, it's going to be interesting to see if Bitcoin actually ends up being useful for ordinary people there in the long run. I am fairly skeptical; multiple countries have tried to use Bitcoin in the past during currency disasters and I have not been super-impressed with the average result. And none of those countries were being as aggressively sanctioned as Russia currently is.
Gold has held up as a value store and is the closest analog I think, but it’s not a perfect comparison and there are trade-offs for each.
I mostly think the technology is cool and provides a new capability to individuals. How much this ends up having a lasting effect remains to be seen (though I lean optimistic).
If you think your currency might be worth a lot more if you just hold on to it, you don't want to spend it for FOMO. Stablecoins don't change that.
Thats a nice theory, but in reality it is false/implausible to be able to control every single on and off ramp in the world.
Evidence: Nobody is currently controlling all the on an off ramps, despite the fact that I have heard the same exact argument that you are making right now, for literally over a decade.
I could cut your lawn, sell you an Xbox, or buy an old tractor completely with BTC. The government can cry about it all it wants, it can pass a hundred laws, or issue a thousand court orders. But at the end of the day, it has absolutely zero control if two individuals want to voluntarily exchange crypto with each other. We've already seen this play out with the illegal drugs trade and P2P file sharing. Spoiler alert: The government lost.
So really, in FreedomLand, you can work and get paid in BTC, but if FreedomLand only recognizes FreedomDollar as legal tender, then when you need to pay income tax, the government will charge you in FreedomDollar, and you need to exchange your BTC to FreedomDollar.
If you cannot or don't want to pay tax, then of course police will prosecute you, and courts will also require settlements in FreedomDollar. Nevermind you have millions of BTC or XBoxes.
Now of course, this "problem" would disappear if FreedomLand recognizes BTC as legal tender, but now FreedomLand government loses all monetary control, and then economic activity descends into chaos.
Notice that although many points are raised, it doesn’t address the direct objections of the previous post.
Obfuscate, misdirect, and confuse the marks.
But even given those cons we see benefits in things mentioned above. E.g. my colleague can send bitcoin to his brother in russia. Tell me what other options to transfer value there are at the moment between west and russia. Very similar for ukraine.
E.g. you want to support independent reporters in Russia. What can you do? Support your family? Maybe even foreign students there?
This is half-true. A wire transfer can't be reversed due to end-user error, which can be abused by fraudsters. However, Incorrect input on the bank's behalf does warrant a reversal.
I'd compare my bank screwing up vs a crypto exchange screwing up (Like getting hacked). I'm still not protected if the exchange gets hacked and my coin is exfiltrated. I am protected if my bank fatfingers a wire transfer.
Also, banks are insured by the FDIC against financial catastrophes. Savings accounts held in FDIC-regulated banks are insured up to $250k if the bank fails for some reason. I get no such protection holding crypto with an exchange. The FDIC turns around an audits banks to make sure they're compliant with liquidity requirements, loan quality measures, etc. Nobody in crypto is watching anyone else in crypto to make sure everything is kosher because that is fundamentally impossible in a system that is meant to be decentralized.
Scammers are everywhere and not nearly enough is being done to address it. It's not even clear whether it's possible or not to even address crypto scams.
Exchange risk is tempered somewhat by Coinbase which is more comparable to a standard bank in terms of risk (imo).
The true value and capability that’s distinct with crypto is self-custody and that is the important part of my comment.
The fine print does not bear this out at all. Coinbase states in their TOS that your funds may not replaced in the case of a breach because they do not insure the entirety of accounts, nor do they stipulate a guaranteed insured amount:[0]
> In case of a covered security event, we will endeavor to make you whole. However, total losses may exceed insurance recoveries so your funds may still be lost.
Comparing the risk profile of Coinbase to a bank is no different than blindly trusting a big bank not to fail. These are not analogous institutions from a risk management standpoint.
0: https://help.coinbase.com/en/coinbase/other-topics/legal-pol...
> “Comparing the risk profile of Coinbase to a bank is no different than blindly trusting a big bank not to fail.”
That’s kind of my point? They share a similar risk.
The most interesting thing with crypto is the new capabilities it enables for self custody of wealth.
There’s also the non-government controlled supply and global store of value which are interesting too, but easier self-custody is the prerequisite differentiator imo. It’s also one of its core advantages over gold (the others being easier to transact with, easier to move/store which is related).
> The most interesting thing with crypto is the new capabilities it enables for self custody of wealth.
Serious question: what are the new capabilities that this opens up? These tokens are really unstable which makes them poor candidates to use as actual currency, research shows that decentralized networks are no less susceptible to market manipulation than traditional financial markets and there's an unbelievable amount of fraud everywhere in this space.
The whole reason the Federal Reserve was created was to weed out endemic fraudulent activity around the country during the era of "Wildcat Banking"[0], when banks were essentially creating their own currencies. Crypto is largely the digital reincarnation of this philosophy, and isn't really doing anything about shitcoins and other scams. Now, we're starting to see the legitimization of shitcoins through sports team fan tokens that provide no tangible value beyond the purely speculative "hodl" mentality.
No, this is a person sending money to their brother, who is presumably not engaged in "waging war."
Crypto bros telling us how great it is for the poor people in such countries to get money. Now we see the downside of this as well. Oligarchs protecting their assets as well.
Leveled playfield.
No added benefit from crypto anymore.
And yes right now for me, sanctioning is more critical to me to increase the pressure on Russia to stop killing people than Russian people being able to use crypto.
The more that financial repression and "cancellations" become mainstream, the more obvious crypto's use cases become - whether or not you support the individual examples of repression.
How much is a human life worth to you? How much are we all responsible for everything and nothing?
Collective punishment? It's just that there are limitations on tools global politics can use.
Independently of this perhaps my expectations on fellow humans are different than yours.
And at the end of the day crypto can be blocked and will be blocked sooner than later. every event like this which circumvent global mechanism will be worked against
This argument seems completely non-sensical to me.
Western governments have been arguing for 3+ decades that we do business with countries like China because integrating them into the global economic system will encourage them to change. But now we're making the same argument that we need to expel Russia from the global economic system because it will encourage them to change. What? At least crypto doesn't flip-flop on what it's moral or ethical purpose is. It's just a tool and an exchange of value, not a weapon.
The sanctions mean nothing if you haven't already integrated the countries into the global economic system, because they won't be losing anything.
I'll grant the implementation leaves a lot to be desired, but the principle is quite sound.
Not all governments are good, not all laws are just. It’s easy to roll eyes at this in the west, but a lot of countries in the world are lead by bad people acting in their own self-interest.
The other bit you get from Bitcoin at least is programmatic guarantees of supply. This protects you from increases in supply inflating your savings away. It makes it a better store of value than fiat.
A standard currency is not always available. The same is true for safe financial systems. This is more relevant for people trying to save in places like Venezuela. Crypto provides new capabilities that may be your best option.
If one potential future is authoritarian governments leveraging total control on their citizens financial transactions via centralized financial systems (what the ccp is trying to build) - crypto is a technology that provides a relief valve from that. It’s a good thing it exists imo.
Limited supply is not irrelevant or “factually wrong” for a long term store of value (like gold) which is more the role BTC plays specifically.
[1] https://static.wixstatic.com/media/e17377_2a348fd21fc543f9a0...
We’re talking about advantages and capabilities - specifically granted by crypto of which self-custody is a prerequisite (yes technically true of stock, but not indexes and not as comparable). Within that context it has advantages over other options and more capabilities.
I’m not pretending it’s better at everything or it should be 100% of your holdings or anything like that, but it is better at some things and the new capabilities it provides are interesting and valuable.
That chart is a limited slice of time. The nice thing about economic bets is it doesn’t really matter what you (or I) think, the market will play it out. I suspect you’re probably wrong, but we’ll see.
Focusing on this despite the rest of what I wrote is still kind of missing my point.
There’s not really much point in further discussion, there’s not much more to say. We just don’t agree.
But feel free to disagree, of course. The evidence doesn't care if you don't agree with it. It's still there, for everyone to see.
You have a clear motivated reasoning bias (crypto = bad and useless) paired without understanding the basics of how crypto works.
You don’t have conversations with people, you just ignore details that disagree with your pre-existing conclusion and focus on digressions you think prove your point (typically against a strawman argument I’m not making).
Your submissions betray this bias too. Crypto (and conversation) is more interesting when considering the nuanced bits even if it may disagree with “your side”.
https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-deb...
You’re right about one thing though, the evidence is there for people to see.
That isn't exactly arguing in good faith, to use your own words.
If you could buy stuff with it and it wasn't an absolute headache (install app, pay transaction fees) and it was easier, it would be more popular.
That would also remove the "it's a speculative asset bubble" problem.
For the interim, using it as a private bank, assuming you can cache it out at an exchange for local legal tender, is the next best thing.
The only true way to make it a currency is for it to have its own country - bunch of people somewhere decide to use it for all their stuff, trade goods and services. Problem with that OFC is a lack of free land and energy.
So maybe when we live in space, and need a long term store of value, but don't really want to carry around bars of gold or platinum, it can have some serious uses. Until them it is exactly like buying oil - technically asset trading but really hard to realize the value in any meaningful way.
You can choose to ignore the nuance, but it exists anyway.
Crypto wallet owners can be entirely hidden and impossible to sue.
Have you ever worked a retail/food chain job and gotten to see how many CC transactions are invalid/fraudulent resulting in the business losing money? I worked at a pizza place where 5-10% of CC transactions were bogus (college town). Checks were more like 20%.
All financial transactions are trust relationships. Some are higher trust than others. If you could buy groceries at Wal-Mart or a new iPhone from apple.com with bitcoin you would have no concern about that. If you send money to a rando on the internet, well it doesn't matter all that much whether it's crypto or dollars.
Sometimes you will have third party intermediaries, like VISA, who will offer certain guarantees/insurance for a fee. It's as simple as that.
It's silly to compare transactions with known/trusted entities like a physical business or trusted insurance provider/intermediary like VISA with sending your money to a random anonymous bitcoin address. You would not generally be wiring money to a random anonymous bank account either.
I've been doing blockchain on and off since 2008. Recently I lost a few thousand dollars by sending crypto to a L1 address when I was on a L2.
I work on self-soverign identity in my day job. I've written smart contracts. I'm a careful person. Basically I think if I'm dumb enough to do this what chance do most people have of getting this right?
> Nakamoto stated that work on the writing of the code for bitcoin began in 2007. On 18 August 2008, he or a colleague registered the domain name bitcoin.org, and created a web site at that address. On 31 October, Nakamoto published a white paper on the cryptography mailing list at metzdowd.com describing a digital cryptocurrency, titled "Bitcoin: A Peer-to-Peer Electronic Cash System".
I just re-checked. It was actually 2009 sorry.
My x to doubt is because nobody claims to have “been in blockchain since 2008” it’s a give away that your talking trash. The Genesis block date was Jan 3rd 2009. You were talking to satoshi about Bitcoin pre launch?
I do have this from 2014:
Project Proposal: Data Rental using the Ethereum Blockchain, Spetember 2014
If you know the history of Ethereum you'll know that is pretty early.
I was on the old "decentralization" Yahoo mailing list and the p2p mailing list back in the early 2000's too. If you can find an archive (which I can't!) you can check my background there.
Self custody is a critical part of this ecosystem. It’s been the biggest mantra of the ecosystem, so I really don’t understand how you can think this is for a small segment. A vast majority of BTC and ETH is not on exchanges. It’s the entire point. What you are admitting to is saying “I was there at the start but I still don’t really get why…”
Where do you get that?
I understand the reasoning entirely. I disagree that it is important or that the security trade off is appropriate for almost anyone.
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution“
Nah, who needs it???
I'm saying (again!) that I don't think the trade-offs involved with self-custody are worth it.
So far all you've done is (a) attacked me personally, and (b) made some kind of circular argument that either I don't understand what Bitcoin is or restated your argument that it is important.
Ok, I get you think that. Just saying the same thing over and over again isn't actually a convincing argument.
I don't think that trade off is worthwhile because the risks associated with it outweigh the risk associated with it for almost anyone.
I was one of those people (might have been early 2010 for me though, can't quite remember when I first became aware of bitcoin, but it was pretty early). I remember seeing the post about bitcoin first being exchanged for pizza after I had a bitcoin wallet. I read the forums sometimes but never posted (which is odd, because I posted on a bunch of forums back then).
Of course if I had a time machine I would have been mining nonstop back then, instead of just briefly to play around with it, and held on to it until much later. I thought it was cool but at the time I thought if it was successful it just meant it would get up to roughly the same value as a US dollar, i.e. $1 for 1 bitcoin, and wouldn't go up much beyond that.
By the way, I held on to my coins for as long as I did in part because I was super paranoid about fucking up my transactions, so I get where the OP is coming from. For a casual user they probably don't want that stress. Hell, whenever I do a transaction to another wallet now that's more than $50 even today I check the address three or four times and still sweat a bit until I see it go through.
I thought the tech was cool, but never owned any real amount and didn’t really have an understanding of why there might be long term value.
There was Bitcoin faucet which used to give out some free - I think that was how I got some tiny amount in my first wallet that I eventually lost when I wiped the laptop for sale.
Sorry mate. Not high scores for that.
I’d your going to claim to be OG sign a message with the keys…
> I’d your
Let the person who has never made a typo be the first to throw stones.
Wait.. you are being critical of me and you are stuck on BTC? To put it simply, people who BTC Maxis in 2022 are like those people on HN at the Facebook IPO who didn't understand why it was profitable.
Screw Meta.
Governments can trivially prevent this if they wanted to. Bringing your wallet along will be of no use if nobody dares to transact with you because they themselves will then need to explain the source of their newfound wealth.
The current ability of crypto to (sometimes) escape government oversight is temporary and only exists because it's currently a rounding error in the grand scheme of things, but I can guarantee you it will be cracked down on.
The specific case I read about was someone escaping the Russian occupied areas of Ukraine this way: https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-b...
It’s also more common in countries with bad currencies and limited access to USD (Venezuela).
You’re right it’s not perfect, but it gives more power to individuals than the alternatives. It’s also possible something like Zcash could allow individuals to transact despite an all seeing panopticon, but I don’t know how that works well enough to have a strong opinion.
Or in fact, any financial law by any government. And yet if you say a major application of crypto is crime everyone gets all hurt...
That being said, most studies point to the conclusion that the major application of Bitcoin at least is not crime:
https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal...
https://cryptoforinnovation.org/resources/Analysis_of_Bitcoi... (by Michael Morell, former Acting Director, Deputy Director and Director of Intelligence at the Central Intelligence Agency (CIA))
Indeed. By regulating the transparent cryptocurrencies and banning privacy coins from exchanges like Monero and MobileCoin which is how the criminals and scammers cash out their ransomware money into fiat currencies.
I think this will forever be the sticking point for crypto for a lot of potential users. It boils down to trust. And the relevant question is: for an average person, do they trust FDIC insurance more than they trust their own ability to understand the crypto infrastructure and protect themselves from rogue or compromised transaction facilitators (because for Bitcoin at least, it's fundamentally impractical to transact for most things without a facilitator; the time it takes for the transaction to get buried into the chain alone is enough to take most day-to-day uses off the table).
And personally, I think for most people the risk model is that trusting FDIC insurance is a superior option.
The capability added by crypto doesn’t mean everything else can’t exist or isn’t preferable a lot of the time for most people.
I do think there’s a lot of room for the current tooling to continue to improve though which may make it more of an option for more people.
For the record, The Current Thing at the moment is to recommend citizens hurting from their government's stupidity to overthrow said government (and if you are averse to dying, then it's only fair that you suffer).
I'm being facetious, but there's a grain of truth in that notion.
If your government robs you with its economic policies you could, of course, invest in croins or other hard to sanction assets -- or you could instead take action to make your government better, more transparent and reliable.
The credit card company can also unilaterally decide to block your purchases if it thinks you have become a bad credit risk or if you donate to a frowned upon political cause or any other reason they arbitrarily decide.
For example, in the smart contract introduce some authorities that are allowed to block and revoke transactions for some time (if the block chain has no support for certified timestamps, use "number of new blocks mined and appended to the blockchain" as substitute).
Let the market decide what kind of protection stakeholders prefer.
People keep losing money making coding mistakes that even "gcc -Wall -Werror" would refuse to compile. Examples: type errors like L1 vs L2 (whatever that even means, not a crypto person), wrong number of function parameters causing some sort of currying, allowing that massive ETH heist a few weeks back.
I'm sure there are hundreds of other similar horror stories.
"-Wextra -pedantic" would protect against even more bugs.
(I'm not saying C is a reasonable choice, just that JavaScript was a laughably bad choice.)
Exactly the same can be said about the legal system. People are just a lot more used to the many existing "glitches" of the legal system in comparison to "bugs" in smart contracts.
It's a piece of code written in an esoteric programming language that even people who are experts in have trouble understanding and spotting errors in.
Compared to actual contracts which are human readable.
People are just more used to and exposed to texts written in, say, Englisch in comparison to code written in, say, Solidity.
Moreover, human languages will always be more simple at expressing human interactions than programming languages. "You pay me 2.5% of the agreed sum on the 25th of each month" will always be infinitely more understandable to an average human than whatever the implementation of that would be in Soldity.
For example: https://www.msn.com/en-us/money/companies/feds-seize-dollar3...
Yes that is a major double-edged sword but it is ultimately a feature of blockchains (at least the base layer), not a bug. Everyone who has ever been a victim of fraudulent chargebacks can vouch for that. If you want reversibility you are free to create a smart contract which allows that using its own token. Frankly I wouldn't want to use a blockchain where someone can acquire my personal info and then social engineer their way into stealing my money, as commonly happens within the traditional financial system.
There is no crypto 2.0
Can we, just for a moment, think critically about whether or not this is a good* thing?
As a consumer / client of the credit card company it seems great at first glance. I get scammed? No problem, I'll get my money back. But where does that money come from? Certainly not from the thief. My hypothesis (I'm not an expert in this field) is that it actually comes from you, the consumer, albeit very indirectly and in two main ways:
1) Credit cards companies charge businesses that allow consumers to use them a fee. Business often pass this fee on to the consumer, sometimes even explicitly. For example gas stations usually publish separate prices for gas w/ or w/o credit card. That fee is the main revenue source for the credit card company, and fraud reimbursement is one of their expenses. Expenses go up? Fees go up. In this way businesses (and less directly you) are paying an insurance premium on top of the credit card company's operating costs and profit margin.
2) Credit card companies most likely write fraud reimbursement off when filing taxes. So taxes that they would otherwise pay vanish. If the taxing entity wants a minimum tax revenue, that means increased rates elsewhere (and quite possibly for individuals).
So what's an alternative? Putting more effort in to the prevention of theft/fraud in the first place.
* "Good thing" meaning net benefit to society.
People make mistakes. Our society should not be an unforgiving one that heavily punishes mistakes or can’t handle basic situations like fraudulent transactions. Prevention of fraud is a cat and mouse game.
The benefit to society is that it lowers the risk of making transactions, so people actually spend their money. The inherent risk in crypto transactions has a (very slight) chilling effect on people's willingness to buy things with it. Why would you pay for something with BTC when you can use a safer payment method?
Also, let's not ignore the fact that crypto has fees too, and few people are paying taxes on the money they make from them, so there's little difference on that side of things except the benefit to the consumer is missing.
As for net benefit to society, it's not the first thing I'm thinking of when I've had my credit card skimmed. What I'm thinking is, thank goodness there's some modicum of protection for me and I haven't been wiped out with no recourse, which could be the case with crypto.
Is it good for the consumer to have these protections? I think people would much rather have the safety net of the financial institution and maybe need to pay a passed on fee at a merchant than not pay a fee and risk being completely drained of funds.
Is it good for banks? Not really, I think? Regardless of whether they're writing it off on taxes, it's still money that's leaving their hands. That does leave the point about them being able to dodge taxes, but, if there's one thing corporations are good at, it's dodging taxes.
--
Forgive typos, on my phone.
You sound like Gov. Abbott. Don't worry about abortion in the case of rape, we'll just get rid of rape.
Why didn't we just think of that before? Just get rid of crime, and there won't be any problems!
I left that little blurb about reducing fraud at the end of that post because I was trying to anticipate the (shallow) counter-argument: "what's the alternative"? "End"ing fraud, by the way, would be a great alternative to the implicit insurance premium we pay if it was at all viable.
To give you some examples of what "more effort in to the prevention of theft/fraud" looks like cf: https://sgp.fas.org/crs/misc/R43925.pdf
Look, I agree we should try harder to reduce crime. But arguing having insurance against fraud is bad and we should instead just try to get rid of crime seems incredibly naive. Sure, there are things which could potentially be done to help reduce fraud, but there will still be fraud. In which case the value from the insurance is still >0 for the victims of said fraud. And a ton of Americans will still be a victim of fraud even if we try harder with technology available today. If we were to move to all Blockchain transactions, those people would have no recourse.
But yeah, I do think clawbacks are a good thing.
With bitcoin you have both: high fees and no fraud protection.
> Credit card companies most likely write fraud reimbursement off when filing taxes. So taxes that they would otherwise pay vanish. If the taxing entity wants a minimum tax revenue, that means increased rates elsewhere (and quite possibly for individuals).
So what you saying this is better, because when fraud happens you (an individual) can't deduct it from your taxes?
I think the arguments are very weak, much stronger would be that government can't supposedly stop you from paying or receiving payments, but they still can do it in other ways (like prevent converting the money or physically get you).
I think though that (at least for me) ability to reverse charge to stop fraud is more valuable than the above.
But after thinking about it a while I realized that I've probably paid more in this hidden premium than I've recovered from reimbursement. Until COVID hit and I had to refute multi thousand dollar plane tickets that were never able to be used. Will I have paid more for the premium or less by the end of my life? No idea.
What it ultimately comes down to is the value, role, and scope of insurance. That's a massive debate of its own.
I've used a 2% cash back credit card for the last 5+ years. If the CC Company offered to make it 3% in exchange for reduced or inhibited fraud insurance I would seriously consider it.
I've also foregone health and home insurance in some instances.
But I appreciate that risk assessment is absolutely not for everyone.
Why do you bother with either? Just try harder to not get sick and try harder to not have your house burn down. Are you not actively trying as hard as you can to prevent your house from getting destroyed? Are you not trying to stay healthy?
Even for people who don't care about the credit card incentive programs, the feeling that the credit card company will take your side in a dispute is itself an incentive to do business with companies you don't know very well.
Consider a traveller shopping in a foreign city, or someone buying things from unknown third parties via Amazon, or buying an app from an unknown vendor in an app store. The customer gets certain reassurances from the credit card / Amazon / app store vendor that certain scams are less likely, though not eliminated. And if you do get a counterfeit you might be able to get a refund just because you say you deserve one.
Yes, ultimately the money comes from consumers, but the same is true of advertising and every other business expense. As a consumer you can often get a discount if you shop places with low overhead and pay with cash, but with perhaps somewhat less assurance that you're not getting ripped off.
Fraud prevention isn't free. The police do some of it, but maybe you want more protection than that?
The two responses to my very simple question prove to me that crypto is a fad that will fade into the background. Maybe a few big players will use it as their protocol, but the average consumer is never going to think about it.
This is mainly with Smart Contracts or Hot Wallet Storage specifically. A bug in a Smart Contract can be detrimental considering that it's code is immutable. A Hot Wallet could be misconfigured or exploited by a remote attacker. This is why it's important to use cold storage methods for larger amounts of funds, typically using a paper wallet, or even memorizing the seed phrase as a last resort. If you're an institution, then you should be employing institutional level security (though, I don't really see this happening as often as it should). You can even employ segregated witness to divy the funds amongst contract holders.
> They're largely powerless to stop it once the transaction has gone through
That's pretty much the entire point. This isn't a bug. It's a feature. It's up to the end user to determine the execution of the transfer of value from one to another on the ledger. The ledger can only ever be written to; making it immutable.
> With crypto, a xss attack or a misplaced password can cost me all of my coins.
I mean, this can happen anyways, even with the current system. If you get phished, click on a redirect, execute a payload locally, or whatever. Not really sure how this is even considered a cryptocurrency specific issue; It's a fairly universal issue as it is already. Also, you're more likely to see something like this with anything utilizing a Smart Contract.
> With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
Well, not if you're using QR Codes. Remember those? They've been around for awhile. I would do this with my Account and Routing numbers if I'm wiring money or setting up a direct deposit regardless. I find my self checking the numbers to make sure I get paid. Even though the bank can reverse it, it would still be a pain. Knowing I can't reverse a crypto tx makes me a bit on edge, yes. It's, again, a feature... not a bug. If you have that much doubt with a transaction, then you should be using QR Codes instead. I personally find them to be convenient. Otherwise, I'm putting the public address in my clipboard and pasting it and then checking the first 6 and last 6 hex symbols. If they match, I'm happy.
> With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
The more congested the base layer of the network becomes, the more likely the fees are to be driven up. Bitcoin has a side-chain called the Lightening Network to mitigate this while focusing on processing micro-transactions. You can basically send 10 Sats for the cost of 1 sat. Some tx are basically free because of how the network is setup. With Ethereum, the base layer can process upto about 15 tx/s. Bitcoin is about 7 tx/s. Lightening can process up to 100k+ tx/s. That's 4 times the speed of either Visa or Mastercard. If you're executing a smart contract on the Eth network, then things can get expensive because you're using gwei as gas to execute the smart contract which is used to deter bad actors from abusing the EVM. Solana can process a 50 tx in about 500 ms which is impressive to be honest.
> I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0.
Less than 2% of crpyto is used for criminal activity and that's mainly because you can get caught using it. A lot of people believe that it's completely anonymous when it's not. You're usually KYC'd somewhere and the only way to avoid this is to do direct p2p transaction without having it linking back to something that's tracable. Bitcoin is a criminals worst nightmare simply because it's a public ledger which anyone can audit.
> their usage as currency will be limited unless the inefficiency problem is solved.
This is common point that's brought up as well and was in the article. In PoW, this inefficiency is not a problem. It's Bitcoins network security to maintain it's own decentralization. It's the base layer and you can build on top of it to address the transaction speed as well as the network congestion; Lightning Network being a prime example of this as a potential Layer 1 solution to Bitcoins Layer 0 solution.
I feel like alot of people are missing the forest for the trees. I've done my research. Have you?
This not much of an issue in pure Mimblewimble based blockchains, where sender and receiver interact to construct a transaction, and the receiver essentially has to prove the ability to spend received funds before the transaction can happen.
Snark aside, my 70yo dad fell into a very stupid fraud where someone called him and convinced him to send money from his bank account to some other (this is using Mexican Gov digital money transfer network SPEI). After he did and realized it was a scam, he called his bank and they basically told him that they couldn't reverse it, nor do anything.
So, bank transactions are not as revocable as they want you to think, for the lay person at least.
Santander [0] agrees with you.
It is all but impossible to block a crypto wallet from receiving funds.
There are pros and cons everywhere.
In the more distant future, if bitcoin survives, its utility will just be one thing, it will be regarded as a unit of measuring transaction value independent of any government. It will not be a replacement for any sovereign currency. Just this extra tool out there in the ether of finance. Notions of store of value, blockchain, proof of work etc. will be regarded as implementation details of achieving a global unit of account. Think of it like the SI unit of value, kilogram, meter, bitcoin. It's still far too illiquid to serve that purpose now; but, once it has at least an order of magnitude larger market cap it may.
Crypto is inherently less stable which amplifies minor corrections, but that’s not what crypto’s bubble bursting looks like. When prices drop 99% that’s when the bubbles burst.
As of 99% dropping, at this point so many minds has been set to see growth or "know" the "minimum" value of main cryptocoins, that masses would not allow for it to drop 99%. There will be enough people along the line to be picking it up at all sort of discounts and Fibonacci supports and arcs to hold the support lines and change trends. I am also very glad to see crypto finally got "locked" on the stock exchange.. and moves with it up or down (logical, since lots of Wall St. guys finally joined the party). I think long-term this will help stabilize BTC, ETC etc, since they will be mimicking serious market (U.S. stock market) moves.
just my 2c (investing in stocks since 1992, and crypto early adopter 2009)
Why do you believe that? Are you talking about pure speculation?
lol. Ether dropped 93% in 2018 and is doing just fine today. I think you have to adjust your "bubbles burst" definition for crypto.
What does this mean? I would bet that there'll always be Bitcoin miners, so the network will never completely "die". If you're talking about BTC/USD rate, it's hard to meaningfully interpret given how unregulated (and possibly manipulated, see Tether) the market is.
As a technology, it's probably more interesting to look at, say, the number of people who did a cryptocurrency transaction in the past month or week.
This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected.
However, day-to-day, if you're making transactions that the government approves of, it's better and more convenient to rely on said government to protect you and end up using a much more efficient (in terms of transactions per second, fees & energy usage) and convenient system such as credit cards.
Crypto is like a tank - useful if you need to go into battle and defend yourself, and while it can be used to go buy groceries at the mall, it's not the most convenient. When you're not in battle, you're better off just using a normal car and relying on local laws and subsequent enforcement to deter anyone from harming you, which, at least in civilized countries, works the majority of the time.
It is completely reasonable to have some assets that the government cannot take away from you without actually going through the court process, putting the screws to someone and arguing to a judge that a crime took place. And that inflates in a predictable, controlled manner.
The last 3 years has convinced me that I will own crypto by the time I die. Not bitcoin - indeed, I don't know what protocol it will be yet. But something.
I would not personally be quite so confident that a state actor (or a well-capitalized non-state adversary such as a criminal organization) would not have the ability to severely curtail, if not outright eliminate, some other party's ability to execute cryptocurrency transactions. Most of us have no idea what unexploited vulnerabilities these sorts of organizations have found, and they didn't get to be as powerful as they are by habitually playing an ace up the sleeve when a three will do.
Compare with the proverbial suitcase full of cash. From a security perspective, it has the interesting property that transactions involving one don't have to be publicly recorded and processed on a public, global, openly accessible peer-to-peer network in order to complete.
Hence why governments around the world are pushing towards cash free societies.
Physical cash is where most illegal (whether you think it's the good illegal or the bad illegal) transactions happen.
Indeed, but it also has drawbacks. You need to find someone with capability to use that much cash without suspicion.
Also, I think most of the money laundering is made across borders, from people willing to enjoy their wealth in a country different than the one they earned it. Think money earned to US to be used in Mexico, or nationals of a heavy currency export regulated country (rmb, ruble). Customs are very efficient at looking for cash moving through these borders.
To wit: it may be very difficult for me to ensure that the smart contract does not contain a malicious payload. Even if we pinky swear to there being no malicious payloads. Perhaps even if I read the code in an effort to personally confirm that there's no funny business going on.
This very problem is a big part of why smart contracts are becoming a popular tool for confidence artists. There seem to be a lot of people who are very (one might even say unreasonably) confident that the fact that smart contracts can't be altered after the fact makes them inherently trustworthy.
I believe the possibility of breaking the law is a necessary escape hatch against authoritarianism. Back in the day this was achieved by physical limits (omnipresent surveillance & control just wasn't physically possible - the tech just wasn't there), nowadays this is becoming more and more difficult - which is great if your government is sane but recent events suggest that even relatively stable governments can quickly turn sour.
You don't have to find either of these use cases acceptable to understand the risk at play when the financial system can be used as a mechanism of control used to try to snuff out things the establishment upper class doesn't like without going through proper legal channels and kept in check by our elected representatives.
What you’re asking for is a way to make these disproportionately illegal transactions on demand at scale. This isn’t a position on technology, it’s a position on government.
Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments.
There was literally a post on HN today in which a government proposed to curtail crypto transactions for entities it considers hostile: https://www.coindesk.com/policy/2022/03/17/senator-elizabeth...
Recently another government seized crypto assets from those it considered adversaries: https://www.coindesk.com/policy/2022/02/16/canada-sanctions-...
And those are just actions taken by relatively benign governments that use regulation to accomplish their goals instead of force. It's tough to think that government-level actors couldn't just disrupt the crypto networks directly if they so desired, either through cyber attacks (ie denial of service or exploiting vulnerabilities that almost certainly exist in the crypto networks). Or in extreme cases even just taking control of network infrastructure directly. Or shutting off the internet. And no, Starlink will not save crypto users against adversaries who can jam EM communications.
Governments are powerful and to think that crypto or anything in the internet space is resistant to that power in the most extreme situations is not wise.
>Unless crypto becomes actually useful for real world transactions, it has to be converted to fiat currency for use, and all the exchanges or technologies that do that conversion are subject to the will of governments.
This is true, except that in some places governments are too inefficient to even control those things. The IT people works for them for pennies, and got there because they are the cousin of some politician. They are also not very capable, otherwise they would work for someone who paid them better and on time. I'm using my country as an example, where people trade them for money in fintech wallets and not banks, since they are more difficult to control despite also having a KYC process.
>Governments are powerful and to think that crypto or anything in the internet space is resistant to that power in the most extreme situations is not wise.
Other decentralized technologies simpler than cryptocurrencies prove this to be wrong. And I'm talking about torrents and some other kinds of P2P networks.
Those things are used mostly for piratery, they make companies lose money, so there's an incentive for governments to take them down, yet they fail to do so. On the other hand, crypto is seen as an investment by people who actually own a lot of money. Investors from big banks sometimes have at least a very, very small portion of their portfolios on it because it would be dumb to not take that risk for just a small amount of money they can afford to lose. So a government might not be that much focused into taking it down since a lot of "important" folks of the business industry are on it too
The only thing I think the US government might be truly worried about are the so-called stablecoins. Having an alternative to the USD is risky for their monetary control, since the supply can be artificially expanded with cryptos like UST which is a decentralized stablecoin, instead of centralized and backed by real dollars
Currency is not an investment.
Yes, people trade currency, but for very small margins and as a hedge. When a currency swings 10,000x as crypto has done, it typically only happens in countries whose economies are going belly-up, see: Zibabwe.
If crypto is an investment, that means it is fluctuating dramatically, and if it is fluctuating dramatically, it isn't a currency (or it is a currency of a failed economy).
Don't believe me? Then I would expect you to be investing in stablecoins. If you only invest in Bitcoin and Ether and not stablecoins, then you are playing the stock market, because stablecoins are kept stable the same way countries can float their currenct to avoid wild swings in valuation.
I believe crypto will have a use in the future, but only with stablecoins, similar to commercial paper. As it is today, it is a scam for gambling and illegal activity, and a few people who want penalize their impoverished foreign relatives by sending them tokens that might be worth much less the day after they are sent (the cost of sending >US$10,000 is peanuts compared to the loss of value due to BTC/ETH fluctuations).
Yes, that's unintentional, but it is an investment anyway. Yes, it's also a gamble, like any other kind of investment. Every investment has its risks. This is a very, very risky one.
>Don't believe me? Then I would expect you to be investing in stablecoins. If you only invest in Bitcoin and Ether and not stablecoins, then you are playing the stock market, because stablecoins are kept stable the same way countries can float their currenct to avoid wild swings in valuation.
Of course I believe you, I'm an argentine. In my country people is forbidden to buy other currencies. They "can", but they are limited to 200 USD every month (minus the consumption they spend by paying Netflix and Spotify with credit cards) and it's taxed. And I'm not taking into account a lot more rules. So it's mostly obligatory to use our local currency that loses 50% of its value every year.
We even have a black market for the dollar. It's sold for twice more from what the government says it's worth. When you Google for our currency, that's just the official value. valordolarblue.com.ar shows you the real value for a dollar in pesos, that's how much it's sold for in the streets. The official value only exists for paying us programmers and other exporters half of what we earn when we work for foreign companies (and that's before the 50% of taxes), as we are obligated to convert all our money to argentine pesos. The situation is even worse for farmers, they pay them like 60 pesos per dollar. So yes, people in my country use crypto mostly for the USD stablecoins. It made the life of a lot of people better too, as the best "investment" here is saving dollars.
>I believe crypto will have a use in the future, but only with stablecoins, similar to commercial paper. As it is today, it is a scam for gambling and illegal activity, and a few people who want penalize their impoverished foreign relatives by sending them tokens that might be worth much less the day after they are sent (the cost of sending >US$10,000 is peanuts compared to the loss of value due to BTC/ETH fluctuations).
I do so too, but I don't think that the investing / gambling side will disappear. Like it or not.
But I also think that tying the value to the US Dollar or any other currency is disappointing and a bad idea, as it's keeping itself to being marketed as such and, as I said, causes a competition against the Fed. And the disappointing part is that crypto shouldn't strive to be just a dollar or an euro.
Having an stablecoin without pegging it to another specific currency would be ideal.
You'd be lucky to have working computers, power sources and internet connections in a hostile environment. Cash and physical assets are king in that domain.
Governments can order exchanges to halt trading and liquidation, or demand haircuts, and 99% of people who hold cryptocurrency won't be able to do anything about it.
Yes. In the early days, people were thinking retail sales of illegal drugs. That turned out to be a petty cash application. What really powered Bitcoin usage was getting money out of China despite exchange controls. There have been disclosures in recent years which established that the money laundering sector was much larger than previously thought.[1][2][3] Just a fraction of that moving through the cryptocurrency system may account for most of the growth in Bitcoin.
[1] https://www.icij.org/investigations/panama-papers/
As it stands, I remain pretty unconvinced that cryptocurrencies writ large solve this kind of (at least, what I call) "borderless" free speech problem today. They simply don't do enough to frustrate the state or the incumbent banking institutions, mostly because they aren't actually peer to peer enough where it counts. Notably, I can't transact with other people on the network with only my smartphone or a small computer communicating 1000's of kilometers over the radio using digital modes without also relying on, e.g., an exchange to act as an intermediary.
How do these systems handle large-scale network partitions where an entire geographic region stops announcing its prefixes to the wider Internet but continues to process transactions and append to the blockchain within its borders? Does the blockchain fork? How is that fork resolved? (Is it ever resolved? The existence of Ethereum Classic implies to me that it isn't, or at least isn't required to be, and I find that prospect frankly frightening.)
The tank analogy is quite apropos, I find. Without a convoy of trucks bringing in fuel, the tanks stop. An adversary powerful enough to sever your connection to the outside world (whether in terms of electricity to keep things going or network connectivity) for the purposes of transacting seems like quite the Achilles' heel.
[0]: Modulo other rulings. Modulo the impartiality of SCOTUS.
https://www.openssh.com/releasenotes.html
* ssh(1), sshd(8): add the sntrup761x25519-sha512@openssh.com hybrid
ECDH/x25519 + Streamlined NTRU Prime post-quantum KEX to the
default KEXAlgorithms list (after the ECDH methods but before the
prime-group DH ones). The next release of OpenSSH is likely to
make this key exchange the default method.
This might not require a full application of Shor's algorithm, as studies continue with statistics from quantum annealers.
https://www.forbes.com/sites/arthurherman/2021/06/07/q-day-i...
If this happens, cryptocurrency as currently designed collapses.
https://stribika.github.io/2015/01/04/secure-secure-shell.ht...
https://csrc.nist.gov/Projects/post-quantum-cryptography/rou...
"Formal complaint regarding 8 June 2021 incident - 2021.06.15, Daniel J. Bernstein
"Executive summary. A week ago Dr. Daniel Apon from NIST publicly accused me of professional misconduct. Specifically, he accused me of initiating private contact with NIST so as to provide false information to NIST regarding the timing of an upcoming announcement relevant to NIST’s ongoing decisions..."
On the mining side, miners would pick a new algorithm, vote, and then cut over when approved. Although, if a post-quantum technique allowed faster mining, a change to the mining algorithm may not be needed. Bitcoin would notice the faster hashrate and increase the difficulty, miners would rush to buy quantum hardware. As long as quantum hardware is generally available for purchase, we'd still have decentralized mining.
On the wallet side, we'd need miners to vote for and approve quantum safe wallet operations. Users would need to update their software and their wallets. I'd expect some stuck wallets (like the initial blocks, lost keys) could get spent. This is sort of like someone recovering gold from a sunken ship.
I agree this seems like an existential threat, but there is an update path. Unless there's a sudden onset where no-one has time to react, I suspect the miners would reach consensus. Some users may be slow to update their wallets, and may suffer losses.
I think we'd eventually see recovery of the coins from the mining of the initial blocks, which are generally believed to lost/stuck. This would sort of be like recovery of gold from a sunken ship. I've heard that recovery of those coins would destabilize Bitcoin value, due to the large value. However, unless they are all unexpectedly recovered at once, I'd expect the market to "price that in" gradually as recovery begins.
I'd expect many cryptocurrencies not to survive the transition, although I'm a crypto skeptic and I don't expect hype/scam coins to survive anyway.
[1] https://blog.coinbase.com/bitcoin-s-elegant-upgrade-mechanis...
One thing seems certain, waiting for NIST is folly.
This doesn't mean anything. Lots of things "need to be there" and aren't. If it doesn't work, it won't work, even if you think it should work.
Gold is a commodity with genuine industrial uses, and ingrained appeal to humans through thousands of years of being adorned and traded as jewelry. Sure, it's been diminished, we have so many materials now that can be used industrially and fashioned in to shiny trinkets, but comparing it to a completely synthetic, abstract instrument like Bitcoin is a bit disingenuous.
I definitely think there's room in the world for a completely decentralised peer to peer digital cash equivalent, but I think it remains to be seen how valuable everyday people in this world consider this utility.
Every investment we are talking about is only rare because the community that participates in it has decided they are rare. Otherwise there is nothing stopping me from taking a picture of a piece of art or trading card and reproducing it a million times.
Bitcoin is fungible, unlike collectibles. There is no value to holding one bitcoin vs another, if "different bitcoins" even makes sense as a concept.
It can also be subdivided, so it is more accurate to say that there are 21 trillion units that will be out there.
Just looking this up makes clear that this is not really the case.
The same coins now like litecoin are unchanged even as far back as 2017. So either it's a weak bubble or a deflated one. Compared to stocks, Crypto is dead..nothing goes up for more than a day..tons of wash trading. tons of scams.
3x tech etfs are way better than bitcoin anyway. I would rather own TECL and TQQQ instead of bitcoin. TECL and TQQQ were up over 100% in 2021 compared to 60% returns for bitcoin.
Also, buying very large quantities of fringe alt coins at millionths of a dollar each can pay off if the coin ends up rising in popularity and price. I do a few moon shots each year and cash out in November when crypto rallies. I’ll put $500 in 10 coins and usually one or two of them 100x at some point. I have my notifier send me a text message when it’s time to sell.
Not saying this stuff is useful, because it totally isn’t at this point. Well, except perhaps to make some random people a lot of money from nothing.
My best advice to getting started is write your trading algorithm or decision making logic in a parameterized way so you can feed in snapshots of time for back testing. I’m sure there are frameworks out there but I literally wrote this hot garbage in a weekend with not a lot of research. I’ll probably rewrite it someday and optimize it a bit more.
It got me so uneasy to the point I just decided to go straight at it. Load the values and hey, let's try some backtesting. Simple stuff. If at the end of the day I end with more money than I began, shit is working. tweak that into oblivion. That's my plan.
So yeah, you also validated me (because I was thinking "this is just going to be stupid stuff. that can't work").
Thank you for existing and lucky me to be able to have this timely exchange in such a noisy communication world heh
o/
Was the housing bubble a lousy one just because home prices didn't go up 100% per year?
> Some guy on reddit's wallstreetbets recently turned $17k into $600k with amazon call options.
This is just gambling. If you are open to extreme risk, you can make plays like this on anything. It doesn't mean there is or isn't a bubble.
The implied promise is that it’s still the early days, and you too can become a millionaire
This was really off topic. My apologies for that, but I feel like I had to get that off my chest :-)
Fiat is going to ZERO. All fiat currencies. I’d you fail to see the utility now at year 13, I hope you will not let another 13y pass.
What would that 70 year old say if they bought a house 10 years ago for 400 BTC and solid it today for 5? On the flip side, someone working for BTC 10 years ago might have expected a salary 50 BTC a year and someone being hired today might be 1 BTC a year. Is that a better situation? While the price per coin skyrockets, the only sensible position is to hoard it and never spend or invest anything. That would be a disaster.
I would replace "non-monetery" with "non-financial". I think it's a perfectly reasonable (albeit, imperfect) solution as a ledger and exchange mechanism for new financial assets.
The easiest way for the regular Joe to use crypto it's with an exchange... that it's basically, just a centralized institution making changes in a private database for when transactions are made inside the exchange.
Only if the user wants to send money to a wallet the transaction enters into the blockchain, outside of that it's like a bank... without the regulation benefits.
I think the state of Crypto right now it's in similar to what HTML journals were at the start of the internet. The reason why social media won over everyone having their blog in a distributed network, was in big part to the easy-to-use experience.
I find it a little bit hard to believe that crypto will not be centralized at the end to some extent. This motto of "crypto it's a fight of the common folks against the big guy" feels like marketing made by people who control crypto now and who want to be the "big guy" this time, rather than the democratization of the banking system.
Look, I like concepts of the tech behind it and I hope to be wrong, crypto has proven useful in some scenarios like Venezuela. But seem naive to expect that, if they don't take into account the limitations of the tech itself, everyone it's going to use wallets and private keys with all the good security practices requires and never make a mistake.
We're almost forced to get Google Workspace / Microsoft equivalente Service for your own email.
- a technology that solves coordination among untrusted parties can be useful
- the early usecases for blockchains are mostly profiteering and rent-seeking
> Claim 1: Crypto is a Bubble (Confidence: High)
Are stablecoins not crypto? The DeFi built on top of stablecoins and other assets is basically what the market/banks had been doing for a long time (except that everything is transparent, fraud is easier to detect, etc.)
> Claim 2: Blockchain technology has no non-monetary applications (Confidence: High)
This one is easy to refute. A few ways:
1. The point of cryptocurrencies, is that we found that we could use monetary incentives to build and run services that have nothing to do with money. Sure bitcoin was only for transfers, but other projects have explored how to build services on top: smart contracts, identity registry, archiving of the web, file storage as a service, a tor-like mixnetworks, and I'm sure others can point out all sorts of projects.
2. The core of blockchain technology (although not all of it, see next point) is about protocols for distributed systems when faults can be malicious. Distributed systems are used EVERYWHERE, think distributed databases. As threat models are different for every products, why claim that we don't need distributed databases resistant to malicious faults? Banks are the first target of such products, so it's no wonder that cryptocurrencies were invented. Another example is the web PKI, which currently uses protocols like Certificate Transparency which are good are letting you audit your domain names and detect if any attacks have happened after the fact. I bet you that in the next 10-20 years the web PKI will run on a BFT consensus protocol, or an unknown breakthrough solving a similar problem, to prevent attacks from happening, period. And if nobody builds it I will.
3. What is blockchain tech exactly? Because I can tell you that many fields in cryptography have seen INSANE advances SOLELY because of cryptocurrencies: general-purpose zero knowledge proofs, multi-party computation (and threshold cryptography), broadcast protocols, etc.
> Claim 3: Future monetary use of blockchain technology will be minor (Confidence: Medium)
That really depends on regulations, and if they want to kill the beast (and replace it with a non-fault tolerant CBDC). But we're already seeing countries adopting cryptocurrencies (albeit the wrong ones) so I guess it depends on where you'll be in the world. The dream of crypto is really, no matter bitcoin maximalists will tell you, to make payments as easy as sending an email. And without an open standard that everyone can trust, how will this ever happen?
Lightning is an engineering marvel.
Modern monetary policies whatever they are exist for reason, things would likely be worse without them. And the big cryptos have no monetary tools...
Dai
Governments can change things. Blockchain is eternal.
You can make the argument about different market sizes though. But the trend in both directions is clear.
Crypto had value swings far greater than that in the past 6 months alone.
Sure, data would need to be verified by a trusted party when it's first entered. A blockchain still protects against forgery after this though.
It may or not end up looking exactly like traditional money, but it'll look like something.
I believe some of these things are in direct contradiction to each other and there just isn't exactly a wide amount of academic discussion going on about it that I've been exposed to.
And what's interesting to me is that if you did effectively create such a system, how would it manifest in usage? If there isn't a digital gold rush, or a speculative aspect to its consumption, well ran monetary systems from established governments give you few reasons to utilize it.
Ironically that means that excessive amounts of money are being thrown at them in order to obtain any kind of small angular velocity towards funders that believe they can capture the next generation of the market -- or simply to prevent it from happening, for those with existing moats.
Simply wait. Give it another five years to a decade or so and the tide will recede and the valuable technology will remain above the silt.
They know the "limitations" of the existing model (the ways in which it is not centralized) -- as do many others -- but they want to lay a claim to some of the solution.
To do so requires twisting reality in ways that involve huge sums of money to create distortion fields.
Claim 2: Blockchain technology has no non-monetary applications (Confidence: High) Gambling is definitely a non-monetary application of smart contracts and oracles that is truly viable as a product.
*Claim 3: Future monetary use of blockchain technology will be minor (Confidence: Medium) There are many forms of crypto, and many are not immutable. Many have systems of governance that allow for changes in monetary policy, just like in a fiat currency.
People have been making similar claims about Bitcoin for over a decade now, and meanwhile it is still alive and kicking and shows no signs of slowing down. It is especially useful in places in the world that don’t have easy access to banking and countries where their currencies are being debased. I encourage you to watch this video if you have any interest in challenging your beliefs:
You shrug crypto off as not being “genuinely innovative” which I think shows a big lack of understanding. Personally, I think the invention of Bitcoin is perhaps the greatest innovation since the internet itself. It cannot be understated how powerful it is to create money whose supply cannot be controlled by a central institution or power. This is the kind of invention that could literally change the world (and likely will).
Your second point in claim 3 is the exact talking point used by the Federal Reserve and other central banks. I think this represents an extremely narrow view of the world. Look at the US dollar which is dangerously on the verge of falling into an inflationary spiral. If you feel safe keeping your money in dollars then godspeed. I personally feel very unsafe given the current political climate. The dollar has lost over 99% of its purchasing power since the creation of the Federal Reserve and the current strategy of printing more money to solve every problem has been much more of a “detriment to people’s lives and livelihoods” than the gold standard ever was. You should research The Cantillon effect which seems to be more and more relevant in today’s economy.
An alternative to the boom and bust narrative is that the banking elites of that time period created the boom and bust cycles themselves through control of the gold supply in order to lobby and justify the creation of a central banking system that would benefit them and ensure that if they ever got into a pinch they could bail themselves out by having easy access to the money spigot. Remember history is told by the victors.
I agree with you that governments are unlikely to let go of control over monetary policy and won’t do it willingly or eagerly, but I think it is already too late for them to kill Bitcoin. They can cut off exchange access to buy and sell for dollars, but by forcing people to use dollars and cutting off access to crypto, I think it will actually expedite people’s willingness and acceptance of crypto. People and businesses will start accepting crypto directly for payments. It will take a long time for this to actually materialize in the real world because there are so many people like you who have such a narrow-minded view of crypto, but when you are faced with accepting a currency that is losing 10-20% of its purchasing power every year, or accepting Bitcoin, eventually people will understand that Bitcoin is the better money.
I expect to receive an onslaught of downvotes for this reply and going against the grain, but so be it.
> when you are faced with accepting a currency that is losing 10-20% of its purchasing power every year, or accepting Bitcoin, eventually people will understand that Bitcoin is the better money.
How can this be a better money with such a volatility? Over the last three months, it looks like the minimum rate was 35kUSD/BTC and the maximum 50kUSD/BTC[0]. If you buy at the wrong time you can easily lose way more than 20% in way less than a year. Looking for articles about BTC volatility, it also doesn't seem to be going down.
Very practically speaking, in most countries, I'd see people buying real estate before they buy BTC to protect themselves against inflation.
Maybe one example is space travel. My parents generation was apparently convinced that we'd have hotels on the moon by 1990. Probably most 20 year olds don't think we'll have hotels on the moon in their lifetime now.
1961 IC invented
1974 personal computer
1983 internet
1998 g
2004 f
On average 20.6 years between the innovations I listed. Consider that since the inception of BTC (and ETH) there might not have been any actual innovations that would fit this rubric.
as far as web3, i suspect that will be a few things. a move away from centralized platform economics and/or a rise in applied cryptography made accessible to ordinary business software developers.
so maybe a disruption of the venture capital buying out industries and replacing them big singleton companies with web/mobile interfaces business model and hopefully bigger advances in things like end to end encryption for all areas where modern technology has revamped how we conduct business. if we're lucky, we'll see actually secure operating systems as well.
to play my own devil's advocate: it could end up replacing a lot of finance, if only for the reason that it seems to attract a lot of the brightest minds in that space, and sometimes that's all you need.
I accept down arrow fate.
Tell me you don't know what a bubble is without telling me you don't know what a bubble is.
No.
crypto is good for the following:
1. when you're living in armageddon and/or under an authoritative regime and/or need an exit from fiat for wte reason. not saying it's easy to exit into it, but it's there
2. to create a recursive never-ending loop of collateralized lending. to trade tokens in order to create tokens that can then be traded for other tokens used to collateralize lending for a different set of tokens
for anything else, there are better and more efficient solutions.
I'd stay away from making statements like this without backing them up.
Or the fact that you trustlessly trade a virtual currency to any other virtual currency. The fact that thats possible is insane.
I mean, I can even see that in reputable payment services like Stripe, BitPay and Coinbase Commerce in the future.
ENS/wallets give users a lot of utility on Skiff - it makes logging in to privacy-first platforms easier (manage on secret key/seed phrase), sharing easier (ENS vs. an address), and decentralized storage can be nice if you don't want your data hosted on big tech.
First sentence of the Bitcoin whitepaper: "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
Actual cash moves quite easily.
- Refilled my sim card in a foreign country for 0.0004 Lightning BTC
- Bought a VPN account for my friend in a country with heavy censorship for 0.0015 Lightning BTC
- Sent 100 and 150 USDT to my friends in a sanctioned country
- Donated 0.026 to EFF
- Donated 0.29 BTC to Ukrainian defense
- Donated 0.22 ETH to Navalny team
- Took my savings out of a country that forbids outwards money transfers
So it's been pretty productive for me. In addition, I protected my savings from inflation.
First off, it is factually incorrect to say that transaction costs are higher than traditional banking. In fact, costs on some blockchains are negligible when compared to traditional banking fees -- literally fractions of a cent for moving large sums of money.
Moreover, it is very liberating to be free of banks, with all of their absurd controls, endless gouging, and inconvenience. Admittedly, in the beginning, it is somewhat scary to trust blockchains, but one gets over that fear very quickly and apps and services keep improving to make it easier and safer. It's not ready for grandma yet, but grandma may have a hard time with her normal bank app right now anyways.
Furthermore, blockchain based Web 3.0 technology with a wallet that automatically recognizes your account without having to ever enter a password or username actually solves a big problem and greatly improves the experience on most websites.
We can debate the philosophical merits of decentralization versus centralization of financial systems until the cows come home, but for me, the benefits of decentralization outweigh the costs.
Without getting into too much detail, the main ones for me are: Freedom over my money. Protection from inflation (since some coins limit supply). Transparency of markets (all transactions are public on the blockchain).
Also, I believe that for most governments there are real benefits to using crypto. After all, the transparency of public transactions facilitates taxation and the implementation of policy. In the long term, it should actually help to curb money laundering, rather than facilitate it. It is very easy to corrupt a banker. It is near impossible to corrupt the blockchain data. Also, in our complex financial system, blockchains and smart contracts can also unlock a lot of value that is currently trapped in our legal, administrative, and bureaucratic systems. Just solving the problem of custody of financial instruments, would unlock incredible value in the economy.
With regards to centralization, I suspect that the real argument that this author is trying to make -- and it really shows his bias -- is that the US should not/won't allow crypto to really gain mass adoption because it threatens its hegemony (the petro-dollar, World bank, dollar as the world's store of value, etc.).
The author ignores that for a lot of the world, solving inflation is a much bigger problem than maintaining central bank control. He assumes that US influence/control over world economics/affairs is a good thing. I'm American, but I don't buy that argument at all. It is manifestly unfair and illigical to ask the world to use the dollar as a store if value and then print trillions of dollars whenever banks or other bad economic actors crash the US economy. Think also of the damage that the petro-dollar has caused the environment, delaying the onset of renewable energy while even facing global catastrophe.
These are just some thoughts off the top of my head.
Lastly, I want to add that for me the most exciting thing about blockchain technology is the disruption and innovation that it will cause in many industries. NFTs are a great example, but just one. Defi is another. There is massive innovation going on right now in defi. New models for lending, raising capital, etc etc. Models that could probably never work with centralized control and current transaction technology. Granted it's something of a totalky deregulated Wild West right now, but there will be winners who may become (in size, hopefully not in spirit) the Amazons and Bank of Americas of tomorrow.
Currently FX trades between banks are settled by a bank-owned coop type system, CLS bank.
"""
“The four most expensive words in investing are: ‘This time it’s different.'”
"""
And then proceeds to talk about cryptocurrency as a bubble.
The same rhetoric was used for email, webcams, web browsers, and internet companies (dot-com bubbles, VCs etc).
This time is much the same. There's a lot of hype and a lot of hate. Behind the hype is real technology that is in the process of being deployed.
This has to win a prize for the most redundantly true headline ever
Claim 2: Google 'Bitcoin Spacechains'
Claim 3: On a long enough time scale all discoveries are minor, this is what it means to always be optimistically solving problems at the beginning of infinity.
If you think art can be appreciated without being an NFT, then why pay any amount of money for any physical art when a super high resolution PNG does the same thing?
The NFT itself isn't - it's in fact just a .. wait for it now .....financial tool to monetize said art.
got 'em
That said, people are willing to pay irrationally large amounts of money for art for pretty similar reasons to why they pay money for NFTs.
This seems to be an object/reference mistake: NFTs (as we've been repeatedly told) are tokenizations of an asset, not the asset itself. You can tokenize anything, so of course there exist things represented by NFTs that are themselves are.
But NFTs themselves? They're not art, at least not until the Andy Warhol of SHA256 shows up.
NFTs as tokens not really. The art used in conjunction maybe. But the token is not art.
Is there a market to short crypto?
Even beyond this: there don't seem to be that many non-speculative monetary applications of cryptocurrencies and distributed ledgers. The few that do exist seem to exist primarily in conjunction with the demand for liquidity in speculative applications.
who cares?
- to exchange crypto you need an internet-connected computer, you can't exchange anything from a human to another human being, many might state that's not different than bank transfer on X.25 but it's different from cash, and that's just the appetizer that simply mean: to participate to the economy you need to be connected, and you can choose between few big ISPs for that and you need a computer chosen between the very few manufacturers we have around the world, typically a computer filled of proprietary FWs like moderns ones;
- cryptos are based on a "blockchain" concept, witch means on a giant append-only file, that's means sooner or later home computer will have not enough storage nor bogomips nor bandwidth to operate cryptos "freely", exchanges will be mandatory by technical needs, not by laws, since only big server farms will be able to process transactions at a viable speed. At this point the "free" and "open" part is gone. At this time cryptos are like today's banks, BUT without State laws and protection, an exchange can be in an exotic place, can disappear and start over with another name etc it's costumers are and will be totally powerless;
- not only: since we pay "on-the-go" naturally with cryptos wildly adopted that means de facto mandatory smartphone always with any humans, like the wallet in your pocket, and smartphones not only means already mandatory exchange on a hyper-surveilled platform but also means depend on them for anything, being unable to even buy food without and integrate social scoring it's natural.
Take the above and observe what WEF want in terms of digital identities and payments systems https://www.weforum.org/agenda/2021/01/davos-agenda-digital-... perhaps together with https://www.protocol.com/entertainment/upland-augmented-real... and you close the circle: cryptos so far are not there, but have created a narrative that digital currencies are good and needed. Most people do no even know the difference between cryptos and CBDC, in the end for most means just numbers inside a mobile (cr)app or website. I expect in a decade a final success of the cash-less push, with the sole payment system remained a smart-phone based one, connected and surveilled, of course linked to a digital ID, of course linked to social score: wellcome to the "western version" of modern China, evolved to surveil even more.
Oh beware a thing: if you want to wait and see because seems too extreme to be true... Once inside such systems, once our IDs, payment systems, social scores are implemented only an improbable civil war can overthrown them, and in a hyper-surveilled and hyper-centralized society where from ovens to toothbrushes to cars anything is connected a civil war means a thing: any Citizen can only let itself die hoping that's enough to crash dictatorship dominance, because it's impossible to fight if you can't eat, you can't travel because all the means to do so are connected and centralized in few hands. Take then a look as software these days: we tell for decades that we need FLOSS etc, what happen in the meantime? Emails are still there, only for 99% are webmails, so nothing practically different than a proprietary service like WA or Telegram. Dependence on few giants is far bigger then ever, anything desktop-centric and P2P-centric is disappeared, even tech communities are now on Reddit, HN etc, witch means on proprietary third parties platforms instead on open Usenet no one really own. Most people, devs included, live on APIs and cloud. Did you really think we are so far from the society depicted above? In the IT we already almost owning nothing "and being happy", actually IT is the core of our society functioning. Companies, especially from the finance sector have internal social score since decades, people think a society like a company, witch means a hierarchy not a Democracy etc...
Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities.
Proof of work burns a lot of electricity, though this is complicated because it drives up demand for renewables.
I also wish I had bought BTC when it was like a basis point, and if I had I’d be a booster instead of a skeptic, like everyone else.
Can we go back to arguing about Rust vs C? This horse has been flogged into quarks at this point.
Tech companies return money to their investors via buybacks. Most investors prefer this as they get to choose when they get taxed.
FTX burns FTT when they have a good quarter, with roughly the same zero accountability to do so as a FAANG with a God Emperor CEO running a dual-class share structure.
Neither of these things are backed by guys with guns who come to your house if you fail to pay taxes in them.
A piece of paper has no intrinsic value, pays no dividend, and gets diluted over time.
It's just that you're just doing it through a buyback rather than a dividend because dividends in the US are taxed like plain-old income and buybacks turn into capital gains and are taxed less.
It's the optimal way to return value to share holders when your share price is undervalued and you have excess capital. If the company ever needs to raise funds for a strategic M&A investment in the future they're always able to resell their shares again.
Some companies are content with maintaining a healthy business and not go after growth at all costs, which is a totally fine operating strategy.
You sir, are the apex predator of subtle HN trolling. (The guy with the collider thing above is hot on your heels).
And they should be. Software has become much bigger than it was "half a century" ago. We need to scale up on C.
> "unsafe" code is really not that bad.
Wow,... I only hope I never need to maintain your code.
HackerNews Crypto Thread Discovers Unconfined Equine Quarks (theregister.com)
Forum Boffins Observe Physics Beyond Large Hadron Collider: New Use For Blockchain in Repeatedly Smashing Dumb Ideas Together
It reminds me of the early days of the personal computer. Early PC's were useless to most people. But they were the greatest tool/toy to some. They couldn't get enough of it. Now it's crypto. It's mainly useless to most but some people can' t get enough of it. Add greed to that and there's no way people won't find a way to reduce its drawbacks and create useful tools.
Crypto's blockchain brought about the technology that lets complete strangers collaborate on a problem and be sure with high certainty that it's trustworthy. People just don't get how mind blowingly important that is.
It's slow in its development but it will have a great impact in our future. Give it time.
Electronic money, sure. But from a blockchain?
Stocks represent ownership so just by that virtue, it has intrinsic value.
But ultimately, it is a bet on actual cash transfers from the profits of the business to your own pockets. All share price appreciation comes from bets (maybe far removed in time) on future dividend payments.
Most crypto has no basis for value like this. Tokens based on proof of stake or utility tokens do, but Bitcoin is pure speculation on future speculation.
Even stocks that don’t pay dividends can benefit from cash flows in the form of stock buybacks. Many big tech companies like Meta don’t pay dividends but do spend tens of billions on buybacks.
When a company buys its own stock, the value of the remaining shares appreciates. This is in some ways better than a dividend because you (as a shareholder) don’t need to pay tax on the cash distribution.
Many crypto proponents just don’t seem to understand how shares work and tokens don’t.
Stock represents specific rights (which may differ across classes) typically including a claim on assets at dissolution.
That's about as productive of a thing as I can imagine. I suppose physically producing a thing might be a step above that depending on whether it's a useful thing.
Satoshi's words come to mind on this. If you don't get it (or it's not useful for you), that's fine.
Really it's just amusing 14 years in that you don't realise you're the old man ranting in the pub.
Bitcoin is a tool for freedom.
What's funny is watching the crypto world relearn all the lessons that went into making the current financial system the way it is. Example: printing money aka managing the money supply. This is a feature not a bug. At least for a currency. Side note: let's stop calling these cryptocurrencies. They're crypt-assets.
It makes me wonder if th Great Filter responsible for the Fermi Paradox is civilizations boiling their planets alive mining crypto before they ever establish a presence in space.
No. Gold standard has none of the properties you told. Fiat currency is a disaster and evil. Besides, it's also likely the only reason why cryptocurrency is drawing attention to anyone.