Cryptocurrency doesn’t address the hard parts of financial inclusion
wave.com
wave.com
> We need to keep track of our customers’ account balances.
Right. That's what the blockchain is able to do. It can assert that you, who says you have 1 bitcoin in your wallet, actually really have 1 bitcoin in your wallet (assuming no attack vectors such as 51% attack).
> We need them to trust that their Wave balance is correct and Wave won’t lose the money.
This is the same argument as above.
> We need to comply with relevant regulations—know-your-customer laws, capitalization requirements, account limits, etc.
Not something cryptocurrencies have claimed they can solve.
> We need to provide an easy way for users to exchange their balance for cash and vice versa.
This is an implementation detail, and entirely depends on how the UX of the wallet is. Sure running a CLI tool and GUI that looks like it's from 2008 (at least it was last time I looked at bitcoin's GUI) isn't great UX, but you can build a different GUI for it. Something plenty of exchanges have already done.
> Of course, the above aren’t the main use cases of cryptocurrency today: those are speculation, theft, extortion, more theft, drugs, even more theft, and speeding up climate change. It remains to be seen whether legitimate, productive uses of cryptocurrency will ever justify the hype. We hope so!
There it is. This is just an article blindly bashing cryptocurrencies. I implore you to ask yourself, what has previously been used to do all the above? That's right. Fiat currencies such as the GBP, USD, and other currencies.
I may possibly be biased, because, I certainly believe cryptocurrency has its place, though I don't believe it will replace fiat. But this article is just unnecessary fear mongering with zero merit.
Trust them to keep your money – yes, you can absolutely rely on that.
Trust them to have “your” money back – that’s a taller order. But it it will be safe, sure.
At least with cryptocurrency you don’t have to keep it at an exchange, while the governments are pushing for abolishing cash and keeping all the money in banks.
BTC forked shifting much of the value of BTC onto another blockchain. If it happens again, you have to remain vigilant to recoup your value.
And regarding trusting a bank: In my country there was a bank with a $15B market cap that did not really posess the money they claimed they posses.
Now: "Tether printer go brrrr and we still shill crypto"
I can't trust the price of BTC to drop to $0 when speculators panic.
I can't trust that my BTC will be accepted if it was once tied to a money laundering (mixer) address.
I can't trust that I will not be rug pulled on any new coin unless I read the fine grained software contract, first.
I can't trust a software contract from being hacked unless I can hire a software contract expert to peruse it, and hope he's ethical, and won't exploit any holes in the contract for his own gain.
[...]
Why not?
There are plenty of reputable stablecoins out there that prove their reserves either continuously on-chain or through regular financial audits.
Tether is the weakest actor? What reality are you living in? It has 90% of all stable coin trading volume.
I think it's silly to make arguments which are falsified by a simple google query.
Tether is one of the weakest stablecoins in terms of regulatory compliance and general community trust.
In other words, most arguments I hear against stablecoins apply narrowly and specifically to Tether, yet people tend to use those valid arguments against Tether to straw-man the entire asset class. Popularity and volume have nothing to do with that.
Pro crypto arguments these days have come down to basically "You're not allowed to make that argument. It's early days. There are no good critics..." and now "you can't conflate my argument."
You took down the Tether strawman, while pretending that you took down the entire concept of stablecoins.
This conversation is going way off track from your original claim that you don't trust stablecoins. Your perception of the community's perception of Tether is neither here nor there.
If there where better stable coins then presumably most people would use them, the simple fact that they aren’t is extremely damaging to any argument supporting the idea.
That's not true. Tradable instruments generally accrue network effects based on snowballing liquidity and trading pairs as a result of being first to market, not because of the instrument's superiority to another similar instrument. You can see this effect in the traditional markets with SPY and VOO. VOO is an all-around superior product (much lower expense ratio, better company structure), yet SPY has 20 times higher volume due to its liquidity, especially options liquidity. Likewise, USDC is an all-around superior product to USDT, yet USDT volume is much higher due to its liquidity, especially across smaller trading pairs.
I also want to point out that when you choose to measure by volume, you over-represent the people who trade through Tether rather than actually holding it for any length of time because they believe it's a sound holding. When you are actively speculating on moonshots like so much of this hyped up market is right now, USDT is the best stablecoin for you due to its high volume and liquidity, but when you're looking for a trustworthy stablecoin to hold onto long term, there are other stablecoins for that that have less volume.
Finally, it's surprising to me that you're now basing your argument on the premise that most cryptobros are rational, because that seems to run counter to everything you're trying to argue in this thread.
More importantly even with the first mover advantage SPY is only twice the size of VOO rather than 10x the size of all competitors combined.
We're really splitting hairs here. SPY and VOO don't have a "slightly different mix of stocks," they have an effectively identical mix of stocks. They use identical strategies to track an identical index.
The difference you're seeing likely comes down to the exchange traded product's discount/premium to NAV, or is the result of sheer chance due to slightly different timings of rebalancing, dividends, etc between the two issuers.
> More importantly even with the first mover advantage SPY is only twice the size of VOO rather than 10x the size of all competitors combined.
SPY is 20x the size of VOO by volume, which is the metric you're using to compare USDT to USDC. So by volume SPY is actually even more dominant over VOO than USDT is over USDC, not less.
All that said, even if what you were saying about SPY and VOO were true, I still disagree that it's logical to use an instrument's popularity as a proxy for its financial soundness.
No, it’s both a different list and slightly different weighting. VOO 510 companies https://stockanalysis.com/etf/voo/holdings/
SPY 507 companies https://stockanalysis.com/etf/spy/holdings/
As to trading volume, 10:1 is comparing every stable coin. There are far more than just 2 mutual funds loosely tracking the S&P 500.
Even if the fund held 510 companies, those last three companies would each represent 0.00% of the fund's holdings. We're literally arguing over a 0.00% difference between two funds.
I also think that the difference between a comparison to total market volume and a comparison to a second competitor is immaterial to this conversation. It doesn't really affect any conclusions about anything.
In conclusion, we're so far off-topic that it may be best to call this thread quits.
If a stable coin can be shady and still transact 90% of all stable coin market without any apparent consequences, then why should we trust any stable coin?
That logic is like saying 90% of torrent activity is related to piracy, therefore nobody has ever used the bittorrent protocol for any legitimate purpose. There is no logic in a statement like that.
Trusting a specific stable coin can be independent of all other stable coins.
While USDC does indeed look better, the management failure of holding corporate bonds in lieu of treasuries and dollars would have triggered an audit in a bank, and would have been big news.
https://www.bloomberg.com/news/features/2021-10-07/crypto-my...
https://markets.businessinsider.com/news/currencies/coinbase...
The very same old scam banks have made in the '300 invented bank notes to be exchanged instead of gold...
And probably that is the real reason behind crypto: some Bug&Powerful in the IT decide that's about time to kick out banks substituting them with something that's the same but in other hands and safer for the real master, BTW It's not just me saying that but also the Geneva Report 2019 "Banking Disrupted?" [1]. Unfortunately I fear most will not understand in time and actual IT "pseudo-free but still some freedom is possible" will be long gone...
[1] https://voxeu.org/content/banking-disrupted-financial-interm...
perhaps to be skim-read together with more recent
https://asiatimes.com/2021/05/beijing-prods-millennials-to-d...
https://voxeu.org/article/digitalisation-and-future-banking
and countless others
Some blockchain protocols like Bitcoin make the silly argument that in order for a chain to be worthwhile, a full history of all transactions needs to be maximally available on the network.
Other chains either drop, or plan to drop data that's been on the network for over a year or so (EIP-4444, for Ethereum). This relies on the weak assumption that the consensus algorithm will not finalize invalid data and then continue to build on it for over a year.
When you take history expiry alongside state expiry, the technology is absolutely out there to bound blockchain size.
You don't need to rely on such a weak assumption.
You can use Incrementally Verifiable Computation to verify the entire blockchain history in constant time. See e.g. https://vitalik.ca/general/2021/11/05/halo.html
I think the ideal blockchain should offer constant time historical verification in addition to rather than as replacement of verifying the tx history. That also makes it robust against possible bugs in the design and implementation of the rather complex IVC technology.
Even if IVC is the only way to verify the full history, then it could still be limited to older history, e.g. up to a week or month ago. That would give you some time to investigate recent hiccups.
So when the next $625-million exploit happens [1] the hackers would just need to wait a year before any trace of them disappears? Awesome
I'm talking about the data availability requirement that the protocol imposes on nodes if they want to remain connected to the swarm. I'm not sure what you're talking about - data doesn't magically get deleted from the internet with "no trace".
This is what you said, emphasis mine: "Bitcoin make the silly argument that ... a full history of all transactions needs to be maximally available on the network. Other chains either drop, or plan to drop data that's been on the network for over a year or so".
I'm reading exactly what you wrote. I don't know, may be the meaning of words in crypto world is "wrong".
It's that spectrum between 0-of-N and consensus-enforced N-of-N that you don't seem to grasp.
I'll say it again, once a piece of data is no longer maintained by all N-of-N participants in a blockchain as a matter of its consensus protocol, that doesn't mean that the data gets automatically deleted from the internet and from everyone's hard drives. On the contrary, there are many reasons why particular actors would want to retain that data, one of which is the very thing we are discussing - to keep a transaction history in case old transactions need to be audited for potential criminal prosecution of $625-million exploits.
> Other chains either drop, or plan to drop data that's been on the network for over a year or so
Yes, the chains, i.e. the actors that are keeping the minimal amount of data to continue to participate in the protocol, drop that data. That doesn't mean the data disappears from the internet. Instead, data availability is likely to remain incentivized within dedicated sub-protocols. That's not to mention the numerous private entities that will have their own external incentives to retain that data. Quote from Vitalik:
> Older blocks, transactions and receipts/logs would still be accessible through dedicated sub-protocols (eg. the Portal Network) or externally developed protocols (eg. TheGraph), in addition to a much smaller but still sufficient number of volunteer nodes and block explorers. Note that many dapps are already moving their historical data queries to TheGraph and similar protocols for efficiency.
> https://www.reddit.com/r/ethereum/comments/qzvsfq/impromptu_...
> data availability is likely to remain incentivized within dedicated sub-protocols
> private entities that will have their own external incentives to retain that data
A lot of wishful thinking which is presented as fact. Someone somewhere might still retain all that data because someone somewhere might have some incentives, and hopefully someone might still retain that data.
Whereas the reality is this: history will be purged. There are zero guarantees for availability of any historical data after the purge.
Additionally, the linked reddit thread is hilarious. "State expiry is so important for decentralisation, so we're proposing a solution where actual history and state is stored on a few centralised nodes, maybe". And there are literally no answers to the question "what happens to historical data" except "well maybe there will be altruism and maybe there will be incentives to store data in some protocols, oh and this centralised service infura surely will want to store the data, trust us it will never disappear".
Yeah, right.
If you really care that much for some reason, store it too. Law enforcement will.
Literally in my first comment that you keep responding to with handwavy things like "surely someone somewhere will store it perhaps maybe we don't know but you just have to believe"
I'm blindly guessing. You didn't actually say in your first comment why you care about having a copy of all historical data. Unless you're implying that in over a year you may need that data to personally mete out vigilante justice to the Axie hacker or something.
We could make them one and the same thing with a stroke of legislative pen. Just because current laws do not manage X new thing correctly, we should not conclude X new thing is terrible.
That's not true everywhere. I live in Argentina and people prefer to have dollars in cash in their houses rather than leaving them in a bank. A few years ago, in 2001, the government took the dollars from the banks and gave them pesos for a lower value. Most banks went broke and people lost their savings and the ones that didn't, gave pesos to people making them lose 75% of their savings. I know similar things happened in other countries too.
Crypto kind of solves that issue. I know some people who prefer to save in DAIs than keep dollars in the bank.
But of course anyone that has interacted with crypto currencies, or more importantly the exchanges knows that's not really true. Mostly it's a very efficient means of taking money from the poor and diverting it to the rich. I think jackson palmer of dogecoin called it hypercapitalistic.
Anything that is designed to be deflationary, like Bitcoin, is inherently going to increase income inequality and harm the poor to the benefit of the rich.
>>Not something cryptocurrencies have claimed they can solve.
I agree to an extent, but the problem is crypto has this massive culture of “we don’t need to solve it because no gods, no masters.” For them it’s a feature to protect, and they are far from a small minority in the crypto space.
They were crying over HN when Stripe jumped in for crypto payments due to regulatory clarity and they are crying over it again because it still hasn't died faster than they expected to.
The simple reality is, it isn't going away; even after regulations.
I challenge them to continue to ignore it, as we all know it will collapse real soon. /s
Did you read the part after that? It sounds like they might use crypto for other purposes, and that they hope the useful things about it come to overshadow the way it's largely used today.
Uh, what now? They actually do a worse job than traditional finance. What happens if I pay for something with a credit card and the vendor fails to deliver? Why I dispute the transaction and get my money back. It's less important that I have absolute trust in the vendor, because I have fall back mechanisms. Cryptocurrencies are deliberately designed so that can't happen.
The only "trust" problem cryptocurrencies solved was keeping track of stuff like account balances in a distributed ledger, but that's purely a problem created by the ideological choice of a distributed ledger.
You are paying 2% - 5% premium on the price for this insurance that a credit card company providers. This is what the merchant gets charged in transaction fees and flat fees to get access to Visa/Mastercard network. There are many cases when you do not want to have insurance benefits of credit cardand you would simply take 2% cheaper price. However, with the current consumer payment rails (credit/debit) this is in practice impossible. (Granted some large enterprises like Amazon get charged less, but economics of scale, combined with the business practices, of Amazon have been found to be harmful for ecommerce ecosystem as a whole.)
I think it is ok to let the free market to pick the winner. Cryptocurrency might not be an ideal solution for all problems, but it might be still a good solution especially in developing countries where banking system is expensive, inefficient and corrupt. Let the option be available for others even if you do not use or believe in it yourself.
> Can you cite any source for this?
It's common knowledge.
https://ycharts.com/indicators/bitcoin_average_transaction_f...
https://ycharts.com/indicators/ethereum_average_transaction_...
- Fee is less than 10c, less then a debit card
- USDC is backed by US Treasury notes, making it more solid than deposit in a bank
- There is no volatility risk of the cryptocurrency
- USDC follows US court orders for crime and money laundering cases
As always with cryptocurrencies, "you're using the wrong cryptocurrency" as if the absolutely dominant ones, Bitcoin and Ethereum don't exist and aren't much more likely to be used than whatever the darling du jour is.
> USDC is backed by US Treasury notes, making it more solid than deposit in a bank
They are "backed" as much as Tether is "backed". To quote, "Circle claims that each USDC is backed by a dollar held in reserve, or by other 'approved investments', though these are not detailed. The wording on the Circle website changed from the previous 'backed by US dollars' to 'backed by fully reserved assets' by June 2021".
> Segregated accounts are defined by the Company as unencumbered accounts of the Company which are eligible to fulfill the Company’s obligations under the statutes and regulations applicable to the Company as a money transmitter licensed in various US states and territories. Such accounts are held at US regulated financial institutions, limited to cash and short-dated U.S. government obligations, and are segregated from other accounts of the Company, including general corporate funds.
So the assets backing are cash and treasury notes.
I am not saying Circle is not lying, but them lying this close to IPO is very unlikely, so you are very likely incorrect.
Seems to me the market is calling for regulation, because it’s a huge barrier to adoption. Ask any skeptic (who doesn’t have a moral issue with it such as environmental impact) and 9 times out of 10 they go “it feels like a scam” or “I don’t want someone to hack my money.”
People like to gripe about regulation, but we also find a little security in it. It often makes us feel safe at the end of the day - and when it comes money, that’s a cornerstone feature that needs be present.
You mean:
"I think it is ok for a _regulated_ free market to pick the winner."
An unregulated free market has scams we're seeing today.
You are comparing crypto to a service that a third party provides on top of fiat. It's not a fair comparison as there is nothing stopping third parties providing the same service on top of crypto (and the third party does not necessary need human intervention to function when both parties act in good faith).
The more accurate comparison is: "What happens if I pay for a service or good upfront with cash, and get stiffed?"
Answer: If you know who they are, you take them to court and use the existing legal infrastructure. If you don't know who they are or it's too low value to be worth fighting, you leave them a bad review and share your bad experience with others to help them avoid the same.
>The only "trust" problem cryptocurrencies solved was keeping track of stuff like account balances in a distributed ledger, but that's purely a problem created by the ideological choice of a distributed ledger.
Keeping track of balances is a tough problem that did not (and still doesn't) have a good solution for after many decades of operation. Transfers between banks take days to settle (and weeks to finalize), same for payments between users and businesses.
Was it feasible to solve keeping track of balances between semi-trustworthy actors on a faster scale and without DLTs (Distributed Ledger Technologies)? Sure... but it has not eventuated and there was no sign it ever would. The telling sign for me is that many financial institutions are looking at, developing or rolling out their own implementations based on the demonstrated principles in crypto. That's good news, but I guess doesn't count for anything for some reason?
You're missing the point: the GGP said "cryptocurrencies solve the issue of trust" but they clearly haven't in any practical sense.
It also a fair comparison, because I don't share the ideological obsessions that motivate cryptocurrency, nor have I made a speculative bet on it where I feel the compulsion to shill for it to save my own skin. As a practical matter, cryptocurrency is stupid and compares poorly to non-cryptocurrency alternatives in nearly all use caseses. It may make sense in some unusual ridiculously contrived use case, but that proves my point.
> Keeping track of balances is a tough problem that did not (and still doesn't) have a good solution for after many decades of operation.
That's not true: it has a sufficiently good solution that nearly the entire economy runs off of it. Meanwhile, the supposed "better" solutions are less scalable and use more electricity than Argentina to perform operations that a typical desktop PC is powerful enough to do.
It's a naive view, but a common one. It deserves the counter-argument it's getting.
Cryptocurrencies have never claimed anything - and never will.
Proponents of cryptocurrencies, however, have claimed an impressively large number of things - often contradictory.
I would argue it's closer to the opposite. Cryptocurrency solves the question, "How do you operate a shared ledger in the absence of trust?"
I, sitting in my cushy home in the USA, with my cushy American, NCUA-insured accounts at a fiscally conservative credit union, don't have that problem. I get to benefit from a regulatory environment that has done a quite good job of directly solving the problem of trust for the vast majority of its participants, so that we don't need expensive, complex trustless cryptographic ledgers to manage our electronic assets.
It is fair to say that for building a startup, crypto adds additional risk due to the issues they say. It isn't about if those can be overcome, but rather if it is wise for that group of people to approach it for the problem they are solving.
Until you found a way to pay for everything in crypto, you have to deal with centralized exchanges to get fiat to pay your stuff.
Playing in fiat requires you to convert from a crypto token and that is a taxable event.
It's a bit like shooting stuff into space. Getting out of earth's gravity is the hardest part, even if it's just a small fraction of the way.
You need to create a circular economy where people pay and get paid in cryptocurrency, like you have within a nation state with their home currency. The creation of that circular economy without a monopoly on violence that forces everyone to converge on a single one is something that will happen in fits and starts.
And of course, you still need policy change to treat the cryptocurrency as legal tender so people don't have to stress about capital gains implications with each and every transaction they do, and get fucked if they ever lose their accounting history and get audited.
It will be interesting to see how things develop in El Salvador now that they have legally enabled this circular economy to develop with bitcoin, and spending is not a taxable event.
I'm excited for the next steps of stable coins.
People always ask "What if Tether isn't 100% backed by Dollar?!"
The more interesting question is "What if the Dollar is shit?!"
"...do...do you not know how the actual dollar works..."
https://www.federalreserve.gov/aboutthefed/audited-annual-fi...
- state monopoly on violence
and
- one of the world's largest economies
Tether is backed up by?
The first country that starts pricing its oil exports in bitcoin will a) cause the price to initially skyrocket, and b) create a stabilizing force on the price that percolates to all other goods and services.
And the interesting thing, is that because bitcoin is energy money, there is a very direct and explicit correlation to the amount of bitcoin you can earn from using your energy to mine, which can then allow an exporter to trivially calculate the price they are willing to sell their energy for (slightly more than they can net from mining).
The dollar is the stable global reserve currency largely because the US has used its military might to violently coerce oil exporters to price their oil in dollars. Once that happens peacefully with bitcoin, the US dollar will regress back to a local currency used to control its own population and bitcoin will be the fair, global reserve asset used for international trade.
b) China, while increasingly powerful, is not the whole world. If the rest of the world decides that bitcoin is the only viable fair global reserve currency that doesn't disproportionately benefit some global empire, then they'll eventually be forced to come along for the ride, and will be hurt from their decision to take themselves out of the game in the early days.
If it happened for those metals, why do you think it's so unbelievable that it can happen for a superior form of digital gold?
Until we came up with better ways to provide payment for goods and services.
Your description of the petrodollar is borderline conspiratorial as well. And even within your reasoning, the US Navy will beat ASIC mining machines 100% of the time. How could it happen "peacefully" ?
This is only because mining ASICs have rapidly developed towards state of the art chip fabrication, making each generation a huge jump in hashes per watt efficiency. Now that state of the art mining chips are 5nm, the regular obsoleting of old chips is likely to drastically slow down and you'll be able to make profit from old machines for a much longer time if you treat them well.
> electricity transfer is not free, so large scale centralized bitcoin mining will require additional power generation facility
This is a very odd statement. One of the magical things about bitcoin mining as an electricity consumer is that it is one of the most modular and delocalized customers of electricity ever created in human civilization. You can drop small pods of miners right next to every electricity producer on the planet with a satellite connection. Some miners are deploying these small units to oil extractors to use their flared natural gas, which then allows oil producers to a) generate income on wasted gas when it's not economical to transport via pipes or liquefied natural gas and b) burn the nat gas more efficiently than flaring, which reduces global methane emissions (a GHG 100x more potent than CO2 that eventually degrades in to long lasting CO2).
Moreover, bitcoin miners will soon be deployed to new electricity producers to help them start generating money before transmission lines and grid capacity are funded and built out. I and many others think this is why bitcoin will soon become the tip of the spear in accelerating energy buildout.
> the US Navy will beat ASIC mining machines 100% of the time. How could it happen "peacefully"
The US military is not obviously an enemy of bitcoin, and may actually turn into a strong supporter. https://www.businessinsider.com/bitcoin-btc-national-securit...
archive link, https://archive.ph/wfesI
This is mostly nonsense. Energy provides a consistent price floor for mining Bitcoin. That has little relevance to its traded price. If energy prices triple, that doesn't mean Bitcoin prices have to triple as well. It just makes mining at lower prices unprofitable. If nobody wants to buy Bitcoins at the breakeven price, mining just stops--it doesn't magic demand into existence.
And in the future flipped world I'm talking about, where in order to buy energy you need to have bitcoin, there is no "buying" bitcoin. Bitcoin is the primary money that you need to have to buy energy. And if you don't have it, then energy producers use their energy to mine it.
At that point, it ceases to be a speculative asset and becomes the key unit of account for civilization that doesn't depend on the enforcement of the monopoly on violence.
So when you say "bitcoin is energy money," that's a tautology. It's energy money if oil is priced in bitcoin.
> that doesn't depend on the enforcement of the monopoly on violence
Violence relieves someone of their Bitcoin keys just as easily as it does their dollars or gold. (At the very least, you can permanently sequester them.)
Wrong. It is significantly more complicated to use violence to steal bitcoin from people than it is to use violence to steal dollars or gold. With bitcoin, I need to coerce you to give it to me. That could mean torture, sure, but do exist multisig key structures that make it impossible to steal bitcoin by coercing a single person.
On the other hand, if I want your gold, I just shoot you in the head and spend however long it takes to rummage through you house to find where you stashed it. I don't need to coerce your mind to give it to me.
This might seem like a small difference, but it's a hugely important one. It completely changes the economic calculation for the use of violence. Violence is a risky endeavor for any perpetrator and only continues if the economic rewards of engaging in violence outweigh the risks. Bitcoin increases the cost, which necessarily should decrease the incidence.
What if mom says no internet heroin this month and won't sign that transaction? Or refuses to sign any transaction at all?
If you monetarily reward terrorism and torture, you can expect it to continue happening over and over again, because it's economically viable.
I'm not going to point to them. But there are numerous videos where, at the end of a coup, the deposed executive is held at gunpoint while the incoming regime demands account numbers at the America, Swiss, et cetera banks where the money is held.
Swapping that to a crypto wallet just makes the extortion instantly verifiable and irrevocable. It's decreasing the cost of violent seizure.
Bitcoin isn't energy anything. The energy required to print bitcoins has been expended in the process of printing the bitcoins.
Distribution of new coins and transactions fees are simply the reward for that service.
It certainly is.
Everything worth doing costs energy.
Who are you to tell us it's not? Are you going to kill us to stop us from using energy in this way?
When you start talking about policing how people use energy, you start down a very dark path.
Circular economy.
Year after year for the 13 years of bitcoin's existence, people have been saying ABC will never happen, and then it happens. You're worshiping a god of the gaps that gets smaller and smaller with each passing year, while bitcoin only grows stronger.
You could still be right, and finally after years of defying the haters, bitcoin is on the verge of collapse and its growth and integration into civilization will halt. Historical performance is no guarantee of future results and all that.
But maybe it's just getting started.
IOW, "BTC printer goes brrr"
https://www.bitcoinblockhalf.com/
https://github.com/bitcoin/bitcoin/blob/7c08d81e119570792648...
What matters more is acceptance as a method of savings.
It's not a technical problem, it's about human behavior
When is a permissioned system better than a permissionless? (and the opposite)
The volatility is what I like the least. Like one day realizing that the Wendy's hamburger I had for dinner was well timed, because a few hours later Bitcoin's value dropped.
In El Salvador we've had an stable currency for decades, the USD since 2001 and a stable Colón since the 1990s.
Exchange rates is something that most millennial and gen z's have never had to worry about in El Salvador. As our wages, many of our imports and exports are prices in USD.
Compare this to other countries like Argentina, Venezuela, Turkey or Lebanon where the exchange rate is daily news. Or like Nicaragua and Costa Rica where prices and payments can be made in both USD and their local unpegged currencies.
There are only a few currencies whose value ocassionaly increase compared to the dollar. Sometimes it's the Swiss Frank, the Guatemalan Quetzal or Euro. From this ones, the Quetzal exchange rate is perhaps the only one that could affect El Salvador the most as fruits and vegetables are sometimes priced/paid by importers in Guatemalan Quetzales.
I'm not Salvadorian, so it's obviously not my place to say what you should do. But I don't see being a second class nation state, in implicit subjugation to the currently dominant global superpower to be a terribly stable state to be in for the long view of human civilization.
But then again, that's one of the more insidious effects of bad currency. It forces people into short term thinking because the value of their savings bleeds away so quickly in time. Those people who don't subscribe to storing their money in weak currencies tend to take a longer term perspective on life.
The nations of Central America have the same options as were available to the nations of Europe. All of Central America and the northern parts of South America were unified under a single government back in 1820. They decided to break apart into many small, weak nations, due to the selfish interests of the different types of agricultural interests being pursued in each area. But they could borrow ideas from the EU. They could reunify. If the whole region was under a single government, they would have much more room to push back against the dominance of the USA. But by itself, El Salvador is always going to have its life shaped by the USA. There is no monetary policy that will change that.
We've had some advances in integration. Many of them in the early 2000s when most of the Central American governments were at the moment right wing.
Unfortunately the left/right wing divide slowed down many integration attempts.
> But they could borrow ideas from the EU. They couuld reunify.
We've tried to do some of them, with the SICA (our EU equivalent) with varying degrees of success or failure.
Some of the successful ones are having our electricity grid interconnected, and the uniform customs regulation for Central America.
Some of them have great potential but are not widely used or promoted, like SIPA, the regional interbank payments that could be like the EU's SEPA but is not widely known, as even if banks use them internally, they still charge SWIFT prices to the end customers.
Others like the CA4, our Schengen free-movement-like-agreement, have been reinterpreted so many times that the spirit of the agreement is now only a fraction of what it originally was.
Then we have some private initiatives like Claro's popular free voice and data roaming in all Central America except Belize.
Others used to be great, but have been limited in the past year due to excessive regulations, like some private banking groups Central Ameican banking services, which used to offer easy and affordable inter country bank transfers but now they are very limited and expensive.
Some we lack completely, like the easier mobility between countries that EU citizens have. Even now, moving countries between Central America without family ties is expensive, difficult or even next to impossible.
El Salvador is linked to the United States in many ways.
Currency is only one, but also 20% of our population lives in the U.S, 24% of our GDP comes from remittances from mainly the U.S., 42% of our imports and 34% of our exports, the second largest city by Salvadoran population is Los Angeles California, most of our airports flights are to the U.S, most of our internet is routed in Miami.
Using other currency than the USD would make every transaction and remmitance a little bit more expensive due to the exchange rate margin.
I'm also aware of the recent inflation in the U.S, which we can't really do much about.
In a longer term though, in the past 20 years, the USD has been a more stable currency than any other Latin American currency except perhaps the neighboring country's Guatemalan Quetzal (GTQ).[1]
We also have lower loan interest rates than neighboring countries, and can apply to longer term mortgages.
[1] There are other exceptions like the Belize Dollar and Panama Balboa which are pegged to USD. Or French Guyana which uses EUR.
"At Wave, though, we prefer to use boring technology, and a simple relational database like Postgres does an equally good job at this."
How does Wave ensure multi-region durability for Postgres, high availability, and strict serializability during failover, without risk of split-brain in the presence of network partitions?
I'm also interested in Wave's storage fault model with regards to Postgres? How are misdirected reads/writes, lost reads/writes, corruption in the middle of the WAL, and corruption at the end of the WAL handled? To ensure that account balances and transactions are never lost? As far as I understand, Postgres does not provide too many guarantees when it comes to interesting disk failures?
I don't mean to advocate for cryptocurrency in any way.
I'm genuinely curious, because I would have thought that a more modern distributed database that guarantees strict serializability in the face of network partitions would be the more obvious choice for tracking account balances safely?
Why is this important? Why can't they get by with a traditional main server plus some backups with a sync, plus failover when the main server goes down? It seems to me that all of your questions are issues that have been often discussed over the last 20 years, and they all have well known answers, except perhaps "multi-region durability". Leave that out, and you've well known answers for your other questions. And it seems to me, what they are saying is that they found it easier to go with a boring and traditional setup, that is, a boring and traditional setup is easier than any other setup.
Because without multi-region or multi-AZ durability, Wave could lose balances. For example, in the event of a DC fire.
"Why can't they get by with a traditional main server plus some backups with a sync"
Because without distributed strict serializability, Wave would also be risking the loss of data back to the last backup.
However, I'm assuming here that Wave are running consensus around Postgres. That they're not taking any of these chances.
But if they're doing it right, then Postgres just doesn't seem like the most boring way to get distributed failover safely, especially when the data is as valuable as account balances, where so much compliance is at stake. Why not simply use a distributed database to begin with?
> Because without distributed strict serializability
Depends what you mean by "distributed". A simple 2-phase commit would do it. Or hell, just a write-ahead log on the application layer.
> Postgres just doesn't seem like the best way to get distributed failover safely
That may be so. But are you arguing in favour of blockchain? When was the last time a real bank forgot your bank balance? They never used blockchains for this.
No, please see my original comment, where I made this clear: "I don't mean to advocate for cryptocurrency in any way."
By "modern distributed database", I don't mean blockchain. I just mean "modern distributed database", e.g. things like FoundationDB, Spanner, Aurora or CockroachDB.
"A simple 2-phase commit would do it. Or hell, just a write-ahead log on the application layer."
Of course, and that leads into my second question, also in my original comment:
How are storage faults in the middle of the committed WAL handled? Or is the rest of the committed WAL simply discarded, conflated with a torn write from a system crash?
These questions are important when it comes to storing balances safely. Banks can use all kinds of techniques for defense-in-depth (not to suggest they do), they're not limited to Postgres. But a distributed database is a good thing these days, no?
I'm also excited about the modern distributed databases. They're pretty awesome.
But yeah, a HN comment is not the right place to design a resilient DB setup. Like I said it's not terra incognita, but it's also not just "spin up a postgres".
Awesome!
"HN comment is not the right place to design a resilient DB setup."
Why not?
In my experience, HN is always the place to talk about building stuff, running stuff, and how to do that better. :)
The gist of my reply yesterday was "depends on requirements, and even they will be huge. And if we just design from made up requirements that's a lot of work to produce a design that nobody will use".
https://www.wcjb.com/2020/08/05/bank-of-america-glitch-accou...
Would you also class going to pay for something and not being able to because the payment network is down as "forgetting your bank balance"? Because those happen even more frequently; the cause being the POS terminal not being able to check your balance, so naievely defaulting it to $0 and giving an error about the network not being available.
But I agree it's definitely a thing that can prevent you accomplishing the thing you want to do with your money, during the outage.
But if we're talking "outage" then bitcoin fees going over $25 is probably also fair to classify as an outage as a currency. And that happens too.
CC payments and bank transfers are also way faster than bitcoin, even when bitcoin isn't having an outage. In the US bank transfers are slow, for some reason, but in Europe they're not.
But of course your are talking about banks because you are missing the point of the exercise.
You just said 2017. I said 2021. And there's also at least 2018.
> You will find that
I will not find that, because i told you what my experience is.
> Illusion
Illusion or not, it's real. /s
> Missing the point of the exercise
The point being lying and contradicting ir sequential sentences to pump a pyramid scheme.
Cryptocurrency on is not fit for any of the stated purposes, and HN will ban us both if we continue, so i bid you good day.
>Having an outage is not the same as forgetting your bank balance
I wouldn't class a high fee as an outage. If your transaction was important enough that it warranted being settled immediately and at a higher priority than every other transaction during peak rush, then a higher fee might be a pretty good trade-off. Keep in mind that the banks do not offer this feature, so in their case your transaction would simply not go through giving you no choice in the matter.
But also there have been hours-long transaction times.
I wouldn't say that banks "lose your balance" at all. It's a failure in availability.
If the bank fails or does the extremely common cryptocurrency thing of "rugpull" then you still have your money because FDIC.
You say "immediately", but i regularly do inter-bank transfers that go through faster than any Bitcoin transaction can go through, no matter what transaction fee offered. And that's not even talking about CC payments, which are done in milliseconds.
The thing about that is that end users don't care, not even a little bit. It's about as interesting as whether the banks runs Linux, BSD, or OS/400.
The service provided is immediate. I don't care if the two banks need to ship physical checks around on the backend.
> the same could be offered by third parties working on top of the Bitcoin blockchain.
But that defeats the whole point of the bitcoin blockchain.
It does not defeat the point of traditional banking.
I think you are making a bunch of assumptions that you haven't written down, so it is hard for me to guess what your assumptions are. In the boring, normal, standard setup that people have been using Postgres for in the last 20 years, data does not get lost so long as you have a main server and a sufficient number of backups running in sync, possibly at some distance. A question like "How not to lose data when your main server is destroyed by a fire" is an old question that database engineers have been working on for 40 years, and for which there are many good answers.
But I think you're imagining some kind of automatic link between the distributed nature of the blockchain leading to a distributed Postgres. But you would need to write out what your assumptions actually are before I could respond to them.
I think the assumption here is that I'm advocating blockchain, which I'm definitely not. Please see my original comment.
"Single master, replicated to another region."
Why do you recommend against using a modern distributed database?
Is it that hard to spin up something like CockroachDB? In fact, it wouldn't surprise me that Wave are running CockroachDB as their Postgres foundation under the hood.
Call me maybe. This is a newer technology and the growing pains have been dramatic. I assume you've followed Jespen?
I use MongoDB all the time, for a lot of projects. But I'm also keenly aware of how many years they have struggled to pass the Jespen tests. I can also recall several times engineers from MongoDB have said "We have finally resolved all of the issues raised by Jespen" and then another bug was discovered.
Again, I use MongoDB all the time. But I'm aware it is simpler and safer to use Postgres, for many, many use cases.
Yes!
You might also want to check out autonomous deterministic testing, which is like Jepsen, but where you can explore many more state spaces by speeding up time, and where you can replay any distributed bugs instantly, just by replaying a seed.
This is a brilliant talk on these techniques:
FoundationDB — How I Learned to Stop Worrying and Trust the Database — https://www.youtube.com/watch?v=OJb8A6h9jQQ
I also work on a distributed database called TigerBeetle [1] where we use these new techniques. You can run our simulation tests yourself even. It's as simple as cloning the repo and running "scripts/vopr.sh", and let me know if you want a tour!
These testing techniques work so well that we've been running a bug bounty challenge with awards up to $8192 for anyone who can find a way to break it or crash it. It comes with the simulation testing all included so it's pretty easy to get started. [2]
[1] https://github.com/coilhq/tigerbeetle
[2] https://github.com/coilhq/viewstamped-replication-made-famou...
That gives me confidence.
[1] https://github.com/mongodb/mongo/wiki/Testing-MongoDB-with-A...
I tried creating this culture of blogging but failed, would love to hear strategies that worked to achieve this.
This is either the most or second most discussed problem in the cryptocurrency space.
There's a territory. There was digital land-grab on this territory. A tiny number of people bought all the available digital-land. Now everybody else needs to buy the land from them. At extortionate prices.
The good news? It's easy to create another territory. It's easy to create an infinite number of territories.
Aside 1: as big of a joke the original dotcom boom was, it looks serious compared to web3's $200,0000 floor price jpeg apes.
Aside 2: I read this week about a couple of people losing their jpeg apes because they connected their wallet to some scam site. I thought web3 was supposed to be smarter than "connecting one's wallet to a non-scam site in a way that allows the non-scam site to scam you if they wanted." Is this the best they can do? I was told we'd be connecting our wallets to everything in the future.
Sounds just like the VC land-grab when investing in a hot new tech startup, and the subsequent dumping on the public at ICO.
But just like with stocks, nobody "needs" to buy crypto. If a company produces something useful to you, you can capture value as a customer without owning the stock. If a company ever uses blockchain technology to produce something useful to you, at that point you will be able to capture value as a customer without owning crypto.
> The good news? It's easy to create another territory. It's easy to create an infinite number of territories.
It's easy to create an infinite number of companies, but not all company stocks trade at the same value.
Wave is welcome to tilt at windmills, but they should also recognize that this kind of posturing deserves any pillorying it may get.
But just to be clear, in case others have not heard: It's definitely being sold as financial inclusion.
But yes, you are right there is a competitive pressure/force at work here.
But that's with fiat, so…
They're also instant (seconds, maybe single digit minutes between banks), but that's because I'm in Europe.
You are missing what cryptocurrency is about. No banks. No middle man. No censorship. No do-overs. Personal responsibility for wealth. When a person says “but I can do x with bank” they have missed the entire point of the exercise.
So does your answer stay the same with the above scenario?
Yes, my answers does not change, and we will fight to ensure such a future never occurs.
what you have is a financial privilege that you are not aware of.
I already said that I'm aware of being in Europe.
The project you mentioned is interesting, but I see it as something much more for the middle and upper classes. I know plenty of crypto enthusiast in those circles.
I tried Buda, which is mentioned in the article as partner. It has been the most tedious experience with a "financial" product I had in my whole life.
Never mind that it costs $50 worth in fees to send a penny on Ethereum, and I need to convert my money to casino tokens on some scammy exchange first.
With crypto, the blockchain is just the infrastructure and no one can stop me from using my money.
Sometimes I wonder if people defending this kind of financial services are actually users. Doesn't seem so.
Transaction processors on blockchains are not infrastructure, they are businesses and they can absolutely choose to not process your transactions.
Do you exclude all the fiat currency backed resources sent to help Ukraine?
Do you also exclude the crypto workarounds to sanctions on Russia that can keep the war prolonged?
The Dutch raised more than $100m which is still more than the crypto total
> “It’s certainly a first,” said Bennett Tomlin, who investigates cryptocurrency scams and hosts the podcast Crypto Critic’s Corner. “We’ve never seen a sovereign nation fund their defense efforts in crypto before. It does prove out a lot of the crypto argument.”
Just to compare about $400,000,000 had been given via normal means by March 12th[1]. Sure every bit helps, but we're still talking different orders of magnitude.
[1 ]https://bank.gov.ua/en/news/all/na-pidtrimku-armiyi-ta-guman...
What are they doing with all the crypto? Did they convert it to fiat? Is it just sitting there?
The only reason so many cryptos were sent is because there a lot of people who don't know what to do with their cryptos, they can't use it for anything and liquidating large amounts of crypto is a pain in the ass.
I'm also assuming those donors will try to write off their crypto at imaginary prices and hope the IRS doesn't notice.
No. Crypto sent a bunch of meaningless novelty coins to a country that has no chance in hell of converting them into food, water, transportation etc.
How many exchanges will actually be able to cash out that amount of money?
https://etherscan.io/address/0x165CD37b4C644C2921454429E7F93...
That amount of money is easy to cash out even on a relatively small exchange.
For a system that claims to "have all data on the chain" it sure seems to be hard to trace the money.
> looks like they cashed out the equivalent of at least mid-7-figures USD. That amount of money is easy to cash out even on a relatively small exchange.
I've seen a few transfers out to USDT. And then some transfers to Kuna.io which is an offshore company registered in British Virgin Islands. Ah, truly "any exchange". It looks more like someone decided to profit off these donations.
What I linked you was a raw trace of the money. It includes all transactions to and from the address, with the amounts of each transaction shown, and with the exchange addresses labeled.
If you don't want to pore through their account history manually, write a script. The API is free.
> It looks more like someone decided to profit off these donations.
We could be looking at a criminal who stole the donated funds and is currently laundering them. Or, we could be looking at a government legally exchanging their foreign donations into their native currency.
Personally, I find that insinuation absurd. Do you really think we just witnessed a 7-figure heist from the Ukrainian government in plain view, and nobody is reporting on it?
Oh sweet summer child. "A criminal who stole from the government, a heist from the Ukrainian government".
How about: someone in the government found a way to profit during the war using tools that are largely unknown to the public, and where "plain sight" is "write a script, the API is free"?