The crypto-skeptics’ voices are getting louder
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Outside of criminal activity (including "positive" criminal activity like evading the capital controls of authoritarian regimes), there's not much to recommend cryptocurrency as a currency. Bitcoin maximum throughout is several orders of magnitude too small to support meaningful use, and transaction fees on popular chains are punishingly high. I personally like to use payment instruments that can be clawed back in the case of fraud (like credit cards) for large purchases, so I can't really understand the appeal of an irreversible payment instrument for routine use.
I’m not sure if you’ve ever heard of the “lightning network” but it uses some really clever cryptography which allows people to send/recv Bitcoin almost instantly, with finalized settlement done on-chain as a normal transaction when the payment channel closes https://en.m.wikipedia.org/wiki/Lightning_Network
The other thing about payment finality is that thanks to blockchains with smart contracts (so not really on Bitcoin) things like escrow become pretty simple to conduct. You can write programs to enforce exactly how an exchange should work (“only release payment after proof has been posted to the chain”), and both parties can have confidence that no one is getting taken advantage of because they’ve agreed to immutable rules beforehand - to me that’s a super powerful primitive to build neat stuff with.
There is some truth to this argument. Stock prices can diverge wildly from fundamentals, and I can understand how people can look at various stocks and throw their hands up in the air.
At the same time, I think this argument misses the point somewhat. Which is that it is the shared part of "shared fiction" that matters. What convinces millions upon millions upon millions of people that dollars should be used is the fact that everyone else is also convinced; not that the exact price of, say, a chair, is somewhat arbitrary.
The flip side is that unfortunately the stability of the USD is in the hands of politicians and other stewards of the country, which is an immense power to wield, and highly susceptible to corruption and misaligned incentives.
The idea behind cryptocurrencies like Bitcoin is that the code and protocol are simply open source computer code. China can’t arbitrarily decide that they have more bitcoins than they actually have, even if they dedicate an enormous amount of power and influence to try to do so. It provides a tool by which people can transfer value even with hostile adversaries. There’s also a fixed supply that will ever exist, and while deflationary money clearly has issues when it’s the only currency used, as a counterbalance to politically-driven inflationary money it seems like a useful hedge, even more so than gold (we have estimations for how much gold exists but we can’t ever say with certainty - but you can search literally the entire galaxy for more bitcoins and you won’t find them).
Sure, criticism schimisicm. Proof is in the pudding.
That's exactly what I said. The pudding was a crash. It proved that cryptocurrencies are speculative assets without intrinsic value and that they aren't a hedge against any other speculative assets or fiat currency (in contrast to, for example, gold).
Clearly Tesla and Netflix were speculative assets without intrinsic value too by that logic.
That's true. Crypto has zero value because it has no utility. It's like a Pokemon card: it only has value if people have assigned value to it. You can't make anything with it, and it doesn't give you any legal right to a future cash flow (like a stock or a promissory note does).
Let me predict your response: "The same is true of fiat!"
Yes, true. Fiat currency can also drop to $0 in value, of course. But no one is pretending otherwise, and fiat currency is heavily manipulated by central banks to avoid large peaks and valleys (which works in some countries and not in others).
The problem with crypto is not that it's imaginary money. It's that its supporters pretend otherwise.
So is that why Stripe, Moneygram, Skiff, Namecheap, TransferGo, Porkbun, FIDE World Chess, etc are still using cryptocurrencies or blockchain? Maybe they chose the ones that are useful and ignored the low effort scam tokens?
I don't think very absolute statements work well these days.
There are blockchains that exist to provide utility by enabling execution of decentralized applications. Not all blockchains are focused on just payments. You may think that decentralized applications don’t provide utility, but that would be a personal view, not an objective fact.
Decentralization is also possible and functions better with tokens (e.g. Bittorrent).
People only talk about DeFi now, and dApps may have rebranded as Web3.
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Moreover total crypto market cap still high 12 figures so I fail to see how that proves your point?
Absolutely, totally wrong. Let's look at some of the most common assets.
- Houses:
> your previously valuable house could actually be worthless due to a structural defect
Wrong. If you buy a new house, you likely have a builder's warranty. If you buy an existing house, you get an inspection. Unless the house is very inexpensive and the inspector is totally incompetent, you're not going to find something that costs more to fix than the house itself cost you.
But even if you did and the house could no longer be occupied, you'd still be able to sell the land and salvage building materials from the house.
Your house can't suddenly be worth $0 because of the collapse of a speculative market. You can be underwater, but if the house can be lived in or the land can be used, it has value.
- Cars: Can be sold for parts or scrap.
- Stocks: Legally entitle you to profits of a company, which is only worth $0 if the company has been involved in major fraud or you bought the stock of a company that was insolvent already. Definitely possible, but easy to avoid. Microsoft is not suddenly going to blow up, for example.
- Govt bonds: Possible to become valueless, but usually backed up by something in a developed country (like bankruptcy laws). If a credit-worthy country like the US has bonds that suddenly become worthless, society is probably otherwise collapsing and you have other problems.
- Gold/silver/diamonds: Can't become valueless because they have industrial uses.
- Index funds: Would, again, require a societal collapse to lose all their value.
If I own Meta stock, how do I get my share of their profits? They don’t pay dividends.
That doesn’t provide any real justification for stocks having value.
Many of the pro-crypto crowd have their investments tied in and believe that it will takeover the current system and some of the anti-crypto crowd are at companies that directly compete against cryptocurrencies [0] and hide and obscure that fact in the discussion and will only 'debate' with people who either agree with them or with those who are new to it all and believe that all cryptocurrencies will be wiped out 100% guaranteed.
The first clue is that both of them are incorrect.
> It's rare to see two groups of people deliberately misunderstanding each other so fiercely.
It really is and the letter does seem to show that, and both extreme camps are going to be very disappointed.
A good example is that NY bill [1] about banning 'certain' proof-of-work (PoW) mining. Not only cryptocurrencies using proof-of-stake or other consensus methods are not affected, this ban is not an absolute ban and it can still be done via renewable methods. It only bans PoW using carbon methods. That is what the extreme crypto-skeptics won't tell you and maybe that is why they learned from this failed petition [2] in the UK and now the deadline to sign their new letter is much shorter.
So you see both extreme camps will be disappointed with achieving their very utopian goals at banning everything or destroying the current system with a new reserve currency.
[0] https://news.ycombinator.com/item?id=31616385
Given that 'blockchain' is somehow the problem in the letter, why specifically 'public blockchains' [0] why not all blockchains both 'public' AND 'private'? Maybe there is a reason why they are attacking only public blockchains and somehow left out private ones? Another critic seems to attack both of them and doesn't see any difference to them at all. [2] So why did they leave that out in the letter if the blockchain is the problem?
Perhaps cryptocurrencies like Ethereum (which has smart-contract capabilities) and Bitcoin to some extent are the prime reason why the folks at Adjoint are eternally at odds with the crypto industry and are dedicated every single day to totally getting rid of all cryptocurrencies? Many have tried going down this path and Seng, and Diehl seem to have already deleted their repositories and associations [2] with Adjoint to pursue this terribly long utopian conquest.
After all, what on earth is 'nanocoin' and why was that deleted? [2]
[1] https://www.crunchbase.com/organization/adjoint-inc
[2] https://medium.com/@johny.codes/private-blockchains-even-wor...