Comment by tatertots1234 | Hacker News Reader

Comment by tatertots1234 | Hacker News Reader

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The letter has some good and bad.

Good because it advocates for more regulation and consumer protection, and points out some obvious concerns with crypto like energy expenditure in proof of work.

Bad because the letter misrepresents the technology and paints privacy as a purely criminal behavior, and suggests the entire technology sector is useless.

> Similarly, most public blockchain-based financial products are a disaster for financial privacy; the exceptions are a handful of emerging privacy-focused blockchain finance alternatives, and these are a gift to money-launderers.

Imagine this argument being applied to End-to-End Encryption. "Most chat messaging apps are a disaster for user privacy; except the ones that are privacy-focused and use E2EE, and those are a gift to terrorists and criminals."

There's lots of privacy preserving crypto tech: Monero, ZCash, TornadoCash, and soon Aztec. zk-SNARK and zk-STARK are recent advances here that dramatically change the future landscape. You can also use CEX as a mixer to provide soft anonymity, allowing regulators and IRS to track your finances, without revealing your accounts to the whole world.

> Blockchain technology cannot, and will not, have transaction reversal mechanisms because they are antithetical to its base design.

This is false. There is a lot of blockchain technology that has transaction reversal mechanisms. USDC and other centralized stablecoins can freeze and mint tokens. Optimistic rollups are built around the very design of transaction reversal. Many NFT projects give the contract owner ability to mint, burn, change metadata, and so on. The original DAO itself was drained and funds reverted by a hard fork, and yet ETH and ETC still continue to exist just fine.

> By its very design, blockchain technology, specifically so-called "public blockchains", are poorly suited for just about every purpose currently touted as a present or potential source of public benefit.

Bah! Perhaps some of the authors would like to shill their own private blockchain companies (Adjoint Inc).

E2E privacy has a lot of uses.

Crypto has none.

It’s just an enabler and hotbed of a variety of scams.

Any use it may have can only possibly reveal itself after the crypto asset bubble/scams die.

So even if you’re a crypto enthusiast, you should be in favor of this whole disastrous phase for crypto ending so you can try again and actually make it useful this time.

Since crypto has become a completely speculation driven asset it’s become useless for anything other than buying and stuffing under the mattress.

Any value crypto may add to the world will only happen once that dynamic is eliminated.

Your post is so perfectly in line with the blanket dismissal and absolutist attitude of the letter that you could pass as one of the authors.

Crypto has its uses. Crypto also has lots of scams. Crypto bubble popping will not destroy the scams; these are endemic to any semi decentralized system, see email spam and robocalls. We can do much more to regulate, moderate, and improve the tech for better consumer protection and usability, which is one thing the letter calls for.

I see a lot that crypto has it's uses. Please explain like I am 5 what some of the best ones are.

>Crypto has its uses.

No, this is wrong. By itself it has no uses besides speculative gambling. The technology fundamentally doesn't enable anything else, if you take that out it's just a really niche and inefficient distributed database. You may be suggesting that some companies have been able to build useful things on top of a blockchain. That might be true but out of all the examples you gave, they're useful in spite of cryptocurrency, not because of it. The exercise for crypto builders now becomes how to separate the useful parts from the ponzi tokens and build just those.

> By itself it has no uses besides speculative gambling.

And the earth is flat, and I refuse to accept any evidence to the contrary.

A simple example of crypto being useful is as a timestamped, censorship-resistant and tamper-proof ledger of cryptographically signed messages. That is one use case for it besides gambling, ergo your statement is easily refuted. I presume you will move the goalposts, though.

Well first of all, cryptocurrency isn't "censorship-resistant" any more than any other encrypted distributed system, so you can take that phrase out. Take a look at Tor or Freenet to see how this is done without the ponzi tokens.

Second of all, you can easily build a timestamped and tamper-proof ledger without making people pay to access it using speculative tokens. The aspect of trying to assign money value to these tokens is the problem, not the tamper-proof part. Conflating all these concepts together under the roof of "blockchain" is one of the many sins of web3 companies, but it's not true. Another sin is this constant attempt by people to "refute" critics. You don't need to do that, the fact that it happens so often should tip you off that the technology is not the focus of the discussion here. If you ever find yourself getting hostile about this, you're falling for the trap that the marketers are setting.

re: censorship, prove to us how you would go about censoring an Ethereum transaction please?

re: timestamp, prove to us how easy it is to build a distributed and tamper-proof append-only ledger without a BFT consensus mechanism?

The technology is absolutely the focus of this discussion here.

>censorship, prove to us how you would go about censoring an Ethereum transaction please?

Very simple, throw the wallet holder in jail. I don't know why you're asking this question, you should be able to answer the same question about Tor or Freenet and extrapolate from there.

>re: timestamp, prove to us how easy it is to build a distributed and tamper-proof append-only ledger without a BFT consensus mechanism?

I also don't know why you're asking this question or what it has to do with cryptocurrency or what I said at all. There are BFT consensus mechanisms that don't require the use of speculative tokens. BFT algorithms are by and large, good and useful; the problem comes in when people try to solve this by handing out tokens and convincing people to use them as money. In that way web3 is actually very intellectually lazy to me, the only proposed solutions it appears that most of them have for this is to simply mint more and more tokens.

> Very simple, throw the wallet holder in jail.

This has no effect on the on-chain transaction, message, or application, which remains widely distributed across all nodes in the network. Tor is great but has different design goals, such as consensus of the entire network secured by about 10 nodes.

> There are BFT consensus mechanisms that don't require the use of speculative tokens.

What BFT mechanism do you propose to secure consensus of this "easy to build" tamper-proof ledger for a widely distributed network of untrusted nodes? Common choices are PoW or PoS, or PoA with a small number of trusted authorities as it is used in Tor.

>This has no effect on the on-chain transaction, message, or application

Sure, but you can't make those when you're locked in jail with no access to the internet. I believe this was made obvious all the way back in 2013 with the Silk Road bust.

>What BFT mechanism do you propose to secure consensus of this "easy to build" tamper-proof ledger for a widely distributed network of untrusted nodes?

Out of what you said, PoA is the only one that has any chance at being fair over a long period of time because it's a lot easier to eject bad actors from the network. If you use PoA there's not much point to using a blockchain, but this is good actually; it gives you the freedom to choose between any number of more efficient datastructures. PoS is mostly just a loose approximation of another form of PoA (whomever stakes the most is the authority) and it's wholly unnecessary if you get rid of the speculative tokens; PoW (and some PoS algorithms too) are quite literally based around consensus-by-lottery, in my view that's another reason why it will never be useful for anything beyond gambling on speculative tokens. I've seen a lot of variations on the algorithms but none of them can get away from that basic problem without morphing back into another form of PoA.

You can jail a person but the contract or message they deployed, which may include private encrypted information or even be a fully fledged blockchain application, is still accessible and functioning as it was before. That is the point of the ledger being censorship-resistant, and it’s a different model than trusting a small handful of node operators.

PoW and PoS may rely on speculative valuation of the token but they aren’t really like PoA at all. The whole concept is that they are permissionless, as opposed to permissioned.

But anyways we have three options: PoW, PoS, PoA. And there are crypto currencies and blockchains for each of those. PoA tends to secure the least amount of value as it’s generally seen as less secure, less censorship-resistant, and less distributed.

Don't you get tired of the endless recycling of pro and con crypto arguments? It's the same thing every time ad-infinitum.

Yep, every time crypto is on the front page you have nocoiners and web3 pumpers making the same ridiculous blanket statements, and then some people in between trying to discern the reality of the situation.

The reality of the situation is that blockchains are a mostly useless and inefficient datastructure that by and large don't solve any real problems. I find it insulting that I can't say this without someone labeling me a "nocoiner." Yes you can make money with them, that isn't the point. Sometimes an algorithm can just be bad. If you can't look at an algorithm objectively, maybe consider that you're not trying to discern the reality of the situation?

'blockchains' (the ecosystems generally, not the datastructure specifically which wasn't the innovative part) solve the problem of arbitrary, mutually unknown individuals making transactions about things of value. They're pretty much the only way we know to solve that problem.

Of course, humans have been around a long time and had to manage before the bitcoin white paper, so most problems where the best solution involved arbitrary, mutually unknown individuals making transactions about things of value have either been ignored and are considered 'not that important' or have been solved 'better' through the creation of trusted third parties (which doesn't solve the problem for truly arbitrary participants, just moves it), or just forcing the risk onto others who previously had no choice but to accept it. This point of view is mainly just because society has had thousands of years being built around a constraint that the publication of the bitcoin whitepaper removed, and it takes a certain amount of imagination to see the possibilities.

When you think about blockchains, you should be imagining what they enable: nonpermissioned (so even foreigners in war zones, or the homeless can take part), access to an international network that allows cross-party transactions dealing in hetrogenous kinds of goods. The network is by default API enabled and compatible (so I can write a smart contract that uses other smart contracts). It uses modern cryptography (unlike many Banks). Because it allows transactions across organisations and assets, things like flash loans where a loan can be made at zero risk to the lender (because the capital must be returned in the same transaction) are possible, something that is entirely impossible in traditional finance. They enable immediate transactional settlement, which is also hard in traditional finance (how do we swap something so that at no point one party has to take on the risk of the other party not delivering?). They enable groups of people that don't know each other to pool their money. This was impossible in the past without a trusted governing body that would incur costs and therefore need to take a cut.

In finance, the main strategy up to now has been to register a corporation with multiple governments, spend lots of money on large marble buildings and conservative (i.e. non-innovative) smartly dressed staff for hundreds of years in order to give a sense of solidity and trustworthiness. Sure, it works, but that's what's really inefficient.

That's not a use of crypto, that's what it does. What is a use for that? I'm with OP on this, I've yet to see a use for it that isn't speculative gambling.

OP asks for a use, I provided. You say it is not a use, it’s “what it does.” Yes, it’s exactly what it does? That’s what it’s being used for.

That's like saying a use for a car is to turn the wheels when you press the accelerator - technically true but meaningless. What problem does

> timestamped, censorship-resistant and tamper-proof ledger of cryptographically signed messages.

solve? _That_ is the question that people aren't answering.

The engine’s use is to turn energy into mechanical motion, and from that we can build a variety of utility on top.

The chain’s use is to provide a secure layer for signed messages. It might be a dissident writing a message that cannot be revoked by their government; it might be a transfer of value from user A to B that is not reliant on a central clearing house to allow it; it may be a state change that represents the transfer of ownership of a digital asset like a ENS domain name alias; it might be a more complex application like USDC that enables a stable dollar-like currency to compose with the rest of the blockchain ecosystem. These are some use cases already occurring; there are other ways to achieve similar (like using PayPal instead of USDC) but all have different considerations and costs/benefits.

> The engine’s use is to turn energy into mechanical motion, and from that we can build a variety of utility on top. <...> The chain’s use is to provide a secure layer for signed messages.

I'm genuinely beginning to think you're trolling here.

> It might be a dissident writing a message that cannot be revoked by their government; it might be a transfer of value from user A to B that is not reliant on a central clearing house to allow it; it may be a state change that represents the transfer of ownership of a digital asset like a ENS domain name alias; it might be a more complex application like USDC that enables a stable dollar-like currency to compose with the rest of the blockchain ecosystem.

We're over a decade into cryptocurrencies, and years into the web3 world, and we're still talking about "might"? For comparison, kubernetes is a year younger than the term web3, and it is widely used across the world, with well documented solutions to problems.

Further, none of the use cases you mentioned actually work, or if they do they worked without a blockchain underneath them.

> It might be a dissident writing a message that cannot be revoked by their government

We've had that for over 30 years [0]. Putting that on a blockchain doesn't actually help.

> it might be a transfer of value from user A to B that is not reliant on a central clearing house to allow it

I do like this one because it's pretty much the textbook example of what's wrong with web3. This should be it's big selling point except 1) I can trade cash/gold/share certs with someone in person/via mail, 2) it's _way_ too expensive to use for normal transactions meaning that 3) People rely on services like coinbase (for coins) or OpenSEA (for NFTs), which are central clearing houses that you have to trust and abide by the rules of. The first link I found states that Coinbase holds over 11% [1] of the crypto market cap, you're _way_ past the point of "you're holding it wrong" here. If the usage of the solution requires throwing away the primary benefit of the solution, it's not a solution to the problem.

[0] https://en.wikipedia.org/wiki/Pretty_Good_Privacy

[1]

Over ~13 years into Bitcoin, only ~7 years into Ethereum and less than two years into much of the applied zkp tech that is now driving blockchain scalability and privacy. There’s a variety of ideas in human history that take decades to mature and find market fit.

PGP does not achieve timestamped and censorship-resistant record on a distributed network. A closer analogy is Tor which is secured by about 10 authorized nodes worldwide; so a different design space than crypto which is permissionless and secured by thousands.

All of your complaints are just that: complaints. X crypto thing works but not well enough for your needs and expectations. But your supposed solution Y, like PGP or physical USD cash, only achieves some facets of what people are using X crypto thing for.

The suggestion that sending wads of cash in the mail is somehow better, safer, and less reliant on central intermediaries compared to a crypto transfer is a hilarious statement though.

> PGP does not achieve timestamped and censorship-resistant record on a distributed network

PGP is timestampted and censorship resistant, and of course it isn't on a distributed network. Yet again I'm asking what is the use case for it being on a distributed network. That's also not what you said in your last comment

> All of your complaints are just that: complaints. X crypto thing works but not well enough for your needs and expectations.

That's not true, my complaints are that if you remove crypto from the X crypto thing, it still solves the problem in the same way, meaning there's no use case for the crypto part of crypto X.

PGP is an encryption technique, it doesn’t include any robust and tamper proof timestamping mechanism. To uphold the veracity of a time stamp and to make a PGP message censorship resistant you need either a trusted authority to continue to host and certify it, or a distributed network of validator nodes like Tor (10 validator nodes) or Ethereum (thousands of validator nodes).

If you remove crypto from this equation you are left with a permissioned solution. Which is fine for many uses, but not the same thing.

A practical example would be removing crypto from a USDC or DAI transfer between two people across the globe who wish to send USD-like asset, despite neither of them having access to a US bank account. The proposed solutions are to send cash in the mail, or PayPal, or whatever, and none are the same as a USDC or DAI transfer.

> Crypto has none.

Posts on HN about some payment provider robbing somebody blind and destroying their life's work are a common occurrence here.

We're not too far gone from wrong-think protesters in Canada having their bank accounts seized by the government.

But crypto has no use case. Gotcha.

>E2E privacy has a lot of uses. ZCrypto has none.

>It’s just an enabler and hotbed of a variety of scams. T his just keeps getting trotted out again and again on HN as if it were a dying circus horse, but with no real merit. Even analysis by companies that spend all day, every day tracking cryptocurrency use and transactions estimate that only something like 2% of them are criminal. Even if we add in fraudulent/criminal funds that were laundered well enough to hide their origin and purpose from these tracking services, the percentage is still almost certainly a small minority.

Add to that a couple things: First, that not all "criminal" transactions are morally wrong just because they're illegal. No doubt there are anti-Putin Russians right now trying to get their money out of country with crypto and breaking a law or two. Are they scum?

Secondly, yes, there are many, many normal people using crypto for many things. I personally know many who do this, for work payments, difficult transactions because of some regulatory bullshit, remittances and even in one case as payment for contemporary dance services while living overseas. Anecdotes, but I have no doubt that they're extremely widespread, because my friend circle isn't one of crypto bros and money launderers. It's of ordinary people.

How fucking tedious to see so many on a so-called hacker site shit so repetitively and with so much categorically dismissive ignorance on something many of its readers emotionally dislike. It's not hard to verify how exaggerated or just worng some of these dismissive claims are.

I think the chat analogy is twice broken. Firstly, the equivalents are something like:

Bitcoin <-> some chat system where anyone can see all the messages but not necessarily who sent them

Regular banking <-> private chatting but the government, those in chats, and the chat service provider can get detailed access to logs. A bit like email but with more government access.

Privacy coins <-> a bit like E2E but maybe chat participants don’t know whom they are chatting to. (I’m not super sure on the details).

So I think the first half of your analogy is pretty broken and there are middle grounds (eg government being able to subpoena chat records from companies) in the chat space.

The second issue is that I don’t really buy the analogy between private speech and money. Some people have many orders of magnitude more money than others but that isn’t really the case with private speech (obviously some people may have much more reach when speaking publicly, but this doesn’t go through E2E encryption; attempting to maintain large conspiracies is a social challenge rather than a technical challenge of overcoming group size limits on your favourite messenger). So in some sense the benefits of private chat are reasonably fairly shared across people whereas the benefits of private money disproportionately go to the people with much more money.

The idea of E2EE in chat is that the chat operator does not have access to the data, and so even the government cannot request this data (and build surveillance mechanisms around it).

I don’t agree with your other point. Whether somebody spends $1 or $1000 on an abortion in the US, they deserve the same degree of privacy, or at least the option to achieve privacy. Replace this scenario with any other that might like to take advantage of E2EE, like a dissident or political activist.

> imagine this argument being applied to End-to-End Encryption

There's a stark line between encrypted communication and encrypted money. If someone can't see the difference between those bits they shouldn't be handling other peoples' money.

It's certainly true that there's a line, but i've never heard a principled case for why they ought to be different. Money and speech are really not much different in terms of their power to organize problematic activity.

Certainly dragnet surveillance of speech could prevent a fair amount of terrorism, mass shootings, child pornography, etc. Dragnet surveillance of money flows accomplishes that too.

We just as a society decided it was worth it in the case of speech, but for some reason have decided the opposite in the case of money, except when that money is physical cash. None of this seems particularly well grounded in any kind of principled argument for one vs the other.

The benefits to anonymity and privacy are always highly diffuse and hard to observe, particularly in the moment. In another comment you ask for someone to enumerate the upsides, but i'd ask you the same question for speech privacy. What are the upsides to you being able to talk to your friends without the government listening in?

> i've never heard a principled case for why they ought to be different. Money and speech are really not much different in terms of their power to organize problematic activity

Speech is more primitive, and far less dependent on community efforts, than money. We can theorise working societies without money. I don't think we can do similarly without speech, at least not without changing what it means to be human.

Firstly I don't think that's actually true in any meaningful sense. I mean, yes, literally we could have a completely trivial society without something resembling money, but at even the most rudimentary levels of social organization that actually exist among humans, something resembling money exists. Certainly at the very least, the excahnge of value is occurring between people in anything that could reasonably be called "society".

Secondly, even if we accept that speech is "more primitive", i'm not sure why that implies anything about how they ought to be regulated.

> We can theorise working societies without money.

Really? At scales larger than a few hundred people?

Sure, there have probably been thousands of such societies throughout history. Bartering was common for many hunter gatherer communities. Having a standard currency isn't very practical if you have many groups across a large geographical area that meet sporadically. Directly trading goods would work just fine in those cases.

How did they agree on what the exchange rate should be? From my understanding, the answer was almost always plunder among the primitive societies or a tyrant/king enforcing a monetary system. There was really no bartering amongst equals across communities.

This line is drawn by society. At one point we did not see the need for E2EE or peer-to-peer file sharing, and now some of us do. At one point we did not see the need for privacy preserving digital currencies and peer-to-peer transactional systems, and now some of us do.

> we did not see the need for privacy preserving digital currencies and peer-to-peer transactional systems, and now some of us do

Fair enough. I think it's time for those who do to make their case. We've run the experiment. The downsides are documented and tangible. There should be a way to thread the needle whereby the downsides can be limited without strangling all of the upside.

The vast, vast majority of money laundering and illicit financial activity happens within the confines of the traditional banking system. Why don’t we start with regulating that properly first?

We’ve done a lot to regulate banking and when we catch banks engaging in problematic behaviours there are hefty fines attached. We’ve seen huge numbers of crypto schemes without any real consequences to those involved or those knowingly profiting off a scam. If we should be regulating all illicit financial activity the largest gap exists in cryptocurrencies not traditional banking.

references : cost of doing business; front-running; political nepotism; private equity; regulatory capture; machine-goes-brrrr

So you should be able to communicate privately with an abortion provider in a jurisdiction where it's illegal, but not pay them privately?

Unless you are in the United States and your money is going to a super PAC, union, or other association. Then your transmission of funds is free speech and covered by the first amendment. [1]

[1] https://en.wikipedia.org/wiki/Citizens_United_v._FEC

> your transmission of funds is free speech and covered by the first amendment

Political spending has been equated with political speech by the Supreme Court. That doesn't mean the government can't e.g. freeze a criminal's assets.

Super PACs have to report how they spend their money and where they got it from. As long as they don't communicate with a campaign, how they spend it is free speech. This is very different from not reporting where you spend your money or where you got it from.

And yet some of the signers are against end-to-end encryption

Climate emissions are only mentioned in a brief side-note. Makes me wonder what their motivation is. Sounds like the writer was a crypto investor, got scammed out of their money, got mad that they could not reverse the payment, and are now against the entire tech stack.

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