In defense of cryptocurrency
blog.cryptographyengineering.com
blog.cryptographyengineering.com
I think this is arguing that reversibility is not antithetical to permissionless blockchains, because reversibility can be implemented on top of permissionless blockchains.
But that doesn't answer the critique -- the critique is that most real world systems do need trusted parties, and if you build a system of trusted parties on top of a permissionless blockchain, then you could have saved a lot of complexity, risk, and proof-of-economic-waste burn by building on top of a permissioned distributed ledger instead. Reversibility is one example of a design requirement that undoes the claimed advantages of permissionless blockchains that are meant to justify their inherent downsides.
A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.
In other words, if you allow an organisation to change things like refund you, then they might as well just manage their own leger like they do at the minute.
USDC exists with reversibility but not all users in the network are forced to use it. There are other protocols like DAI that have different features and considerations. And in many cases these are open source protocols that can be forked as desired.
Probably the closest thing we have like this is the web, which is more or less a decentralized protocol, atop which we have built a lot of centralized platforms.
They don't seem to be ready yet but they look somewhat promising.
I can look at the USDC contracts and see that privileged users have the ability to freeze the USDC in my account.
I can look at the DAI contracts and see that they do not.
Good luck getting visibility into the back-end processes of web2 applications. Even if they publish the source on github, there's no way to verify what they're running
"Smart" "contract" are as invisible to the average user as the backends of web2 applications (or any other applications for that matter). The authors of these "contracts" routinely create buggy contracts because the code is complex [1]
But sure. You can definitely look at impenetrable code written in an esoteric language for an equally esoteric VM and see exactly what it does.
[1] just an example, https://web3isgoinggreat.com/?id=akudreams-earns-34-million-...
But think about where faith is being placed in traditional software vs. decentralized software: with traditional software, you rely on a whistleblower inside the company, or a government agency to expose corruption, malpractice, maliciousness, noncompliance, or incompetence.
In a dapp, there are also knowledgeable watchdogs who are incentivized to expose scams/fraud, or report bugs (I'd wager there are more responsible disclosures in crypto than exploits by bad actors).
Knowledgable researchers keep casual users informed of developments, and give layperson explanations of how dapp works (and Cunningham's law dictates that they're likely to be called out if their explanation is incorrect).
Either way, people are placing their trust somewhere. Traditional applications basically rely a lot on "security by obscurity" which doesn't make them truly secure. And many users enjoy truly transparent applications.
The biggest problem with crypto for the average person is that it's incredibly hard to assess risk in order to develop risk-appropriate strategies and expectations for interacting with crypto. And it can also be hard to get a straight answer when discussing risks (good signals are surrounded by lots of noise). That's why I think that rather than writing off the industry as a whole, those of us who have more insight into the technology (and the risks) should be advising less technical participants to be incredibly cautious, not to approach crypto outside of the top two as an investment without incredible diligence etc. (though, like the author, I'm very much opposed to bitcoin due to proof of work)
Indeed.
> In a dapp, there are also knowledgeable watchdogs who are incentivized to expose scams/fraud, or report bugs
Indeed. Moreover, they are incentivised to actively seek out and exploit those bugs because there are literally no avenues of recourse.
> Traditional applications basically rely a lot on "security by obscurity"
No. No they don't.
> The biggest problem with crypto for the average person is that it's incredibly hard to assess risk in order to develop risk-appropriate strategies and expectations for interacting with crypto.
Indeed. Whereas with "traditional applications" you have anything from regulations to courts in case something goes wrong.
> those of us who have more insight into the technology (and the risks) should be advising less technical participants to be incredibly cautious
Yeah. Yeah. Those who actually have insight into technology clearly and openly call that almost all crypto projects are scams. And that "smart" "contracts" are neither smart nor contracts and run obscure code whose authors often don't know how it works.
The people who pretend to be knowledgable and advising post things like "I can look at the contracts and see <various things>" perpetuating the myth that this is true.
The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock? The former process takes weeks, and dozens of man hours from lawyers, realtors, escrow agents, bankers, county property registrars, etc. Whereas a buy order to execute Microsoft shares happens in microseconds. That's because we've built a highly streamlined autonomous system for executing stock transactions. Yes of course, there's a trusted layer built on courts and fiat law at the bottom. And occasionally for a corner case, real lawyers have to get involved. But the vast majority of the time, this layer is completely abstracted away and trading stocks are just bits flipped on a computer.
When somebody says something like "let's put houses on the blockchain", the idea isn't to get rid of the fiat law system completely. At the end of the day, you still need courts and sheriffs to enforce property rights. But the idea is that we can wrap the house in an LLC, whose bylaws state that it's governed by on-chain contracts. (Which Delaware Chancery courts will absolutely recognize and enforce.)
Now instead of directly transacting at the very low-tech county property registrar we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house. (This is very analogous to how Cede & Co technically owns almost all the stock shares in America, and holds them under your name for you.)
That NFT is way more powerful and efficient to transact with than the county property record. It lives on a credibly neutral level that already has billions in native capital and liquidity and exposes a fully Turing complete smart contract system. You can sell your house atomically and instantly to anyone in the world with no lawyers or escrow agents. You can pledge it as collateral and borrow against it. You can fractionalize it and sell a portion. Or roll it into a larger portfolio and slice into tranches. All with no more than few dozen lines of code. Without blockchains all of those operations would take hundreds of pages of legal documents and weeks of back and forth.
Replace NFT with deed, and what you think we can’t execute the transfer quick enough? No we can but we don’t because, we want to title search, violation search, inspect, appraise, survey the freaking thing you are about to blow your life’s savings on.
There is a reason why people continue to lose millions and billions on NFTs and crypto and why systems to slow and prevent rampant fraud exist.
There is no real technical problem with a real estate transaction that has not been solved. I closed on my house remotely, in 6 weeks, never having met anyone except my broker. 6 weeks were spent doing due diligence inspections.
I have an NFT of the Brooklyn bridge to sell you, cheap, 200 million dollars.
It's interesting, both have registries, so why is one harder? Is it because the registry is better? No, it's because real property transactions are more complex:
- What condition will the property be delivered in and when? - What happens if the condition is not as specified? - what personal property is included in the transaction? What condition is it in? - Are there disputes over the property lines? - Are there easements? How do they work? - Are there third party consents needed? How do those work? - Will the seller vacate immediately, or will they rent back? - How will you pay for the property and when? - What happens if you don't pay? How much is the deposit and what are the terms of the deposit?
The complexity of the transaction derives from the complexity of the subject matter. Sure, if you could standardize those items, you could make property more like stocks, and people are trying to do that, which so far limited success. But for the average person, this is a huge investment, and they will want to spend time and create a transaction that works for them.
Almost none of the complexities related to the transfer of real property relate to issues with the county registry. Sure registries could improve, but very little would change.
One of the expenses is paying for title insurance. Sure in some sense a perfect ledger would obviate the need for that insurance. But given there seems to be more fraud in blockchain than in normal US real estate transactions, not sure the insurance price goes down, rather than up...
Microsoft stock is basically fungible whereas houses and most other real-world property very much are not.
But that doesn't mean anyone will buy a house by browsing some site and buying an NFT, even if this were prefectului legally worked out.
And that is because a house and piece of land are complex real world objects that don't live on-chain, and can be arbitrarily different from when the NFT was minted. Perhaps there was flooding and the house is now damaged. Perhaps there is some insect infestation. Perhaps the land is in the process of being expropriate for highway construction. Perhaps a nearby high-rise is obscuring all the sunlight and the house is to dark for your tastes.
The complexity in real-estate transactions comes from appraising all of these sorts of things, not from the need of keeping the lands registry up to date. To buy a house, you need to have an expert appraise it's status. You also need a contract that gives you some protection from hudden huge issues that your expert may have missed. These things take the majority of the time and effprt, and NFTs do nothing to help with them.
For houses this is easy to prove. But this goes for nearly every other suggested NFT application, including tickets.
But you can at least not need to trust the registry's "database" of who owns what.
So, you arrive at "your" property with a 20x20 pixel jpeg that you call your ownership rights (even such a jpeg would be prohibitively expensive to store on blockchain, but whatever).
So, you arrive, and there's someone else living there. They don't want to move out, no matter how much you wave your jpeg around. What does your NFT give you in this case?
When you buy a house, for $1 million or $50,000, the normal case being described in yours and the parent post is that you are buying a house on margin while using the house itself as collateral for the loan.
If you show up at a house that is for sale and ready to be sold with a million dollars in cash -- well, a million dollars in easily-authenticated cash equivalent -- and ask to buy the house as-is, no conditions or concerns on your part, you can make a deal happen markedly faster. Not microsecond fast, because why, and the sellers might balk at such a weird transaction or shop around to see if they can get another seller at a higher price, but once you take financing and any sort of buyer-protection out of the equation it basically comes down to registering the sale with the local registry.
Over there, buying a house without taking out a mortgage does not count as "weird": it's not terribly common, but happens often enough to not be considered weird. After all, if you have 100% of the house price on hands, there is not much reason to take a mortgage with 20% down payment and then immediately closing the rest of 80%, is there?
Buying houses are expensive because:
- Realtors are a state-sanctioned monopoly for real estate transactions and suck up a % of the costs. They also provide the necessary service of aggregating information about the market and negotiating on your behalf - Due diligence on the state of the property. This means inspecting that there’s no mold growing everywhere, checking that proper maintenance has been carried out, etc - Property law developed over literal centuries to provide the legal framework that we have now, if you damage something as you move out I can sue you to recover costs involved, we have statements about property state before closing, if the building doesn’t meet code we negotiate about who pays the costs - Property registries matter because legally speaking that’s a part of how you prove ownership. The county knows who to send the tax bill, if you default creditors can impose a lien, these are legal technologies that developed over time
This is why you can’t just pledge your house as collateral and borrow against it in a HELOC like you can borrow against your stock portfolio. The bank needs to verify that nobody else has a claim on your property and that the property actually exists and is worth as much as you say it is.
A house NFT has none of the legal protections of a SPA and all of the risks. If it’s not up to code you’re fucked, if the county has a tax lien there’s nothing you can do, etc. Us engineers like to think that everything is an engineering problem, and that’s often true, but law seldom works that way.
You know you can buy a house without a single realtor involved yeah?
The idea of houses on a blockchain are pretty much a pipe dream. But there are a lot of systems in traditional house buying that could be made easier with crypto-like ideas. Saying “real estate should be on-chain” should be read as asking for more NFT-like features in how real estate is transacted.
- as a cash bidder you need to provide proof of funds to the estate agent, which might just be a screenshot of your entire bank account balance. privacy with a zk-proof could be used in theory here to hide your balance while still giving the agent confidence you can meet the bid
- blind bidding process is usually opaque and broken, subject to discrimination and some winks and handshakes behind closed doors between friendly parties. a blockchain would give transparency and treat transactions equally regardless of race, sexuality, and friend or family ties.
- settlement times are extremely long in the order of months, not seconds. this is sometimes just because some party including the agents are on holidays, or slow to respond to emails, or forget to sign some paper, or whatever.
- escrow and exchange of funds in some cases could in theory happen with smart contracts where both parties sign a message to perform the exchange, which would reduce the significant commissions and fees.
- the process feels archaic compared to buying most other types of property.
> as a cash bidder you need to provide proof of funds to the estate agent,
Here, you don't provide them to the seller, you provide them to the solicitor acting on your behalf. Even if we removed that person from the chain, they are required to perform KYC on these transactions, so for regulatory reasons I still need to provide proof of those funds.
> blind bidding process is usually opaque and broken,
As much as I hate this, that's a (design) feature not a bug. Blind bidding doesn't exist in a vacuum, a seller is perfectly able to accept a bid from a party. Blind bidding is what a seller would use in a competitive market to extract the highest possible bid. If they wanted to accept a lower bid they could, by e.g. accepting their favourite bid at the second highest offered price.
> settlement times are extremely long in the order of months, not seconds.
This isn't because of transactions though, this is because mortgages take _weeks_ to come through, solicitors and agents take time to communicate/juggle multiple accounts/offers, and frankly they're still working with paper documents and off of the "who shouts the loudest gets service" system.
> - escrow and exchange of funds in some cases could in theory happen with smart contracts where both parties sign a message to perform the exchange,
The problem with using trustless currency for physical goods is that you need to trust the other party. If they just walk away without providing the keys or clearing the house out, it doesn't matter what it says digitally, you have a problem.
> which would reduce the significant commissions and fees.
On my past property purchase, I paid ~6% of the value in a transaction tax to the government, and ~£1000 in other "legal" fees. Meanwhile the actual transfer of funds cost me £0, (thanks faster payments - free almost immediate transactions up to £250k), and if I was a cash buyer, a bank transfer would have cost me £35. The fees are negligible even today.
I've been banging this drum for years now, the problems you're outlining are not technical, they're policy and regulatory. You can solve all of the above problems with regulation, like we've done in the UK. That said:
> - the process feels archaic compared to buying most other types of property.
Couldn't agree more. It feels like being dragged back to the stone age.
Yes these are mostly policy and regulatory hurdles but there are also some technical solutions that could be applied here.. The fact that a screenshot of a bank website or PDF passes as proof of funds for a 6 or 7 figure cash bid is laughable.. the idea that a concluded auction won’t fully settle for days, weeks or months is wild after being accustomed to bidding and auctions based on smart contracts. if a listing agent accepted USDC and a zk-proof as a proof of funds for the bid, the actual transfer into a solicitor’s holding account could be settled in minutes and with zero privacy invasion.
This is all purely hypothetical, and not likely to work across the board.. but it does present some areas that cryptographic tech could improve upon our traditional financial system
There's nothing about blind bidding that is solved by crypto in any shape or form. Moving to a blockchain approach for bids doesn't guarantee that you have opened bids, you can still allow people outside of the ecosystem to bid externally.
> The fact that a screenshot of a bank website or PDF passes as proof of funds for a 6 or 7 figure cash bid is laughable
Not really - a screenshot or pdf passes if the person you provide the proof to is happy with it. If you try and prove your funds with a screenshot from <local credit union in the phillipines> for a UK property transaction, they're going to ask you for more details, and they're going to ask you where the money comes from.
> if a listing agent accepted USDC and a zk-proof as a proof of funds for the bid, the actual transfer into a solicitor’s holding account could be settled in minutes and with zero privacy invasion.
For transactions under 250k faster payments guarantees transactions in under 2 hours, and anecdotally when sending my deposit for my last purchase, it was confirmed in about 15 minutes. For transactions over 250k, SWIFT transfers take a couple of days _because of regulation_, not because of technical problems. They're subject to AML checks.
> This is all purely hypothetical, and not likely to work across the board.. but it does present some areas that cryptographic tech could improve upon our traditional financial system
It's pie in the sky thinking, frankly, and doesn't even pass the sniff test. I completely disagree that it improves upon our financial system. The delays in these processes today are around AML/KYC checks, surveys, ownership dispute checks, etc. If you remove the legislation around AML/KYC checks, and streamline the surveys/ownership verification process, you could turn the entire process into 30 minutes for transactions under 250k, and some number between 30 minutes and 1-5 days for larger transactions.
Meanwhile, if you keep the regulations, don't fix the manual part of fetching deeds from the previous owner manually verifying them against a local land registry, and move the entire thing to the blockchain, I would bet you'd save a couple of days off a multi-month process, _and_ you still need to trust that your solicitor has correctly verified ownership, sourced your funds, etc.
The policy that's needed to change here has _nothing_ to do with trustless systems, because fundamentally the system you're interacting works on trust. Me telling HSBC to wire £250,000 to my solicitor for a property purchase doesn't actually send them £250,000, it just marks it to be cleared at a later point, but from HSBC's perspective the transaction has mostly happened at that point, and if the receiving bank is Lloyds, they're more than happy to trust that HSBC is good for the £250,000.
If all parties agree that the smart contract is what settles the auction, then yes it could be superior in some ways, and inferior in others. Bids would be transparently recorded for all parties to see, perhaps held in escrow or using zk-proof to accept each bid, and accounts could be shielded to provide privacy. Accepting a new bid outside of this smart contract auction or after this auction settles would be a violation of the agreement. It also means the auction can be performed through an automated system, without a listing agent facilitating it via emails and phone calls, which is significant as that same agent stands to benefit if all parties bid higher than they really need to.
> For transactions under 250k faster payments guarantees transactions in under 2 hours, and anecdotally when sending my deposit for my last purchase, it was confirmed in about 15 minutes. For transactions over 250k, SWIFT transfers take a couple of days _because of regulation_, not because of technical problems. They're subject to AML checks.
Not all buyers have this smooth of an experience. I'm not disagreeing with you, the UK has good banking infrastructure and if every country in the world could send value through Faster Payments to every other country in the entire world, there would probably be less need for crypto. It is a pretty good model for how financial systems can be improved to facilitate most average use cases.
We are approaching this from different points of view and with different shared experiences around how smoothly our first-world home purchases and bidding processes have been, and that's OK. The fact that you think a PDF or screenshot of a website frontend is "acceptable" proof of 6- or 7-figure cash bid is probably enough of an indicator that we should just agree to disagree and move on with our day.
Have a trusted third party transfer it back to you? Or give up your house to the hacker?
Or time delayed exchanges for important things like your house NFT.
Now who owns the house? Do we have to let it decay forever?
> (i.e. the market value of the house + some percentage).
Where does the market value come from? "Market value" for properties varies wildly, and the number a property does not necessarily track to a fair market value - I might be willing to accept 10% under market value to someone who is a cash buyer because I need a quick sale, or I might be in a ripping hot property market where properties are selling for 20+% over their market valuations
> time delayed exchanges
That's all well and good if everyone involved is digitally contactable for the entire duration of the process, but if I'm ill for a period of time, or otherwise vulnerable, it doesn't matter whether the delay is 2 days or 2 months. The advantage the current system has is that there is inherently a central organisation that says "yes you own this" and they handle disputes. If you have an actual problem of suspected fraud (say your car catches fire with all of your ID in it), you can go to a government office, sign some legal documents, and get new ID and continue. Similarly, if someone impersonates you there are legal protections that can and are enforced.
Not with blockchains we don't. They're also doomed to fail, and not working. A system where your money loses 25% of its value in a day its completely unusable for a mortgage. Saying "I'm sure the problem will be solved" doesn't mean anything, you could say the same thing about a credit system.
This doesn't even make sense. 'Realtors" is plural, and there are many, which is incompatible with monopolies. Realtors have a monopoly on their trade only because anyone competing with them becomes a realtor, by definition.
It's like complaining about the airlines' monopoly in air passenger transport.
https://en.wiktionary.org/wiki/realtor
https://en.wikipedia.org/wiki/National_Association_of_Realto...
It's not really the NFT that's the 'win' there, if indeed it is a win.
It sounds like a lot of work to build that though.
Maybe we can find some nerds to make it for "equity" on the chance that such a database has value? They could use it for other stuff too if they want.
Government run then, the institution that is involved with contract oversight here, an easily identifiable authority in this situation. If you don't trust that here, then there's no point in bothering with sales contracts in the first place.
> It'd have to be regularly audited but also kept as up to date as possible. It should have very precise access controls. Also, it should be as fast as possible, and there should be a record of everything that's ever changed. If you want a full copy of it, you should be able to request it at any time.
So like a database with auditing switched on? The type that is already run all over the world for all sorts of things?
> If you want a full copy of it, you should be able to request it at any time.
Like a database that offloads snapshots every so often? And maybe has an API in front of it allowing querying of public data? Like are run ... everywhere? For all sorts of things already?
> It sounds like a lot of work to build that though.
I mean, it sounds exactly like a ton of running systems with fairly standard options, so no, it seems like it would be fairly trivial.
And of course we all know that there are no development costs for blockchain solutions. Nobody needs to build a webpage, or develop smart contracts, or security audit them, or build in permission systems so there can be authority oversight, or provide APIs, no, they all just appear fully formed and fully secure out of the ether... no boring 'work' to build that!
"Blockchain gives you that for free" must be one of the biggest fallacies out there.
> Maybe we can find some nerds to make it for "equity" on the chance that such a database has value?
Doesn't sound to me like we need to give these 'nerds' a continuing stake in a public service. Any old software company can build that sort of thing out for you for a one-off fee. Adding profit motives for unrelated third parties seems to me like a pretty poor choice. But what do I know, perhaps we should introduce more avenues for speculation around the housing market, that sounds healthy.
I come from a place that still has toll booths so that toll booth workers can keep their jobs.
I have to take off my shoes before I can get on an airplane so that my government feels safer.
I personally compute my government taxes, which only occasionally (if ever) get verified. That's how we fund the country.
If I routinely saw the government creating new technology that improved the lives of citizens, I suspect I would share your opinion.
It would be interesting to map "places interested in crypto" against "places that have low trust in their government" and what kind of overlap there is.
The way I see technology in the US: First, the nerds get excited and start forming groups about it. Then, the business people figure out how to monetize it. Eventually, the government gets sold an overpriced enterprise solution. Then we do it all over again.
Then why are they going to bring in a blockchain solution? It's got the exact same problem there as any other software solution would.
That's my point here, making it a blockchain (or a database!) doesn't magically solve the root cause, it's just an implementation detail.
If it even is a problem (a lot of other posters don't seem to think so), the problem isn't that the data storage medium isn't decentralised, or that there's too much trust in the system, it's the absolute ton of bureaucracy and paper-shuffling that takes several weeks. Choosing blockchain + API vs DB + API here doesn't address that. The gains come from modernising the system, not the storage tech.
I think you've overlooked this in the grandparent, because you've probably never had the experience of going to a low-tech county property registrar's office to pull a record.
> it's the absolute ton of bureaucracy and paper-shuffling that takes several weeks
Of course, but so much of that bureaucracy is about being risk-adverse. I really do have to take my shoes off at the airport because somebody tried to wear explosive shoes once, about 20 years ago.
So, yes it's the "ton of bureaucracy and paper-shuffling that takes several weeks", but that doesn't really address what's going on. Our governments will easily adopt new technologies when they're simple.
If minting officially signed records is as cheap and easy on-chain as it looks like it's going to be, it would be silly not to use the technology, even if you think government should have been the entity to build and maintain it.
> Choosing blockchain + API vs DB + API here doesn't address that.
This whole class of technology precisely addresses that.
It removes the "who has to build and maintain this DB and keep access to it forever" step, which is pretty significant for important records.
Literal teenagers can buy and sell pictures of apes easier than I can prove to a mortgage company that I own my residence. Something isn't right there, and I don't think it's the children and their fancy record keeping that's wrong.
When the intern at a county clerk's office somewhere in the middle of the country says "hey boss, let's mint NFTs for these records, it costs about a penny each and I can set up the computer to do it as a summer project", that's about the threshold we need for widespread local government adoption.
And if governments ordering security theatre at airports is relevant to their ability to administer property then I've got bad news for you about the track record of people working on building important stuff on blockchains. Difference is they have no need to be involved in property transactions whatsoever, whereas when it comes to enforcing property rights you're stuck with government being involved anyway.
> I think you've overlooked this in the grandparent, because you've probably never had the experience of going to a low-tech county property registrar's office to pull a record.
No, I haven't overlooked this at all, in fact it's bang on with what I'm trying to get you to understand - that pulling a record can be made faster with a better system, yes. But for some reason you're insisting that only a blockchain can fix that, which is just nonsense.
> If minting officially signed records is as cheap and easy on-chain as it looks like it's going to be, it would be silly not to use the technology, even if you think government should have been the entity to build and maintain it.
You're glossing over the massive effort to bring such a system into place for the land registry in the first place, and reducing the entire problem to record signing. The signing of a record is the most trivial part of the problem. In a DB-driven centralised solution it would be actually free.
So I'll repeat myself here - you're trying to address a bureaucratic issue with a data structure, you're choosing one data storage scheme over another as if that makes the difference, when the difference that leads to the speed gains in the proposal is legislative change and modernisation, not a specific storage scheme.
> It removes the "who has to build and maintain this DB and keep access to it forever" step
It does no such thing, as the data structures and smart contracts specific to land registration will still have to be created, and updated as needs change over time, the human-usable interfaces to those will still have to be created, probably involving API servers and web UIs in the exact same way as any other solution. Someone has to build all this. Someone has to run the infrastructure regardless, and those people will want paying somehow. The fact you can abstract some parts of it away through a blockchain doesn't remove the need for that payment, perhaps in the form of transaction fees, for instance, or rent seeking on these tokens you mentioned earlier.
> Literal teenagers can buy and sell pictures of apes easier than I can prove to a mortgage company that I own my residence.
Umm, so? I mean, Ape pictures are again, trivial, land registries are not, and the proof you want could be an entry in a land registry database just as easily as it could be an NFT. (As it could be for that ape picture, and as it usually more or less is anyway, due to centralisation of API-provision...)
> When the intern at a county clerk's office somewhere in the middle of the country says "hey boss, let's mint NFTs for these records, it costs about a penny each and I can set up the computer to do it as a summer project", that's about the threshold we need for widespread local government adoption.
And that intern is going to know how to implement all the smart contracts around property transfer correctly, taking into account all the legal regulations, edge cases, boundary definitions (and disputes), court system oversight and the million and one other things that are implicit in that proposition?
Seriously? You genuinely think the hardest and most complicated part of transfer of property ownership is the bit where you need to sign a record?
Because that's all you're talking about solving here, and even that isn't something a blockchain solution can do any more easily than any other solution.
All of the benefits of moving to a blockchain that you list are possible, probably with lesser effort and lower complexity, using other systems. None of it is because of blockchains, all of it is process modernisation that you feel you can just gloss over because blockchain.
Your argument is akin to being anti-Twitter because the local government could build a notification system just as well. Maybe San Francisco could, but most of America cannot.
Twitter's core function is that it lets you send and receive short messages. That's absolutely great for a local government office, but it didn't make enough sense for any local government to invent Twitter. That's not the job of local government.
The value here is in the network effect of agreed upon protocols between interested parties.
If parties agree on data sharing protocols, which is something we've all been talking about forever, then the network gains value.
> we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house
He's literally talking about ownership rights tokenized for convenient settlement with a governance layer that can be overridden by officials. I think that's a fine idea to try out. It will probably reduce friction most of the time.
> you can just gloss over because blockchain
The idea is that a universally trusted, always-on database allows you to build new types of applications. This seems obvious to me.
I was listening to NPR a while ago and they had story on about governments that paid for ransomware attacks so they could access critical records. That's where we're at today.
All networks are hard to get off the ground. If you can't tell, I was a fan of the "semantic web" idea. I feel like this time it's going to work because there's a money-layer built into it.
Not really, they could all deploy the same DB solution, we could open source it and containerise it and give it away for free. It could be run as a managed service for a small fee. There's no need for each local government to design their own or even run their own.
Exactly the same as with a blockchain solution.
> Your argument is akin to being anti-Twitter because the local government could build a notification system just as well
My argument is not in the least bit akin to being anti-twitter. My argument is more like saying twitter is possible with multiple different back-ends, conceptually. I'm saying look, your short message service can be implemented in a bunch of different ways - in the back end it could run on a NoSQL server of some sort, or some sort of RDBMS, of which there are many, or we could probably mash something up with SQLite to get off the ground. The important thing that's addressing the need is to build a short message service.
In contrast you're there insisting that only an MSSQL system will enable twitter. But with MSSQL we get archiving for free! And with MSSQL we can just UPDATE a record and it will be changed! Huh, how about that?! Nobody else can do that!
And I'm here scratching my head and saying that's just an implementation detail, sure, it could work, there will be license fees etc, but it's not the only way, and we still need to do the rest of the work.
> If parties agree on data sharing protocols, which is something we've all been talking about forever, then the network gains value.
Yep. And those protocols are still going to have to be designed and deployed by someone, a blockchain solution doesn't magic these into existence any more than any other solution does. APIs and UIs will still have to be built. Data schemas will still have to be defined. It doesn't reduce engineering effort.
> He's literally talking about ownership rights tokenized for convenient settlement with a governance layer that can be overridden by officials.
Sure, and maybe it would work great, but that doesn't require a blockchain either, it doesn't need to be an NFT on a public blockchain to provide that low-friction experience.
Throwing 'blockchain' at a massively complex situation doesn't solve anything in and of itself. It seems to me that saying 'blockchain' allows its proponents to mentally skip to the end of the process, where the value actually comes from one of the early or middle steps.
Step 1: Figure out how to encapsulate land registry records in a simple but comprehensive way
Step 2: Make legislative changes such that these records are now the source of truth
Step 3: Expose these records in an easily digestible and transferable way
(edit/addendum - > If you can't tell, I was a fan of the "semantic web" idea.
I always found that really naive, perhaps I just never understood it, but it seemed to rely on honest actors categorising their content in ways that would allow it to be retrieved, catalogued and processed correctly, then presented to users. Some of the professors at my University, Southampton, were well into it. Even back in the late 90s I was jaded enough to know that anything relying on people to be honest and not use all sorts of SEO tricks to game the system was doomed. I know there was more to it than that, and some of its ideas did filter into the modern web in various ways.)
If you think a government bureaucrat or judge will trust a blockchain because "proof of X" when a dispute does happen, you've got some weirdly conflicting beliefs about government. Furthermore, if you think they would trust it more because it's public then they would trust a DB that, say, Price Waterhouse Coopers were running that any county clerk could sign in to with an audited account and put some information in, then again I really don't understand what is your mental picture of the government.
However you slice it, the fact remains that, if there is ever a dispute on the ownership of your property, the government will want to consult an official paper trail of how that ownership came about. The more layers of abstraction you add, the more places your trail could be attacked, the longer it will take to do it, the more expensive experts will have to be hired for the trial and so on.
Permissionless databases also lend themselves well to a kind of DoS attacks, where someone can trivially bury the real data in mountains of low-effort fake data (perhaps with some high-effort fakes thrown in as well). If the county clerk's intern can mint an NFT for each house in the real registry, I can easily mint 100,000,000 fake NFTs for the same houses as well - good luck disputing the ownership then if your house purchase wasn't registered in the paper registry.
A permissioned DB run by a trusted entity (which could easily be some company, even though I hate that this is what usually happens, and would much rather see the government handling internally) that is responsible for auditing who has access to modify the digital registry and so on is the only possible solution for improving the bureaucracy of this. And even then, it will only improve it so much, since you will still need to send documents that prove you are who you say you are, and the other party is who they say they are, and you both agreed to the contract that made this transfer possible. Of course, much of this can also be fixed by using a government-certified digital certificate proving your identity (this is a common service in the EU at least).
Was that before or after listening to NPR and their story about private companies that paid for ransomeware attacks (https://www.npr.org/transcripts/1003972313, many many others)?
You, and every other crypto bro vastly underestimates the scale at which local government operates. And the scale here means not "number of transactions per second", but "number of edge cases that need to be handled on a daily basis."
Some time ago I was in a conversation about how blockchain is going to solve everything around property registrations. Blockchain is just a slow distributed database that solves jack shit on its own, of course.
Here are some simple examples that land registries have to deal with: https://news.ycombinator.com/item?id=27212564
Good luck to you and your summer intern minting NFTs for that. And that's before we go into the whole definition of ownership https://news.ycombinator.com/item?id=27217681
Besides replacing it with tech bros and crypto douchebags doesn't seem like much of an improvement.
If anything (at the risk of sounding extra American), these threads remind me that the US is still the place to be if you want to build something different.
There's a positive side to how the US works too. The few things we really commit to, like building our military, we really are the best at. Also, the lax regulation does let new technologies like driverless cars get tested on open roads. Hurray? I think so.
Somewhere has to be the test-bed for new ideas. When they fail, they'll be expensive and stupid and maybe even stick around for a lot longer than they should (can we please, please, fix the shoes thing with the TSA?). But all together, we do a lot of cool stuff first that changes the world.
Interesting, because recently the USA exited Bloomberg's top 10 innovative countries, while if I remember correctly 7/10 where European countries [0]. Sorry guys, you can't stay on top forever.
[0] https://www.bloomberg.com/news/articles/2021-02-03/south-kor...
Governments, by design, are the most dangerous institution we have. In the 20th century they were a leading cause of death. Between the wars and communist policy a lot of people died. Fear of government is entirely sensible, we're more likely to be killed by a government than any serial killer.
And we don't know what the big wars of the 21st century will look like, but we may be about to find out.
You need something that's going to help you solve disputes and enforce contracts. If the government isn't competent or your enemy for arbitrary reasons, they'll just ignore any evidence you can point at and do whatever they want to anyway.
Have you read any of the proofs behind any of these algorithms? Ever notice how often some one finds a crack and disappears millions of dollars? Think we’ll actually make it secure some day?
I’m also not convinced this even needs technology. Some things are better locked up on paper in slow, bureaucratic institutions surrounded by layers of administrators. Makes it a lot harder to break in and steal stuff.
Most people aren’t buying properties online like games on Steam. If it takes 6 weeks or 5 it won’t make much of a difference.
Even if you want to digitize proof of property ownership it would be orders of magnitude more efficient to host your blockchain on a handful of Raspberry Pi’s. You could probably manage all property sales on an entire continent with it. Not dealing the Sybil attack problem is a lot cheaper and easier than trying to deal with it.
So I imagine they can either legal pressure on the illegitimate owner to transfer the NFT to the other owner (which has worked with some bitcoin transactions in the past), or if that doesn't work, then the system of smart contracts created for something like houses would most likely have something in it that allows the smart contract owners to mark that NFT as void in the blockchain (while it remains in the perpetrators wallet, it would no longer be associated with the physical benefits) and have a fresh NFT minted based on the data in the previous one and sent to the legitimate wallet.
Barring all that, they could just not recognize the owner and send police to physically remove someone who thinks they own it because the have the NFT. That's one reason why some people like bitcoin so much, the government can't (easily) take it from you by force (because there's no physical aspect to it) like they can a home or gold.
If this were to happen and the blockchain and the physical world diverge, how would potential house NFT buyers know whether the physical house purportedly linked hasn't been overridden by local government? If the answer is for local registries to publish a list; then that list is the only thing that matters. The entire blockchain component becomes completely superfluous and a centrally managed electronic exchange would be faster, easier and cheaper.
And calling read-only functions (doesn't write anything to the blockchain) doesn't cost anything.
I didn't think of this with my original post, but there are NFTs that are used for access to things that people already say "don't buy these on the secondary market, legacy, no longer used". Not too dissimilar of an idea. Those NFTs are still in those people's wallets but it no longer provides the benefits associated with it.
Like the old Premint pass, which gives you access to tools to help launch NFT projects. The description for the old pass says "DO NOT BUY THIS PASS. This pass has been replaced with the PREMINT Creator Key" and the banner image says "THIS PASS IS NO LONGER VALID": https://opensea.io/collection/premint
“NFTs create a frictionless easily exchangeable market for goods… BUT make sure you check with the people, project, company or government that has authority over this good as to whether this particular NFT is actually a useful representation of anything. Because, at any arbitrary point they can just decide to not honor any of these.”
Why not buy the good directly from this party? Then at least the government has authority and can enforce your right to the product or service or at least a refund?
It's up to the organization or society or code written in smart contracts whether they want to honor, and how much they honor, the promises made for having possession of that NFT. It's really no different than any other organization out there for any service.
I can buy a ticket to a concert and be denied entry as well, or the concert be cancelled, or the company goes out of business, or any other manner of things. I still have the ticket, but it no longer provides the benefit associated with it.
Additionally I can go to the concert, and then try to sell the ticket to someone else, possibly claiming that it will let them get into a future concert, and that buyer needs to verify that the legitimacy of the ticket before purchase.
Or someone who buys a video game that's basically just a case with a code to download the game from a store that then redeems the code but sells the game to Gamestop with a no longer valid code, and Gamestop puts it back for sale even though it's basically useless at that point. That's kind of what's going on with people putting those old Premint passes up for sale on the secondary market.
You could argue that organization should not be trusted with future NFTs or be sued and punished, or the person who sold the now defunct NFT be punished, and that's fine, people no longer patronize or sometimes sue organizations or people all the time when they've been wronged somehow.
As for Premint, they do want you to buy directly from them and not from the secondary market. That's what they are directing you to do. I don't know too much of the details of Premint but they probably wanted to upgrade their service and used older smart contracts without update capability built into it, so the contracts were immutable and limited in some way.
So they needed to issue new smart contracts that had better capabilities, and in the process it rendered the old contracts obsolete. I'm guessing, I don't know, I'm not a customer and I don't work for them, it's just a service some people I know were considering using at one point since it's huge and has a large network of users and one of the things their service helps with is limiting access to bots, which is something the people I know cared about preventing, and is difficult to prevent, at least currently, in web3.
Additionally, a lot of the community are against upgradeable contracts because they theoretically can be upgraded to something totally different, and they prefer immutability, with all its potential warts. Some projects use upgradeable contracts and don't have to do what Premint did, and some people don't.
But regardless, if you're going to offer an organizational service that's not on the blockchain, then inherently, by definition, it can't be strictly enforced just by the presence of an NFT, because people aren't computers and their physical actions aren't guaranteed to happen by lines of code like a computer program can (at least not yet).
Tickets for a concert were a meatspace analogy, not me arguing to put all tickets on the blockchain. One difference, though, is the NFT 'ticket' can be proven for any organization that wants to incorporate it, without a prior agreement or API access created by the original organization. Like I know some NFT projects allow people who have NFTs from other specific projects in their wallets to have early access in their own projects, or grant access to private Discord rooms, or let them into events, etc. and it can be granted via software, without people checking or verifying anything.
Yes a REST API and a centralized database can provide that, but not if that organization goes defunct.
As an example from my own history, there's a game I worked on once that the company once debated on buying servers to host the multiplayer aspects of it, but eventually I just incorporated the general async turn based api of Apple's for the game. The company went defunct not even six months later. If we had gone the server route, the game would have been unplayable as soon as the company folded, but since we used the general protocol provided by the platform, the game was playable for many years afterwards (might still, I haven't checked in a while).
That's a very real (to me, anyway) benefit of building on a blockchain. As long as the blockchain platform is still up, those smart contracts can still be used, and its support doesn't have to be constantly justified by the parent company / count on the company not going out of business to keep running. Like Nintendo is getting rid of its Wii and 3DS shops here in a few months because they can't justify keeping it up. If the blockchain existed then and those things were stored on there (like files are stored on IPFS or Arweave for web3 today) they'd still be accessible without any continued expenses from Nintendo.
Right now I'm having to decide which of my digital games I need to make sure are downloaded and on my device before I lose the opportunity to redownload in a few months (technically I can hack the device and download stuff from torrents, but I'd rather not have to do that for a while, if ever).
Another benefit, to me, is similar and legacy related. Like my Facebook profile, website, games, journals, etc, when I die, all go away the instant that Facebook stops being a thing, and more importantly when I stop paying for web servers or cloud computing. My SO already made it pretty clear they're not really going to do anything to perpetuate them, so if I want those things to exist and be available I'll need to find something that can withstand not actively paying AWS, Azure, DigitalOcean, etc. to keep it going. Putting these things onto the blockchain would allow for that, and at the very least will outlive anything put onto cloud services, and possibly even the current crop of social media websites (definitely a few of them, maybe not all of them).
Some things I worked on are probably also circulating in some torrents of Flash games or console games also, but a lot of it isn't. And I have some physical copies of things I've worked on also (a lot of board game prototypes, some journals, etc), but I have a feeling a lot of that is just getting thrown away not too long after I die unless I something of mine becomes a big hit, maybe not even then.
You might not personally care about these things, but other people do. Or at least will once the infrastructure and supporting software is built out more.
FWIW I also think general protocols on long lived platforms and IPFS are great.
BUT, I really don't think the blockchain has a role to play solving any of the issues you laid out. The reason the game you mentioned was able to continued to be played was because Apple was providing the network. The minimum ETH write fee is almost always at least $1 and frequently cost $3.50. Would people still be interested in playing the game if each write cost that much? Same goes for your archiving plans. IPFS is great but it's not a guarantee that that data will be seeded forever. For that you'd need to write it to one of the chains you're confident will survive. ETH data costs somewhere in the thousands of dollars per MB range? I'm not sure it's a real solution to that. I'm not dismissing the issues of very long term code and data longevity. They are real issues but in my opinion still quite unsolved.
I wish there was something kind of like bit torrent that lived on people's computers that helped maintain a certain amount of data for every person if they wanted to (even if it's just text data, like journals or stories or a simple message to future people that might stumble across it, whatever), that would remain even when they're gone, and can be accessed by people who do searches by certain types of metadata (or by name), and didn't cost any money or web 3 tokens or crap to keep the platform going. That would be my preferred method. I've even been tempted to work on building such a solution at times.
But until then, web 3 seems to have the better solution to what's already out there at the moment.
> But in the 99%+ of times you're in the happy path, economic transactions occur based on autonomous rules encoded in software.
In the happy path, people just “trust” that the system works; that the merchant and cc company transact properly, that cc company and bank work together, that the software underpinning all this is tested and has no errors, that the bank and cc company can help in disputes of fraud from the merchant…
It’s actually based on a lot more trust than the normal person realizes and polar opposite to nearly trustless.
(1) Do we really want high frequency markets in real estate? Is that socially and economically desirable?
(2) Land and property records so far have survived centuries (if not millennia), can we hope that an NFT solution will have the same long-term compatibility?
Not really, no. Just taking the European example, there have been countless cases of litigious states of affair after e.g. invasions, revolutions, nationalizations, privatizations, etc.
E.g. a house in Romania post Ceaucescu fall, a noble family's domain in Russia in 1917 or France in 1790, a German estate in East Prussia in 1945, a property in Kosovo, etc.
Where I live in Europe nothing litigious for about 200+ years and I can easily pull records for my place beyond 100 years without any need for reading/parsing technology.
""" Nobody owns stock. What you own is an entitlement to stock held for you by your broker. But your broker doesn't own the stock either. What your broker owns is an entitlement to stock held for it by Cede & Co., which is a nominee of the Depository Trust Company, which is a company that is in the business of owning everyone's stock for them. """
https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...
Also: https://bitsonblocks.net/2019/02/07/who-legally-owns-all-the... compiles similar information on Singapore and Hongkong (googled - not verified).
To be perfectly pedantic, you still aren't the owner of the Microsoft stock. Your broker makes a record of you being the beneficiary of X shares of Microsoft stock, with about a dozen asterisks. Each of those asterisks fall off over the course of the next few days and then it is all finalized - your broker owns a bunch of shares for your benefit.
It only feels like it is instantaneous because they assume everything will work out (it usually does). They can do this, because everything is reversible if it doesn't.
Now, if you would like to be the actual owner of Microsoft stock, you can do that. If you've never done that before, expect the process to take a few weeks. But go right ahead - head over to ComputerShare [1] and start the process. If you really want, you can even get them to issue you some paper stock certificates in your own name, but that takes even more time and comes with a lot of extra fees.
[1] https://www-us.computershare.com/Investor/#DirectStock/Summa...
Who enforces seizure when lendee defaults but the lender is "anyone in the world"?
So Bitcoin was designed for micropayments, and irreversability is a feature to reduce the friction. That is fine because it was intended for "small casual transactions" which very few people are going to invest the time and effort into disputing. It even looked like it might be successful as a micropayment system at first, given small Bitcoin transactions were initially processed without any transaction fees.
The problem is that it has clearly failed as a "peer to peer electronic cash system". It is now used primarily for large transactions, which you absolutely do need consumer protections for if you are a legitimate user (indeed the fact that there aren't consumer protections has made the space so popular with fraudsters, scammers etc.). And as others have commented, the newer cryptocurrencies which attempt to offer such protections end up being worse in every conceivable way from the traditional solutions. Leading back to the original article - is there any legitimate point to cryptocurrencies nowadays?
No it's not. It's now used primarily as a vehicle for speculation.
Number of nodes is rising, number of wallets is rising, number of hash-power is rising.
Also, please look into the "Lightning Network". It's the second layer on top of Bitcoin and that's where the whole ecosystem scales (in terms of numbers of transactions per second). Cheap, scalable and fast transactions.
Adoption is happening in many places.
I check LN every 6 months or so and situation is not looking so great.
As it was with Bitcoin itself in early 2010s the shops advertising crypto acceptance are doing it mostly for publicity/ideological reasons or actually have stopped existing.
So I check: https://acceptlightning.com/map.html
Random selection:
* http://paraeasy.ch/joomla/ - Adobe Flash Player not supported ...
* https://www.kaeserei-lustnau.ch - unclear if the shop actually takes any payments
* https://shop.energy-kitchen.ch/#/shop - application not taking requests at this endpoint
* http://www.room77.de/ - SMTP-packets to port 25 (info[at]room77.de) may very likely get a response just as much as electrons sent to our telephoney landline-device (+49.30.31102260). Single static page.
* https://acceptlightning.com/rummels-acoustics.com - standard Bootstrap page - page not found
Finally I find - https://www.livingroomofsatoshi.com/graphs This looks like a serious operation - and lighting network is used quite a bit for smaller transactions.
Unfortunately, this is something that would be of interest only to someone who already owns BTC or some other crypto.
If you are Joe Sixpack you have very little reason to pay with crypto because it will be more expensive than paying with Visa/MC/Paypal etc.
So where are the successful use cases that utilize Lighting Network?
It's been pretty successful as a sword to destroy the original value proposition of bitcoin.
A channel between 2 entities is backed by real bitcoin and a scheme to manage the ledger based on bitcoin primitives (multisignature).
Lightning is just a series of channels + routing, so in effect it's a path of channels between you and the party you are transacting with + ledgers of those channels updating with the value that is being moved. At any point in time you can close any channel and materialize however bitcoin you have on your side.
Gambling. It’s gambling. A significant fraction of the American economy continues to gear towards gambling. Whether it be short-term dopamine hits from ad-fuelled social media or trading crypto, it’s a similar pattern of decay across a common although growing demographic stripe.
Very small transactions happen on the internet all the time. Services like venmo allow for very small casual transactions all the time. And there is no cost for the transaction.
Sure venmo is trusted third party and the transaction is reversible, but it's still significantly easier and cheaper than bitcoin. Or any other other coin for that matter.
And what happens if one of the parties is not willing? If someone's e-wallet gets broken into and funds are transferred? How does any current system handle that situation?
A lot of folks consider irreversibility a feature, when there's a strong case to be made that it is a bug.
I would think it was the exact opposite.
A 'regular' bank account has reversibility, and so if there are some shenanigans you can (potentially) get your money back. With a cryptocurrency 'bank account' (wallet), if anything bad happens you're SOL.
What this means to me is that cryptocurrencies are not for anybody. We don't have to create digital systems with the limitations of cash. We haven't had to do that for decades. Now there's a push to go back to the time before that, for (in general) no discernible reason besides people gambling on the price.
So instead of reversing, we could make all NFTs locked from trading for 3 days after transaction which anyone could appeal for a dispute and buyback the NFT for the same price anytime.
The challenge here is, can we actually come up a set of robust rules that is not too rigid yet not abusable. It's not easy, it won't be right off the bat and it certainly require a lot of critical, innovative thinking. And maybe the solution won't have to be complex at all.
In a traditional system, if there is a bug in your bank's software that makes you loose money, you can ask the bank to give you the money back. If they refuse, you can take them to court. If instead the smart contract has a bug, there's no one you can appeal to to get your money back. So I think that having humans-in-the-loop is still important, at least for big transactions.
As others pointed out, this problems are much smaller for small transaction so maybe there could be some use there. But I have to think better about this use case.
Which like the article argues, is not something that can be solved by any ledger, distributed or not. Even if banks reverses records, they don't change the data which is already on the database/record, instead they just issue a new transaction from the backend or withdrawing it from a legit reserve that they own. In any case, no reversing was done.
What if instead of taking the bank to the court, we have something in place for it that runs based on certain "if statements" or "switch case". Of course, is not as easy as it sounds, we need conditions that are robust enough and not vulnerable to abusers. It's a very complicated problem to solve.
As I said in my comment, the problem is that if you have a bug in the statements that should protect you, then there is no recourse for your lost money.
The question then comes to whether we want to deal with unpredictable human "bug" or consistent computer bug. For the later, we can engineer our way to a minimum risk model, where it become punishing to exploit a bug.
We are doing the same thing with the current system, it's just that different banks and companies are responsible for different systems. There are bugs and exploits in systems of our finacial institution and we rely on human to mitigate the risk.
Will computer be better than human or can we build a hybrid system? That's the question we need to answer.
Do you want to use DeFi-like solutions with smart contracts? Use RSK.
I don't see what the problem is with moving things up one layer if you retain the option to delve back into the base layer.
Even if the base layer of Bitcoin is using energy, one can argue that the functionality it offers (trustless, borderless, permissionless, programmable, digitally-native money) is worth the energy cost.
It's not a worldwide phenomenon. There are orders of magnitude more Christmas lights and wash dryers than mining servers. And yet...
Per an ancestor comment you replied to:
> Reversibility is one example of a design requirement that undoes the claimed advantages of permissionless blockchains that are meant to justify their inherent downsides.
If we need reversibility on a permissionless blockchain, why have a blockchain? A postgres database would do fine. You could even broadcast the write-ahead log to allow any party to verify that history isn’t silently rewritten.
You even said it yourself:
> Do you not want to transact on the base layer because of lack of reversibility or fees? Move to a higher layer solution that sacrifices some characteristic of Bitcoin to enable something new.
If we’ve established that reversibility is a table stakes requirement for a financial system, the thing you’re “sacrificing” is the very thing that makes PoW essential. Since PoW is planet-melting, can’t we just use a database instead?
I can't come up with any reasonable measure by which Christmas lights use more energy than Bitcoin mining. The reports that suggest this seem to extrapolate US figures across the world, which looks unrealistic. And they're old enough that they don't account for the switch to LEDs.
Even if a billion households had 50 strings of LED lights each and kept them lit 24/7 for all of December, they'd still use less energy than the annual usage of Bitcoin.
> Even if a billion households had 50 strings of LED lights each and kept them lit 24/7 for all of December, they'd still use less energy than the annual usage of Bitcoin.
On the final math, at 5 watts per strand, you'd wind up with 182.5 TWH. Bitcoin at 150TWH-250TWH puts it into the ballpark. Nice.
The idea that Bitcoin (#23) is worth as much or more as all the economic and general human activity of Poland (25), Thailand (24), or Vietnam (22) is highly suspect:
This claim appears to be untrue -
https://charlesarthur.medium.com/does-bitcoin-use-less-energ...
tl;dr - the claim appears to be based on a combination of pre-LED figures in the US, and just plain wrong figures from other countries, and is probably out by a couple of orders of magnitude.
So, the only use case for Bitcoin is as an optional gold alternative.
As soon as you have a trusted central authority (monitoring and reversing payment transactions, interacting with government agencies to execute real estate transaction, etc.) I’m lost on why you need a blockchain.
You might have missed the entire point of cryptocurrency. The idea is that it is not centralized and a single entity can't "reverse" transactions.
FWIW, in my own usage of crypto, the lack of central authority is exactly why it is used. I don't really care that other people are just hodl-ing their funny money in someone else's wallet. Crypto, outside of an exchange, means I can send money to anyone I want, and no other entity can prevent that.
The thing is, users define the market. If we were talking about a traditional "product", if 99% of users used a product wrong, that product would be considered an abject failure, at least from a UX / messaging standpoint with a clear mismatch between user wants/needs and product capabilities.
The average crypto buyer buys crypto because they want to make money. The average crypto buyer doesn't give a shit about decentralization or removal of bureaucracy. The average crypto buyer is getting exactly what they came for.
The way it's actually used completely destroys that part of its value, but don't let reality get in the way of a good investment opportunity. I think if you set up a coin that doesn't use a distributed ledger, and instead uses an SQL database, you wouldn't get buy-in from the ~tulip~crypto fanatics because it doesn't line up with aforementioned mythos.
I would go so far as to argue it's the entire aspect of the value proposition. Take away decentralization and all you've got is a poorly architected, inefficient, unwieldy PayPal.
The people in this thread understand this value prop, but for a significant portion of crypto investors, the value prop is gains.
It may be true that some casual crypto investors are interested because of the decentralization aspect, but that same user wants a PayPal-like experience. Most are not willing to deal with the complexity of doing it "right", and most of the non-technical people I know who buy crypto do it for the gains, not for the defi.
In effect, this makes decentralization nothing more than a marketing promise, and the reality is exactly what you said - a poorly architected, inefficient, unwieldy PayPal. Sure, this system is capable of much more, and realizing the "true" value prop of decentralization, but that doesn't matter much if users are in it for other reasons.
If users were doing it "right", or for sake of argument, let's say users are forced to do it right, I suspect they would just stop participating, bringing valuation down with them.
Yes it would.
There is a chance (in my estimate, negligible) that my anecdote is an extreme outlier, but I still dare state with confidence that most forks today are designed in a way that less than 99% of users end up sticking them in their eyeballs.
People using forks for the unconventional and usually unintended purpose of impaling their eyes* are a tiny minority of fork users and thus changing fork designs to encourage the intended method of use is not considered a high priority. Most people are naturally disinclined to pierce themselves, particularly in such a delicate part of their face, and as such the design of a typical fork with its pointy tines directs users to avoid this particular usage mistake.
The thesis stated above in the thread was, that cryptocurrencies are very commonly used in a way that defeats their intended purpose of decentralization. It seems reasonable to assume there is a flaw in contemporary cryptocurrency implementations that encourages this kind of use, or at the very least, doesn't discourage it very strongly.
* Excluding specialized forks for non-mainstream audiences such as very young children
This is basically it. Crypto-currencies are essentially tool to evade financial regulations. The price that you pay for that is a high operational risk and a lack of property rights.
No, this is extremely false. The miners/stakers can prevent that by blacklisting your wallet address. You might be thinking of privacy coins which are a very small subset of cryptocurrencies that are hard to use because of the security requirements, and are extremely impractical for most people who aren't criminals, and they only really work correctly if everyone using them has perfect opsec which currently they don't. And also a powerful entity who really wants to stop you can still prevent your transactions just by attacking and disabling the network itself through traditional or non-technical means, such as infiltrating the foundation that manages the project.
Do you mean 99% of transactions occur on centralized exchanges without going on-chain? I would like to see the numbers you are using.
But there is a very significant amount of crypto trading occurring on-chain, to the tune of multiple billions of dollars per day.
With a blockchain architecture, the app can't go down unless the entire blockchain goes down. And apps can be built piecemeal by many teams/hackers who add small bits of functionality here and there through standardized interfaces, rather than top-down by trusted agencies - "money legos".
When serving data, I often use HTTP pulling from a Postgres DB. Both of those are massively over engineered for the problems I want to solve but I use them because:
* They're already built so it's not my engineering time.
* Others can interact with them easily.
This is more strongly the case, and becoming more so over time, in crypto work.
I can make something with key based auth that I can uniquely identify such that a user can prove they own it to integrate in my "real world" systems, while letting them sell it, trade it, auction it or whatever.
To build this I do a starter tutorial, load a common library and publish. After I can just use already existing APIs for integration. That's it and it works because the data and APIs and Auth are all common and standardised now (either inherently for Auth or by convention for the data).
By the time you build a system with historical "proofs" with enough replication, you'll basically have invented a Blockchain with more complexity.
In any case, "write-once" media can still be rewritten; the same lasers that etch data into a CD-R can do so to destroy the same data. You're going to want redundancy/backups and you're going to want each new row in the table to cryptographically reference the previous (such that any data destruction invalidates all subsequent rows) - by which point you've reinvented most of what constitutes a blockchain anyway.
I do believe Write-Once was actually a thing with the banking mainframe I was acquainted with in my youth. It wasn't a CD-R thing, it was just an IBM thing which enforced write-only at the BIOS/Hardware level. Honestly, I'm not sure, I was young and impressionable :D. IOW, I might have been misled.
Anyway... All you need is logically write-once with proper signing, audits, etc. and you'll be just as close to unforgeable, etc. etc. as reality demands.
Heck, even journald on Linux provides unforgeable log entries. It is vulnerable to a destruction attack, so whatevs. Everything is. Even a blockchain -- witness the rugpulls.
> by which point you've reinvented most of what constitutes a blockchain anyway.
I love that.
Anyway, I'm here to dissuade you. Do whatever you want. Just be aware of the potential consequences.
Most corps now have proven that they act for their own shareholders and can't be trusted to look after all users.
Gov agencies while are a potential candidate for establishing trustworthy data owners are too beaurocratic to ever allow for permissionaless building on top.
Blockchains sort of allow both trust yourself (by owning private keys) & build permissionlessly on top .
> monitoring and reversing payment transactions
I disagree with the article on this point. No reasonable person expects to be able to reverse a cash transaction; that the same applies to an electronic equivalent ain't the fatal flaw that critics seem to regularly insist without real basis. Transaction reversal is indeed outright harmful to honest vendors, and is only really necessary for the legacy systems because the legacy systems have borderline zero protection against dishonest vendors retaining customers' payment information and pulling money from it (and/or giving it to others who will do so, be it voluntarily through some shady dealmaking or involuntarily through card skimmers and database breaches and what have you).
> interacting with government agencies to execute real estate transaction
You wouldn't need a central authority for this. Local governments are fully capable of putting real estate NFTs or whatever on something like Ethereum or Cardano and publishing public keys such that people can verify their authenticity. They're much more likely to do that than to try to run an equivalently fault-tolerant and accessible-to-the-public SQL database themselves (and absolutely more likely to do even that than to trust some entity outside their legal jurisdiction to do that, barring outright state/federal mandates to do so).
This isn’t the only form of dishonesty. There’s cases where you initiate an honest transaction, the vendor ships you something you didn’t ask for because they are trying to clear inventory, and then refuses to refund or exchange. Then you file a claim with Amex and get your transaction reversed in about a week.
The flipside is there are times I've been unable to pay with cards because the processors deem it to be too large of a risk, despite me being happy risking my own money. Or, see the risks people take running businesses on PayPal - large companies able to reverse transactions / hold your money solves some issues but raises others.
Technically true, but also completely pointless. An organisation running an SQL database doesn't need hundreds or thousands of redundant SQL nodes/copies to reach the level of robustness required.
Not every usecase requires that sort of resiliency, of course, nor does every use case prioritize it above latency and throughput; nobody except the truly deranged are asserting that a blockchain could or should replace every SQL database out there. For those who do need that sort of resiliency, though, a public blockchain is much more cost-effective.
Are there any extant proof-of-stake blockchains that achieve the security guarantees necessary to make a currency viable? Last I heard proof-of-stake was still a hypothetical idea, not something that someone had actually managed to make a working currency with, and that all of the cryptocurrencies in common use were still using proof-of-work (which is of course much more resource intensive).
If you want to eliminate Sybil attacks in PoS, there is no way of externally validating which branch of a split chain is legitimate. Each of them has a majority of stake backing it.
As for PoW however, you can just look at the total work proven.
Which is itself possible by penalizing stake pools that go offline, thus motivating them to maximize uptime. That's how Ouroboros-based chains (Cardano, Polkadot) do it (among other mitigations against various attacks).
> If you want to eliminate Sybil attacks in PoS, there is no way of externally validating which branch of a split chain is legitimate. Each of them has a majority of stake backing it.
Which is why Ouroboros-based chains consider the "pledged stake" (put simply: an upfront collateral) of each pool when selecting one to control the next block and receive the corresponding rewards. This has its own implications (in particular, the pledge needs to be high enough to deter would-be Sybil attackers but not so high that it's unattainable to honest pool operators), but it seems to be effective in practice.
This is still unfair to stakers that legitimately have infra disruptions. I have not seen any design for PoS that is actually fair and reasonable and I doubt it will ever happen because this is simply not something you want to just put in an algorithm. The problem space fundamentally requires human intervention at a high level.
I'd hardly characterize that as "unfair"; it's no more unfair than any other perceived correlation between uptime and trustworthiness.
> The problem space fundamentally requires human intervention at a high level.
It fundamentally requires the opposite. The more human intervention possible, the more room for exploitation and corruption and unfairness. This is evident both within the crypto space (Safemoon comes to mind) and outside of it (the legacy financial system comes to mind).
I am saying that correlation inherently makes no sense. Uptime isn't the same as trustworthiness, that assumption is only made because designers of blockchain algorithms have bizarrely decided that "trustworthiness" is not a real thing so they need to continuously look for other things to use as a substitute for it, instead of just using what most people (including many promoters of cryptocurrencies in their real, physical lives) use: trustworthiness.
>It fundamentally requires the opposite.
No, this is extremely, extremely, extremely wrong on every possible level. Even from the perspective of a cryptocurrency, this is extremely wrong. I can't stress this enough. You are creating a system for humans to use for human purposes. The entire point of it is human intervention. When designing these blockchain algorithms (which I should remind you are designed and maintained by humans as code that needs to be continuously maintained by humans) all that happens is you encode that particular form of exploitation and corruption and unfairness into the system itself. Even within your example it's wrong; discriminating against those with bad uptime enables exploitation and corruption towards areas that have bad infra. And remember since this is code that can be updated and changed by humans it will be vulnerable to the same level of corruption that you see anywhere else. You might trust the maintainers not to do this but now you're back to the same old trustworthiness again.
The former is pretty darn important for the latter. How can I trust something that is prone to outages?
> You are creating a system for humans to use for human purposes. The entire point of it is human intervention.
One does not follow from the other.
> When designing these blockchain algorithms (which I should remind you are designed and maintained by humans as code that needs to be continuously maintained by humans) all that happens is you encode that particular form of exploitation and corruption and unfairness into the system itself.
Well then it's a good thing that code is available to the general public and can be audited by the general public.
> Even within your example it's wrong; discriminating against those with bad uptime enables exploitation and corruption towards areas that have bad infra.
The correct response would be to improve infra in those areas, or for people in those areas to use one of the umpteen gajillion VPS providers in the world to run their stake pools instead of trying to do so from their closets.
> And remember since this is code that can be updated and changed by humans it will be vulnerable to the same level of corruption that you see anywhere else. You might trust the maintainers not to do this but now you're back to the same old trustworthiness again.
Then it's a good thing that the code in question is open to audit by the general public and that new versions of the code require consent from the network before they actually go "live" in any meaningful sense.
Cardano, Solana, and Polkadot seem to be doing quite alright.
What gave you this idea? If I have proof that I paid you cash for a service, and then proof you didn't provide that service, I absolutely expect to be able to reverse that transaction, via the legal system.
> A blockchain is much more resilient; the equivalent would be to have hundreds or thousands of redundant SQL databases around the world and somehow keep them all in sync.
That level of resilience is completely unnecessary and is part of why blockchain is such an extraordinarily wasteful technology.
> Local governments are fully capable of putting real estate NFTs or whatever on something like Ethereum or Cardano and publishing public keys such that people can verify their authenticity.
And who will hold these NFTs? And where will the data the NFTs sign be stored? If the government holds the NFTs, then nothing will change for you: you will have to bring the exact same kind of proof after you bought a house to the government so that they can update the blockchain record.
If they want to distribute the NFTs to the current owners of the houses, than they now need to establish an Ethereum/Cardano/[...] wallet for each person who owns a house in their district - a decade-long project in the best case, involving a level of bureaucracy to ascertain that no house NFT was incorrectly transferred to the wrong owner that will blow your mind (or, more likely, a process which will cause massive fraud and property disputes for decades to come).
And of course, the NFTs don't solve the problem of actually storing the data (physical scans of the documents that were used before the move to digital, at the very least, since the chain of ownership of each piece of property is an extremely important part of how you can settle disputes). Who will hold these records, and update them as needed? If it's still the county clerk, the problem of bureaucracy flies back in. If they want to make them part of the NFTs and store them on-chain, then minting the NFTs will be exorbitant, and it's doubtful the Ethereum blockchain would survive having the entire archives of home ownership in the USA on-chain.
That's very different from what's meant by "reversible transactions" in the context of other payment systems. If the legal system can dictate the reversal of a cash transaction, then it can do so for a crypto transaction - without either needing to have some explicit protocol to do so.
> That level of resilience is completely unnecessary
That's just, like, your opinion, man.
> And who will hold these NFTs?
The owners of the properties they represent.
> And where will the data the NFTs sign be stored?
NFTs can store arbitrary data.
> If they want to distribute the NFTs to the current owners of the houses, than they now need to establish an Ethereum/Cardano/[...] wallet for each person who owns a house in their district
Which is many orders of magnitude easier than the current system.
Besides, it doesn't have to be all or nothing; a gradual opt-in transition would be perfectly doable.
> If they want to make them part of the NFTs and store them on-chain, then minting the NFTs will be exorbitant
On just about anything noteworthy that's not Ethereum, the cost is on the scale of cents. Wow, such unaffordable, many expensive.
And no, you don't need physical scans of the original documents. A transcription will do fine.
Mine and everyone else's who holds important information in databases. The whole financial system for one.
> NFTs can store arbitrary data.
Up to some size.
> Which is many orders of magnitude easier than the current system.
It is not. The current system scales with the number of home transactions. Your proposal scales with the number of homes - a much bigger number.
> Besides, it doesn't have to be all or nothing; a gradual opt-in transition would be perfectly doable.
Sure, but then it's just a whole bunch of extra work for no benefits for 10-20 years. Not just for the county clerk, but also for home owners and buyers: not only will they still need to process the existing requirements, they would also have new requirements to obtain and prove ownership of their ETH/other crypto wallet. And they wouldn't see any advantage at all until the next time they sell their home (hopefully they will still remember their wallet address and private key by then!).
> On just about anything noteworthy that's not Ethereum, the cost is on the scale of cents. Wow, such unaffordable, many expensive.
Well, there are exactly two block chains that are somewhat noteworthy outside the crypto bubble: Bitcoin and Ethereum. And Bitocin doesn't support NFTs.
And any other block gain that becomes even mildly popular quickly explodes in values and transaction fees just like the other two. Turns out that storing hundreds of thousands of copies of the same data, and writing every single transaction to hundreds of thousands of systems before it is considered settled, without any kind of permission system, is actually very costly.
Note: you're right on the cash transaction statement, to some extent. There are still some important differences I feel, mainly related to the fact that today's systems enforce knowing the legal identity of parties to a transaction for something like a house, even if the sale is done in cash - which wouldn't be guaranteed if the house could be traded by selling an NFT on a chain.
If your opinion is that your information warrants less redundancy and resiliency than what Zoomer cryptobros get with their sad monkey NFTs, then maybe your information ain't all that important?
> Up to some size.
That size being more than sufficient to store a land parcel's coordinates, address, and other identifying data.
> The current system scales with the number of home transactions. Your proposal scales with the number of homes - a much bigger number.
They both scale with both. Or do you propose that the current system instantaneously sprung into existence without spending centuries distributing paper deeds beforehand?
> Sure, but then it's just a whole bunch of extra work for no benefits for 10-20 years.
If you don't consider the greatly improved auditability and resiliency to be a benefit then that's further reason to question whether your opinion is actually representative of people with important information needing stored.
> not only will they still need to process the existing requirements, they would also have new requirements to obtain and prove ownership of their ETH/other crypto wallet
That doesn't logically follow. It's quite possible for it to be a "one or the other" deal.
And ownership is pretty trivial to prove: you either can initiate transactions with that wallet's private key or you can't.
> Well, there are exactly two block chains that are somewhat noteworthy outside the crypto bubble: Bitcoin and Ethereum.
There are a lot more than only two which are noteworthy. That you believe otherwise is itself reason enough to disregard your comment as thoroughly misinformed...
> And any other block gain that becomes even mildly popular quickly explodes in values and transaction fees just like the other two.
...as is this. There are multiple NFT-capable blockchains that have demonstrated better scalability both in theory and practice by virtue of them using a consensus method more sane than burning energy on useless SHA256 hashes.
> There are still some important differences I feel, mainly related to the fact that today's systems enforce knowing the legal identity of parties to a transaction for something like a house, even if the sale is done in cash - which wouldn't be guaranteed if the house could be traded by selling an NFT on a chain.
It wouldn't necessarily need to be guaranteed, because the information is already in a public ledger. If you want to get fancy you could address that further with NFTs representing personal identification (which has other applications, like tracking licenses and certifications and other endorsements, but I digress).
Maintaining read replicas and coordinating writes across all of them starts to look a lot like one after a certain point.
> it is much cheaper than the wasteful process of crypto mining.
It almost as if not all blockchains involve mining.
No they aren't. They are already running public SQL databases (with limited query access) for managing property changes. And they already have a set of processes and employees to manage real estate transactions and taxes. If a blockchain startup wants to try to get a local government office to let them run it on a blockchain, they will need to prove that the taxes always settle, and that fraud can be reversed. These are both important parts of the system for the local government.
I suspect that there is a granule of use in the idea, and that's that you can farm off the infrastructure for your real-estate management onto third parties and ensure they give you your taxes and respect your authority. But that's not really what people think of when they say "blockchain" with dollar signs in their eyes. The incentives for the people running the infrastructure go out the window too, because the profits are modulated by the government, and it's way easier to just sell them software directly that only has to claim to be effective, and rarely has to deliver on it.
Not a single county I've lived in has offered that, to my knowledge. If they did, then if other online county services are any indication, the uptime would be horrendous and the interface would be 90's era garbage.
> If a blockchain startup wants to try to get a local government office to let them run it on a blockchain, they will need to prove that the taxes always settle, and that fraud can be reversed.
The former is baked into any cryptocurrency worth its salt, and the latter can be done by minting a new record of ownership invalidating the previous one. Better yet, time-limiting parcel NFTs and issuing them in exchange for tax payments would directly tackle both rather cleanly and would work just as well for land leases as it would for traditional real estate.
One way to avoid this lock-in is to change the underlying incentive structure. That's what the blockchain does. The fundamental difference is not about centralized vs. decentralized, it's about the incentives that are a result of centralization vs decentralization.
That's just one example - sometimes you need technology which is out of hands of authorities. Cash or Gold bars have similar properties but you literally have to physically take it with you if you want to send it somewhere.
Leaving payments aside - ENS domains, exchanges, insurance, lending borrowing and bunch of other products which are equally accessible to a farmer in Nigeria as it is to a Wall Street suit. You don't see a value in that?
It's technically possible to replace any blockchain with a database but where are you going to host it and who is the trusted central authority?
Blockchain might not the solution but it shows us an alternative to trusting some middlemen that have too much power, instead we trust code that is emotionless, non-judgemental and consistent.
A distributed ledger is more than just a database, it's a technology that can orchestrated trust online without a central authority. That's a huge deal, compared to a sql database that is owned by someone, who is the singularity that administrates the whole thing.
Yes. Because that code just appeared out of nowhere, and it's perfect, and devoid of issues.
For e.g., you could literally send NFTs to any address (including a smart contract address) which make things stuck forever. Now there's a safe way to transfer things which check whether or not it is a valid address. And this became the de facto standard for almost any NFT smart contract.
All these didn't came out of nowhere.
The trust in put on the code itself which not one but all of us agreed upon. Today, we don't have the tools to allow people to actually understand it but it doesn't mean that we won't in the future. Abstraction layers will be built.
Of course this is an optimistic speculation. I'm personally not attached to crypto in anyways but I'm excited about innovative opportunities that it enabled.
There are ponies and magical unicorns that grant you wishes.
> Abstraction layers will be built.
And those abstractions will definitely be built and will be different from any existing ones because? And once again we will have to trust people building them that they are built correctly.
> I'm excited about innovative opportunities that it enabled.
And those innovative opportunities are what exactly?
Blockchain present us with a new way to coordinate online activities and transactions. It's the right path forward? We don't know, at least not until we exhaust all the possible options and therein lies a lot of opportunities for technical breakthroughs that could possible solve all the concerns we had, technically.
Demagoguery
> Blockchain present us with a new way to coordinate online activities and transactions.
No it doesn't. Blockchain is a distributed spend-only log. There are very few if any applications for it.
> therein lies a lot of opportunities for technical breakthroughs that could possible solve all the concerns we had, technically.
Yeah, yeah, magical blockchain will solve all the issues, we just have to believe hard enough.
Who is hosting the blockchain? Who is the trusted authority over the maintenance of the protocol that implements the blockchain, that all miners must use if they want to participate in the system? Who is it you're trusting not to organize a malicious 51% attack against the system, when it has already happened several times to quite a few blockchains? It is a blatant falsehood that blockchains don't have any trusted authorities. They actually require trusted authorities to function. You're not trusting "emotionless code" as the code is well known to have these flaws even by the admission of its own designers; what you're actually trusting is some game theory laid out by programmers you trust, that says the miners won't do bad things because they're getting paid. But in several cases we've seen that they actually will do bad things! And that's not even considering all the other bad things like fraud and ransomware that happens on blockchains that the operators seemingly just throw their hands up and don't do anything about. They don't even consider that to be their problem.
I hate, hate, hate that this line is used so often in discussion of cryptocurrency. It makes no sense at all. In order to have any kind of real discussion around this, the crypto community needs to move past these thought-terminating cliches.
Miners/Stakers who is incentivize to validate the network and maintain the collective consensus.
All your points are valid and universally known but the more important here is whether or not those vulnerabilities are inherently caused by the nature of blockchain or tehcnical problems that we can/need to solve.
A good blockchain is not owned by anyone, any changes made need to go through multiple layers of peer review.
We are still very rooted in our current ways of doing things hence we are seeing phenomenon where companies are trying to take control by either building their own blockchain or centralised service on top of a blockchain. But if I travel back to the 70's and told you that someday you can run an Internet company, would you believe it?
We are no where near endgame but if you dig deep enough, you will see many exciting technical breakthroughs. One of the fascinating one is zero-knowledge validation. Blockchain could be the solution or maybe not, I don't care, I'm excited about the innovative opportunities that it brought upon.
If I understood what you were talking about, I would probably idly wonder how I could fit it in between being President of the United States, a firefighter, an astronaut, and a professional soccer player, but I wouldn't actually disbelieve it.
(Hey, in the part of the 1970s where I was alive at all, I was pretty young.)
This is the only advantage of bitcoin I see.
This is both a good and a bad thing.
The major point is to not have this. No central authority, or government, will be able to alter the value of the currency.
Letter: "Crypo rests on tech that is useless." Blogger: "I disagree, I think there are some fascinating things to be done with blockchain tech! Just... don't expect me to share them. You should DYOR."
sigh
once you have a trusted third party, though, you no longer need permissionless blockchains and PoW/PoS. that also eliminates the need to "mine" and the environmental concerns. of course it also eliminates the get-rich-quick schemes as well. you wind up with VISA running on top of a permissioned DLT.
Isn't VISA just an escrow agent between every transaction who also lends money and charges interest to the purchaser?
So in a sense, the escrow is sort of like a smart contract on the block chain. The disconnect happens between the physical and the virtual world (how would you know activity X took place in the physical world to advance the transaction through its lifecycle?)
Escrow, as it has conventionally existed, tries to accomplish that same thing, but isn't quite that thing. In the moment, the escrow agent must themself manually initiate the "triggered" property transfers, and is capable of violating the rules, hence why they have to be a trustworthy party. Sure, they can be sued later, but in the moment they can effect the transfer.
This is substantively different from a smartcontract where that all happens automatically.
You card issuer, which is usually a bank, lends the money and deals with the account.
VISA does not lend any money. They just provide the service of moving money for a fee.
If governments want to spend more than the rest of the economy, they should finance it via taxation, not inflation, which erodes people's savings.
The simplest apparent answer is that this (the provision of payment services) is not a competitive market and as small retailers have nowhere else to turn, they're forced to pay high rents to what would have been called a trust in late 19th century Gilded Age terminology.
The solution is also fairly clear: if you have what's called a 'natural monopoly' then it should be state-owned and state-managed (see the network of roads, water pipes, etc.), and if it's not actually a natural monopoly - meaning a system where competition doesn't make sense, i.e. having multiple networks of privately owned roads is silly - then you need anti-trust actions by the government to foster competition in the industry, which would reduce fees and costs for merchants.
Arguably, if consumers had to pay the cost of transactions, rather than merchants, you might seem a lot more political pressure to make credit/debit card transactions the same cost as cash transaction, i.e. no added cost.
Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers, so perhaps that's the best option for the credit/debit interface as well. Of course, this would allow government to track everyone's individual non-cash purchases, but then they already have access to the credit/debit ledgers, don't they?
Crypto takes a different approach: a single protocol that is shared across all countries.
Ultimately, as someone who finds blockchain technology really cool, what I struggle with is, in which scenarios is blockchain better than Postgres?
Different developers are comfortable building inside a shared execution environment. If Western Union built a smart contract execution system, you'd have a much, much harder time convincing developers to build inside of it than you would on Ethereum. It would be much less likely that Ethereum would shut off, change the rules, ban you from the platform, etc.
The advantage that gives blockchains is composability. Thousands of different applications can instantly talk to one another using standardized calls inside atomic transactions. Databases by contrast are siloed. So they work really well if you stay within the application that database was built for. But really poorly once you try to cross applications, and hence databases. Imagine how hard it would be and how many hoops you would have to jump through to be able to use Venmo to buy Nasdaq listed stocks. In contrast USDC and Uniswap work together seamlessly because they're both built on the same common credibly neutral layer, Ethereum.
Banks have the privilege of being legally required for any transaction greater than 10k euros or such. Therefore it is only fair that they must ensure cheap service.
Cash ain't free!
Sure, I give you the cash, now you have the cash. But you don't want a heap of singles in the back room, you want money in the bank.
Firstly, you need to keep that cash securely, which has a cost. Then, you need staff to reconcile your takings with your figures for the day, which is a cost. Then it needs (secure) transport to the bank (cost) and the bank may charge you fees for cash handling.
Sure, for individuals who sell things infrequently, it's fine, but for a business there are significant costs. This is why (for example) in the late 90s and early 2ks in the UK, large businesses pushed pretty hard for the 'cashback' feature on debit transactions, so they could offload some of it back to the consumer!
This is almost always missed in this debate. Credit cards are evil because they have fees attached and I, as a pure, innocent cash user have to pay the same price! Scandal!
But you may actually be costing the business more, especially in places where such fees are capped. This is part of the reason why we see card-only retailers popping up in some countries now.
Where I live, the 'roads' are owned by each individual property owner with an easement to every other property owner in the town. Why would we want a group of government bureaucrats to literally own our roads?
Oh, maybe you don't know how easements work?
The easements are reciprocal to everyone else in the town.
An interesting thing with this is that if a giant company wants to drive around, take pictures of everything, and then monetize those pictures (G's street view), they would be trespassing.
Nobody (but my neighbors, rarely and just for short time) parks cars in front of my house because it is private property. No need to ask a government road owner to pass ordinance to restrict parking of RVs, and put up no parking signs, and have police write tickets ... it's private property and a call to towing company gets it removed from my property. In practice, everybody is polite and friendly.
I am curious how anyone other than maybe Google street view is losing. Who do you think is losing? Who is there to charge, as the people using the roads live there and have the easement for use.
A huge positive is that I don't need a stupid license plate or even a license to travel around in a car or on my dirt bike. It's private property and the government rules only apply on government roads.
In a small town privately-owned roads can work because there aren't many outsiders using the roads, therefore the road owners are themselves the main road users, and so they may have the right incentives to do adequate road maintenance, and they don't charge anything because they have a reciprocal agreement, but a large road network that is privately owned would lead to a "monopoly equilibrium" where roads would be poorly maintained and road users would be charged high fees.
It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"
Source for this misinformation?
https://ycharts.com/indicators/bitcoin_average_transaction_f...
Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee.
Unlike credit card transactions, which are a percentage of size.
Let's also remember that work is being done to do low cost smaller transactions on L2 networks.
It spent half of 2021 in the 10 dollar range.
> Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee.
You don't use a credit card to send huge amounts in the first place.
Personally I need to do ten and hundred dollar transactions. One or two dollars for bitcoin would not be terrible for the latter, but it's still a lot more than a debit card ($0.21 + 0.05%), with no advantage to me over debit. I think that's a better comparison than the complex situation credit cards are in.
I don't imagine anyone ever uses credit cards for billion dollar transfers anyway, normal banking is good enough for that. I just checked and the business account that I use for contracting has EUR 0.10 flat fee costs per transfer to anywhere in the SEPA region.
You gotta get up to speed with these things then. A lot has been happening the past year.
Lightning in it self is used all over the world by small vendors in developing and western countries. And it's a mix of using a service provider for using this (usually in the west) to self custodian where they cannot motivate the cost.
It was one of the big things needed before El Salvador's legal tender roll out.
I can give you more examples if you want.
https://twitter.com/HODLneverSODL/status/1518134911244320769...
https://twitter.com/CoinCornerMolly/status/15323143997629480...
Current transaction fee (for 1 cent or a billion dollars)
Bitcoin - $1.62 per transaction
Ethereum - $3.50 per transaction
Ethereum L2 - as low as 12 cents
Here are credit card fees by comparison (lowest fees assuming you have high volume):
Visa 1.29% + $0.05
Mastercard 1.29% + $0.05
Discover 1.48% + $0.05
American Express 1.58% + $0.10
https://www.fool.com/the-ascent/research/average-credit-card...
If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.
In theory. Many banks are not using this system and stayed on old SEPA wire transfers: charges split between sender and receiver or covered by sender, 3 work days to process, ability to pay more to speed-up the process by two days etc. It's slow and/or costly.
At present, this global computer is very weak. Cryptocurrencies are a good first program to implement on this computer because each transaction is essentially just adding and subtracting a few numbers. So yes, in some sense, it's crazy that the cost of adding and subtracting a few numbers costs $20.
However, even though these global computers are currently very weak computationally, the new computational model allows for new things to be built. For instance, smart contracts. Using smart contracts and cryptocurrencies, you could easily implement almost every facet of the global financial system. From bank accounts, to money transfers, to bonds, to securities, brokerage services, margin services, options, credit default swaps, etc. Yes, many of these things can be implemented some other way, but blockchains allow anyone with a computer to build something along these lines.
And yes, it's nice that the Eurozone regulated free money transfers. But how much work went into building the Eurozone and passing the required regulations? What if you want to write your own options contract? How long would it take to get regulation passed in the EU to allow free options contracts? Blockchains allow you to build a system akin to the entire EU banking infrastructure from your laptop. Even if it's not quite as good as the current system, I think it's still a cool idea.
Any fraudster that wants to!
There are more reasons than technical why such things are limited.
> The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost.
If the original design of Bitcoin anticipated Visa-scale transactions for a fraction of the cost, what's the motivation for a L2?
I'm assuming Nakamoto wasn't being cheeky when he wrote fraction of the cost. Afterall, 1000/1 is a fraction...
I could just as easily come up with a post hoc story that says that the reason that he has never come forward to claim credit is out of extreme embarrassment about the size of the fortune he lost, and that this is evidence that he does care about the money.
The entire conversation started because someone pointed out that just because Satoshi said something doesn't mean it has to be true (although they made that point in a rude way.)
The vibe I am getting from your responses is: 'satoshi is a saint, everything he said has to be true, and any attempt to point out that we have little evidence about Satoshi's character is a baseless smear.'
I am sure that is an inaccurate and unfair characterization of what you are trying to see, so please correct me as to where I have it wrong.
I thought you were defending the a comment claiming satoshi was being malicious. I would've done better to search for a more charitable interpretation.
If Satoshi did stretch the truth or lie in that quote, I would be inclinded to view it as motivated by ideolatry rather than greed. However, any speculation as to motives is fairly pointless given the lack of information.
For all we know, these coins have already been "burned"
like I said, the best you can do is burn the private keys, but that isn't verifiable - you can't prove something doesn't exist
The leading L2s on Ethereum are rollups, which store all transactions on chain in compressed form.
the TAM is 400+ trillion.
Payments are low margin, low value business. Often even subsidized by the systemic banks.
Do you really think it costs zero to secure the entire GDP, and the entire wealth, of an entire economy? zero cost SEPA transactions don't secure the EU economy. The US military and their nuclear weapons do, and they don't cost zero, like a SEPA transactions for a coffee.
What's the cost to secure 10 trillion? 100 trillion?
What do you mean by that? Backing?
The point is that money is not wealth. Wealth is the ability to consume goods and services. If you got stranded on a deserted island with a suitcase full of millions you'd still live in extreme poverty despite all your millions.
Therefore securing crypto-currencies doesn't replace the need for securing actual wealth. On the contrary, it's an extra cost that its users have to bear, in addition to the costs of securing GDP and the entire economy.
The suitcase, stuffed with medium of exchange, holds value across time.
This is the key concept to understand the issue at hand.
For a medium of exchange to become useful, it must first become able to hold value, preferably long term, months/years.
The only way an asset can do that, if there is demand to hold the asset for long durations, committed long term investors.
Bitcoin is an experiment in bootstrapping a neutral money system from scratch.
If you look at bitcoins money velocity, it’s much closer to M2, than M1. Thus comparing it to investment assets, or bonds, is much more relevant today than to payment systems. It’s a store of value for now, maybe a little speculative, sure.
Once it grows large enough and value becomes more stable, it can become a decent medium of exchange then.
This implies market capitalisation in many trillions, and if it proves to be successful: displacement of many other store of value. Negative yield bonds, gold. Maybe even real estate and rental yields on that are actually negative in real terms in many markets. We will see.
As such it would represents a cloud economy of sorts with large amounts of wealth stored in it, trillions of dollars. That would require a correspondingly sizeable security budget to protect.
Regarding the question of bitcoin's utility as money. The defining trait of money is that it's used widely as medium of exchange, not that it holds value. An asset has to hold value reasonably well, for it to be able to be used as money, but holding value is not what makes an asset money. Some assets depreciate quickly and don't hold value, but most don't, most assets do store value and yet are not money. Is bitcoin a good store of value? No, it isn't, because a good store of value not only has to hold value over long periods, it also needs to have low volatility. Using a high volatility asset such as bitcoin as a store of value, means there's a big chance you may forced to sell it at times when its market price is well below your purchase price.
Lastly, I don't know what "bitcoin's velocity" is. As far as I know, the velocity of money is a concept from the Quantity Theory of Money. The basic assumption that this theory makes is that GDP is sold and paid for with money. If you wanted to apply QTM to bitcoin, first you'd need to locate a country that sells its entire GDP in bitcoin, and only then you could calculate bitcoin's velocity, in principle. This velocity would be specific to this country. Then again, I'm not aware that such a country exist, so I don't know what you mean by bitcoin's velocity or why it is relevant to this conversation.
> That’s why it recently cost $22 (!) to send a single token transaction on Ethereum
So Ethereum has prices ranging from 3.5$ to 22$? Great.
And vast, vast majority of my transactions would be costlier on Ethereum. I am rarely paying over 267$ in one transaction. 22$ per transactions would result in typical grocery shopping doubling in price. 3.5$ would be noticeable.
Also, in bank transfers that I use I am simply not paying anything at all (within European Union).
> well under Visa/MC fees most of the time
That is simply untrue, and depends on how much you transfer.
So there's the units of computation used x "gas price".
But yes, the "gas price" that serves to price congestion on the network is wildly variable due to congestion and low throughput. And that limited throughput is currently a real practical problem as you've pointed out in that the fees are too high.
The answer will likely be in L2s as other people are pointing out. I think one interesting side effect of this ecosystem is it is actually driving new research and application for cryptography (including substantial funding): for example practical uses of zero knowledge proofs.
L2 like zkSync and Optimism are already very cheap and can likely continue to get cheaper.
And for those transactions using cash, let alone BitCoin, would not have eliminated those transaction costs.
Charging the same price for 1$ and 1000$ transaction would either make 1$ transaction not viable (BTC/ETH is doing this) or would be overall less profitable.
https://en.wikipedia.org/wiki/Price_discrimination
Also, insuring against fraud is actually more expensive for more expensive transactions. And CC provide some minimal service here.
Whether you need any of these is debatable of course but it’s extremely disingenuous to consider it an apples to apples comparison seeing as blockchain provides literally none of these things.
For large transfers (a billion dollars) the banking transfer fee is likely zero. I don’t pay for wires with no limit and my status/relationship with banks is nowhere near where it would be for a billion dollar transfer.
Oh and wire transfers provide quite a bit of protection too. I recently had an international wire transfer where the recipient provided the wrong account number. For $10 the funds were returned. With blockchain they would’ve gone up in smoke and lost forever.
People make mistakes. Payment information gets compromised. Fraud happens. As long as blockchain is based on ignoring these fundamental truths it will never achieve any meaningful adoption.
You can have other ways of making sure payments are safeguarded...actually one of the smartest ways to do this was setup on the dark web illegal markets where there was a middle man that didn't have custody of the money (at least in the best multisig ones) but was able to complete or reverse transactions if needed. Basically an escrow account...
https://darknetone.com/understanding-multisig-vs-escrow-vs-f...
The other fees they rake in (I'm assuming you mean interest) are from issuing unsecured loans. That's another topic entirely.
Escrow is many thousands of years old and certainly exists in many forms in the financial system today. It's just that because of all of the other things I mentioned the average person uses it maybe a few times in their lives for very large and complicated transactions.
The suggestion to use escrow or some other kind of really convoluted system for extremely small payments when I can swipe a card anywhere in the world with all of the benefits mentioned above and more for relatively tiny fees is frankly ridiculous. Of course it makes sense for marketplaces where every single actor in the marketplace is breaking the law in the first place.
I've been involved in crypto since 2017 and I'm STILL waiting for a reasonable use case or application where it results in a net benefit for the average person.
Why would sellers need to pay up to 6% to a realtor and buyers pay thousands in closing costs...because there is a disparity in access to information. Crypto/Blockchains can change that.
Oh...and wire transfers can take up to 7 days before they are finalized. Crypto transfers it's generally considered settled in a few minutes.
Wire transfers can take several days, I suppose depending on mechanism/method. That said anyone who's participated in a real estate closing, funding round, etc knows you receive bank confirmation of the wire in minutes-hours and it's a done deal. In funding companies, for example, I've personally experienced this with wires in the tens of millions of dollars.
You are correct...but again this is something the average Joe doesn't have access to. With crypto/blockchain everyone has the same access (more or less) at their fingertips.
It's not a perfect system yet for sure...there is a long way to go, but it is a huge leap forward in leveling the playing field for financial usage for everyone (I mean just looking at western union in 2021 they had $5B in revenue...that's about 5% of the transaction amount with an average transaction size of $300).
Sellers and buyers don't need agents right now. Thanks to Zillow, the price disparity is moot. I knew more than my past real estate agent when I purchased my current house (it was a corporate move or I wouldn't have used one.)
Wire transfers should be instant and irreversible, that's why scammers use them. Where have you seen one that takes 7 days?
The money is often frozen completely then returned to the defrauded party if caught quickly enough. Sometimes banks try to screw over people who are found to be victims of fraudulent transfers after the money has been pulled from the receiving bank.
When you are moving large sums of money between well known institutions the money is very illiquid, mostly to prevent mistakes, fraud, etc. It’s why most fraud that you hear about involves movement of money overseas or into another type of asset or more liquid form, e.g bills, physical goods etc.
No one sits their stolen funds at chase bank… Makes blockchain and NFTs the perfect gateway for fraud.
https://www.bloomberg.com/opinion/articles/2021-02-17/citi-c...
If this was done by check, Citi could have simply cancelled the check.
New payments contracts now include "revlon clawback" clause. The blockchain analogy is a buggy smart contract that gets fixed.
Even worse, because Bitcoin is no recourse, if you find out that there was legitimate fraud (seller doesn't own the deed, house has leans, etc..) you have some possible recourse while Bitcoin doesn't give you anything.
None of the type of information disparity that realtors help with are going to be solved by blockchains. Perhaps you could eventually build a better title system, but title-related expenses are a tiny portion of closing costs and there are reasons for the complexity.
The biggest portions of the closing costs that aren't directly related to the lender's pricing or real estate commissions-- title insurance-- can't go away anytime soon because the claims they protect against can be decades old. So even if you had a perfect title system today (which seems really hard) and everyone moved to it instantly, we'd still be stuck with those costs.
Except 500x is not nearly enough. It may be enough to temporarily drop the fees but it a post-blockchain world where everybody does dozens of blockchain transactions a day, be it to play a game or buy a coffee or ride the subway, it's not ever close to being sufficient. Your scaling factor needs to be millions of times better.
So what's the solution? Even more complexity on top of this ridiculous Rube Goldberg machine? All that to emulate solutions that already exist and already work well and vastly more efficiently?
Why?
Rollups on Ethereum today can handle a couple thousand tx/sec, and the sharding system they have planned will boost that by about a factor of 200. These systems are somewhat centralized for block production but fully decentralized for verification.
Having had to spend time more than once physically visiting bank branches to send wires, or wait for days to get checks to clear from one bank to another, I'm not convinced that today's solutions are all that impressive. They don't exactly seem simple, either.
> Bitcoin - $1.62 per transaction
This is misleading. A best-effort transaction can be submitted with a fee of 1 sat/vB. For a 374 vB transaction (a typical 2-in-2-out P2PKH -- see https://bitcoinops.org/en/tools/calc-size/), this is 11 cents. $1.62 is either an enormous transaction, or one submitted at very high priority.
1. Divide miner revenue (fees + seignorage) by the number of transactions, yielding the total amount that miners extract. It was $34m today, with ~261k transactions, yielding a cost per transaction of $130. [1]
2. Estimate energy cost at 1,173 kWh per transaction [2]. If you assume cheap electricity at say $.09/kWh you get a cost of $105 per transaction in electricity alone, which ignores hardware capital costs, etc.
Either way the cost is over $100 per transaction, and would be reflected in a falling value of BTC. But it may be masked if there's an influx of new money into the system.
1: https://ycharts.com/indicators/bitcoin_miners_revenue_per_da...
2: https://fortune.com/2021/10/26/bitcoin-electricity-consumpti...
If the creators had predicted its explosive growth, they would have chosen a faster rate of reward halving, more quickly bringing the transaction fees in line with the externalities.
Perhaps someone could create a "Bitcoin Green" fork which would simply speed up the reward halving to once a year instead of once every 4 years, since by now, everyone has heard of Bitcoin, and only large specialized operations can mine it profitably (thus the reason for its inflation has disappeared).
3.4 trillions in Jan 2020 -> 5.8 trillions now
Tell me more about the wonders of paying $1.62 plus currency conversion fees plus speculative asset volatility risk to send money to their bank account with eventually consistent settlement...
If you used real sources I'd take this thread seriously, but you don't and this is exactly why I don't respect the majority HN's view on most things with regards to Bitcoin and to a lesser degree crypto in general.
It's currently $0.04 for a high priority tx on the mainchain [0] right now as the memool is pretty clear.
- Transactions are more expensive in BTC for small amounts, and more expensive in Visa for big amounts.
- However this is only true if you use on chain transactions for BTC. BTC transactions using lightning are always cheaper than Visa no matter the amount.
- Lightning nodes do not yet form a network big enough to cover 100% of the transactions, and most transactions are small, so the idea that VISA transactions are cheaper for most people is, for all intents and purposes, mostly true at the moment.
Lightning, though, is quite an interesting system. Half of the solution it offers is technical, but half of it will be the social construction of the network of channels. I doubt most people will open one consciously, but I assume wallet providers will make that automatic.
Eventually, this means somebody needing the decentralized aspect of BTC will be able to open a channel and profit, while somebody who wants convenience will use a centralized wallet and be happy.
I suspect most people will want the turn key solution and that the system will centralize a bit.
Anything above 3000 will likely be cheaper using BTC.
But I see your point.
Although you are probably going to use your card to buy this: https://www.apple.com/shop/buy-mac/pro-display-xdr
But again, I see your point: our financial system is already very efficient, BTC will have to be way better than it current is before it can compete with it for day to day use.
I'll keep an eye on lightning though. It makes any transaction, no matter the size, instant, and cost a tenth of a cent. It has potential.
Mastercard and Visa charge a percentage (?!), Bitcoin is a fixed amount per transaction.
Plus Bitcoin won't deny your ability to make a transaction.
No, Bitcoin transaction fees are dynamic. https://bitinfocharts.com/comparison/bitcoin-transactionfees...
You pay a flat fee per transaction with Bitcoin, you pay a percentage fee with Mastercard and Visa. Yes, the Bitcoin fee changes with time based on a market. The Mastercard and Visa percentage changes based on how much they like you.
Visa will not steal all my money.
It's still new! It needs time! You need to follow the latest developments! It has a lot of potential!
It's time already that someone shows some of that potential and it better not be something like NFTs!
Aside from NFT, stablecoins like USDC and DAI are also quite novel and interesting applications.
These applications are providing value and utility to those using them, and could potentially improve other parts of the world’s payment systems by providing a decentralized option alongside centralized processors.
Crypto will be eternally new, because we will keep finding new ways to build on top of it. A few years ago zkSNARKs we’re not feasible on a blockchain. Now they are becoming widespread and being put into use. A few years in the future, we will likely have new cryptographic primitives that will provide new applications and areas to build and develop.
Not to mention, most NFTs as used in reality are 100% vapourware. As the owner of an NFT, you sometimes don't even have the right to reproduce the thing the NFT signs yourself (as in the case of the NBA moments NFTs).
Even when you do, you typically have no official ownership of the thing - for example, if you buy a Bored Ape NFT from someone else (not Yuga Labs directly), you'll likely have no legal standing to sue Yuga Labs if they later decide to delete the Ape you bought the NFT for (sinec you have no commercial relationship with them, and the NFT itself is just an NFT, it's not a contract).
Hah. Like giving Meta the ability to create legal disputes against long-standing companies that happen to share its new name. This is a system that rewards those with the funds to pay the legal fees, or settle disputes outside of court with large lump sums. Not all users want a system where Meta can take a domain you own simply because they now have a trademark that loosely correlates with it.
> Not to mention, most NFTs as used in reality are 100% vapourware. As the owner of an NFT, you sometimes don't even have the right to reproduce the thing the NFT signs yourself (as in the case of the NBA moments NFTs).
I am talking about ENS, not NBA moments or apes. NFT is permissionless tech, so there will be a lot of dumb and stupid ideas built on top of it.
Agreed, yet the government won't care and will make sure enforcement happens anyway.
If your NFT based domain system is used by a dozen hardcore nerds, then nobody will care, sure.
But if it somehow managed to overtake DNS and become the de-facto standard, the government would just come up with a way to regulate it anyway. Eg, they'd demand that web browsers not implement ENS, or consult some sort of additional blacklist.
That the trademark system can itself be abused to take out other legitimate companies with similar sounding names, as happened with Meta, Apple and many others (even worse with McDonald's vs many family restaurants in Scotland) is a different problem altogether, that ENS won't solve either way.
Therefore, an un-debaseable, trustless and liquid asset is crucial in making the powers-that-be accountable for their actions.
As an example, the appeal of deflationary Bitcoin is much more salient to a citizen of Argentina than to a citizen of the USA (although recent inflation might make the appeal more obvious). Or on the even more extreme end, the citizen of Zimbabwe would much rather have decentralised solid crypto of one sort or another than their local currency.
The answer to dysfunctional governments is not get rid of the government. This is just dumb. We need well-functioning governments to enforce human rights, and law and order.
As you're probably aware, central banks are usually intended to operate somewhat indepentently from governments. (One could argue to which degree it's actually the case, though.)
Which means that monetary systems are supposed to be somewhat indepentent from governments.
Assuming that Bitcoin were to be adopted as some kind of reserve currency (held by central banks) and also used by states and citizens, where exactly is the "getting rid of the government" happening there?
Exactly, nowhere.
> We need well-functioning governments to enforce human rights, and law and order.
Agree. But this doesn't rule out the possibility of indeed using Bitcoin.
Bitcoin undermines governments. For example, bitcoin adoption would seriously limit the government's ability to manage the economy via monetary policy. It would also affect its ability to prevent unrestricted movement of capitals in and out of the country, and within its borders. Financial regulations would be harder to enforce, and a larger chunk of the economy would go underground. So, clearly, it would weaken governments. I don't know that anyone disputes this.
Bitcoin undermines certain possibilities of governments, yes.
As most western governments have been successfully hijacked by big corporations so that politics are skewed heavily in favor of the corporations' interests, it has become a tough decision IMO between:
- A: letting governments continue to be the executive branch of the Exxons, Apples, Googles, Facebooks, Amazons, ... and letting the latter continue with making few people richer and letting Gini coefficient converge to 1
- B: taking away governments' favorite (because in the beginning it's so nicely subtle that people won't object) instrument (more debt) to enact politics and thus forcing them to make uncomfortable choices instead
The current system appears to be instable (at least to me). Instability hurts more than continuity, everything else being equal. Bitcoin could become either an effective threat to discipline governments to not let their spending get out of hand or the very foundation to build a new stable monetary system.
We'll see. If it turns out to be more stable, people/institutions will in the long term converge to it.
> ... and a larger chunk of the economy would go underground.
Which is exactly what needs to happen (ideally not in a crash but in a soft transition) in order to get humanity's ecological foot print to a sustainable size in the short time that's left. As soon as the economy has transitioned to sustainable processes, it may of course grow again, but right now, what we need is gentle shrinkage or "degrowth".
Well, I think I misunderstood what you meant by "underground", confused, I wouldn't say I am.
> Monetary policy is not a tool to finance government spending.
Ok, it is not officially intended to be, sure.
> Sure, it might be used for this purpose, but this is not the point of it, ...
Here's the problem. In reality, monetary policy is indeed doing exactly that. ECB is currently planning to stop buying up government bonds. Whatever technical term you use for this buying of bonds is irrelevant. Effectively this ECB policy has been supporting the growing national debt of Euro zone states.
IMO the actual situation matters more than the theoretical/proclaimed purposes/goals of policies. Yes, the ECB can state "our goal is 2 % inflation". But that statement ought to be a lot less relevant to someone who wants to judge the current state of affairs and make decisions for the future than for example the actual number (inflation).
> Second, the underground economy has nothing to do with ecological sustainability or economic degrowth.
I read "underground" here as "shrinkage" of the economy. That was a misunderstanding on my part then.
To get to your take on this. The claim that Bitcoin would make the "inofficial" sector of the economy grow bigger/worse than it is under the current monetary system is IMO only that, a claim.
Sure, some cryptocurrencies provide working privacy. Bitcoin isn't really one of those.
I'd be confident that - were Bitcoin to become relevant as some kind of reserve currency - there would be effective measures taken, to make anonymous transactions really difficult if not impossible.
Also Bitcoin critics: Bitcoin is not deflationary.
When you're seeing one extreme weather event after the other and a climate catastrophe is imminent, is it a reasonable choice to run the world economy at full throttle, considering that this economy is still based on ~ 80 % fossil energy?
It's like when your car is speeding towards a concrete wall ... and you keep your foot on the gas ... because you "want to make a really fast turn to the side to avoid the wall".
Is your claim Bitcoin is deflationary, and if so how do you define deflationary?
“Bitcoin consumes 'more electricity than Argentina'”
"Wash dryers consume more electricity than Argentina."
"Steel foundries consume more electricity than Argentina."
What is the point? Comparing global electricity usage of a single sector and comparing it to the usage of a whole country is meaningless.
On a yearly basis, (US) Christmas lights use more electricity than Montenegro or El Salvador.
It doesn't say anything about the worthiness of Christmas lights, but it makes them a much smaller gain if you eliminated them.
US clothes dryers account for 60 billion kWh / year and by and large rely on direct heating elements. Switching to a heat pump design could apparently cut that in half: https://www.energystar.gov/ia/partners/pt_awards/SEDI_Fact_S...
It's the old saying about no silver bullets. There's a lot of small but meaningful low hanging fruit we could take advantage of that begins to add up in a big way.
... and it benefits much, much fewer people.
That's analogous to the pro-air-travel disinformation argument: "air travel is only 2% of CO2 emissions". It is only so because air travel is only adopted by a small minority of people: that doesn't stop it from being insanely carbon-intensive.
These facts don't provide a defense of one or the other as "not that bad"; these give us multiple opportunities to make small but meaningful reductions in waste with relatively little impact on the quality of life of the world at large.
In the EU we have a functioning carbon cap, and as such mining is less profitable here.
https://ec.europa.eu/clima/eu-action/eu-emissions-trading-sy...
But the US will hear none of it:
A quick web search tells me that the law which capped credit card fees at 0.3% is from 2015. That's less than 10 years ago.
After explaining improvements to this specific issue, it still feels like way too much friction for the average person to deal with. I think there will be more improvements as time goes on but maybe that's just the cost of doing self-custody. In the end, I guess it's up to the individual to decide whether it's worth it or not.
Wouldn't it just require one to be hacked - where the risk is losing access to your wallet? Say an evil hacker destroys one of the halves of your private key, now the wallet is unavailable.
If the risk is - drain the account - then yes, both would need to be hacked in order to get access.
However, I'm sure the MPC wallet prompts you to write down your half of the key on a piece of paper during wallet set-up. That way if your device fails (or you cross fate with a particularly chaotic hacker), you can import your key into a new wallet.
(big sigh)
> proof-of-time-and-space construction used by Chia
as reason to reduce importance of induced waste. Chia just wastes something different and is not improvement in any form.
Not really. If someone did something stupid it does not follow they are stupid. The same for evil, dishonest or irritating acts.
Though maybe "weird" would be better than "dishonest"? I posted in this form in comments on the original article.
Other cryptocurrencies are experiments in changing Bitcoin in ways that:
1) Are not enough of an improvement to break Bitcoin's network effects (Monero, Litecoin, etc).
2) Change the consensus rules so much that it ruins the incentives and wildly increases complexity and attack space (Proof of Stake blockchains).
We haven't even come close to unlocking the value of the Bitcoin innovation. Thankfully, short-sighted articles like this won't be enough to stop it.
Yes, Blockchains inherently get their robustness from an incredibly wasteful algorithm. No it's not a problem they're inefficient because we're actually just going to do everything off-chain. No, it's not a contradiction for my defence of cryptocurrencies to advocate for not using them.
Ok, so I've been a bit snarky here, but the core of what I want to say is this: It is very difficult to read about the compromises made to achieve practical uses of crypto and still have the view that there's any of the original value proposition left.
I think the best cryptocurrency defence is just "We've got a lot of smart people trying new things and maybe something of value will end up being created". That's about as compelling as you can get.
While not usable as currency, cryptocurrency is still an asset crucial for holding government accountable for its spending. Government can dilute fiat currency, but not Bitcoin for instance.
Every article or comment defending cryptocurrencies has followed this pattern and it isn't convincing to me. I'd love to have my mind changed, but when every rebuttal follows the same script, I remain am unmoved.
I guess to your point. How much corruption is avoided, and how much wealth is being saved that would otherwise be locked out? Without the means to quantify it, it feels like another, "this is theoretically possible"-type argument in the same way. The answer I expect to get is, "No one knows, but it is possible." I guess I'll keep waiting to be convinced. There are a lot of great things that are theoretically possible. Still waiting on them.
Sure, but this presupposes that Y's trading volume and/or market cap are indeed actually insignificant. A lot of people make that presupposition, but it's often about as accurate as a drunk chimpanzee playing darts. Proof-of-stake is the case-in-point: "but but Ethereum hasn't switched yet so therefore PoS is obscure", quoth the "skeptic", entirely ignoring that multiple of the top 10 cryptocurrencies by market cap and/or transaction volume are already proof-of-stake and have been for some time now.
Even taking that presupposition at face value, what's experimental today is less so tomorrow. That experimental solutions do exist bodes well for the state of things even months (let alone years, let alone decades) from now. If you want to wait until then, then you do you; meanwhile, those of us willing to experiment will do so.
I would hazard to say that it's not the criticism of the current state of cryptocurrency that irks most of its proponents - most of them agree that it's not very useful currently.
However, it becomes problematic when you take that valid criticism of the technology's current state and use it to support the conclusion that the entire tech is a permanent dead end. That problematic reasoning is what this article's really speaking out against.
If you want your mind changed that cryptocurrency is currently useful, I can't help you there. But if you want your mind changed that many of the drawbacks of blockchain technology are not as insurmountable as detractors would have you believe, the article does a good job of laying out points in favor of that.
Let me summarize the sentiment to see if I'm understanding: "I'm excited about crypto now because of what crypto could be in the future."
To me it feels like being really excited about technology X because technology X+n might fix the problems with technology X. I just can't get behind that as a general principle. I've been hypeburned too much and I just don't have it in me anymore.
It's your right to not be excited about cryptocurrency, and your reasoning is fair enough. Also, the article does a good job of clearing up misinformation about what cryptocurrency is intrinsically incapable of. I don't think those two things are in conflict.
Rather, a technology should be judged against its present merits. As an extreme example:
A: I have cancer - just a few months yet to live with the currently developed treatments.
B: That's actually not a problem because cancer treatments might get better in the future.
Should A feel great instead? No. The converse is that any technology can be accepted. Future merits or lack of future merits are simply not a justifiable measure by which a current technology should be judged. It's as absurd. Just as absurd as saying, "You should like natto today because some day natto might taste better."
The amount of kettle logic that occurs in these types of discussions inevitably leads to that. I wish there was a way to talk about crypto holistically, but discussions about externalities get detoured into discussions about counter-examples, which get detoured into discussions about value, which get detoured into discussions about monetary policy. Every complaint is met with a just-so rebuttal that brings in a new dimension of justification. Cryptoskeptics end up being defeated by attrition. It's a fine way to cinch a debate rhetorically, but lousy at changing people's minds. I guess that's the rub, people just drop out which looks like a win. I wish cryptoenthusiasts saw how that happens. They could make better arguments.
Bitcoin's decentralization does not come from miners. It comes from the fact that users will not recognize blocks that do not follow the protocol rules, as being part of the blockchain.
As a consequence, market participants will not pay as much for "bitcoins" that do not come from valid blocks.
The fundamental service miners provide is that proof of work is used as a "tiebreak" so that bitcoin users can determine the "true" chain among all the chains that follow all the protocol rules.
Miners really are just dumb utilities.
A miner staying within the rules of the protocol can do two things that are negative. First, a denial of service attack by mining empty blocks or censoring transactions. Second, executing a "double spend" if he has more than 50% of the hash capacity.
Those are serious considerations. But we cannot claim that bitcoin's decentralization is reducible to those two things. The current allocation of hash power among miners is actually far more distributed than what is really needed for bitcoin.
Implicit in all the above is, miners do not "vote." That can be a helpful analogy, but it shouldn't be taken too far.
Show me.
The problem is in this passage (mine the emphasis):
> But the question we should be asking is not whether to be angry about the power consumption of proof-of-work mining. We should be trying to figure out the right path out of this mess. And more concretely, whether there’s a path forward which is more likely to produce *a good outcome* than what is already happening in the industry — namely, that projects are rapidly deploying cleaner technologies to replace proof-of-work.
1. What is a "good outcome?" A good outcome for whom? A great outcome for most species, and most h.sapiens, would be an outright ban, because of the risk spread.
Think actuarially:
There is always the possibility the crypto industry trends cleaner, but legacy chains will be around for yonks, and bluechip crypto is unlikely to ever move off PoW. This means that, yes, while there is a possibility the industry might trend clean, this is an emormously polite way of saying that the downside risk is both severe and likely.
Put another way: if you were selling planet insurance, and you found out they had a lot of PoW crypto going on but were thinking about maybe one day kicking the habit, you'd probably either charge them a fortune or tell them to take a hike, right? Think actuarially.
There is also a suggestion that banning mining (or crypto transactions) might just move the action to other jurisdictions. This suggestion seems strained: for while a coordinated international treaty or ban might make time to confect, it's certainly not impossible. Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property.
A ban on crypto mining would likely be even easier to implement and spread, as most nation-states correctly view crypto as a threat to their command&control. I mean, look at Ecuador.
Finally, banning crypto would also be something nation-states could take back to their populations as proof of progress on climate change. And they'd even be right.
As harsh as it is for a supporter of crypto (and former industry wonk and former whole-coiner) to say this, I'm sincerely beginning to think that the lasting value of this whole Blockchain Thing has been the thought it has provoked. I, for one, would never have had to think so deeply about the nature of value and currency.
But you know what? These days, I stick to fiat.
This only logically follows if literally all cryptocurrencies are proof-of-work (let alone proof-of-work using a hashing algorithm as energy-intensive as SHA256). This is patently false, and therefore the assertion that an outright ban on the very concept of a cryptocurrency is somehow a net benefit to global society requires more of a supporting argument than "Bitcoin exists and is currently dominant". By your metric, banning only proof-of-work cryptocurrencies would be more than sufficient, assuming that such a ban could be enforced...
> Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property.
Right, and that totally eliminated (or hell, at least even significantly curtailed) copyright infringement in those jurisdictions, right? If you sincerely believe that, then I've got an NFT of Ecuador to sell you.
The cat's out of Pandora's box. You can't "uninvent" peer-to-peer networking, and you can't "uninvent" decentralized ledgers. Nation-states can impose whatever bans they want; unless they're willing to pull a PRC or DPRK and start committing rampant privacy violations for censorship reasons, those bans are toothless.
Against this, I argue:
- easier/cheaper hashing actually doesn't work -- the yield curve in bitcoin mining is there for a reason, and without it, I doubt PoW would fly.
> ...and therefore the assertion that an outright ban on the very concept of a cryptocurrency is somehow a net benefit to global society requires more of a supporting argument than "Bitcoin exists and is currently dominant".
Bitcoin is an investment, because it's terrible for small, frequent transactions. (Both in UX and eco terms.) Reductio ad absurdum: If it doesn't remain dominant, then it has no use case, as it's a lousy investment instrument. If the above goes throw for bitcoin, then, a fortirori, the same reductio can also apply to any other PoW coin.
And don't get me started on PoS -- it's literally just an MLM you can buy into. A system for centralizing wealth in the hands of whoever already has it.
> Right, and that totally eliminated (or hell, at least even significantly curtailed) copyright infringement in those jurisdictions, right? If you sincerely believe that, then I've got an NFT of Ecuador to sell you.
It did, though? I remember the nineties well -- relatives would go to China and come back with armfuls of factory-pressed CDs and DVDs. Anything you wanted. Clean and new-in-box. That went away because of IP protection baked into trade agreements. And before you say 'BitTorrent', please remember, the analogy is _factory_ piracy -- because, like nineties piracy, Bitcoin requires mining rigs, and these are large, physical assets, like factories, and this is unlikely to change. What happened to IP after Napster is another thing, and does not invalidate the analogy. A similar virtualization/p2p move is unlikely to work for mining. (But I could always be wrong about this -- I'm open to persuasion, if you can paint me a word-picture of what competitive distributed mining would look like, other than NK Monero malware.)
> By your metric, banning only proof-of-work cryptocurrencies would be more than sufficient, assuming that such a ban could be enforced...
It's not hard -- a helicopter and a FLIR cam would work, as well as cooperation from the energy provider. Choke off the supply of mining, and wait for this to in turn cause transactions to become unwieldy.
> The cat's out of Pandora's box.
Shoot it, then.
> You can't "uninvent" peer-to-peer networking, and you can't "uninvent" decentralized ledgers.
Yes, but you can ban the sale of various things. Laws are possible things.
> Nation-states can impose whatever bans they want; unless they're willing to pull a PRC or DPRK and start committing rampant privacy violations for censorship reasons, those bans are toothless.
Expand/explain. I do not understand the point you attempt to make.
And yet there are numerous non-SHA256 proof-of-work systems that have worked (pun intended) just fine while having lower energy requirements.
> Reductio ad absurdum: If it doesn't remain dominant, then it has no use case, as it's a lousy investment instrument. If the above goes throw for bitcoin, then, a fortirori, the same reductio can also apply to any other PoW coin.
This presupposes that all PoW coins have the same properties - never mind that pretty much every cryptocurrency created since Bitcoin has had "do it faster and cheaper than Bitcoin" as an implicit if not explicit goal.
> And don't get me started on PoS -- it's literally just an MLM you can buy into.
The people who say this are the same people who know next to nothing about PoS.
> I remember the nineties well -- relatives would go to China and come back with armfuls of factory-pressed CDs and DVDs. Anything you wanted. Clean and new-in-box. That went away because of IP protection baked into trade agreements.
It went away because now you can buy knockoffs on AliExpress instead of relying on relatives in China.
> And before you say 'BitTorrent', please remember, the analogy is _factory_ piracy
Nope. The equivalent to electronic money is electronic piracy. Moving the goalposts does not a good argument make.
> Bitcoin requires mining rigs, and these are large, physical assets, like factories, and this is unlikely to change.
Again: there are other PoW blockchains besides Bitcoin.
Even in Bitcoin's case, hashing ASICs don't have to be large; that's currently the most profitable approach, but mining can and would readily adapt. SHA256 is also a common enough algorithm outside of Bitcoin that hardware accelerators for it have ample non-Bitcoin usecases; you'd have a hard time blanket banning any and all SHA256 hashing unless you're willing to break password authentication for the vast majority of computers in a given jurisdiction, and you'd likewise have a hard time justifying the ban of hardware that makes password hashing faster (even if it just so happens to be capable of mining Bitcoin).
> a helicopter and a FLIR cam would work, as well as cooperation from the energy provider.
And if the farm's off-grid on solar? The energy provider would have zero visibility on that, and the helicopter flying around day in and day out would be far more ecologically destructive.
> Shoot it, then.
Good luck with that.
> Yes, but you can ban the sale of various things.
We're literally talking about a class of electronic currencies which do not give the slightest sliver of a rodent's anus whether there are laws prohibiting a given transaction. That strategy hasn't worked for IP infringement (despite your assertions), it hasn't worked for the drug trade, it didn't work for liquor trade during Prohibition, it's already starting to fail with the firearms trade in gun-restricting countries (thanks, 3D printers and hardware stores!)... there is zero reason to believe it would work for cryptocurrency.
> Expand/explain. I do not understand the point you attempt to make.
What part did you not understand?
Just wait until a few years from now when cash money will be phased out and replaced by CBDC's. That's when suddenly all those critics will wake up in horror and realize that money as we know it ceases to exist. What money is CBDC's than? Well, it's credits, social credits to be more precise, controlled by smart contracts, controlled by governments.
So with these government controlled smart contracts in place, how are you going to give your kid a 1000 bucks? If the government only allows you to give a maximum of 100, than that 100 limit will be programmed into the smart contract and your 1000 bucks transfer will be rejected. Or imagine you want to go a second time on holiday in a year. The smart contract might be programmed to only allow you 1 holiday a year due to carbon footprint, now you cannot book your flight. This is just the tip of the iceberg, when you just take a little time to think about all the ramifications, you should get worried. They are even planning to control how and on what you can spend the money you earn, it's written in publications, and no it's not a conspiracy..
The total control of humanity that CBDC's will bring is a horror story. It's comparable to the Chinese Social Credit System, but then on steroids. Much of the smart contracts will be run by AI. So, what are you going to do when for whatever flaw in the system or whatever reason your credits are blocked? You don't own money, have no wallet, you might not even be able to buy a piece of bread, whatever you credit score was before. That's what's in store for you crypto currency critics.
So please, do your due diligence and think twice before criticizing crypto currencies.
"Smart contracts" okay, the cryptobros can't even make smart contracts for bored monkey pictures without shooting themselves in the foot 10 times, why do you think a government will suddenly need one of those to do anything?
Why do you think the government needs an immutable ledger powered by inneficient computations to keep track of transactions when current DBs work just fine? The cryptobros can't even make lightning scale to the size of a small ecommerce site and want us to believe that somehow that's the future?
But to be fair crypto has its uses: speculation and separating fools from their money
They mentioned CBDCs, not blockchain.
1) is much easier to address (at least in vague and aspirational terms) but rather uninteresting in the absence of clear examples of 2).
- the option for non-custodial and semi-custodial ownership of things like digital assets, from currency to domain names to other types of online property. most of our digital assets today are custodial, owned by companies seeking to gain profit and create moats. maybe some users would like another option, despite the additional risk of having to maintain their own private keys.
- fast settlement times for worldwide payments that do not require routing through a centralized intermediary that will skim a significant percentage off the top of each trade. fees paid in a PoS system can be redistributed to all participants in the network through burning + staking and delegation, which is a very different way of handling payment processor fees than what we have now
- a network of financial applications and systems that is permissionless, so that anybody can fork an existing tool or deploy their own tool without going through regulatory hurdles and roadblocks based on an archaic tightly permissioned boys-club financial system
- smart contract functionality like a 0% fee crowdfund contract that can support hundreds of thousands of participants, settle instantly, and even provide shares as tokens back to donors in case some future rewards should be distributed back to early investors
- generally better payment systems that use new cryptographic primitives rather than pencil signatures on paper, insecure card numbers and 4-digit PINs, constant privacy invasive systems
Thank You, Thank You, Thank You
If the entire field turn into toxic waste that no one wants to touch it will be extremely undervalued. Therefore it would be a tremendous opportunity.
Bagholders will always try to find new victims. Crypto is praised even when it's in the shitter. "Buy the dip, it will be $200k before years end, I'd buy it myself but..." etc.
If this clarifies: I'm talking about blockchain technology and its applications. Not a particular blockchain asset.
The unproven part is whether users will be satisfied enough with the security and censorship considerations of something like a ZK Rollup for it to scale to facilitate a significant part of the world’s economic activity. This is reasonable to question as we are only about 1 year into a range of this tech being heavily applied on mainnet.
The technology to do so already exists / is currently being developed via:
- Optimistic rollups (Arbitrum, Optimism)
- 0-knowledge rollups (zkSync 2.0 (in public testing), Loopring, Immutable X)
- sidechains (Polygon PoS, Fantom)
https://ethtps.info/ https://l2fees.info/
At worst, you'll only need to wait for a year or two to get sub-$0.10 transaction fees on the ETH rollups, as user adoption picks up. For me, I've been an active user of Polygon PoS & my transaction fees are often below $0.01, with the most being $0.05.
There're also scalability improvements that're currently in the works, such as EIP-4844 (Proto-Danksharding, partially named after one of the core contributors to the ETH protocol). It should be noted that this is placed in the backburner, as the move to PoS is more important.
I do hope this works, genuinely. I feel I’ve been burned already on this stuff so I’ll believe it when I see it. Would you say my misgivings would be proven correct if TPS is not well over a thousand in a few years?
They have. There are other cryptocurrencies besides Bitcoin. Even the worst proof-of-stake chains have multiple orders of magnitude better throughput and latency than Bitcoin does. Hell, there are plenty of other proof-of-work chains with better throughput and latency than Bitcoin. And that's all entirely ignoring sidechains and other such shenanigans pushing transaction rates and speeds even further.
Independent of this: "We should be trying to figure out the right path out of this mess. "
For me I'm fine on thinking about how to solve the climate crisis before I will spend energy on solving crypto issues but that's something every one has to decide for themselves.
Fixing climate change will be more beneficial for everyone who has kids and/or likes his/her family members kids or kids from friends.
Which I do.
I think overall people would prefer less energy costs, more food and more water and less extreme weather before crypto but that's just my guess.
But at least on hn I'm reading more about crypto than that.
That's the most obvious reason to move to cryptocurrency. Amazing that people don't see that.
With crypto, I authorize a payment with a secure signature without revealing my credentials. With digital payments like credit cards, I have to give you my credentials and just hope you are honest. In the context of cryptocurrency this is laughably bad.
I believe cryptocurrency is one asset (of multiple ones including gold) that can not be debased by the government, and as such forces the government to be financially accountable (I include central banks under "government").
I also believe lots of them offer a wasteful amount of security - for instance, Bitcoin secures almost $1.2M per hour against double-spending: https://www.crypto51.app/
I also think Bitcoin's inflation should be curbed. Only specialized mining operations benefit from the inflationary mining subsidy. Once inflation is reduced, miners will be limited to spending from transaction fees, not from the future.
In a sense the courts are occupying a position of authority but it’s the same authority that courts have over all property, digital and traditional.
We'd be better off banning it all now then later adding a carve-out for non-PoW, non-deflationary, reversible, scalable, private, actual digital cash.
> It's less that I'm glad the market is crashing, and more that I'm glad that the insufferable crypto bros are finally getting a punch to the mouth. Seriously, these people are the worst. Your average "crypto investor" has no skills, no mathematical foundations, nothing. Except for pure stupid luck, and the ability to spew inane crypto babble 24/7. And yes, they think they are much smarter than you, because they achieved better financial results than you did while only doing 1/1000 of the work to get there. I truly hate the fact that these people are so rich. It makes me want to move to Alaska and just try to ignore society for the rest of my days.
> This came off as pretty bitter. I apologize, but I am bitter, and I'm having a shit couple weeks.
The scams wouldn't even be a problem - every fledgling platform has them - but the fact that the crypto community embraces scams and even encourages them. Scammers can rug a project for millions and turn around and launch another project within a week and everyone will still buy it because of greed.
And this is the crypto dilemma: the crypto community has utterly failed at self-regulation. Ergo, it has to be regulated by the government. However, a cryptocurrency that's beholden to government rules is antithetical to the core crypto ideas of self-ownership, privacy, and freedom.
I disagree that there is a monolithic "crypto community" that encourages scams. For example, a great deal of the Bitcoin community is fervently anti altcoin and many even consider Ethereum as a "shitcoin".
Regarding utility, everyone is entitled to their opinion. I disagree. There was a time in my life when I was "unbanked" and Bitcoin was the only way I could transact online. In the end, utility is subjective and it is not the government's job to decide whether something has utility or not.
This really needs said louder. Writing off the entirety of cryptocurrency as "useless" betrays either stunning ignorance or immense privilege (or possibly even both). Even in the "developed" world (let alone "developing") there are countless people whom the legacy financial system does not serve yet is happy to exploit; cryptocurrency ain't some silver bullet, but it does address quite a few of the legacy system's injustices.
The core ideas behind crypto remain solid. Unfortunately that has been hijacked completely by speculators.
People on here just fucking hate other people making money.
That’s not to say that Google is necessarily ethical, or LeetCode interviews are necessarily good, or that cyber money is necessarily going to work out. Maybe, maybe not on all above.
But that’s not why people scream on here about these things.
Am I missing something?
What does this mean? Is there a central node in PoS, or are they saying that power is proportional to stake size?
As for the rich getting richer, that's no different from mining. Stakers have much lower ongoing costs, but the rewards are lower too so their percentage annual return isn't necessarily better. And everyone gets the same return so there's no economy of scale, which is not true of mining (or, for that matter, savings accounts).
Note that PoW works exactly like this too, except far worse due to economies of scale. Purchasing mining facilities in bulk will give you a much better deal than buying rigs as a home miner. Whereas in PoS, both the ultra-whale (1000 ETH) and mini-whale (32 ETH) are earning the same exact % return on their investment. The average user delegating in a staking pool is also earning fairly similar return to all validators (with some % of their return paid to validators for their services).
I do not think the claim that PoS is more centralizing or more “rich get richer” than PoW is necessarily true.
And there are theoretical solutions to this as well; projects like Bright-ID are working on proof-of-identity / proof-of-humanity.. maybe we'll see a proof-of-stake blockchain with governance tied to identity in the future? This could even be combined with zero-knowledge to ensure voters are unique humans without making their wallet<->identity associations publicly discoverable (though there may be situations where this is desireable as well)
This is what I'm hoping for. As soon as this proves viable, this opens up the door for things like automated international UBI.
The cryptocurrency debate in technical circles reminds me of two extremely obscure religious sects screaming at each other while meanwhile the rest of the world doesn’t know either of them exists.
Exchanges run private order books like any other investment org. People trading (gambling?) one ticker symbol (crypto or not) vs another (crypto or not) has absolutely nothing to do with real world use or utility. I can watch the Euro move up and down on forex and buy/sell to make money in my currency of choice while never touching a Euro, using it for anything, or having any real long term confidence, understanding, or belief in anything Euro or European related. I just know it made me X in USD this day/week/month and that's all I care about. Fill in EUR with BTC, ETH, etc. No one on exchanges cares about anything other than what it means for them in their local currency.
The use of exchanges is a get rich quick scheme not unlike penny stocks in the late 80s/early 90s or dot coms in the late 90s. In the late 90s very few in the general population jumping on dot com stocks had any idea what the hell any of it meant. They just heard a story about someone making $100k in a day and wanted in.
Look at the FOMO ads during the SuperBowl... There was zero value or utility demonstrated and 100% of the messaging was "everyone else is getting rich quick at crypto.com so don't miss out". Their fees (in real money) are absolutely bonkers so of course they're doing everything they can to bring people in.
Have you seen Wolf of Wall Street? There's a scene where the main character gets taken to lunch by an experienced broker. Long story short the lesson was this:
"Fuck the clients. Best case scenario let them think they're getting rich on paper while meanwhile we take home cold hard cash every time they trade via commission."
Be careful with surveys you "read somewhere"... The often cited "300 million crypto users worldwide" stat[0] (for example) comes from a blockchain payments company (surely they're unbiased, right?) that for some reason estimated this number from a Central Bank of Canada phone survey extrapolated to the worldwide population...
It's really interesting that whenever I bring up blockchain explorers and the fact that blockchain has the most transparent and reliable adoption metrics ever no one takes me up on an analysis of the data and deflects to virtually anything else instead.
Adoption and use data is there without bias. It requires some interpretation to determine something more akin to MAU/DAU but even very generous measure will show that 13 years after the launch of bitcoin blockchain is the most poorly adopted technology platform in recent history[1].
0 - https://triple-a.io/crypto-ownership/
1 - https://blog.cryptostars.is/blockchain-the-most-poorly-adopt...
Also talk about moving the goalposts, we've gone from "no one knows about crypto or cares about if its good or bad" to "they don't really use it they just trade it"
You misunderstand me. Many people trade crypto but this doesn't equate to actual use. Crypto exchanges run order books just like a forex exchange or other investment platform with a SQL or whatever backend.
Do you really consider people speculating on insert-random-coin-ticker-on-exchange-here as use? It moves on an internal order book, it doesn't touch the blockchain itself. That is not use. That is people investing or speculating with an asset just like any other asset. It has nothing to do with the underlying technology or use. Nothing.
Looking at the chains themselves you will see that very few people actually transact off exchanges on actual blockchains (real use). This is what I mean when I say cryptocurrency USE is irrelevant. Buying and selling BTC to take it home in USD to buy a Lambo is not USE of BTC. It's financial investment/speculation on some random asset and USE of USD.
The ironic aspect of this debate is I'm on my second blockchain startup for a reason - I believe there are plenty of use cases where it makes sense. I just don't think the cryptocurrency/blockchain communities are doing themselves a favor operating under the mass delusion that crypto is a big thing (while still being early?) when all available real data says otherwise. Trying to pump the underlying cryptocurrency by shoehorning the tech into anything and everything (and doing so poorly) will backfire as well (and already is).
Blockchain and cryptocurrency advocates need to look inwards to identify blockers to mass adoption and address them while identifying real world use cases where blockchain/cryptocurrency provides real value and utility.
I think you could reasonably read that post as a critique of speculative investment in assets. With the conclusion that if that's the only meaningful activity with cryptocurrencies then they're not doing very well.
Investing in companies or in future production is a different matter. If cryptocurrencies can actually get that going at some point it'll be interesting!
I'm talking about blockchain explorers. Use of the actual networks and technology. Trading on crypto exchanges does not utilize blockchain in any fashion.
Given that this is HN I would think the focus would lean towards the underlying technology. That said one of the things I appreciate about HN is the wealth of knowledge and conversation about things other than technology.
I suppose there's a valid debate to be had in terms of what constitutes "use" but my focus and emphasis on actual network activity as seen in blockchain explorers refers to use of the network/technology/blockchain for some purpose. I don't care what that use/purpose is as long as it actually uses the technology (which is on network and reflected in explorers).
As we both acknowledge, blockchain explorers representing the reality of blockchain network activity provide an abysmal view of the adoption of that technology relative to historical technology platforms 13 years after release.
How do you use bonds?
in January, 10 trillion of debt wolrdwide was negative yield in nominal terms. in real terms - a whole lot more.
Holding assets IS use. that's the root of your misunderstanding. For some reason everyone here is fixated on cheap payments. That's not what it's about.
I'll quote myself:
"It's really interesting that whenever I bring up blockchain explorers and the fact that blockchain has the most transparent and reliable adoption metrics ever no one takes me up on an analysis of the data and deflects to virtually anything else instead."
Again, trading on crypto exchanges has nothing to do with the technology or use of a blockchain.
I'm not fixated on payments. I don't care what the activity/use is as long as it uses the actual technology and network (which is reflected in blockchain explorers).
Notice my comment did not include “trading”.
Specifically only holding. Only demand to hold an asset for long durations gives it value long term. Gold and bonds are the perfect instances of this that most are familiar with.
Bitcoin is an experiment in bootstrapping a new money from scratch.
Before it can serve as a decent medium of exchange, it needs to first prove it can hold value first, as a store of value.
Otherwise, how can you send value with it, if it can’t even store it value? It’s a necessary precursor.
It is however quite volatile for now and only very few committed investors hold it long term.
Who’d use a volatile asset for savings? For now it’s just a spec asset, and sure people are trading it, but as the market capitalisation growth, and fluctuations subside, it may very well become a decent medium of exchange.
Trading is usage as well, as it increases network effects, and availability of the asset across different trading venues, thus increases market penetration.
For the transition from SoV to MoE to occur, a large well dispersed number of holders is required. What difference does it make if they outsource the custody part? It makes sense for some, and regulated entities cannot warehouse it anywhere but a qualified custodian anyway. So sure, holding can occur on exchanges as well.
If you must insist on the blockchain data, look at bitcoins money velocity. It is much closer to M2 than M1, and thus it acts today as a savings vehicle/investment asset: therefore much more similar to bonds than credit cards.
>[...] that the entire technology field is worthless and cannot be used for any practical purpose.
However, instead of addressing the core issue of whether cryptocurrency or DLT serves any practical purpose, the article instead cherry-picks specific issues that he thinks are resolvable:
* Energy waste
* Transaction speed
* Privacy
The author seems to be missing the forest (that he himself identified) for the trees. Why doesn't he provide a real world use case for DLT? I'm still waiting for that.
It's literally a public ledger. It's harder to hide see: https://www.foxbusiness.com/markets/crypto-bitcoin-money-lau...
I've seen a few high profile cryptographers get into the crypto space recently. I can't really blame them, it's exciting to see new cryptography put into practice. Who knows, maybe they will solve it all, but I doubt it personally.
(I don’t think drugs should be banned or controlled, for what it’s worth. I believe in pragmatic policies of harm reduction. I’m just not going to deny reality, and the harms this system causes.)
The legacy financial system - even just the electronic parts - are meanwhile the product of many decades of development, and it still ain't viable for large swaths of the working class worldwide.
As you yourself say, they are talking about cryptocurrencies. Cryptocurrencies are money. Digital money is a practical purpose.
This is the letter:
>After more than thirteen years of development, it has severe limitations and design flaws that preclude almost all applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions.
They claim the limitations and design flaws make blockchain inferior to existing solutions. The author is arguing that the limitations and design flaws have been or will be overcome.
Payments?
So why is Stripe [0], MoneyGram [1], Checkout.com [2], still using them? They seem to know that some of the ones that they chose have a use case?
Downvoters: What are these three examples of companies actually using this DLT technology doing then?
[0] https://stripe.com/blog/expanding-global-payouts-with-crypto
[1] https://www.bloomberg.com/news/articles/2022-05-29/moneygram...
[2] https://www.cnbc.com/2022/06/07/checkoutcom-jumps-into-crypt...
It's interesting what the pro-regulation crypto-currency shills are advocating for. In the US a couple of pro-crypto senators proposed a bill that would introduce regulation to cryptocurrencies under the CFTC. They avoid classifying these things as "securities" in order protect crypto from stronger regulation. Despite these "currencies" quacking and walking like securities.
This is more like a compromise made by a mob boss with corrupt government officials: we'll agree to your regulation as long as you agree to look the other way. In other words let's make it look legit and I'll keep scratching your back.
What the letters to congress hope to achieve is stronger regulation on what are effectively unregulated securities. If companies want to dabble in crypto-assets let them: they will have to publicly report their activities, disclose their financials, and face the same penalties as those who are caught breaking the rules.
I somehow doubt this is the outcome the crypto industry wants. A number of executives have been hauled to court over money laundering and fraud charges. I suspect a great deal more would follow suit were the government properly informed and willing to go after them.
<sigh>
I don't know how on earth can people be so confidently wrong, with almost religious fervor backing it up. It's not morally superior to be ignorant. Have you even read the post to the end ?
Blockchains do solve a well known problem in distributed systems in a novel way. The main novelty is PoW consensus, a probabilistic equivalent to an Atomic Broadcast algorithm [https://en.wikipedia.org/wiki/Atomic_broadcast] which ensures that a distributed network of computers all agree on the order of the same set of messages. The protocol uses bits and pieces of ideas that were invented in the 90s (Hash pointer data structures and the idea of PoW itself), but assembles them brilliantly into a novel whole that solves an extremly difficult and decades-old theoritical problem in way unheard of before.
You can talk to the moon and back about how it's enviromentally wasteful or doesn't scale or not a currency or an attractive tool for scammers or etc etc etc..., but if you're unwilling to even understand the raw, neutral techonology it is built on, well, here goes all credibility of all your other non-obvious claims.
So they found one way to prevent Sybil attacks that has been a well-known problem. Big deal.
Update
A "blockchain" is not a novel concept. The PoW system used is one way to prevent Sybil attacks when distributing work among untrusted peers, and that's it. Novel, neat, but useless.
If cryptocurrencies needed defending it's because they're a solution in search of a problem. All of the problems they've found so far appeal to conspiracy theorists: people who don't trust banks, government, and all kinds of things. In the mean time the people who've benefited the most have left thousands of people bereft of their life savings and ruined their lives.
My favourite right now are all the scammers who've turned around and stopped ripping off banks and old people and started targeting people who buy NFTs and adverise it on their socials. It'd be freaking hilarious to watch unfold if so many people weren't getting burned in the process.
Only to immediately follow it up by conceding your main point > "he PoW system used is one way to prevent Sybil attacks when distributing work among untrusted peers, and that's it. Novel, neat, but useless"
Ok, so you shifted the goal post from "there's nothing special about it" to "being novel and neat is insufficient for being 'special'". Whatever special means here.
The weirdest part is that your convictions (and concessions) are based on the Bitcoin whitepaper, which is quite literally the oldest part of modern day blockchains/cryptocurrencies.
Nakamoto style PoW consensus and the UTXO model bitcoin uses - never mind being very much novel and "special" - is the bedrock of the past 13 years of distributed systems and cryptographic research.
I'm more than happy to walk you through the landscape in question and the novel, neat, and useful things therein, but you seem quite content in your veil of ignorance. Feel free to prove me wrong.
> Only to immediately follow it up by conceding your main point > "he PoW system used is one way to prevent Sybil attacks when distributing work among untrusted peers, and that's it. Novel, neat, but useless"
I don't see any goalpost moving. PoW is not blockchain.
Blockchains are exactly 3 things
- A ledger of "things"
- Consensus to agree on "things"
- A state machine that that transitions based on "things"
PoW is how Bitcoin achieves consensus. The brute-force operations that "waste" energy is actually a highly robost leader election algorithm.
So sure, "PoW is not a blockchain" is technically accurate, but a useless statement on its own.
OP states there is nothing unique or special about blockchains, then notes a unique and special fundamental aspect that enables (some) blockchains.
PoW precedes bitcoin by quite some time so the idea that it is a unique and special thing about (some) blockchains is false.
The person I replied to means by the 'it' that they see no novel unique thing about the bitcoin system itself, or perhaps any arbitary cryptocurrency system in general. It's reasonable to assume that in a discussion titled "In defence of cryptocurrency", saying "it" without qualification references the main thing everyone is talking about, not any single part or sub-idea.
But the brilliance of bitcoin is exactly how it merged 2 completely different ideas to obtain a breathtakingly novel 3rd idea that is much more valuable than the sum of its constituents. A centralized blockchain gives you exactly as much trust in its contents as the amount you're willing to put in whoever holds the root hash pointer, a PoW posting/updating algorithm gives you trust that writes by anonymous nodes probably cost that node some amount of computational work (as much trust as the underlying work function has anyway).
On the face of it, those previous 2 things have nothing to do with each other, none of them references (even implicitly) the other in any interesting way. It takes intelligence to look at those 2 things and imagine a distributed append-only database with untrusted unnamed peers, and then come up with the all the rest of details and rules that make it work, and then implement all of this in a (relatively) bug-free open source real system. To the extent that any of this seems obvious or inevitable in retrospect, it's all the more evidence for how genius it is.
It doesn't matter a single gram that the technology later attracted scammers, radicals, and con men who think it's a silver bullet for solving any problem, I can say just as much about OOP. And yet nobody disputes the genius of Alan Kay and the novelty of Smalltalk.
The reason I don't think there's anything genius about cryptocurrency as a technology is because it's not impressive. It's been more than 13 years or so now and wow, PoW managed to do exactly what we said it would: burn a ton of energy on useless work in order to prevent Sybil attacks.
PoS is also really stupid.
Cryptocurrency was cute and easy to ignore when it was a bunch of libertarian crypto hackers messing around in their bedrooms and writing long, naive forum posts about how they were going to replace banking and form a new world order. They made themselves sound like conspiracy crack pots without any help from critics.
But the technology was built and designed by people with dangerous political beliefs and poor understanding of economics. And whether they were naive and had good intentions in the beginning matters little now that it has been completely co-opted by conspiracy theorists and fascists.
They're trying to convince senators to pass bills that would regulate cryptocurrency by the CFTC and not the SEC. They are undermining every possible avenue to regulating cryptocurrencies, exchanges, DAOs and all of the systems built on this technology.
They're doing it because they're making too much money ripping off regular people, retail investors, etc and right now there are few consequences to doing so. The people making money off of cryptocurrencies are suckering people into departing with their life savings, leaving piles of e-waste and new coal plants in the global south, and are generally not interested in helping anyone but themselves. They literally do not give one single ounce for any Joe-Bitcoin user out there. As long as there are enough new people coming in so they can cash out they're happy to say anything.
This is the world that cryptocurrency people want. Small government, no regulation, no sanctions, gold-standard deflationary "money", untraceability, etc.
Regular people don't benefit from this. They benefit from the existing banking and legal system that put limits on what is acceptable to protect them and their businesses from fraud and crime.
There's nothing to defend. Cryptocurrency has spoken for itself. It's not genius magical technology that's going to usher in a new age of peace and prosperity. It's a community run like a conspiracy convention where any crack pot can come in and share their theories about the evils of governments and the global banking system coming for you. It's garbage technolgy promoted by terrible people who want to extract wealth from poor people, commit crimes, and not be subject to regulation by governments.
Even if it would be 0% then it is still wasting energy and removing that consumption would reduce overall waste.
And “green” energy still have massive environmental and economical costs.
Ah so that number keeps going down! It's nice that you all hold Bitcoin/Proof of Work to such high standards that it cleans itself up so fast. I really doubt any other industry can do that or has such great metrics, so keep up the great work everyone.
And "green" energy still have massive environmental and economical costs.
Basically, the idea of "zero-sum energy" is incorrect. So the disdain for Bitcoin/Proof-of-work using any energy source is misplaced. There is plenty of energy currently out there, currently being wasted for decades, that would cost more to store, and cost more to transport. While proof-of-work can (and does) use it directly on the spot. These are often remote, low infrastructure, areas and so unlike other computationally intensive things, such as a data center, Proof-of-work requires very little bandwidth and doesn't even need a steady low-latency internet connection, so it works well. And so far, no other use case has been able to do this - or form the partnerships with the site owners to do this.
this remain almost (or completely) theoretical, vast majority of POW wastes perfectly fine energy displacing productive use
it occurs mostly for economic reasons, it is somewhat accelerated by the common criticism but ironically mostly irrelevant while getting to the same outcome either way
grid-reliant proof of work is probably going to get deprecated. (remote sites typically can connect to a grid to sell their own excess energy though, they still wouldn't be reliant. when the state will pay more that day than what the operator will make mining, they just turn off the miners and sell that energy that day, but won't draw from the grid themselves. from the site operator, these are all just logical verticals that move towards lowered environmental impact)
Can you gave examples of PoW using energy that would be wasted otherwise and is not something like reactivation of shut down fossil fuel power plants?
The ones that pull energy from the grid, yes
There are many that don't, and I expect them to increase, partially because the state energy company there is forcing approval applications now
Combine those two sentences and you can deduce that that many miners are not connected to the grid and don't need to.
https://www.cbsnews.com/dfw/news/i-team-cryptocurrency-miner...
The energy sources being used in Texas are flare gas sites that were billowing many gasses into the atmosphere for decades. The miners are instead separate organizations partnered with the site operator that use their own capital to install generators with catalytic converters and use the energy on the spot. This reduces emissions by over 60% by one metric (I'll try to find that source again, I was surprised it was so only 60%)
A couple things to note. We started this thread talking about how now only 60% of the bitcoin network uses fossil fuel sources. What I described above is a fossil fuel source, like how Electric Vehicles get their power from fossil fuel sources, with a further similarity being that both things reduce emissions in other ways. This means that 40% of the bitcoin network and proof of work industry is not fossil fuel, while some growing portion of the 60% is fossil fuel while still reducing emissions. Its just much more nuanced, the ideal you are asking for is reducing emissions while having a fossil fuel source while not taking away from another use case while not being connected to the grid. Its multidimensional and overlaps on several categories.
Secondly, the flare gas industry also has governmental pressure in Texas, as they cannot add more stacks due to state regulations. But in reality its way worse than that, because the texas energy regulator is a captured entity for that industry, despite the law saying "no increasing emissions from flare gas sites", there is an exception rubber stampable by the regulator, and that exception is basically the rule. Texas has not been able to reach its sustainability promises and goals. Proof of Work mining has been a solution for the sites and the state, and this is politically favorable as the governor and regulator do get detailed analysis to understand how this helps their sustainability situation while not alienating their political party and constituents. (aka, an economical sustainability solution is always OK with Republicans, the economic solution has just been elusive, until the bitcoin miners showed up)
Thirdly, despite this symbiosis, you should be thrilled to know that this pretty much prevents old fossil fuel sites from restarting specifically for bitcoin mining. But we are 100 years into the oil and gas exploration and this is likely not stopping. Bitcoin mining is currently a sideshow in comparison, and is just small enough to be easy enough to try and hate because we are all powerless against "big oil" and have been better off just accepting that its there. My main point here is that the headlines about "coal mine restarted exclusively to mine bitcoin" are egregious outliers that don't reflect whats going on at all. This is kind of intentional, not suggesting a conspiracy, but one way to dissect these headlines is to understand that its state-by-state. New York has a completely different grid style, different geography, and different issues with Proof of Work load. Headlines out of New York (where the coal reactivation plan was by an entrepreneur there, alongside some other negative headlines were) need to be seen as New York specific problems, and not "this validates my perspective against Proof of Work" problems. Its impossible for it to be otherwise, right now, given how energy is set up in this country. The intentional nature of this negative perspective largely comes from the miners themselves: They don't want people to compete with them so its better that nobody knows whats really going on, even if that means the public gravitates to these wildly negative ideas of reality. There is very little publicly available information about these non-grid connected flare gas miners, because they aren't publicly traded. The publicly traded ones so far are doing something else, or simply are grid connected. But there are enough hints in that CBS article about organizations you can look into to find more about whats going on, in Texas.
The same thing is playing out in other Midwestern states, and other areas of North America.
Bitcoin mining helps reduce natural gas flaring. Energy that would otherwise be wasted.[1]
Your next rebuttal will be that this simply incentivizes fossil fuels to be used for longer than would have been the case without Bitcoin mining.
My answer to that will be that fossil fuels will be with us for a long time still, flaring is currently happening whether you like it or not, and this is a way to reduce the environmental cost of flaring.
https://www.investing.com/news/cryptocurrency-news/oman-supp...
> blockchain technology, specifically so-called “public blockchains”… are not an improvement on existing non-blockchain solutions.
The article may have worked as a standalone article but doesn’t really provide a response to the letter it starts off with.
Which I concur with. Cryptocoins are worthless, the idea Bitcoin has a market cap of $5-6 hundred billion is absurd, and maybe the increasing fed funds rate etc. will pop this speculative bubble more than it already has (Bitcoin had the even more absurd market cap of $1 trillion toward the end of last year).
Why is a Bitcoin worth anything? I know why my M1 Mac is worth something, I know why a box of raisins is worth something, I know why a bar of gold is worth something. I see no worth in a Bitcoin. I ask why it has any worth and the bag holders cast around looking for an equivalent, and only seem to find that dollars have been unmoored from value for half a century and the response is it's like the dollar (of course the dollar is implicitly, not explicitly like before 1971, backed by tens of thousands of tons of bullion gold among other things, but that's another tangent...)
A bitcoin is an ID number pointing to pretend money. It has zero intrinsic value.
When suddenly it loses its popularity and/or supply of greater fools, it'll fall apart, and I'll have taken some poor sap's actual money, even if it was delayed / distanced / distributed by some thousands of layers.
In the event that the world falls apart, the Mac is at least usable as a weighted object, if all else fails.
Bitcoins become purely thought in such a situation, and even in far less catastrophic ones.
I could say "I don't use Macs because I find I can't be productive with them." That's a subjective statement.
Or I could say "I don't find it entertaining to sit in front of a Mac," or "I don't learn anything when I use a Mac," "I can't create anything valuable using a Mac." None of the properties you listed are intrinsic properties of the Mac, they're all a function of the Mac's utility to certain people in certain situations.
Perhaps I'm Amish. Or perhaps I don't have an internet connection. Or I am old and blind and don't have a friend to teach me to use a screen reader. The Mac would be valueless to me.
So, the Mac's value is derived solely from its utility to a certain group of people. It lets that group of people perform tasks that they couldn't perform (or would perform less efficiently) without it. That's the same way Bitcoin's value is derived.
> pretend money
All money is pretend.
> It has zero intrinsic value.
All money has zero intrinsic value. Extrinsic value is still value.
Money is an agreed upon tool for exchanging items/services of value - but it also a store of value, because it retains at least a semblance of stability. Cryptocurrencies are... well, not currencies, for starters, but they're also simply a proxy for "real" money (ie: fiat).
Where cryptocurrencies entirely fall apart is when the realization hits that they all fall into the greater fool category - once you run out of new marks, the scheme collapses, and all the money - note actual currency - ends up in the hands of a few early adopters and a couple extra lucky folks who timed it right. Negative sum games are not a good thing to prop up.
I also don't believe it's helpful to ponder the value of objects in the context of societal collapse. If that's your definition of intrinsic value, I don't think it's useful or practical.
All money falls into the greater fool category. The difference is that fiat money is not opt-in. It too is held mostly people who adopted earlier than you and lucky folks. Millennials are over 20% more likely to cry when trying to buy a home than the general population.[1]
> Negative sum games are not a good thing to prop up.
Your logic is circular - crypto has no value, therefore it's not useful, therefore it's a negative sum game, therefore it has no value.
You could just as easily say the opposite. People perceive crypto to have value, therefore due to its unique storage/transfer properties it has usefulness or extrinsic value, therefore it provides utility and is positive sum, therefore it has value.
It's all subjective.
[1]: https://zillow.mediaroom.com/2022-06-02-Half-of-Americans-cr...
And no, it's not circular - "negative sum game" is literally baked into the concept of a purely speculative unbacked "asset". More money has to go in than can possibly come out, and there's precisely zilch to show for it.
Any place that accepts crypto is simply immediately selling it for fiat, and making the customer pay more than they otherwise would in fees and headache.
Anyway, it's fun to be obtuse, I know, but you're pushing the limits here.
The dollar is also a negative sum game, a purely speculative unbacked "asset".
More effort has to go into keeping track of it than can possibly come out.
> Any place that accepts crypto is simply immediately selling it for fiat, and making the customer pay more than they otherwise would in fees and headache.
Crypto payment processor fees are usually about 1%, which is less than half of the typical credit card processor fee. As for "headache", you'll have to elaborate on that.
You... Really ought to look up what greater fool theory is. And maybe money, too, while you're at it.
In any case your argument is a bit silly? There is an infamous Italian artist who sold tins of his own shit [1]. Would you like to argue that these tins are worth ‘something’ because I can empty the shit out and reuse the tin? I’ll take the bitcoin thanks.