On the dangers of cryptocurrencies and the uselessness of blockchain | Hacker News Reader

On the dangers of cryptocurrencies and the uselessness of blockchain

schneier.com

182 pointsmikece343 comments

>This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology.

>And, more importantly, technology can’t solve economic and political problems

This is such an important sentence that is bear repeating ad infinitum. For completeness: if you do have a technological solution to an economic and politcal problem, you have created a new political problem (for yourself): getting everyone to use and understand your solution.

Yanis Varoufakis elucidated it pretty well recently: Crypto won't form a revolution because we haven't changed our own institutions, our relationships and so on. That is what changes in a revolution. In other words we still have the boss-employee wage relationship, the role within a corporation and so on, completely unchanged.

There’s an important discussion to be had around this: revolutions take inspiration, which only comes after people see that things can be better.

You can argue that crypto won’t form a revolution because we still support and value trusted third parties, but using decentralized assets on a blockchain may be what inspires people to change those institutions and relationships.

Sadly, many of the “get rich quick” scams we see getting deployed on blockchains won’t help build the public’s confidence in changing our current system, but there’s still time.

Using a blockchain is literally trusting a third party. Blockchains require third party miners/validators to run the chain. The idea that blockchains will change anything about this is a pipe dream. The design of them simply makes it impossible for everyone to "be their own trusted third party", whatever that is supposed to look like.

Ironically, the most feasible way to really go "off the grid" is still probably to hide large amounts of valuable commodities (i.e. gold, platinum, etc) inside your home. In the words of that grug brain developer from yesterday, you go back to collecting shiny rocks. But I really doubt cryptocurrency is going to encourage people to do that, it's bad for many obvious reasons.

> Using a blockchain is literally trusting a third party. Blockchains require third party miners/validators to run the chain.

I disagree. I have to trust that at least 51% of validators (though smaller in other cases) are honest. That’s in no way that same as trusting that a traditional third party is honest. In some blockchain systems, you only have to trust that there is a single honest participant in the network. You can even participate in these networks to reduce the amount of trust you have to have in any part of the system.

These are very different trust assumptions to what we have today with large, centralized institutions.

>I have to trust that at least 51% of validators are honest

Those 51% are third parties. Full stop. There is no difference. You don't control them, they are not you, they are not your friends. They're third parties. You can argue why you trust them more than "centralized institutions" but that doesn't make them not third parties. And this of course is assuming that the validators aren't centralized and will never become centralized, which there is no guarantee that it won't happen or has not already happened.

I am not making this up either, this is a design parameter of the system; the fallacious premise of blockchains appears to readily assume that miners/validators will become greedy and hostile but also seems to trust them not to centralize and attack the network, for some reason that has not held up in practice.

I have to trust that at least 51% of validators

Don't you mean 51% of hashrate? Pretty big difference because a single person with substantial resources could acquire 51% of hashrate.

Maybe this ugly, complicated, expensive workaround to a political/economic problem is the best shot we have at addressing this problem at all, since the political process isn't working, only doubling down on stupidity.

I would argue that cryptocurrency is tripling/quadrupling/quintupling down on stupidity, it's obvious from taking a single look at the ecosystem that nothing works. It's overloaded with scams, it's not actually decentralized or fair, and the main people pumping it up are VCs and other billionaires. The valuations are just random, there are no real profits anywhere to be found. Proof of work is essentially a lottery that you win by wasting the most energy that you possibly can, and proof of stake is literally just a lottery. Is this really the best that people think we can come up with to solve our financial woes? Cryptographically secure lotteries? I'm just stunned at how many cryptographers are willing to go along with this fraud.

Edit: I forgot to mention the colossal stupidity of NFTs. I mean, seriously, it's VCs selling facebook profile pictures with million dollar price tags and pitching it as some kind of artist's revolution. The community mocks you for having "right clicker mentality" if you don't buy into the scheme.

> It's overloaded with scams

I always find that this argument doesn't stand because we're talking about money and money always involve scams, fraud, etc. Look at the current financial system. Do you think there are more scams happening in crypto than the current system? If so then you're brainwashed. If anything, cryptocurrencies have brought much more transparency to what's happening in financial markets.

"Transparency" does nothing when the scammers are so emboldened they commit fraud in broad daylight because they know the regulators aren't paying attention and they can make off with the money faster than you can analyze the data.

>Do you think there are more scams happening in crypto than the current system?

Yes, absolutely. Pretty much everything I've seen in crypto is a scam or fraud. The tokens have no value and the whole thing is about pumping them up and dumping them on someone. I have yet to see any blockchain company that actually delivers a useful product that can't be made cheaper and more efficiently in tradfi. The "financial innovations" coming out of defi are all either blatant fraud, ponzi schemes, or are ideas that are known for decades/centuries to be so risky and stupid that no functioning market would allow you to do them.

>If so then you're brainwashed.

Less of this please.

> "Transparency" does nothing when the scammers are so emboldened they commit fraud in broad daylight because they know the regulators aren't paying attention and they can make off with the money faster than you can analyze the data.

Source? I keep reading articles about the FBI finding out the culprit of such and such scams.

How is this anything other than wishful thinking?

best shot we have at addressing this problem

What problem? I ask because USD is one of the most sought-after currencies largely because it has so few problems.

What if you think the only political problem worthy of resolution is politics itself? That is, the two wolves and a lamb voting on who is for dinner model expanded up to encompass 7 billion dumb apes. I would argue the only thing worth caring about is that they can't vote that you're for dinner. It doesn't matter how many other people are along for the ride or back happily engaging in the prior game. Getting people to change sides can't be a part of the problem by definition because if a political solution were actually possible then we would not be where we are.

The only problem to solve is insulating yourself from the demonstrably awful global political process. And ledgers which that political process can't change are arguably an essential part of that solution.

If states and the political process didn't exist and you had to actually pitch it as a business model to modern venture capitalists, it would be a near impossible task.

So your customers are just some group of people inside the borders of some contiguous territory over which you exert direct military control?

And you claim no duty to that group and despite a demonstrable failure in basically everything you do relative to the traditional form of execution, you demand a pricing model that amounts to some permutation of "tell us how much you made and spent this year, great now we want a cut of x out of it".

And all your customers have to do to evade your business model is leave?

And you only transact in tokens you continuously create out of thin air with the thinnest imaginable pretexts?

And last century when this was tried it was the largest non natural cause of death?

And your failure mode may provoke an extinction level event?

Why would anybody actually participate in any of this for any reason other than they have no viable alternative whatsoever and thus you end up with a self selecting group of participants who consume more economic resources than they produce? Apple pie and baseball is not an acceptable answer. Isn't economic collapse basically inevitable?

Oh that's where we are now back in the real world? Well that's inconvenient. Better get to building alternatives asap.

> For completeness: if you do have a technological solution to an economic and political problem, you have created a new political problem (for yourself): getting everyone to use and understand your solution.

I'm not so sure about that. I mean, for example, fusion energy would solve a fair few of economic problems and would be a major part of the solution to the political problem of the climate crisis. I imagine there are a few other technological advances that would fit in like that too.

Very far aside: fusion energy may be closer than we think : https://astralcodexten.substack.com/p/your-book-review-the-f...

Edison learned this lesson early on.

https://www.newenglandhistoricalsociety.com/thomas-edison-in...

We already have technologies to solve the climate crisis, among them nuclear fission. We have the technology and experience to build safe and clean fission plants today, but we don't due to political and economic reasons.

Politically, nuclear power is unpopular in most countries, including educated ones like the US and Germany. Economically, we do nothing to incentivize nuclear. Very few places have a meaningful carbon tax and (at least in the US) state laws regulate energy grids such that they provide price insurance to unstable energy sources, but prevent base load sources like nuclear from profiting when energy is scarce.

Fusion solves none of these problems. If fusion technology were ready today, there would still be no political will or economic incentive to build fusion power plants.

How do you reckon fusion would be a solution to the political problem of the climate crisis?

As far as I understand fusion, it's pretty much like fission but without any of the nasty nuclear waste or other problems.

Sure, tritium ain't the most fun, but it's half life is a lot less than what the ol' Fukushimas dump out.

Also, I thought that when things go wrong with fusion plants you get, like, maybe some really hot stuff dumping into a special wall or something. I don't know, sounds not the most fun, but bearable. This is as opposed to fission, where if things go wrong you get a reason the Soviet Union fell apart.

So, knowing that tiny amount, I figure that more countries and their voters are on board with fusion, more so than with fission. Meaning that those pesky political problems are lessened and therefore we can reap the economic benefits that both fusion and fission give.

But all that's beside the original point that tech does influence things positively. I was just using my little tiny bit of knowledge and pulling fusion out of thin air as an example.

Yea, I see what you're saying but it's not a good example. I don't imagine there aren't many good examples because I agree with the article's premise that tech really can't solve political issues.

The existing resistance to fission based nuclear power is irrational. Fission is amazingly safe. If you add up all the deaths that have ever happened from nuclear mining, plant accidents, and fallout, you still have orders of magnitudes fewer deaths when compared deaths those from coal mining and plant accidents in the same period. And that's to say nothing of deaths related to pollution caused by coal.

I think the perfect proof that the resistance to nuclear is irrational is the drastic effect three mile island incident had on the public opinion of nuclear power. You had a nuclear meltdown (basically the worst thing that can happen at a nuclear plant) with with no deaths, no fallout, and and it basically turned the majority of the US public against nuclear power. Meanwhile in 1979, a 144 miners died coal mining.

Even for the worst nuclear accident that has ever happened (Chernobyl), estimates of the death toll including all fallout related deaths (cancers after the fact) are only for several hundred. But in the 1980s (when Chernobyl occurred), a hundred miners died every year in coal mining accidents.

So if people today are against nuclear because of safety concerns, even when by any conceivable metric it is safer than existing alternatives, why is everyone suddenly going to become rational about fusion? Won't the same irrational beliefs that turn people against fission turn them against fusion?

In the last century mathematics gained a new level of rigorousness and maturity. Technology is just a tool to suplement this trend. Same is happening in other disciplines today. Economics and politics won't be spared. Whether it will be crypto or some other idea doesn't matter. In the end there will be a formal framework for economy and politics verifiable by a computer.

> if you do have a technological solution to an economic and politcal problem, you have created a new political problem (for yourself): getting everyone to use and understand your solution

Many of th problems crypto aims to solve are not only political and economic, but also technological. The technology in this case may end up being a driver for new political and economic systems.

Similar thing happening with digital payments - like Apple Pay - that are overtaking cash and card swiping in many parts of the world primarily because of a tech innovation that allows for convenience, security, and privacy. Crypto stands to overtake some aspects of our economic activity in a similar way, regardless of what politicians ask for.

>technology can’t solve economic ... problems

It certainly can. Maybe not blockchain but the old problems of lacking food etc in the west have largely been fixed by technology like tractors and fertilizers and we have obesity now.

Technology can definitely solve some political problems, at least in a very narrow sense. If you don't believe this, ask yourself what happened after the printing press was invented, or the steam engine.

That's not the same as saying technology will resolve social problems. And I personally think crypto is ridiculous. But knowing technology can completely reshape politics is still an important lesson.

There are many flaws in this perspective, but I'll pick one: the argument that there is no problem being solved with blockchain. This is trivially falsifiable: blockchains are being used to facilitate illegal transactions.

Of course, from there, people often wince. But that wincing comes from an assumption: that a transaction is morally just if and only if it is legal. This is a fairly bad assumption (particularly with a brief skim of the history of the 20th century), but even if it were true, it is provably the case that blockchain technology is solving this problem in a way previous solutions have not been able to, given it is the chosen mechanism.

> This is trivially falsifiable: blockchains are being used to facilitate illegal transactions.

He literally makes this point in the article.

I read the article and do not see this point being made. Can you point it out?

> Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it. (And “ransomware couldn’t exist because criminals are blocked from using the conventional financial networks, and cash payments aren’t feasible” does not count.)

He's specifically calling out ransomware criminals as not counting, but I think he'd extend the logic to crime in general.

That's not refuting my argument. My argument is that the general problem of being able to transact freely across the globe with radically reduced risk of government interception is a legitimate problem for many individuals now and in the past, who live under governments with unjust laws. Plucking one very obvious form of immoral criminality out of that gigantic pool of use cases is misleading at best. I think many people in the West forget how lucky they are that, on average, the correlation between the morality and legality of economic transactions is fairly decent.

> the general problem of being able to transact freely across the globe with radically reduced risk of government interception is a legitimate problem for many individuals now and in the past, who live under governments with unjust laws

I'm far from convinced that blockchain solves this. For a transaction system to be used in a serious and widespread manner, there must be recourse in case money is lost to fraud, hacking etc... . Currently this is typically provided by some goverment/state body regulating the system and prosecuting criminal abuse of it. I haven't seen any good arguments that cryptocurrencies can provide this kind of security without government involvement.

Blockchain might provide a provisional workaround for people under unjust governments, but the long-term robust solution to me seems to be political and cultural progress, not technology.

Technology leads norms, not the other way around. Technology doesn't dictate norms, but forces materialization of norms that otherwise wouldn't be necessary.

There are some situations where technology forces a reassessment of norms, yes. But this is beside the point, which is that blockchain does not properly solve the problem of secure global payments. It's a stopgap, and incentivises people to design a better solution.

Someone who lives under an oppressive government is not going to be less oppressed just because they gain the ability to send digital tokens around without government interference.

If the person purchases goods or services with, or holds said token during a period in which a government devalues or confiscates their other stores of value to a greater degree, then I think it’s fair to say they are less oppressed.

Can you give a concrete example (even a hypothetical one)? I'm a little lost.

A government might: block sending or receiving remittances; track or prohibit purchases of goods and services it considers immoral; devalue the official currency to a significant degree; easily confiscate gold, land or other traditional stores of value.

Some or all of these could be considered opressive, depending on the context. A medium of exchange that can circumvent unjust laws could be said to decrease repression. Not sure how much better I can explain it.

Literally all governments have capital controls and ban certain goods and services.

Devaluation of a currency is not oppression either.

Economic persecution is oppression. Let's say they fabricate a legal case against you and make you pay a big fine. How is bitcoin helping you being less oppressed in these circumstances? Feel free to come with another example, where bitcoin would help. I can't think of any. That's why I'm asking.

> Literally all governments have capital controls and ban certain goods and services.

Hence my “depending on the context” qualifier. E.g. a ban on the purchase and sale of alcohol could be consider oppressive, as it’s an example of moral issue codified into law. If the government tracks all transactions that involve its official currency, using an anonymous or pseudonymous one instead could circumvent the oppressive law.

Similarly, anonymous use of the Internet could bypass blanket laws prohibiting pornography. It might also bypass more reasonable laws, but in the former case, you could say its use resulted in decreased oppression.

> Devaluation of a currency is not oppression either.

If a government wishes to finance an unjust war, rather than levying unpopular taxes, it might print vast quantities of money, resulting in its citizens’ real (if not nominal) savings being reduced significantly. This falls under economic persecution by definition. Storing your value in a different form, one that’s not pegged to said currency, could lessen the effect.

> Economic persecution is oppression. Let's say they fabricate a legal case against you and make you pay a big fine. How is bitcoin helping you being less oppressed in these circumstances?

I haven’t argued for that particular issue as I don’t necessarily think cryptocurrency can directly resolve it, but it’s easy to imagine. If you had managed to store your wealth in the form of a less inflated currency, you’d preserve it better. Hence the magnitude of the fine on diminishing your savings would be reduced. Also, the state might not be able to prove you own enough assets to pay the fine and might have no means of confiscating them.

> Feel free to come with another example, where bitcoin would help. I can't think of any. That's why I'm asking.

Your original commented argued against a “digital token”. But it’s irrelevant what form of money you use, if it helps circumvent unfair laws, it reduces oppression. It can even be beanie babies or tulips, as long as others are willing to exchange them for goods and services. Cryptocurrency just makes the process easier than those particular assets do.

Okay, but a tool that enables individuals to bypass unjust laws, also enables them to bypass just laws. Therefore it's not clear how the potential for decreasing injustice by allowing individuals to circumvent unjust laws is not counterbalanced by an equal (or greater) potential for increasing injustice by enabling them to circumvent just laws.

The other objection is that, even if you believe that it's a good thing that individuals are able to circumvent laws with impunity, crypto-currencies are not great at that except perhaps when it comes to financial crimes. Because, for example, purchasing illegal goods remains equally difficult regardless of what you use to pay for them. In some circumstances it could be marginally easier if you use a crypto-currency, but claiming that crypto-currencies solve "the problem" of purchasing illegal goods is far fetched to say the least.

Finally, another problem that crypto-currencies also claim to solve, which is that of hyperinflation (or some times just inflation), has nothing to do with oppression or injustice in my opinion. At any rate, I think it's hard to say with a straight face that crypto-currencies are a good store of vale or a hedge against inflation. The evidence overwhelmingly shows they're high-volatility assets and therefore not much of a store of value, let alone a hedge against anything.

If, as you said, an asset has some degree of:

> potential for decreasing injustice by allowing individuals to circumvent unjust laws

then I don’t think this claim can hold simultaneously:

> Someone who lives under an oppressive government is not going to be less oppressed just because they gain the ability to send digital tokens around without government interference.

Setting aside utilitarian arguments for the moment, on an individual level, such and asset can clearly still be of some help to a person in an oppressive society.

> In some circumstances it could be marginally easier if you use a crypto-currency, but claiming that crypto-currencies solve "the problem" of purchasing illegal goods is far fetched to say the least.

Back to the utilitarian/counterbalancing argument, if it’s true that crypto only marginally facilitates crime, then perhaps we shouldn’t be too quick to dismiss it as an overall negative in our cost/benefit analysis.

> The evidence overwhelmingly shows they're high-volatility assets and therefore not much of a store of value, let alone a hedge against anything.

This is why I’ve used terms like “for a period of time” and “comparatively”. A stablecoin like DAI has mostly maintained its peg to the USD for the past five years, during which time the Turkish Lira’s value declined by 300% or thereabouts.

Note that I’m neither advertising that particular stablecoin, nor any other token or cryptocurrency. Yes, the vast majority of them are highly volatile, which makes them unsuitable as a longer-term store of value for the time being.

One argument states that with high enough adoption, the ratio of crypto held in wallets compared to the amounts being transacted will be so great that the volatility will diminish.

Of course, that is not the case with most cryptocurrencies at the moment, as adoption is still fairly low, as is transaction throughput. It’s questionable if the issues are ever going to be resolved. But I don’t think we should use that as an argument against the very concept of using decentralized “digital tokens” as money.

I think that is an unreasonable bar to set for a technology. It doesn't have to be the only way to do something to be viable. It might be the best solution for a problem but there still could exist other solutions.

The article merely dismisses it out of hand, though, and the comment you’re responding to offers an alternative viewpoint.

Uncensorable digital currencies are being used to facilitate illegal transactions, and amongs all the blockchains, only ONE of them started with the intention of being a currency of some sort. Yes, there is a distinction between "blockchain" and "blockchain-based currency". Most of the other bullshit blockchain could not be used for that purpose.

I'm pretty sure a lot of people dismissive of blockchain, even on HN, would agree that the world is probably a whole lot better if Bitcoin is the only blockchain exist. It is a bit unfortunate that technical issue might prevent bitcoin of ever be a functional currency, but that is a different topic.

Bitcoin maximalism like this is so ... pathetic.

Other cryptocurrencies are either functionally identical or improve on bitcoin in some way. There is no difference. Just give up.

decentralization (of nodes, not miners)

liquidity (you can buy and sell a billion dollars if you want)

upgradability (I once thought doge was just a fork of BTC, and i actually like its inflation characteristics, but was puzzled to find segwit and taproot were nowhere to be found on its roadmap)

Yes all those things!

Slightly out of date re doge! Dogecoin 0.21 roadmap has segwit and CSV. Check issue #1798 on Dogecoin GitHub.

I look forward to using doge for atomic, subatomic swaps, Lightning payments, etc…

Thanks, that's all I was hoping for, doge over lightning. I like the culture of doge more, people seem to want to use it and not just stack them up for the apocalypse.

Fair enough, I also like the doge community. It’s hyper positive. I’m happy to spend doge on beer and stack sats for the apocalypse.

> decentralization (of nodes, not miners)

Others are just as decentralised. They are smaller, sure, which makes for a difference in numbers of nodes, sure, but not some absolute quality which makes bitcoin work and others not.

> liquidity

Same.

> upgradability (I once thought doge was ...

Doge? Doge is a joke. Literally a joke. If you're surprised that something someone created to take piss out of the whole ecosystem hasn't kept up on changes, well, I don't even know what to say here. It's like saying you're suprised that you can't pay your taxes in disney dollars.

If you meant your argument about monero, it might make sense. As it stands, Bitcoin is total shit at facilitating illegal transactions.

Not sure why you are downvoted but you are totally correct on that.

If Bitcoin was being used for facilitating illegal transactions, why haven't many exchanges delisted it already, or banned Bitcoin entirely? Is that why $3.6B in Bitcoin was traced up and seized by the authorities and not Monero? [0]

That explains why the scammers, criminals, etc are moving to use Monero instead of Bitcoin. Once that Bitcoin gets sent to an exchange, it is game over.

[0] https://arstechnica.com/information-technology/2022/02/3-6-b...

As far as I can tell, Bitcoin maximalists don't like hearing that they are betting the farm on an obsolete prototype.

Mentioned explicitly by Schneier in his post:

"And “ransomware couldn’t exist because criminals are blocked from using the conventional financial networks, and cash payments aren’t feasible” does not count."

I assume you picked your strongest objection, you need to say something about why blockchain is better than alternatives to make illegal transactions.

I'm not making a claim on why it is superior, I'm commenting on the fact that its use for this purpose is evidence enough that some people feel it is the best choice for this problem.

I don't really have any interest in crypto currencies, but they seem to have fond some use in remittances to countries with dysfunctional governments and hyper-inflation that don't allow conversion to USD. It is in some of those circumstances illegal to move in and out of the local currency, but is that a just or reasonable law? If ETH or BTC allow Venezuelans(as one example) in the US to help their relatives buy food, is that not a good thing?

There are numerous accounts of people fleeing war and persecution using crypto currencies to escape with their life savings. That seems like a good use case. Not everyone gets to live in a place with strong rule of law, and bad governments love to seize people's bank accounts and hard currency.

Other than the speed, though, is it better than mailing USD?

Well, mail has to go through customs and cash is very easy to size. You can memorize the key to a crypto wallet and no one will know that you have it. If you try to mail USD as remittances to a lot of countries, it simply will not arrive. It's also not always possible to convert between currencies legally. A number of authoritarian governments prevent their citizens from doing so.

>This is trivially falsifiable: blockchains are being used to facilitate illegal transactions.

yes, and so does the other crypto - cryptography. facilitating illegal transactions, illegal speech, illegal opinions, illegal thoughts. list of users includes terrorists, drug dealers, pedophiles, Russians, antivaxers and so on.

it boggles me how do people fail still fail to understand, after watching our collective liberty being eroded for the past 20 years in the name of combating terrorists and protecting children, that the slippery slope is not a fallacy but a law of nature.

the people and entities who want cryptocurrency gone don't give a flying fuck about things they feed the useful idiots as the rationale to do it.

But that isn't answering the question. You're just saying blockchains are good "because slippery slope" without mentioning what they actually do.

I thought their answer was very clear: facilitates illegal transactions

this is a good thing because tyrannical governments make all kinds of things illegal, and blockchain removes some of this absolute power to prevent various transactions

Speaking as someone who has been harmed by ransomware, no, it is very much not a good thing. But presuming it was a good thing that I get my data held for ransom, there's no explanation as to why blockchains are uniquely suited to remove some of that absolute power. They appear to be no different from any other illegal digital banking scheme, such as Liberty Reserve: https://en.wikipedia.org/wiki/Liberty_Reserve

Specifically, the "product" is they've assembled a criminal conspiracy to launder money and hide fraud, and they're offering it as a service. When you have sophisticated scammers running them it always takes time for regulators to unravel these schemes; blockchains certainly did not invent this.

another great argument in favor of banning cryptography. no encryption - no ransomware

Indeed!

We should also ban crime too, that will surely stop it. Why not get rid of general purpose computation and global communication networks while we are torching our technological footprint.

the Internet is here to stay. too useful for commerce and disseminating propaganda globally. it will remain, in some perverse walled-garden form

general purpose computation though... I feel it's already on the chopping block. I think we'll see the first signs during the upcoming "cyber pandemic".

They will take my intels amd and rpis from my cold dead hands!

If you're caught committing crimes (like for instance, using the computers to arrange transactions of human trafficking) and you invoke a standoff and shootout with the police, then yes, they probably will. That's true with or without blockchains.

And because I can see where this is going: The takes along the lines of "it's not illegal, I was just flipping some electrons into ones and zeros" is a really bad take, you can do better than that.

Agreed. Crime is not a good thing, and please do not thing I am trying to endorse it. I just know that it exists and will use whatever resources it has access to. I philosophically disagree with denying ourselves something because someone somewhere can do crime.

Now, encryption and by extension cryptocurrency, this is truly revolutionary. They can shoot me in the head, but they cannot read my data, access my devices, or take the money. All that remains is silicon and metal. I like the idea that when I die, everything I have written privately, and every sat I have earned will rest forever, unreachably.

>I philosophically disagree with denying ourselves something because someone somewhere can do crime.

That's not why we should deny cryptocurrency. We should deny it because it is fundamentally bad, it serves no purpose besides scamming and fraud. The technology is broken and can't ever achieve its stated goals except by pure luck, at which point it is no better than any other solutions.

>they cannot read my data, access my devices, or take the money

Yes, they can. A dedicated aggressor (i.e. a nation state actor) will just torture and blackmail you until you give that up. Of course it gets harder for them if they kill you, then they would have to brute force your data. But then why would they need access to your devices, if you were the target they were trying to get rid of? If your private correspondence was with another party, they can also just blackmail the other party into giving up dirt on you. Cryptography can't actually do anything about these classic "meatspace" techniques.

Multisig constructions were created for the torture case. There are unfortunately cases where this has proven true.

I know your opinion re usefulness, noted. It contrasts greatly with my experiences.

Some of us dream up ways to keep the State out, you keep dreaming up ways the State will defeat it. It is a cat and mouse game for all eternity. I am confident we will survive.

No, you are looking at this totally the wrong way. I don't "dream" of the state defeating things. This is basic threat analysis, it does you no good to avoid doing it. Being "confident" that something will happen in the future is not the same as being confident that your current solution will hold, which chances are it will not. Also, multisig is not appropriate for a two way communication (like for instance, a financial transaction), you need three or more parties to make it useful.

Agree about understanding the threat — but I really don’t think I am avoiding the threat model here.

I’ve been philosophizing on the nature of Bitcoin for a long time. You haven’t given me an attack that would defeat this system yet. If you have a valid attack, I would encourage you to circulate it where technical folks can deal with it.

All you are doing is throwing your opinion that it is useless, the state will defeat it, etc. I mean cool, but coiners will not agree with you. There are many others here that have told you their experiences, threat models and uses.

I love this take because it's almost there but it's narrowly missing the point just to draw a huge straw man. Ransomware is not specifically enabled by cryptography. It's enabled by people providing "money laundering as a service" which is an apt description for cryptocurrencies.

It’s far closer to the truth than you are willing to admit.

Ransomware is primarily enabled by encrypting your files. How they take payment is irrelevant. No encryption (eg: a universe where AES, RSA, ECEIS is broken), no ransomware.

My position is the fallout of ransomware is enabled by people failing to take backups.

No, this is totally wrong, you didn't think this through. They don't need to do that. They could just copy the files to their own machine, delete them, then send them back when you pay the ransom. Encryption certainly makes it easier for them, but the main thing that enables it is money laundering. Which is the primary reason anyone uses cryptocurrency to transfer huge sums of money.

Could sure, but that’s not how ransomware typically works. Typically, it is a non interactive process that is enabled by automated application of strong encryption delivered via a binary payload. It is encryption that puts the user in danger of malicious intent not the payment rails. Before Bitcoin, LR ukash and shady payment card processors handled this. Cryptocurrency is just a better rail, so good guys and bad guys use it.

Is your problem with the network enabling crime? (Internet?)

Cryptocurrency is not a better rail. In fact it is a worse rail for almost everything. But it is the only rail that currently allows people to do this at the scale it does, due to its operators openly welcoming unlimited amounts of money laundering on the network. This has nothing to do with cryptography or the internet. It is entirely about money laundering. Yes, money laundering happened before, that is not an excuse for these networks to allow it to happen in such large volumes and at such great speed that it is enabling this entire new class of ransomware.

POWERFUL TECHNOLOGY!

> They appear to be no different from any other illegal digital banking scheme.

One very important distinction is that Liberty Reserve doesn't exist anymore, because they didn't bother to design a technology that enabled them to dodge prosecution.

Neither did various crypto scams. The big exchanges that the regulators will go after are all centralized.

the bitcoin blockchain seems unlikely to ever stop producing blocks until the end of human civilization

> "in some cases, transacting against the law is a good thing"

> "as a victim of ransomware, it is very much not a good thing"

Blatantly fallacious argument, the point isn't to defend ransomware, but to defend other examples of illegality that are justified.

Non-tyrannical governments (ie most governments) also make very harmful things illegal for very good reasons, and a system which can facilitate these harmful things is in itself a harmful thing.

I don't know how you can argue that facilitating illegal transactions is on balance a good thing, unless you also argue that the world would be better off if all currently-illegal transactions were instead legal.

The problem is where does one determine the point of tyranny? You will find that even the most apparently benign governments can turn given the political will of elected tyrants.

I’d say a government that outlaws abortion is a tyrannical overlord with no legitimacy. And yet here we are.

> This is trivially falsifiable: blockchains are being used to facilitate illegal transactions.

There are other mechanisms for facilitating illegal transactions, e.g. the Hawala network. So the blockchain is at least not the single mechanism for this.

And if we're really precise, the blockchain itself doesn't solve this particular problem. It solves the trust problem, just like Hawala.

> This is trivially falsifiable

Only if you consider making it easier to break the law to be solving a problem rather than creating one. Personally, I hew towards the latter point of view. And if you think about it, the continuation of civilization literally depends on having a significant majority of people do the same.

> a transaction is morally just if and only if it is legal

But that is not the same thing at all. What you originally said was that (legal) crypto transactions solve a problem by making it easier to do other illegal things. The legality of the crypto transaction itself is a red herring. The point is that you are advancing the view that crypto's ability to facilitate breaking the law in general is a feature, not a bug, notwithstanding the legality of crypto per se.

Civilization cannot survive that attitude spreading too widely. A system can only sustain so many parasites before it dies.

> Only if you consider making it easier to break the law to be solving a problem rather than creating one.

The question at hand, raised by Schneier, is if the technology has the capability to solve any problems. This seems objectively true: that it has the capacity to help solve the very specific problem of transacting in spite of unjust laws and tyrannical governments. This is a problem we aren't used to having in the West as of late, but certainly it's a common problem for many in history.

What you're asking here is if, on net, we ought to consider it a harmful or beneficial technology, to the point where we ought to promote its development or stifle it. That is a separate, more complex question than the one raised of if the technology can solve any real problems.

Blockchain is a relatively poor facilitator of illegal transactions, in that the chain of past transactions needs to be kept and known to many parties in the distributed algorithm. That makes it not-difficult to track down who it was that made a transaction.

> But that wincing comes from an assumption: that a transaction is morally just if and only if it is legal.

I don't think this is true. The wincing comes from a different assumption; that the state has the right to restrict some transactions.

I think almost everyone agrees that there are laws that are either unfair or should be repealed; however, most people don't think that means that the state should be blocked from enforcing laws.

While I agree that there needs to be some ability to act outside of the law to allow public opinions on unjust or inappropriate laws to shift, but I don't think being concerned that laws are easy to bypass means that we believe all the laws are just.

It's not even the state - if Visa and banks, et al decide they will not work with you, then you're severely restricted in the ways you can receive payments: cash and crypto are really the main options at that point.

That is a different argument. The comment I replied to was about illegal transactions, not transactions that are blocked by private entitites.

There's no reason to believe that analogous companies won't emerge in cryptocurrencies (in fact it's already happening). VCs are betting there is a market to capture in reinventing payment gateways for merchants, easy-to-use wallets, privacy protections, insurance, escrow, loans, fraud detection, and so on top of cryptocurrencies. These corporations will stand between you and the merchants, and will be able to refuse doing business with you.

Don't expect you will be able to use "bare" decentralized blockchain protocols to bypass the new overlords any more than you can currently by sending cash in an envelope to bypass Visa.

If the state decides to take all your money, it can deploy such force that you will surrender it, regardless of where and how you decide to hide it.

Isn't Bitcoin worse than cash for facilitating illegal transactions? Sure, it works over distances without physical contact, which is a huge logistical advantage. But on the other hand, the blockchain is literally a public ledger, so anonymity is tricky. I know there are solutions, but they require significant savvy. Overall I'm not sure that Bitcoin really solves this very well because your average criminal will probably have better intuition about how to hide and cover up cash transactions than Bitcoin, especially as volumes increase and law enforcement develops their expertise, it will only increase the risk for unsophisticated individuals.

This reads to me like an argument against the internet because everything can still be done on intranets or other permissioned networks. After all, the internet can be used by criminals so we should absolutely stay away from it!

The author fails to see that people want to build products and companies on open networks, and so the closed ones will struggle to compete.

> After all, the internet can be used by criminals so we should absolutely stay away from it!

The dotcom tech bros must have been trying to persuade typewriters, post offices, etc in 1990s at the time at the near height of the dotcom speculative mania. The skeptics at the time called it a fad at the time and would be no better than using fax machines.

So again the internet is being used by money launderers, scammers, criminals, etc. Does that mean we need to go back to using fax machines?

I think everyone knows the obvious answer to that question.

The historical strawman you're presenting is a wildly inaccurate portrayal of the period you're describing.

If you're actually interested in what Internet skeptics were actually focused on in the early days, read Cliff Stoll's books[0]. His second book is where he established himself as the leading thinker on Internet skepticism in the early days, and his first book is where he established himself as one of the most important protectors of the Internet, with his first book work leading directly to many of the digital security and privacy laws and principles we take for granted today. Early Internet skepticism wasn't driven by clueless Luddite thinking, nor was it focused on nonsensical issues. Most of the problems he pointed out in 1995 have only become more serious and more apparent in the intervening years.

[0]https://en.m.wikipedia.org/wiki/Clifford_Stoll

I have a contrarian view on cryptocurrencies: I don't think the blockchain is the biggest innovation. I think that Bitcoin is. And Bitcoin is more than just a blockchain.

However, I think blockchains are only useful for a single purpose: digital money. Every other use seems misplaced for me.

I'm not sure a meme should be "worth" 400 Billion dollars.

Or what else could you mean what the "more than just a blockchain" is?

The game theory behind it that makes the whole thing work.

For questionable values of “work”.

It doesn’t work as digital money (see the narrative of it being digital gold).

And it’s not stable yet. The block rewards are decreasing and we don’t know for sure if it will still work when they are mostly gone (we will find out in a few years though).

I certainly agree that digital money is the use-case, but I don't think Bitcoin is it.

Transactions are far too expensive and has too poor privacy for that to be the case.

It’s super cheap. I sent $30 to a friend last night via Lightning, it was <1c. They used it to buy drinks.

There is no record of the tx on a blockchain - it is reasonably private. It is not as private as monero, zcash — sure, but there is no ongoing record of tx.

And broke decentralisation doing it

How so? Why is Lightning centralized? Cos it isn’t. That’s just bcasher lies.

So you used a centralized solution to reduce your transaction costs, giving up on one of the main features of Bitcoin.

You are wrong to say it is a centralized solution. My channels, my peers, c-Lightning and a friends open source wallet. Where is the centralization? Where is the trusted third party?

What feature was given up? Sats are sats and they are accepted where sats are taken.

To get a comparable user experience you need to depend on a third-party to manage the channels and liquidity.

Otherwise you can't use it on your mobile phone, have problem with finding an available route, having failed payments, having to open new channels and you still have to make regular and expensive Bitcoin transactions when topping up or opening channels.

third-party is not necessarily a harbinger of centralization, as long as there are many third parties to choose from (and you can always setup your own channel if it suits you)

With that logic then Bitcoin is unnecessary since you have several banks or fiat currencies to choose from already.

I have not experienced these issues myself, but I don’t doubt that experimental software is tricky.

It’s true that while an onchain tx is simpler to manage, there are many cases where an onchain tx is undesirable. Lightning facilities that.

If Lightning is centralized, can you give an example of something that isn't? Certainly not TOR or the internet.

Bitcoin.

And no, Lightning is not Bitcoin. That's just marketing for suckers.

Lightning is Bitcoin. It’s trading state changes of sats between channels.

Is a Casascius coin Bitcoin? A paper wallet? If I give you a casacius coin, have I given your Bitcoin? Lightning is analogous to being able to fractionally trade a Casacius coin.

Lightning is using Bitcoin, but it is not Bitcoin.

Giving someone a casacius coin is not the same as sending someone a digital Bitcoin, as the properties are different. And in the same way sending someone Lightning Bitcoin is different as it hasn't been recorded on the blockchain yet.

A pre-signed Bitcoin transaction is a bearer instrument, just like a Casascius coin or dollar bill. Your understanding of the Lightning Network is flawed.

https://github.com/lnbook/lnbook/blob/ece69d5c2ac8116ef83c18...

Ahhh, it is in fact “on the blockchain” yet. The sats are in the channel, and there is a channel establishment tx on chain, all before a single millisat is sent.

It’s just trading balances. Don’t fear it!

> hasn't been recorded on the blockchain yet

That's not a very useful distinction. The latest channel update, being just a standard Bitcoin transaction, can be published on-chain any time a participant desires.

Would you similarly claim that 0-conf transactions in the mempool are not Bitcoin, as they are not recorded yet?

IMO Monero and Zcash were the next attempts at true digital money, and both seemed to work well for that purpose. However, people don't seem to want digital money unless its value is highly volatile, and Zcash and Monero never achieved such volatility.

It's ironic, because volatility is the opposite of what you want in a currency.

Doubly funny as people market Bitcoin as a store of value, but in reality it's far too volatile (and too young) for that.

I think Monero is closest to being the perfect cryptocurrency. Complete privacy, fast and cheap transactions, truly decentralized. Now if only we could get people to use it.

Monero just makes different tradeoffs than Bitcoin. Some upsides, but also plenty downsides. [1].

[1] https://phyro.github.io/grinvestigation/why_grin.html

See “the web PKI 2.0” https://cryptologie.net/article/561/the-web-pki-20/

Thanks! Mina is the most interesting cryptocurrency I've seen since Bitcoin. I didn't mention it since I'd look like a shill trying to pump my favorite coin. Disclaimer: I have 0 cryptocurrencies in my portfolio right now. I'm only interested in the technical aspects.

David, I am highly concerned about fairly new and poorly understood zkproof systems vs transparent blockchains for long term storage. Monero, Grin, Zcash; have all had their issues.

What would be required in your mind for you to trust Mina to accurately and retrievably store your life savings?

I really don't understand these arguments. "Blockchain" is a collection of technology but at its heart it's about byzantine-fault tolerant consensus and distributed protocols.

I explain this here (https://cryptologie.net/article/555/my-friends-always-ask-me...) but if you're looking at it from the outside, you should see blockchain as

1) a distributed database: it is here to emulate a centralized system, like a central bank! and

2) a distributed database that works even in the presence of malicious actors, so like an international central bank that wants to operate across borders

There's nothing more than that, if you want to understand the technology in a financial scenario.

If you want to understand how this kind of technology can be useful outside of a financial scenario, think about the web PKI (which I wrote about here https://cryptologie.net/article/561/the-web-pki-20/) or protocols like certificate transparency and binary transparency, and how they could provide resistance against attacks (instead of detection of attacks) if they used a BFT consensus protocol.

There's a lot talk about what blockchains could be but most of the time this is just people lying to themselves or others about getting rich. It's the FOMO from Bitcoin. It's somehow picking the next Bitcoin from the 30,000 shitcoins.

Algorithmic stablecoins have shown their obvious weaknesses in recent times and is another application that doesn't deliver.

But here's the nail in the coffin for me when it comes to blockchains: the government could shut down any blockchain, including Bitcoin, tomorrow if it chose to.

The US could make mining Bitcoin illegal and make it illegal for any financial institution who wants access to the US financial system to transact with cryptocurrencies. Will that shut down the network? Not technically, no. But it will make any such network basically useless.

The US government exercises this power all the time. It's why most cannabis dispensaries and growers are forced to deal with cash because they're excluded from the banking system.

China shut down crypto mining and it basically disappeared the next day (mostly moving to Kazakhstan it seems). With rising energy costs in the developed world (including the disruption to natural gas supply in Europe thanks to Russia's invasion of Ukraine), at some point hte fact tha Bitcoin uses more power than Sweden is going to be an political issue.

The US dollar is maintained by the long dick of the US government. A currency is a projection of government power. And no crypto network is a match for the projection of power of nation states.

I think we need a word to replace FOMO for these purposes. Perhaps one already exists?

It strikes me that it’s not so much the fear of a potential new missed opportunity driving the tulip mania, but the retroactive regret of having missed the (10,000x) opportunity that bitcoin specifically represented.

I suspect labelling it might have some persuasive/deflating power.

Bitcoin regret? ROMO?

I like how your comment points out cannabis.

> The US government exercises this power all the time. It's why most cannabis dispensaries and growers are forced to deal with cash because they're excluded from the banking system.

The US tried to ban the use of cannabis. The result was not that cannabis stopped being used or that it significantly reduced the levels of cannabis use - instead, recreational cannabis users and those with legitimate reasons for using it were forced into more dangerous black market activity, and often criminalized and put behind bars. Millions of dollars of state funding was spent exercising this drug war, which most people now see as a colossal failure, and finally some states are decriminalizing and legalizing cannabis use so long as it falls within government regulations.

No single country can do much to take the network offline by banning mining. If all countries in unison decided to criminalize mining and enact a PoW-war, and were successful the blanket removal of PoW mining, then maybe the network would suffer to remain online, and users would be forced to migrate to more resilient consensus mechanisms like Proof of Stake.

I generally agree but there definitely are exceptions. For example they can provide viable financial models for tech organizations like Brave and Protocol Labs (I'm not endorsing them) to actually care about privacy, which is an enormous social issue right now.

Agreed - privacy of transaction is the #1 issue blockchain potentially solves.

I don't get it... aren't all transactions completely public on the blockchain? Isn't that the fundamental way it works? (Mixing services notwithstanding.)

Sure, your wallet isn't necessarily traceable to your identity, but the whole transaction history of your wallet is there, and if you ever convert those bitcoins to real cash, you're going to need to divulge that identity to someone.

"Shielded" transactions on networks such as Zerocash are private. There's an increasing trend in this direction as "zero knowledge" layer 2 networks come online, since they have the same underlying mechanisms which makes private transfers easy to implement (or to even have as the default).

And Monero is the only widely used coin that actually does this, the rest make things even less private because all transactions are publicly available on the blockchain.

Are you referring to things like the Basic Attention Token? As I see it, there are two separate things going on here.

1. A micropayment system. Nothing here requires a blockchain. Maybe doing it in a privacy-preserving way is easier with a decentralized solution, but I’m not convinced this is necessarily true.

2. Bypassing problematic regulation. The US and US-led financial system make legally moving small amounts of money around on behalf of clients prohibitively expensive and require an unfortunate degree of discrimination. By magic, blockchains bypass this.

The latter is, in my mind, a huge problem in both directions. A non-blockchain company should be able to offer micropayments without getting tangled in a KYC-AML morass. To the contrary, I would argue that financial services on a common carrier basis would be superior to the current system.

On the flip side, I don’t understand why regulators tolerate cryptocurrency exchanges or why they should tolerate them. From outside, Bitcoin (and, even more so, Monero) are systems by which unknown people can instruct exchanges to move fiat currency without knowing on whose behalf they are moving it. This flies entirely in the face of AML-KYC. The exchanges do not know the customer. Money is laundered.

The big open question here is whether they can provide viable financial models once the speculative mania around this stuff wears off.

The way it has supported the development of practical zero-knowledge proof-based applications alone is worth the weight of the blockchain industry in full, and then some.

Not sure it has made it worth wading through the 2017 hot takes that HN continues to insist on upvoting though.

While I get your point, zkSNARKS preceded blockchain by two decades.

No - zero-knowledge Succinct Non-interactive ARgument of Knowledge (zk-SNARK) was first outlined in 2012[1] and the first real production implementation of it in the wild was Zcash (development of which started in 2013).

The ZK proof protocols being used today in blockchains are very different than those envisioned in the 80s. Specifically they are "non interactive" and "succinct" (proof is very short and easy to verify). Most of the massive leaps in development of ZK proof technology recently has been led by crypto currency space.

[1] https://dl.acm.org/doi/10.1145/2090236.2090263

Ironically the zksnark paper had a glaring, crypto system breaking error and the implementers of zcash went out of their way to hide the parameters until sapling, where they could correct the problem.

That being said, zcash is a quite useful construction.

Cryptocurrencies have also resulted in the invention of an entirely new crime: stealing CPU time.

I think you will find incidences of CPU theft going back to the first multi-user mainframe computing systems.

You can’t even argue ransomware is a new crime from cryptocurrency, as this existed via payment card networks back in the day, see Reverton malware.

To clarify: I'm referring to the ability to convert CPU cycles directly into money.

Yeah, revolutionary technology! Money from computation! Sign me up!

There's no need to be a dick about it.

I mean no offense to you personally, it’s just one of my quests in life to dispel misunderstandings of this revolutionary technology.

It’s easy to find flaws in any tech. It’s how we adapt that is important.

What misunderstanding are you referring to?

you forgot to add /s

No I didn't.

Boy, whoever's funding the negative press around cryptocurrencies, send some money my way... I'll find better arguments than void hate.

Yes, when I see articles I disagree with my first thought is that someone paid them to write it, and not that most people disagree with me and statistically most articles will be from that side.

Probably their thinking is that otherwise intelligent people are writing roughly the same complete nonsense all at roughly the same time. I'm a big believer in Hanlon's razor though.

and you don't find it rather peculiar that the concentration of anti-crypto rhetoric has suddenly spiked about a year ago, and now there's a relentless assault from all opinion outlets?

especially here on HN, where a few years ago it was all blockchain this, blockchain that, and you could have intelligent conversation about cryptocurrency without someone immediately clawing at your throat. and now we have bi-hourly 5-minute hate instead

totally organic, yes?

> and you don't find it rather peculiar that the concentration of anti-crypto rhetoric has suddenly spiked about a year ago, and now there's a relentless assault from all opinion outlets?

When the price goes up, people are happy and write happy articles. When the price goes down, people are sad and write sad articles. How that actually happens is that, the people writing the happy and sad articles are different groups of people who each wait for the price to do what they need it to justify their position.

The price is down, so it justifies negative positions. When the price is up in ~3 years, there will be more people writing happy articles. When that happens I won't think they've all been paid to (even though it is obviously more likely that the group selling something has financial interest in promoting it).

when the price inevitably goes back up, the rhetoric will simply switch back to drug trade, child porn and climate change. the current state of the market contributes very little to the overall narrative.

https://www.google.com/search?q=bitcoin+blockchain+child+por...

> the current state of the market contributes very little to the overall narrative.

You're the one complaining about the last few months of increased negative articles. If you cannot see the connection between the frequency of negative articles and the price of Bitcoin, then I'm sorry but I don't know how to communicate in braille.

not a few months. a year or so, like I've explicitly said. the prices were past their mid-plague peak, but otherwise fine. and the dominating narrative up until the terra/luna/whatever crash a few months ago was climate change, not volatility.

and besides, the OP blog post has nothing to do with the prices either.

The funny thing about media bias is that people assume it's dark forces conspiring about what information to feed the public, but the reality is that a stronger bias is simply “who is willing to show up to talk about it in an entertaining way”.

There have traditionally been more of these on the pro-crypto side, because not many people devote time to talking about it unless they're getting paid, and there's not much money in being anti-crypto. There are some people (like me) who do it anyway, though, and TV bookers/publications have become better at finding us.

this article is seeing more engagement and votes than most because it is easy to disagree with and talk about why it's wrong

stronger arguments that no one cares to argue against will languish on the backpages

You really think that Bruce Schneier, renowned digital security expert, needs to be paid to write a denouncement of cryptocurrency—the enabler of a host of recent ransomware and similar attacks?

As a security professional, I deeply respect Bruce. He fundamentally understands the nature of cryptography, infosec and society. I’ve read his work and followed him for years. Got the Bruce T-shirt.

For some reason he totally missed the whole cryptocurrency thing, which a lot of cryptographers did in the early days. The problem is that he still is regurgitating the same FUD from 8+ years now.

These days I look to up to folks like Dan Boneh. That guy is amazing.

The core thinking behind the argument in this article is perhaps this:

This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology. And, more importantly, technology can’t solve economic and political problems.

It's the same issue with things like personal data protection and mass surveillance - everyone who claimed this could be solved by technology like Tor and onion routing has been proven wrong, and it's eminently clear that only reform of government policies, i.e. legal policy changes like enforceable data privacy laws, offers any real solution.

>everyone who claimed this could be solved by technology like Tor and onion routing has been proven wrong,

Can you expand on this? Outside of theoretical attacks only possible by the largest nation state actors and attacks that rely on something other than Tor (e.g. bad opsec, enabling JS, etc.), are you saying Tor has been broken? Is there a paper?

Not sure what OP meant, but Tor is mostly broken right now for anything on clearnet, it's either practically or outright unusable.

Not being practical is much different than what the OP seems to be claiming; that onion routing itself is broken in terms of security/privacy.

I'd read "Surveillance Valley: The Rise of the Military-Digital Complex", by Yasha Levine, for a discussion of why Tor/Onion has relatively little value for private communications, unless it's used in a highly specific manner - and even then, one end of the communication is inevitably going to be known to metadata trackers at the very least. It's also highly probable that most or all Tor nodes on the Internet are backdoored by one intelligence agency or another at this point, meaning they can reconstruct the hops pretty easily.

https://www.goodreads.com/book/show/34220713-surveillance-va...

It's unfortunate, I thought you would have proof, or at least a technical paper, since you said "proven wrong". I was excited to dive into something more technical than the typical hand-waves to 'probable' backdoors and intelligence agencies.

The same tech bros have already ignored the 'free software' arguments made by the FSF and just moved on to implement their surveillance capitalist tools in their products; a telling that the move to stop and get rid of all non-free software has been a complete failure.

They continue to scream open-source as if it helps everyone that they can be trusted, but it is only by talk or if the tool, company is shutdown; and everything else is closed-source and not free software. This is why the FSF has failed to stopping all of it as it's co-existing with closed-source software.

Now what we are seeing here is the same tech bros are now trying to stop all cryptocurrencies, blockchains and their projects which i'm afraid that they will end up being very disappointed just like the FSF was with stopping all non-free software. And no, the crypto maxis thinking that it will takeover the current system or all crypto projects will succeed will also be very disappointed with that expectation.

> To me, the problem isn’t that internet can be made slightly less awful than it is today. The problem is that it doesn’t do anything its proponents claim it does. In some very important ways, the internet is not secure. It doesn’t replace the post office with ethernet cables; in fact, in many ways it is far less trustworthy than the postal service. It's not decentralized, and its inevitable centralization is harmful because it’s largely emergent and ill-defined. It still has trusted intermediaries, often with more power and less oversight than the post office. Internet still requires governance. It still requires regulation. (These things are what I wrote about here.) The problem with internet is that it’s not an improvement to any system—and often makes things worse.

> In our letter, we write: “By its very design, the internet is poorly suited for just about every purpose currently touted as a present or potential source of public benefit. From its inception, this technology has been a solution in search of a problem and has now latched onto concepts such as e-commerce and information-at-your-fingertips to justify its existence, despite far better solutions to these issues already in use. Despite 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 services and are not an improvement on the existing mailing system.”

> I and others wrote a letter to Congress, basically saying that cryptocurrencies are an complete and total disaster, and urging them to regulate the space.

This guy wants the US government to regulate what data structures, algorithms, and protocols you’re allowed to use in your software.

Sorry, but I don’t think anyone really wants the US congress and a baby boomer with a blog to be the ceiling of technology progress.

"There is no reason for any individual to have a computer in his home." - CEO of Digital Equipment Corporation, leading computer maker, in 1977. Microsoft was founded in 1975.

https://www.google.com/search?q=ken+olson+quote+personal+com...

The quote doesn't end with "and there never will be." Quoting him like this is a little bit like quoting someone in 1900 saying that we don't need gas stations.

The Apple II was probably the first reasonable, non-pure-hobbyist home computer, and it didn't appear until 1977. And even then it took another year or two years for useful software to appear.

This article talks about everything except what I think is the value proposition of Bitcoin/blockchain: A gambling system one can speculate about entirely anonymously.

It’s anonymous Las Vegas and people love it.

It’s a programmable Wall Street stock market where new kind of invisible wolves can Ponzi scheme the hell out of others in a new kind of scary unstoppable way.

You can argue this is bad for the world (in fact I think it is), but in my opinion this is why blockchain still exist.

Not because it’s a value storage system, or programmable money.

The scary part is that it’s built to be unstoppable so people will continue to gamble and get rich/poor over it.

A new more interesting discussion could be: is it inherent within humans to be able to gamble in this unhealthy way and what can we do to raise awareness about its real nature? (Similar to having facilities where people can get help on gambling or drug addiction)

Blockchains are useful for maintaining chronologically ordered global state in an adversarial environment. And that's pretty much it.

One often overlooked application of crypto is that it may be attracting a large proportion of scammers and those easily scammed, thereby pulling a whole bunch of scam activity out of the regular financial system and into the crypto space. If we can get all the fraud onto the blockchain, I'd call that a win.

Blockchain solves the problem of trust; you don't have to trust centralized entity with your transactions because with the Bitcoin's blockchain implementation there is consensus among nodes on the chronology and the nature of transactions plus all transactions are open to public aka transparent.

> Someone, please show me an application where blockchain is essential.

There seriously should be a requirement for anyone writing an article or a comment about how crypto is useless to install MetaMask and go play with Defi protocols for a few days: https://ethereum.org/en/dapps/ (You can use all of this if you have an internet connection, no arbitrary restrictions by governments or companies imposed can stop you - how on earth does it not blow your mind?!?! Not only that, countries that will have digital stablecoins (like USDC) will gain tremendous benefits; to the similar extent as Petrodollar has). I honestly can't get the short-sightedness of tech people in this area. This is a revolution. Obviously.

So your answer is that defi is essential to blow minds. I can agree to that. The rest is only "will be" while the question was about "what is".

Blockchains are useful when two parties needs a third party to trust. Blockchain eliminate the third party. yes, there might not be a robust solutions today but its pretty robust problem to solve.

>Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it.

I would like to fundraise with an international group that doesn't trust US based corporations with their personal data. Is there an existing way to do that?

Also, more generally and away from things that start in the financial sphere, a decentralized web-scale database seems to have broad conceptual appeal but the only functioning large-scale instances all come bundled with cryptocurrencies. I think this is largely because we don't a way to pay for servers without the financial layer (and figuring out a way to dial down the financialization while keeping decentralization would be good).

Cash?

Me and a few hundred pseudonymous individuals on Twitter will...what? Mail different currencies to a trusted central party?

What could go wrong? /s

Or mail the currencies to the international group directly?

> on Twitter

Don't go changing the goalposts now. You previously said:

> an international group that doesn't trust US based corporations with their personal data

So no Twitter for you.

As in sending cash by mail potentially across borders? Is that really a solution?

Absolutely, you can even get it insured (although there's often a limit in the $1,000s or $10,000s).

Have you ever encountered a project actually fundraising in this way?

> Have you ever encountered a project actually fundraising in this way?

https://www.eff.org/files/2020/05/27/eff_membership_form_202...

I periodically send an envelope of cash to Mullvad. So far I haven’t had any issues.

Mullvad supports Monero now, you can save yourself the trouble.

Most projects don’t have any issue using bank accounts because they work well. As others have stated some projects do.

How does getting it insured guarantee that the money will make it to its destination? That's only to get it back in the instance of theft. Anyone who's ever had family or friends in third-world countries can tell you firsthand that mailing even consumer goods is a bad idea. Mailing cash is plain foolish.

Would you also argue that email is useless because you can just send a letter? I don’t think “crypto is useless because you can just send cash by mail” is a serious argument, sorry.

This is subject to third party government veto (with or without due process) as it crosses borders. Crypto is not.

It's also slow and risky.

> I would like to fundraise with an international group that doesn't trust US based corporations with their personal data. Is there an existing way to do that?

Sure, there is a large semi-informal Hundi network to “move” money internationally.

https://en.m.wikipedia.org/wiki/Hundi

You send the money to their bank account with SWIFT? Not every bank is owned by a US company. Or mail cash - you can even get it insured.

If a US bank won't send money to a foreign bank, it's because the bank is in a sanctioned country (and now you have bigger issues than how to send the money, i.e. legal issues).

To whose bank account? Multi-signature wallets are a really nice feature which are cumbersome to imitate in a real bank account (involving physical signatures).

To the bank account of the organization you’re donating to? Or to whatever bank account the org would put real money in after they sell the crypto they get

I have work done in Venezuela all the time. How can I instantly and for free send them payments if not for Bitcoin Cash or Monero?

BTC and Monero aren’t really instant or free because the recipient has to convert them to real money (and pay fees) before they can use them for most things

> an international group that doesn't trust US based corporations with their personal data

I don't think it is actually possible to exist in the western (and sometimes nonwestern) world without US based corporations having your personal data.

For starters, this fictive "international group" would have to essentially have no internet footprint. Its members would also have to never engage with international groups who themselves have US based corporations as third parties. It's just not realistically doable. Bitcoin has nothing to do with it.

Could you be a little more descriptive with this hypothetical?

How do you communicate from outside the US with someone inside the US without involving any US companies?

No Internet (nevermind facebook/twitter/email/etc) because US companies will certainly control at least some of the nodes in your path and probably the DNS.

why does the entire thing need to be without a company?

User A posts on Twitter that they are crowdfunding an idea or project. Users X which may be one, two, or thousands are willing to support and pay for that. Same could have occurred on FB, WhatsApp, Discord or anything, none of those apps are facilitating the exchange.

> why does the entire thing need to be without a company?

Because OP said:

> an international group that doesn't trust US based corporations with their personal data

That is not realistically possible in today's world, and is an issue way broader than crypto.

The international group of donors does not need to give up any personal data to read a tweet and decide to deposit some of their tokens into a crowdfund contract.

> The international group of donors does not need to give up any personal data to read a tweet

https://developer.twitter.com/en/docs/twitter-for-websites/p...

> What information does Twitter collect through Twitter for Websites and how is that information used? When you view Twitter content or Twitter products integrated into other websites using Twitter for Websites, Twitter may receive information including the web page you visited, your IP address, browser type, operating system, and cookie information. This information helps us to improve our products and services, including personalized suggestions and personalized ads.

So? Most of this is negligible, and can be shielded if the donor cares about this level of privacy - using a VPN, disabling cookies, spoofing your browser client.

The OP is probably talking about personal data such as mass collection of users photo ID, passport, email address, home address, full legal name and gender, telephone number, date of birth. In a standard non-blockchain crowdfund, these are the sort of things each donor would need to first share with PayPal Holdings Inc. - or a similar company - in order to have their donation fulfilled.

So? Most of this is negligible, and can be shielded if the donor cares about this level of privacy.

Passport fraud is slightly more illegal than turning off your browser cookies.

Don't shift the goalposts. The conversation is not about legality or illegality of certain actions, but about how this fictional "international organization" does not want any US company to have their personal data.

The point is that in such an unrealistic hypothetical, crypto is a very small concern.

lol @ goalposts. the conversation has gone from “blockchains have no application” to “ok, blockchains have an application, but it probably only concerns a few.”

there are many users who would be happy to have systems of value transfer that don’t require routing all value and personal data through a central US company.

That's an awfully contrived example, and that is clearly not what has driven Bitcoin or cryptocurrency adoption to date.

Worth learning more about DAOs. They're sometimes frivolous ("buy the constitution") but often actually interesting (see LabDAO and other funding organizations in the Decentralized Science movement).

I recently had to move a lot of money between my own accounts. It took days.

On algorand, transactions of any amount take 4 seconds and cost .00035 cents.

On Solana they take 0.03 seconds and cost a fraction of that as well. That might sound unnecessary, but it actually enables novel and compelling use cases for monetary transactions. Programmatic value transfer solves problems we didn't even know we had, whether its Bitcoin, Algorand, Ethereum, or Solana.

various issues in this post, but to examine the central question:

> Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it.

Application:

User Alice and Bob want to swap domain names they own, but using an escrow to facilitate the trade safely and mitigate counterparty risk - and they want this exchange to settle in mere seconds or minutes, without the need to share private data with a third party, and without the need to pay a % commission to a rent-extracting centralized corporate entity*.

This application can and already is being achieved by recording these domain name properties and their records of ownership on a public distributed ledger - a blockchain.

The application of blockchain is as it always has been: creating a decentralized and permissionless ledger.

* most blockchains use transaction fee markets to mitigate spam. In this blockchain app, a small fixed transaction fee must be directed to all users upholding the protocol - which, importantly, may include Alice and Bob themselves as token holders, block producers, and/or delegators within the network.

Edit: lol at downvotes. author literally asked for an application - the downvotes end up hiding my comment and help to maintain the HN echo chamber.

One purpose I use Bitcoin for is as a store of value.

I can't know what the government will do with its currency in the future. But I know what the Bitcoin protocol dictates.

Sadly, the supply not being responsive to the demand also means I'll see crashes. But I also see crashes with gold, stocks, and real estate.

Completely normal "store of value" behavior. https://www.google.com/finance/quote/BTC-USD?sa=X&ved=2ahUKE...

classic fallacy, you've chose a window of time where the arrow points down. there are many other windows of time where the arrow points up. besides value, the operative word is "store", as in, store it another 5 years and see which way the arrow points then.

Ah yea, the store of value routinely moves 10% in an hour, and I’m the one being fallacious.

You may know what the Bitcoin protocol dictates, but Bitcoin protocol has little to do with its value. It is worth what people will pay for it. You don't know how much or how little people will be willing to pay for it tomorrow, and that number varies rapidly. That's not a property I'd want in a "store of value."

Indeed, demand is the biggest risk in owning crypto assets.

Here are what I believe the largest factors that influence demand:

- liquidity (depends on, say, GDP and national currency supply)

- network effects (it's easier to use Bitcoin if more people are using Bitcoin, because more services and trading partners pop up etc.)

- amount of "speculators" - people buying because the price went up recently. They are betting on momentum.

- amount of "true believers" - people seeing the value of the protocol, and sticking through crashes or betting on mean reversion.

How can I have a digital form of money protected from a politician that doesn't like me? That is what crypto provides - you cannot seize my money. You can compel me to give it up, but I will not wake up one day and have a court notice that I'm ("temporarily") bankrupt.

You can have a court notice that says any transactions from wallet X will be considered contempt of court punishable by jail, which is close to the same thing for most people.

If a powerful politician cared enough, they could take everything you own. BTC won't save you from tyranny.

You can be arrested and held in contempt until you give up the money.

What money? I don't have any money.

Yeah, sorry, I lost it all in a tragic boating incident.

On Green's challenge of "I postulate that no one has ever said “Here is a problem that I have. Oh look, blockchain is a good solution.” in 2015 I worked in digital identity and showed how identity itself in its very definition was the emergent artifact of relationships, and the only way to establish idenitity in a consistent and scalable way was to federate the consenus of which your identity was the artifact. The company abruptly pivoted from its federation protocols based ID to an identity blockchain, and it is being adopted by governments and financial institutions today. The next problem was "how do you do cryptographic key management in autonomous swarms of devices that connect via a mesh protocol that cannot connect to a central base station?" again, this is the same identity problem, where the integrity and quality of "legitimacy" of a node's identity is an artifact of the consensus of the mesh it connects to. Now, these cases don't need proof of work, but they absolutely rely on consensus, and not a database.

Their criticisms of blockchains imply a misunderstanding of a core aspect of security, which is that a proof in a closed loop system cannot be shown to be externally consistent with another instance of itself without some encompassing closed loop system both instances are a part of. A generic consensus protocol (like a blockchain) enables the federation of these consistency proofs. This particular blockchain may not be the best possbile one - but I'd argue back that a cryptographic substrate that facilitates consensus and federation for distributed computing is as significant an invention as the internet.

There is another piece where it's finally clicking that "security" isn't so much an engineering problem as it is a critical theory of technology based on different ideologies that favour autonomy or governmance respectively, and like a critical theory, it can be used to both befog and obfuscate - or prove - whatever you like in it.

On currencies, to borrow an adage, if you don't know what problem cryptocurrencies are solving, the problem may be you. That's unnecessarily provocative, but the real problems it solves are those around peer-to-peer transactions and dynamic federation - all the stuff the internet used to promise until it succumbed to the very criticisms Schneier is making of blockchains, particularly emergent centralization and scams.

I have tremendous respect for both of them, but Schneier and Green are both making appeals for governance to people who don't want it, and I think they are lending their engineering cred to a general global governance narrative that I'm not sure they appreciate the motives of.

"The future is now, old man".

laser

Block chains can be useful. Git is the most obvious example.

Is Git on a block chain?

Each commit is hashed as a block that includes the hash of the previous commit, so, yes.

Though, to be more accurate, you would say thay each "repository" is a block chain rather than say that Git is "on" a block chain.

It is a blockchain. It's different from Bitcoin, Ethereum, etc. in that it doesn't use a trustless consensus method. And that's literally the only situations where cryptocurrencies make sense, situations where you need to be able to operate with zero trust of the other party/parties. Turns out those situations are a lot rarer than crypto advocates claim, and even when such situations exist crypto is actually pretty limited in how much it can do/solve.

The underlying data structure for a blockchain and git is a merkle tree. So by some looser definitions, yes.

Git is not what most people mean when they say blockchains (e.g. the decentralization of the blockchain and the use of the consensus algorithm is implied)

Kind of like how "Crypto" now means gamblinging on speculative assets rather than the study of cryptography?

When I'm criticising blockchains I often use the term "distributed consensus blockchains" in an attempt to avoid confusion with Git and certificate transparency logs and other useful data structures.

The term blockchain didn't really exist before Bitcoin, and there isn't confusion about what people mean when they use it.

I'm pretty sure that if we researched the origins of the "git is a blockchain" meme we'd track it back to the community of crypto currency sceptics which I know you closely follow.

"A blockchain can be a useful data structure like the one git is using" isn't intended as a helpful clarification. It's an attempt to push for a change to the meaning of "blockchain" as originally (and currently) understood, to advance slight-of-hand arguments such as "blockchain was invented in the 70s, there is nothing really new here".

Schneier calls that a "private blockchain"; he's critical about what he calls "public blockchain" which he defines as essentially the blockchain+mining+cryptocurrency component.

Git and secure scuttlebutt use merkle trees and chain blocks cryptographically, so yeah, they technically use a blockchain.

In my opinion main difference between "technically use a blockchain" and the term blockchain as used in the article and in common parlance is a way to automatically determine by distributed consensus which chain is the "real" blockchain. That's what proof-of-work or proof-of-stake do, and git and ssb don't provide a way to do that, so this article is not about them.

Not very courageous to release a piece like this AFTER the crash.

Understood that nobody would listen while times were good, but because of the timing the conviction of the author is questioned.

EDIT: Author has been releasing criticism of cryptocoins for some time now. I guess he's bona fide.

Schneier has a pretty solid reputation and his articles appear regularly on HN. https://en.wikipedia.org/wiki/Bruce_Schneier

Information from the first paragraph of the linked article:

Previous post: https://www.schneier.com/blog/archives/2019/02/blockchain_an...

Post by Matthew Green he is replying to: https://blog.cryptographyengineering.com/2022/06/09/in-defen...

Blockchains offer democratized access to programmable money, and you think this is a BAD thing? Where's your creativity?

Getting too creative with money historically leads to ordinary people losing their savings and homes.

1980s penny stocks. 1995-2005 Enron creative accounting. 2008 subprime mortgages. 2017-21 crypto ICOs and DeFi.

Maybe we don't need any more ultra-creative capitalism, but better regulation and shared financial digital commons where interoperability is guaranteed by government mandate. The EU has been quite successful in making Eurozone cross-country banking just work for the ordinary consumer and small business.

After all money itself isn't the point, the business it enables is. Money should ideally get out of the way and not make you think about it, but crypto so far has taken the opposite approach where the money itself is everything and nothing is actually being traded.

You can try to regulate Bitcoin but you can't stop it. It will become like the drug war or prohibition.

It's sufficient to regulate the high-profile crypto on/off-ramps. Exchanges should follow the same rules as banks and brokers, and there probably should be an energy waste tax levied on PoW coin transactions which exchanges would enforce, similar to how brokers do dividend tax withholding today.

If someone wants to trade Bitcoin peer-to-peer for cash 2010-style, that's fine by me, it won't create systemic risks.

I agree, and exchanges already are heavily regulated. But taxing energy consumption? How can you tax energy waste? What if someone sets up their own power generation? Is it wasting energy to let sunlight hit a parking lot?

> What if someone sets up their own power generation?

I'd like to see how this is economically feasible for crypto.

Me too. It's another financial incentives to make clean power generation more accessible.

> ...exchanges already are heavily regulated.

They are not, compared to banks and brokers. They do all kinds of things that would be absolute no-nos in regular finance, like trading against their customers.

Ah, that's a good point. Well, good thing is you don't need an exchange to use it, and there are decentralized exchanges.

What is there to stop beyond the horrible energy consumption and scams?

Bitcoin doesn't do anything useful at all. It's a net negative for the earth and the public at large.

People will just keep using it. But you might be right that it is a net negative since it's mostly used for speculation... But, it's not completely useless (tell that to the criminals who use it regularly). Or people who own it because they don't want all their assets in a highly inflationary currency.

You're playing a semantic game here. Yes, technically if criminals are using it, it's not "useless". To the rest of us, it's actually worse than useless because the criminal activity is a net negative on society.

The idea that crypto is a hedge against inflation is laughable, look at any of the price activity in the last few months. Crypto tokens have no fundamentals or inherent value or anything. The price is completely random.

I'm not condoning all the illegal stuff that happens with Bitcoin, to be clear, but just because a government says something is illegal, doesn't mean it should be. For example we're happy in the U.S. (well most of us I think) to be freed from oppressive rulers who taxed without representation, and something like Bitcoin would have been quite useful in that situation. There are many countries who are in a similar situation.

> Or people who own it because they don't want all their assets in a highly inflationary currency.

When compared to world currencies BTC currently has an inflation rate that makes it the second most inflationary currency in the world after Venezuela. As a store of value crypto is not great.

What's your math on that? Current block reward is 6.25 BTC which occurs on average every 10 minutes. That's 52594 BTC per year. The max outstanding BTC is 21M (there are currently just over 19M) so that would be less than 0.25% annual inflation. Pretty sure there aren't many currencies (if any) that are at that rate, even before the current high inflation rates.

If you're factoring in the price, over the last decade, it has been one of the best (if not the best) performing asset, so I think from that perspective it's actually deflationary.

You’re confusing money supply with inflation. Bitcoins supply is incredibly constrained, and yet it is inflating at an incredible rate. This is the opposite of what is happening in Zimbabwe where supply is not constrained at all and inflation is lower than what bitcoin is at YTD.

Inflation is a measure of how much goods and services you can get for a given unit of currency. It is not a measure of how much currency exists, although it can be affected by that.

My math is that you need three bitcoins to buy what one bitcoin got you 6 months ago. That is an inflation rate of 600% per year. The world is losing its mind right now because good currencies are inflating at 8% instead of 3%.

On the whole, yes bitcoin is a high reward investment, if you bought it at the right time. It tends to inflate and deflate pretty wildly.

All that means is that, according to most economic consensus, it is a very bad currency. Deflation isn’t a good trait in a currency since it incentivizes saving over using capital to create economic activity. Deflation also tends to favor those who have money, and makes borrowing money a bad idea, which also suppresses economic activity. Massive inflation is bad too, for obvious reasons.

You want your currency to be predictable and stable. A slight amount of inflation is, by conventional economic standards, a good thing.

Ah I see. True it's not very good currency over the short term. You picked the high from 6 months ago. Try more than 6 months ago, say >=2 years.

Yeah I definitely cherry picked a convenient time period. But the point is that most people want a stable currency. Predictability is a good thing with money. Bitcoin has never been stable or predictable.

A deflationary currency (like long term bitcoin) is great personally, since why wouldn't I want my money to be worth more tomorrow than it is today. But in the macro sense, we really don't want that. If my personal money is worth more as each day goes by, my incentive isn't to go out and spend it on useful economic activity. The incentive is to hoard your money and spend as little as possible right now since things will get cheaper the longer you wait to spend. Deflation is a situation where the rich get richer by doing nothing.

So from a societal perspective a currency that deflates over time, like bitcoin, is a currency that discourages spending, discourages economic activity, and concentrates wealth into the hands of those who already have large reserves of capital and don't invest it into new ventures.

Bitcoin might make a good investment, as you pointed out it is up 1000x in 10 years. But that volatility is what makes it a poor currency. That rise was unpredictable, and for every huge deflationary period (price rise), has had an almost as big inflationary period.

You're right, currently the volatility and deflationary aspect does incentivize its use more as an investment than a currency, but there are some unique aspects which make it more desirable as a currency. For example,

No foreign exchange required. It is decentralized so no need to exchange it with any 3rd party.

Flat transaction fees. You can transfer $1B of value to anyone in the world for a buck. How else would you do that?

Theft protection. It's as safe as you want to keep your private key, you can even use multisig to get other people involved.

Privacy. There are many methods to make it anonymous, untraceable so others don't know you own it, how much you own, or what you spend it on.

I submit to you that government-induced currency devaluation has caused orders of magnitude greater monetary losses for ordinary individuals than all of those events combined.

First, programmable money is obviously a bad thing - you only need look at the large number of disasters in the DeFi space.

Second, it's not really democratized if only the rich can afford the transaction fees.

Third, what does "democratized access to money" even mean? Does it solve the problem of poor people being unable to access financial services? Not that I've heard. I don't know anyone who doesn't have access to a bank account but is able to store their money on the blockchain. Does it mean something else I'm not thinking of?

Democratized access to money means that I can move my life savings as a refugee from a war torn country by just remembering 24 words. Access to a bank account doesn't preclude this need. Think corrupt countries like Ukraine or even Cambodia, Laos. There are banks, but they go belly up every week and new ones come up. If you think outside of the narrow scope of the first world, there are many unbanked folks that can benefit.

As for the rich affording tx fees, maybe a replacement for daily cash isn't everyone's use case? Maybe it doesn't have to be bitcoin? It can be one of many other cryptocurrencies that has low tx fees. There are places in the world where the volatility of crypto looks stable in comparison to the local geo-political and financial climate.

Cryptocurrencies offer the world a "splinter economy".

Having said all that, of course this stuff is not without issues that need addressing. Regulating this technology into oblivion isn't it though.

>Democratized access to money means that I can move my life savings as a refugee from a war torn country

This has nothing to do with cryptocurrencies, blockchains, or "democratized access" at all. What you're suggesting is simply for people to use foreign banks. If your local money is being destabilized by war, I can't see why you'd want to put your money into an extremely volatile offshore casino, which is what cryptocurrency is.

Now we are getting closer to home.

I don’t trust banks, they have robbed me my entire life. Have you ever interacted with foreign banks?

What you're saying makes no sense, storing your money in crypto is like putting it in a even less trustworthy foreign bank.

So I must really distrust banks then, eh!

I know the usefulness of state-free money. I’ve lived it. You are just trying to worship at the feet of Authority.

Many things wrong with that:

- Cryptocurrency is not state-free money. Among other things, it requires functioning infrastructure, stable electricity and internet available at affordable prices. These things are provided by the government everywhere on earth.

- Cryptocurrency is not authority-free. Actually, you're trusting several authorities any time you interact with any blockchains.

- I'm not denying you got use out of cryptocurrency. I'm sure you did. At first glance it does appear to be some kind of functioning financial system, but it is not. A lot of other people have also lost significant amounts of money with it.

Electricity and internet access are typically private sector commodities and services. There is often still internet without Government.

Which authorities? I signed a tx, sent it to the swarm using free and open source software, and it was included in a block. Trustless. No authority.

I’m sure lots of people gained and lost fortunes. It’s fine. The trade off is worth it.

No, laying out a power grid is very much not a private sector thing. In most stable countries, the grid is either operated outright by the government or the government leases the grid out to the private sector. The same thing is true with the internet cabling.

>Trustless. No authority.

This is very, very wrong. It's another one of those marketing lines repeated by blockchain companies that is blatantly wrong if you look into it even just a little. At minimum, you need to trust the "swarm" that you just mentioned. It's effectively acting as the authority and you're trusting it to make the right decisions. And if the swarm goes away, you can't make your transactions anymore; the value of your tokens will drop to zero.

>The trade off is worth it.

To this date, no one has been able to explain to me clearly what this trade off is. "It's trustless" is not a trade off, that's not communicating what the actual benefit is. And it's also just wrong.

No, you don’t have to “trust the swarm”. You broadcast it at the swarm that can present the highest valid block that satisfies the difficulty equation. This is an expensive proof to fake. The trust we have is the trust in math and physics; eg: not trust.

The swarm isn’t going away. It’s grown a lot in the last 14y.

You don’t get it because you DONT WANT to understand this. You keep talking about censoring and governments and trust. You can’t accept it because it is.

>You broadcast it at the swarm that can present the highest valid block that satisfies the difficulty equation.

And you have to trust that the swarm will not drop your transaction or devalue your tokens through various means that they have available to them.

>The trust we have is the trust in math and physics

That makes no sense. The "math and physics" you describe are specific equations that were chosen by the swarm operators to ensure their own profits via block rewards. The swarm can change that math at any time by changing the protocol, and they have already done so several times. You don't get to decide what the math is or whether it's favorable to you, the swarm does, and you're trusting them to keep doing it that way. They are quite literally acting as the sole authority to the system; most bitcoin users are not ever going to run a full node.

>The swarm isn’t going away. It’s grown a lot in the last 14y.

I should remind you, past performance is not an indicator of future results.

>You don’t get it because you DONT WANT to understand this.

I understand it very well. What you have been told are marketing lies. If you actually inspect the system you'll see that they're not true.

They cannot devalue your token. The (taproot/segwit) tx is immutable. They can withhold it, yes. That’s why we have fees — humans are greedy, and will likely accept the tx fee as a bribe. There are always other miners that WILL take the money.

The Bitcoin difficulty equation has never changed. The math has not been changed. We have newer tx formats, and a newer signature scheme. We also have complete backwards compat.

Do you really understand this?

>They cannot devalue your token.

Actually they can, they can technically just print more BTC by changing the protocol. Also I should remind you, Elon Musk (who is not even a miner) can devalue your token just by making a few tweets.

>There are always other miners that WILL take the money.

They can't do this if the other miners force a protocol change through as their blocks will start to get rejected, the only option then is to fork the chain.

>The Bitcoin difficulty equation has never changed. The math has not been changed. We have newer tx formats, and a newer signature scheme. We also have complete backwards compat.

This doesn't matter, the point is they have the ability to change all of it. Look at any of the bitcoin forks, this has already been done countless times. Saying "this will never happen to BTC" is certainly an opinion you can have, but it's not one based on any kind of objective "math and physics" reality of what they can or can't do. It's an opinion based on trust that they won't change it. You're trusting them to be the sole authority over the network.

>Do you really understand this?

Yes. Do you understand that all distributed systems have weaknesses and constraints, and are subject to change by their operators? Blockchains are not special here. Please don't trust anyone who designs these kind of systems and isn't forthcoming with a full description of the pros and cons.

There are trade offs. I am acutely aware of them. In other conversations I will freely explain.

I also know history, probably better than most on this board. This conversation is about trying to find the crux of your disbelief.

The thing is, you and Bruce are not being original in your arguments. Some of the things you have said are absolutely undeniable the truth. I am saying it doesn’t matter. Nothing you have proposed is existential for an internet protocol, you are throwing gotchas that we mostly disregarded years ago. Sometimes, In practise, worse is better.

>I also know history, probably better than most on this board.

I should remind you again, past performance is not an indicator of future results. The history might give you clues, but it can't point you to a guarantee of what will happen.

>This conversation is about trying to find the crux of your disbelief.

If you have an interest in being reasonable, I think you can see how this statement is total nonsense. I don't "believe" or "disbelieve" in anything, this is just the reality of the situation. If you're trying to get me to "believe" in something, that suggests you're putting trust and faith in them and you want me to do the same. A "belief" would be if I was making predictions of when BTC will collapse, or if I was saying it will never collapse. We can guess, but no one can know that for sure.

I certainly do hope it collapses, because it is actually a giant fraud based on nothing. It has no value, it has no fundamentals, it is based entirely on the "belief" that you will be able to dump the coins on someone else some day. Yes, I know that government-backed fiat dollars are also technically like this, those are at least based on the local economy remaining stable, the economy that (unlike any cryptocurrency) is absolutely required to keep your farms and food imports running if you personally want to not experience mass famine and death. If BTC collapses, you can't get your money out because it's worthless; if your local economy collapses, you will have a lot worse problems than not being able to take money out of the bank. And no, you cannot remove the need for a local economy by forcing people to transact in cryptocurrency, businesses will just not transact on markets that are too risky for them.

>you are throwing gotchas that we mostly disregarded years ago

They were not disregarded for any real reasons other than the opinions of the BTC miners and the developers of the protocol. Actually a great many people disagreed with their opinions and thought they were wrong to disregard them, hence the existence of bitcoin forks, and all the other crypto coins that aren't BTC.

I unfortunately understand the BTC maxi attitude, but it's not even consistent with its own world; the goal appears to be to dismiss all the other coins as "shitcoins" for disregarding certain issues with the network in favor of profits, despite that BTC has exactly the same fundamentals and also disregards a lot of issues with the network in favor of profits.

Hmm, you’ve been robbed by banks? That sounds like a big deal, you should file a report with the inspector general of the FDIC if you’re US based: https://www.fdicoig.gov/

Not US banks. Several countries have confiscated bank funds in the last 10y, in fact my place of birth changed the law that untouched bank accounts within 3y get confiscated by the State. This is a major western nation btw.

But since then, I don’t leave enough fiat with banks (including US) banks that they are in a place to rob me.

I trust in ECDSA and Schnorr signatures about 100x as much as I trust FDIC.

And several crypto exchanges/lenders have totally collapsed or rug pulled in the last 10 years. Trusting crypto is not "trusting ECDSA and Schnorr" any more than you would be trusting the bank to use those same algorithms, you still are trusting an entire ecosystem of known bad actors. Do you really think those banks that confiscated funds don't encrypt their traffic?

Yes, and I tell people not to store on exchanges, take custody of their coin. There is no bank in Bitcoin!

Agree, there is risk for the 5 minutes it takes to transfer the coins out. If you are on boarding from fiat, there is a degree of trust to extend to the exchange. But this is not Bitcoin, it is a centralized exchange. There are other ways to buy and trade coin too. Earning is best.

I knew not to leave coins with MtGox. I knew not to leave them with Cryptsy. This is a lesson I learned from banks.

Can you elaborate how a bad actor, any bad actor, can confiscate, steal, reorder or devalue a UTXO recorded on an immutable blockchain for all eternity?

>Yes, and I tell people not to store on exchanges, take custody of their coin

The reality is most people will not do that as it is a massive PITA. You can observe this right now.

>There are other ways to buy and trade coin too. Earning is best.

That's even worse, the coin can become devalued in between the time you started the work and when you get paid.

>Can you elaborate how a bad actor, any bad actor, can confiscate, steal, reorder or devalue a UTXO recorded on an immutable blockchain for all eternity?

They don't have to do that. They can use any number of other techniques to stop you from transacting. Or they can just lie to you, gain your trust and then scam you into giving up your coins, as seems to be very common these days.

Reality is people will learn NYKNYC eventually. It’s a multi year journey for some. We had the largest outflow of BTC for exchanges ever last week. Ledger hit new sales records for sale of hardware wallets. People are getting it.

I will not accept that people consider it a PITA. I will teach them, personally if I have to. I have onboarded many.

Many places including the US "confiscate" untouched bank funds as part of a common law process which allows people to recover money from accounts which they are no longer able to access. If you're referring to Cyrpus, only people with more than 100k euros in cash had money taxed, and even then the tax rate was only 47.5% - much lower than the losses many people experience while holding money in crypto.

“Oh so that’s ok then!”. You are feeding into my point.

I get what you are trying to say, but I counter it by saying the same amount of Bitcoin sats are associated with the same address it was sent to. No haircuts, no confiscation.

Check history. I think you will find folks that bought BTC to avoid a Cyrus haircut are quite happy today. Nb: I was only tangentially referring to Cyprus. I am from another place.

Ok, but how?

It's incredibly difficult to open a bank account in a "stable" country from a developing country, but anyone can open an account on Binance and then transfer the crypto to their own wallet.

That's only because Binance is just operating as an unregulated bank there. It is also extremely easy to lose all your money that way because the coin you chose to transact in plummeted, or the exchange decided to freeze your account, or the exchange becomes insolvent and decided to halt withdrawals, or your country decided to start blocking that exchange due to massive fraud, or you simply lose your private keys...

You mention Ukraine, Cambodia and Lao. None of those countries is particularly corrupt.

But its worth noting that the current rate of inflation for BTC/ETH is far higher than any of those countries.

Another way of framing it is that crypto currencies are less stable than a currency from a country that is actively under attack from a nuclear superpower.

These countries are insanely unstable in a lot of ways to the point that it's hard for the average joe to move "significant to them" sums of money out of them. Furthermore, you need to pay serious bribes to operate a business. Privacy forward blockchains can help with that.

"just remembering 24 words"

Really hope you don't get a concussion on your way out of that warzone!

> Democratized access to money means that I can move my life savings as a refugee from a war torn country by just remembering 24 words

It also means if I know your 24 words I can take your life savings and you'll never be able to get it back. Which means I can coerce you as you cross the borders as a refugee and take everything.

How would you even know that I have my funds in self-custody crypto?

If you're the kind of person who is willing to extort refugees, I'm willing to bet you'll leave them to die if they don't cough it up. Extortionists don't need proof.

if only the rich can afford the transaction fees

For at least the past year, average fees have been below a dollar, and less than five cents if you're willing to wait an extra 30 minutes for a confirmation.

If cryptocurrencies are "democratic", then so in the same sense are disease, starvation and violence. Available to anyone. Doesn't make them a good thing.

All I see are scams, hype, and tricks to get marks to stuff more money into the pockets of bad actors, followed by thievery.

Being creative is often fine. Being creative when you're ripping people off for billions of dollars is not fine. Our culture may respect and admire talented criminal underdogs like art forgers and counterfeiters, but we still put them in jail.

I wouldn't really count on Bruce to have the complete picture, he is obviously biased.

He has some valid points but completely misses the mark because he doesn't understand the technology or its purpose. Having an immutable ledger would be very useful for things that should be public and transparent (e.g. where tax dollars are actually being spent, eliminating middlemen, etc.), but the structure right now is in its infancy and has its doors open to the same bad actors that have ruined the traditional financial systems.

At least blockchains are working to prevent collusion, whereas Bruce would rather whine to Congress and throw the baby out with the bathwater, either from ignorance, bitterness, or some combination of the two. Instead of fighting against the technology, he should advocate for public servants to be incorporated into a system that actually lets any casual citizen audit their input to the system as a whole, with confidence that all of the data is accurate and cannot be manipulated.

𝐁𝐢𝐭𝐜𝐨𝐢𝐧 𝐢𝐬 𝐭𝐞𝐫𝐫𝐢𝐛𝐥𝐞 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭. No. Bad power generation is bad for the environment. Also, proof-of-stake does not offer the same level of security and accessibility.

𝐓𝐫𝐚𝐧𝐬𝐚𝐜𝐭𝐢𝐨𝐧 𝐟𝐞𝐞𝐬 𝐚𝐫𝐞 𝐭𝐨𝐨 𝐡𝐢𝐠𝐡. Only when the network is congested and people are transacting a lot. This is required in order to incentivize miners to include your transaction. When too high, layer 2 protocols like lightning or the Liquid Network. Also, fees are flat, so it doesn't matter how much or where you send.

Good power generation is also bad for the environment. Every form of energy generation has an environmental cost (e.g. land use for solar, mining needed to make wind turbine components). If someone is shoveling food into a landfill, you don't say "Oh well, that would be fine if we just had more food. Not his fault." People are burning electricity for no reason when it's still a scarce resource.

So it's only useful if no one uses it or if you're sending more money than the average person earns in a year?

Energy is not generated, it's captured/converted, and energy is not a scarce resource. In this case, it's converted to financial security to prevent double spends and allow this currency to exist.

> and energy is not a scarce resource

Explain to me the spikes in electricity prices?

Have you heard of the sun? It's sending quite a bit of free energy. In fact too much, many would argue, and there's nothing we can do to stop it.

Fine, if you want to be pedantic then energy conversion infrastructure is a scarce resource. And I have this great way to convert energy into financial security that’s millions of times more energy efficient than yours, it’s called a payment processor keeping a ledger on a database and having a contractual obligation to keep it accurately (providing customers with legal redress if something goes wrong).

You must be lucky to live in a good country at the moment, but it's not all about you and not all about the current moment.

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