“We can make the blockchain actually work for payments if we take payments off the blockchain.” Sounds about right.
Truth is crypto enthusiasts have been overly ambition in this space, insisting a single L1 chain will come along and be the solution.
The average user A) Doesn't care and B) needs a higher level transaction layer that is flexible, where charges can be reversed or funds restored in the presence of theft or fraud. That stuff happens all the time in real life.
There is no way to improve the blockchain as currency UX without a centralized mediator(s) for average people. People get scammed all the time despite there being dozens of safety nets in place. How is that going to work when an attacker just needs your crypto keys to steal your entire net worth?
Now do all the above using Bitcoin/lightning network. You'll be done in 15 mins.
[0] Money transmission is the act of receiving currency from one party and transferring it to another party. Basically, middlemen in a transaction (e.g. banks).
[0] https://www.coindesk.com/policy/2014/01/31/fincen-declares-b...
You can buy a prepaid Visa with cash in just a few minutes.
Doesn't it require having a U.S. corporation? That's a few hundred dollars off the bat. It also requires you to provide evidence that you are within the types of businesses they authorize. I also suppose it requires having a bank account. Opening a business bank account does not take a few minutes and it can be close to impossible for certain categories of businesses. Multiply that by 10 if you are not a citizen/resident. I also don't believe Stripe allows sending money. Furthermore, receiving payments on Stripe effectively takes a week due to the waiting period. Finally, if Stripe decides to freeze or terminate your account, you are f'ed.
That said, Bitcoin is still a whole lot easier to accept, and on the L1 level can't be blocked by anybody. Cryptocurrency is definitely the future, but traditional banking is trying to compete sometimes :-)
[1]: https://e-resident.gov.ee/ [2]: https://wise.com/
PayPal etc don’t require any business stuff. Being a traditional bank is unimportant for getting paid for online stuff.
There’s a lot of ways to get access to something that qualifies as a bank account. For example, Cash App got big because it provides what a bank account does and qualifies as one, even if it is not a traditional bank at all.
Once multiple apps are available worldwide as well as multiple ways to have a bank account or a bank account equivalent, why would cryptocurrency be the future?
Multiple apps are already available for the majority of the population. The west, India, and China alone are close to half the world population.
In the west, opening a business bank account does indeed take a few minutes. There’s more than enough that allow opening one online.
It isn’t needed for Stripe or many payment providers, so it’s a moot point. Same with many payment providers not requiring a business.
References: - https://support.stripe.com/questions/selling-on-stripe-witho... - https://www.statrys.com/blog/connect-stripe-bank
In Russia, it is a bit easier than running an LLC, so many entrepreneurs choose to start as an SP. In Estonia I've seen zero sole proprietors – the burden is the same, but LLC taxes are more favourable (0% income tax until you pay out dividiends) and limited liability (which you don't get as an SP).
[1]: https://en.wikipedia.org/wiki/Sole_proprietorship#United_Sta...
I don’t expect you to know the answers to these questions, but the focus was on the difference between Bitcoin and Stripe/PayPal, etc. The thing I replied to specifically said there was an onus of several hundred dollars which I was disputing as well and which is not correct for the US.
In Russia, they aren't if it's systematic [1] (and if you get caught, which is usually not a concern for many unregistered one-man businesses). Stripe isn't available in Russia but most local payment gateways check your paperwork thoroughly, so if you're not a registered SP, card payments are mostly off the limits and the main payment method is card to card transfer there. (There's a few options, but those aren't widely popular because who cares)
[1]: https://www.consultant.ru/document/cons_doc_LAW_10699/cc12ef... article 171 of the criminal offence code (in Russian)
I don't really have any experience with SPs in Estonia, but I think it's pretty similar. Let me try and sign up for Stripe and see what happens :-)
Update: I've just signed up as a “sole proprietor” and charged myself 1 EUR. I've only had to fill in my name and home address. Not even I had to submit any documents, perhaps because I already have an LLC registered with Stripe. Still not sure if it's legal, but from the technical standpoint yeah, you probably can use Stripe without any paperwork here in Europe.
Compared to... 1 dollar, no, 15 dollars, no, 5 dollars, no, 65 dollars, no, ... transaction fees for Bitcoin.
And of course there other payment systems around the world that don't rely on card transactions.
And don't forget that the entire lightning thing is dependent on banks aka nodes with large sums of money to provide liquidity in the system.
Each problem that's dismissed out of hand by crypto proponents is compounded by the endless streams of bigger and worse problems.
How is building a competing chain to more efficiently solve a problem (high transaction fees) in a competitive market in any way "dismissing" that problem? That seems the exact opposite of dismissing a problem.
Do those new solutions come with new problems? Sure, that's true of any technology. Dynamo-based databases solved high availability and network partitionability of data but come with several trade-offs. That doesn't mean you shouldn't use Cassandra for anything.
That said, Solana is not the hill I'm willing to die on and it's hot garbage. Hedera seems good though.
- decentralised
- trustless
- censure resistance
Edit: - pseudonymous
- decentralised: why is this good?
- trustless: I trust the companies I use, it works
- censure resistance: OK, fringe case for most
- pseudonymous: why do I want anyone to be able to see my transaction history?
— Satoshi, 2009-02-11 https://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/...
> pseudonymous: why do I want anyone to be able to see my transaction history?
Transactions are viewable in the blockchain so that every party involved can audit the system and confirm the issuance.
Yes. Because society is built in trust. Something crypto world is busy rediscovering.
Right, which is why we have regulations on reserve requirements for banks, as well as things like FDIC insurance that guarantees your money in a bank account.
Surely this is a joke? Most currencies enjoy a high degree of trust until they collapse due to structural reasons that have nothing to do with trust whatsoever.
The euro zone and the dollar show that there is practically no shortage of trust whatsoever.
Seriously, this dude is supposed to liberate us from the evils of money?
How did it come to this? The root problem with currency is the zero lower bound of interest and liquidity preference which both combined result in permanently positive interest rates. When you refuse to pay interest, the economy stagnates and it can result in mass unemployment. This has nothing to do with trust. The Bitcoin economy is plagued with mass unemployment. The insanity of unemployment is a consequence of the insanity of non neutral money. Alternatively, you can pay interest, however this means you must perpetually borrow more money, e.g. Keynesian fiscal stimulus, notice that the insanity originates in money itself, not in the political response, the political response must be at least as insane as the money system, no less and it collapses. Now, there is a third way, QE aka not bothering to ask people whether they want to lend their money out, however, due to liquidity preference, the additionally created money will stagnate somewhere, meaning you can't ever stop QE. Again, in this case the insanity is a structural property of the currency, the monetary intervention has to be as insane as the money system and no less.
The apparent untrustworthiness of politicians is the result of the insanity of money, not the other way around. If money worked properly, you wouldn't need politicians to mess with it, you wouldn't even consider trust to be the problem because the amount needed would be so miniscule as to never matter in the grand scheme of things.
It is really strange to me, that people notice a constant problem with money and yet they still come up with the same conclusion "you're holding it wrong", what if it is impossible to hold it properly? What if permanent money is irreparably broken and forces its own debasement and all the other problems?
Imagine a world where the web is controlled by a single entity, say Facebook. They get to decide who is allowed to create a website. They get to decide how much it cost. If they're not happy with the site's content, they can take it offline. Do you believe that would be a better world to live in?
- trustless: I trust the companies I use, it works
That's because there's usually no alternative. But when there's a trustless alternative, you may find that it is less risky or costly. Many people chose e2e encrypted messengers because they don't trust a third party with their private messages.
- censure resistance: OK, fringe case for most
"[...] Then they came for me—and there was no one left to speak for me."
It may be fringe but it's a massive issue for those who are censored. It's also not that uncommon. It is estimated that there are over 1 billion unbanked people worldwide. Also, try "PayPal horror stories" on Google.
- pseudonymous: why do I want anyone to be able to see my transaction history?
What parent meant is you can transact with people without knowing their real identity. I could send you a BTC tip on HN without knowing your name or address. Regarding your concern about privacy, no one can really determine your transaction history by looking at the blockchain. It's possible to do some guessing but all you really see are transactions going from opaque addresses to other opaque addresses with no attached identity information. Also, this can be further solved with CoinJoin[0].
Private messages are not money. Example: you ordered some goods and those arrived in bad shape. What's your recourse in the trustless world?
There is no trustless world, just a world where trustless is an option and where "trustful" systems can be built on trustless foundations.
[0] Those systems give some guarantees about the trusted party (e.g. that they can't just run with the money).
You cannot build trust on a trustless foundation. As, again, the crypto world is busy rediscovering.
What exactly does Bitcoin provide in this case?
> this is what I meant by building "trustful" systems being built on top of trustless foundations
So, a service that exists outside bitcoin, has a trust system built entirely outside bitcoin and only doing something with bitcoin because reasons... is "building trustful systems on top of trustless systems".
I don't think you know what "building on top" means.
Edit: grammar and mobile typos
There are many centralized services that do dispute arbitration on top of USD. Those systems are built entirely outside of USD. PayPal for example doesn't have an account at the Federal reserve nor does it handle physical cash. They are effectively "off-chain" payment systems for USD.
So I guess your question is, what are the advantages of BTC over a fiat currency like USD. The answer is two folds:
1) BTC has an open network (the Bitcoin blockchain) allowing users to exit payment systems for the purpose of self-custody or for interconnecting with other payment systems. There's no equivalent system with fiat. Self-custody of USD literally requires transporting and storing pieces of paper. You also can't directly transfer USD from PayPal to say, CashApp.
2) BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
In addition to the above, Bitcoin enables the creation of payment systems that are more tightly built on top of it, like the Lightning network, which preserves many of the properties of Bitcoin (e.g. trustless). You could also build a dispute arbitration system where the arbiter just needs to be semi-trusted (e.g. there are schemes that can cryptographically prevent the arbiter from stealing escrowed funds, etc.).
We are talking bout fiat? No.
> So I guess your question is, what are the advantages of BTC over a fiat currency like USD.
No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
> BTC has a predictable money supply. Fiat currency doesn't: money supply can be arbitrarily inflated.
Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
> You could also build a dispute
Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I was asking about fiat because many of your criticisms equally apply to fiat.
> No. The question is: what does the trustless blockchain offer when you still have to rely on a centralised trusted entity.
I answered that multiple times already.
> Which immediately means that whoever got in early and got the first initial supply is at great advantage compared to anyone who got in later. For example compared to any people born 20 years from now.
That's, unfortunately, the case for almost anything of value.
> Could. Maybe. Should. Perhaps. That's all you can ever hear from crypto proponents.
I'm not sure I would consider myself a crypto proponent, I was trying my best to answer your questions as objectively as possible.
But it seems you are very emotionally invested in this for some reason... Did you have a bad experience with crypto?
They... don't.
> I answered that multiple times already.
You haven't. All you're saying "o let's have this centralised trusted entity that does something with blockchain because blockchain".
> That's, unfortunately, the case for almost anything of value.
If bitcoin is a currency as you would have us believe, then this is not what a currency should be.
> But it seems you are very emotionally invested in this for some reason...
Ah yes. There are only a few ways crypto discussions go: problems are dismissed out of hand and/or "have you had bad experience with crypto" (often in the form "you're just sad that you didn't get in on it early").
My question to you: what is your alternative? USD has many of the problems you mentioned and more. Transactions happen "off-chain", monetary inflation largely benefits the wealthy, etc.
They already said fiat doesn’t have close to the same issues as crypto. The monetary inflation benefits to the wealthy are nowhere near the same for Bitcoin or any crypto. It’s a fraction of how bad Bitcoin is. They also basically said that multiple times too.
They have answered the rest too. Being on chain isn’t an issue for fiat because they aren’t trying to be on chain. They aren’t trying to shoehorn in blockchain.
Yes the last line is a recurring one lol.
There is no central authority in LN. There may be "hubs" which are more or less important, but that's not centralisation because there are several of them, it can also work without them, and also they can't steal your money.
Would you say that email is centralised because there area few big server (Gmail, Microsoft)? But even if it may more convenient to use one of the big server, you still have the choice not to use them.
The incentive structure of Lightning to me seems to heavily incentivize the formation of a few centralized nodes affiliated with wallet providers – a structure which would forfeit many, if not all, of these properties.
Yes, being able to settle across currencies pretty efficiently is nice, but the real value is just what you mention: Dispute arbitration and managing liability in case of fraud.
Could you tell us what L1, L2, L3, L4 are in a credit card example?
L1: Central bank (implements monetary policy)
L2: Member banks (have accounts at the central bank)
L3: Non-member banks
L4: Clearing house, SWIFT, etc. for interbank payments
L5: Credit card networks
Did you know that fiat doesn't even have a blockchain to withdraw to when you want to exit or switch payment network/provider?[0] Did you know that with fiat, the money supply can be changed arbitrarily?
Those are problems that Bitcoin still solves when you use an off-chain transaction network (at least for the many people who believe those are problems worth solving). Also, it's worth noting that the Lightning network is hardly centralized. It's a bit more centralized than Bitcoin but we're light years away from say, Paypal.
[0] The closest that comes to this is SWIFT, but it's not an open network. Even large payment systems like Paypal aren't connected to it. It's also not censorship resistant and you can't use it p2p.
It depends on a blockchain?
[0] Or better, use the lightning network. As an end user, its benefit over more centralized alternatives like Paypal or credit cards is that it's an open network. You don't have to ask permission and open an account to start using it. Also, low fees. Also, your account can't be frozen or confiscated. Also, it works everywhere in the world and there are no extra fees for international payments. Also, you can do peer-to-peer transactions.
Edge cases are not mass deployment use cases
There aren't many use cases for the "average Joe" for now. It's still the early days and not many merchants support it. So if you aren't particularly interested in the technology/philosophy nor have a use case for it, there's probably no compelling reason for you to use it. Right now, it is of most utility to unbanked/underbanked people, for remittances, and p2p payments. It is also used for payments by merchants but only in some niches (e.g. online porn, gambling, cannabis industry, etc.).
Of course, it's also appealing to speculators who believe in its long-term potential. They are probably the largest class of Bitcoin holders, but Lightning doesn't really target that use case.
Let me tell you a little story. A boy creates wealth, the government creates money in proportion to the wealth. The alternative is to succumb to incumbents, the wealthy, the aristocracy and ask them for permission whether you are allowed to create the wealth or not.
It is a weird line in the sand to me that something must either happen on a blockchain or not be the right solution, pretty much regardless of whether that blockchain's finality guarantees are worse if understood at all.
Companies use proxy countries to bypass sanctions all the time. You know how they're caught? Financial audits.
> change the fact that circumventing agricultural import laws is a massive crime
I'm not sure how people so easily forget that it was a massive crime to protect jews from being murdered. That same thing still happens today with various minority groups around the world.
If you pay attention to non-developed world problems, you become painfully aware that bypassing laws that are a "massive crime" is extremely important for solving some of the worst problems in humanity today.
Government will adapt and just ban shipping vessels from visiting sanctioned countries, or create a vast make work agency to inspect cargo on ships that visited sanctioned countries.
As for why everyone isn't using bitcoin to bypass? Good question.
We are scaling BTC like the internet, in layers..
Those layers are different levels of abstraction that actually sit on top of one another, but encompass the lower layers.
e.g. HTTP, SMTP, POP3, etc., all sit on top of TCP — that is to say: all of those protocols actually use TCP, they are TCP, they are all made from TCP packets/communications.
TCP sits on top of IP, that is to say: all TCP packets are in fact IP packets.
They are layers of abstraction, and each layer of abstraction is not just 'related' to the lower layer(s), or 'referencing' the lower layer(s) once in a while, each of those upper layers is in fact an instance of the lower layer.
At the bottom, it's all IP. The higher layers aren't substitutes for IP that get turned into IP when necessary, they are all IP.
If your comparison was valid, then protocols such as e.g. HTTP wouldn't actually be valid TCP packets and valid IP packets, instead HTTP would be completely separate to the lower levels it is built upon, and at some point it would be converted back and forth to the other protocols. Which is not what happens.
If your comparison was valid, then all L2 cryptotoken transactions would actually simultaneously /be/ blockchain transactions — and not just written back to it periodically.
Edit:
Here's an analogy: it's like IP protocol is letters, those letters can be grouped into words, which is the next layer up, e.g. TCP, UDP, etc., and those words can be grouped into sentences, which are like the higher level protocols, such as HTTP, SMTP, POP3, etc.
Granted, the OSI model also includes lower levels, and I'm only discussing three higher layers, but the principle is the same. The higher levels /encompass/ the lower ones, they are actually built /with/ or /from/ the lower-level components. This isn't how Lighting works. It's a separate distinct network to the main blockchain, and it then writes back to blockchain.
And you can't apply your same logic to it bc of lack of understanding.
To be quite frank, based upon the fact you think the layers of OSI and TCP/IP are to help it scale, you clearly appear to have little (or no) understanding as to how that actually works — so your direct comparison to LN scaling here isn't just weak, it's meaningless and just plain factually wrong. And this is particularly obvious to folk who /do/ actually understand both.
— Good day to you, your bad logic and your poor argument.
"A really vicious critique of the misguided ISO networking standards attempt, written when the 'OSI model' was trendy & lots of people were babbling about the sacred seven layers."
https://news.ycombinator.com/item?id=19866389
Pfff, TCP/IP will never succeed. It doesn't have enough layers! /s
https://archive.org/details/elementsofnetwor00padl
"The Book": The Elements of Networking Style: And Other Essays & Animadversions of the Art of Intercomputer Networking, by M. A. Padlipsky (1985)
The World's Only Know Constructively Snotty Computer Science Book: historically, its polemics for TCP/IP and against the international standardsmongers' "OSI" helped the Internet happen; currently, its principles of technoaesthetic criticism are still eminently applicable to the States of most (probably all) technical Arts-all this and Cover Cartoons, too but it's not for those who can't deal with real sentences.
Standards: Threat or Menace, p. 193
A final preliminary: Because ISORM is more widely touted than TCP/IP, and hence the clearer present danger, it seems only fair that it should be the target of the nastier of the questions. This is in the spirit of our title, for in my humble but dogmatic opinion even a good proposed Standard is a prima facie threat to further advance in the state of the art, but a sufficiently flawed standard is a menace even to maintaining the art in its present state, so if the ISORM school is wrong and isn't exposed the consequences could be extremely unfortunate. At least, the threat / menace paradigm applies, I submit in all seriousness, to protocol standards; that is, I wouldn't think of being gratuitously snotty to the developers of physical standards -- I like to be able to use the same cap to reclose sodapop bottles and beer bottles (though I suspect somebody as it were screwed up when it came to those damn "twist off" caps) -- but I find it difficult to be civil to advocates of "final," "ultimate" standards when they're dealing with logical constructs rather than physical ones. After all, as I understand it, a fundamental property of the stored program computer is its ability to be reprogrammed. Yes, I understand that to do so costs money and yes, I've heard of ROM, and no I'm not saying that I insist on some idealistic notion of optimality, but definitely I don't think it makes much sense to keep trudging to an outhouse if I can get indoor plumbing . . . even if the moon in the door is exactly like the one in my neighbor's.
Appendix 3, The Self-Framed Slogans Suitable for Mounting
https://donhopkins.com/home/Layers.png
IF YOU KNOW WHAT YOU'RE DOING,
THREE LAYERS IS ENOUGH;
IF YOU DON'T,
EVEN SEVENTEEN LEVELS WON'T HELP
On the occasion of The Book's reissuance, Peter Salus wrote a review in Cisco's Internet Protocol Journal which included the following observations:
Padlipsky brought together several strands that managed to result in the perfect chord for me over 15 years ago. I reread this slim volume (made up of a Foreword, 11 chapters (each a separate arrow from Padlipsky's quiver) and three appendixes (made up of half a dozen darts of various lengths and a sheaf of cartoons and slogans) several months ago, and have concluded that it is as acerbic and as important now as it was 15 years ago. [Emphasis added] The instruments Padlipsky employs are a sharp wit (and a deep admiration for François Marie Arouet), a sincere detestation for the ISO Reference Model, a deep knowledge of the Advanced Research Projects Agency Network (ARPANET)/Internet, and wide reading in classic science fiction.
In a lighter vein, The Book has been called "... beyond doubt the funniest technical book ever written."
You will get no argument from me on that
There isn't a crime in the world that can't be stopped in more appropriate ways than giving an authority presence the ability to stop me or anyone else from spending resources that they own. Nowhere on the list of top crimes against humanity have there been situations where it would've been better if centralized powers had more authority.
Authority is a fundamental and underlying requirement of essentially all aspects of civil society, including but not limited to justice. There is actually no way to define even the concept of crime without an appeal to a supervisory authority.
Authority, and specifically "centralized" authority, is a necessary component of any system that can effectively serve more than a nominal quantity of human beings.
It would seem bitcoin, a global, massively successful cryptocurrency with no centralized authority, serving as a sovereign nations national currency, serving markets all over the world to the order of trillions of dollars would be one of many direct contradictions to your claim.
Currency had an actual definition, expressed in terms of other actual things. It's not just whatever you say it is, or whatever someone might use to perform an economic activity.
Additionally, Bitcoin is plainly not "massive successful". It is at best "marginally utilized".