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Comment by snapcaster | Hacker News Reader

I mean it has good use cases they're not just the ones that scheme promoters want to be true. I know TFA pokes some holes in the censorship resistance attribute of bitcoin but i think everyone can agree it does provide value transfer solution that is much harder to block than Visa/Stripe/etc.

1). Silk Road or dark net markets in general. Can't be done with Visa or other existing solutions at any kind of scale

2). Funding of political dissidents. Wikileaks, canadian truckers, etc. These people got blocked by traditional payment providers but still received crypto. (there are still other obstacles for dissidents but at least this solves 1)

3). Money laundering. Find someone who sells bitcoin miners, buy them with dirty money and use them to mine bitcoin sent to fresh address not tied to your other activity.

4). Uniswap and maybe flash loans in defi seems like new things I haven't seen in tradfi or elsewhere. Maybe some cool promise here

I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain

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My theory is that the likelihood someone understands the use cases is inversely correlated to their trust in government.

For example: https://www.bbc.com/news/business-60912789

These articles all follow a common pattern.

1. The trigger – Inflation/distrust in government/bank withdrawal restrictions/paypal freezes your funds/country is at war/etc

2. The response – People gravitate towards a system that is resilient to whatever failure mode they experienced

Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. Meanwhile in places that are smaller/less stable/not economically self-sufficient/on the fringe, people are increasingly turning to it as the best alternative.

You still have no answer for the crypto on/off ramp issue.

I think the idea would be that in a scenario where crypto becomes a currency, there wouldn't need to be an off-ramp (at least immediately, think war/revolution). You would trade the crypto like "real" money.

This requires price stability, which is at odds with the use of crypto as a speculative investment vehicle. People use fiat to transact because it is stable. It’s stable because a central bank is using tools available to bring about stability.

There are decentralized stable coins such as Dai that survived massive crashes/volatility in the past and still remained on peg. Crypto ≠ Bitcoin.

Unless you have a nation state backing the currency, its speculative assets all the way down.

It's a hedge. Like anything other hedge it's not bulletproof. I'm blessed to live in a country that has sound monetary policy (you do too probably). But there are millions (if not billions) of people who don't. Crypto offers a way to avoid capital controls when governments fail. It's not the crypto itself, its just the most convenient way. See: https://restofworld.org/2021/the-cryptocurrency-dons-of-beir...

Sort of agree. Find ways to issue them digital wallets with fiat currency support. Venezuelans using Zelle to transact in dollars comes to mind. It’s a financial inclusion and digital identity story, high level. But if you’re violating nation state laws (AML/KYC/money laundering/capital controls), you’re not likely to avoid repercussions for that, state monopoly on force and all that jazz.

https://www.coindesk.com/markets/2020/06/16/venezuela-is-a-t...

There's another likely scenario (at least in my mind) where Bitcoin is a global reserve "currency" like gold used to be. In this instance, the on/off ramps that exist already would still likely be the ones around. That is to say, completely centralized instiutions that interface with completely centralized fiat currencies. Bitcoin isn't going to replace countries, countries will likely have fiat stablecoins which is exactly where our increasingly cashless societies are headed towards.

tldr; either the crypto itself is traded like real money, or a l2 or even centralized unconnected layer is - either way on/off ramps that currently exist (p2p and centralized) continue to exist and thrive.

You still need an on-ramp inside of the authoritarian country you want to depart

If someone is trying to escape their local currency, they won't want an on/off ramp. In foreign nations with a large underground USD economy, people skip the local currency and trade/spend USD directly. The same could happen with BTC. In fact in the most extreme cases this transformation is already happening: https://www.reuters.com/technology/venezuelas-economy-regres...

> But a major part of Venezuela's crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.

> "Nobody is going to tell you 'every night when we do the books, we convert bolivars into bitcoin,' but yes, this is happening."

I've used crypto for regular monetary transactions (selling art) and it's a huge pain in the ass compared to using actual currency. The idea that people are going to do day-to-day purchases with bitcoin is pure fantasy, it would be a huge step back from what most people are used to.

You pay fees for every single transaction: chain storage, gas, if you want to deposit or withdraw or exchange to another currency, etc; it's slow to go through and at peak times you get gassed out and it doesn't go through at all.

The value fluctuates wildly at all times of day, so your transaction might lose a significant percent of value before you've had a chance to even access it let alone trade it for a more stable currency or asset. Oh, and you have zero safety net for if something is entered wrong, a key is lost, if you end up not receiving the item you purchased, you're outta luck and there's no bank or credit card agency you can petition for a chargeback. Plus you lose ALL your money with no recourse if you can't keep track of a non human memorizable secret key, or if it gets in any way intercepted or stolen from your computer, or if you accept the wrong transaction...

How can everyone convert bolivars into bitcoin? That would imply that equal amounts of bitcoin are being sold by someone in exchange for bolivar. Who is that and why do they think it's a good deal?

People who spend it before it gets inflated but yes you are right, if everyone is posting sell orders and nobody is picking those up then the Bolivar will plummet vs Bitcoin.

We do. It's called people accepting cryptocurrencies in exchange for goods and services. Here is the roadmap: https://intercoin.org/communities.pdf

Ok then you tie an identity to a Bitcoin address and you have the same exact problem

Who’s talking about Bitcoin ? ;-)

This is the only right answer. Pack it up.

For real, every time I try to answer my I do crypto, often people just don't understand. They just don't. They just don't understand why I don't trust entities.

If you don't understand this, then you don't understand crypto. Period. There is no other debate necessary. Period. Full stop. We go on our own way.

Full stop.

The problem is that crypto doesn't really solve those problems either. As the article says far more eloquently.

I understand that you are saying you were burned by a central authority. But the truth is that the only way to get everything to work is with a central authority. The article gives examples of crypto being fully reliant on central authorities, for instance.

Everything being done by crypto today could be done better by trusted companies putting together a semi-open peering arrangement that both doesn't waste pointless electricity and that doesn't allow just any potentially hostile actor join the group of authorized peers.

The question to me really is which central authorities you trust less...

And for me it is at the moment the crypto side. I don't trust exchanges and I can't be bothered to do local transactions. So central government "approved" system is easier for my life.

And this is the case for basically everyone.

In fact, given that ownership is fundamentally a mutually agreed upon social norm, and not any sort of real truth - Even if you trust the central authority of your locality less, they are likely a much better resource regardless.

I really think crypto advocates just don't actually understand how power works. Power is not the number in the ledger, it's the number of people who will step up to enforce it for you.

It turns out that number is very, very tiny for crypto. Much, much larger for your local currency - even if it's not as large as you'd like it to be, or "fair" as you think it should be.

His example and your support is mixing up central authorities that matter for crypto.

Crypto companies with legal exposure? Yes can be censored.

Open source crypto protocols? As long as raspberry pi’s and digital comms exist, it’s akin to saying the govt can shut down Linux. This is the censorship resistance that matters. It’s not perfect (some ungodly amount of nodes are in AWS and the Trail of Bits report did a good write up as well).

The central authority here is open source software. The author spent a lot of words demonstrating they didn’t know this at all.

Open source crypto protocols are completely irrelevant without connections to crypto companies.

There's this fantasy that crypto can replace money, and that you would therefore never need to trade it for real dollars. That's not going to happen, for reasons outlined in the article and because no medium of exchange that's deflationary can ever be a currency.

If it goes up in value over time, it's an investment and people won't spend it.

Will the open source be free forever? Sure. Whatever. Can people run nodes that burn electricity? Yup. Does that matter? In no way that's relevant to the general public.

Worse, even the crypto networks themselves are subject to issues with their authority: Enough bad actors who join can steal the value of a large percentage of the network.

When we're looking at potential theft of billions of dollars, you better bet that someone will invest the hundreds of millions required to rewrite the chain and take control of a large number of coins.

Then what? Then everyone will need to get together and act like a central authority to either rewrite the chain back to its state before the attack, in which case you do need to rely on a central authority, or you need to admit that _allowing untrusted nodes into a financial network is a Bad Idea._

"Censorship resistance" is irrelevant too, by the way.

> Open source crypto protocols are completely irrelevant without connections to crypto companies

Bitcoin, an open source crypto protocol, launched without the existence of crypto companies.

Mt Gox, instead of helping btc, almost set it back years due to the hack.

Bitcoin grew adoption and scale on tor/DNMs and localbitcoins, both of which had organic, non-exchange economic activity which kept accounting in pure crypto vs returning to fiat/needing an exchange.

The attack you’re describing is a 51% attack, and it had yet to happen due to protocol design on the main chains. If it does, I suppose you’d be right.

But I generally think you don’t understand how the tech works and what proof of concepts exist to disprove your opinions, or at least strongly counter your opinions. and without addressing why they’re wrong you have a weak argument.

What good is Bitcoin without the ability to trade it then?

Your assertions are the ones that are extraordinary, so yours is the side that requires proof. You're effectively claiming that a distributed peer database with a somewhat secure history has some kind of intrinsic value. I'm calling that BS.

Where is the money? Where is the _value_?

The fact that a few people were trading Bitcoins doesn't mean it can ever go mainstream. Something that's a niche hobby isn't going to change the world. If you want to use Bitcoin as a hobby barter medium, then have fun, but that doesn't imply value outside of a tiny community.

Prove me wrong. A "proof of concept" is in the technology domain. For crypto to work outside of a community of crypto-libertarians, it needs to be usable by regular people. Libertarians are famous for not actually being able to design social systems that work in the real world; last time they tried they were chased away by bears. [1]

And as the article pointed out (did you read it?), most apps that support crypto rely on a centralized server since the chain can't be downloaded to mobile devices. How useful is a medium of exchange that requires you to bring a laptop with you everywhere?

[1] https://www.vox.com/policy-and-politics/21534416/free-state-...

> Your assertions are the ones that are extraordinary, so yours is the side that requires proof.

Ah, or your assertions are akin in a technical sense to saying “the internet is a complex series of tubes, prove me otherwise!” Your criticism is based on a pretty clearly patchy technical understanding.

Banning Linux would result in stagnating development because most Linux developers do not want criminal prosecution. Only the most diehard contributers would remain. No more drivers upstreamed from vendors.

I fail to see how a currency that a) requires internet access, and b) can fluctuate so massively over the course of a few months, is any kind of solution to instability in developing countries. crypto is also arguably as or even more at the whim of national governments. look at what happened when China banned it. they're not gonna be banning dollars or gold anytime soon.

also, perhaps the cause of people not understanding you is not some kind of lack of mental faculties on their part, but your - what I would describe as - extremely obnoxious style of communication

Hey - I get it, I used crypto precisely because I wanted to avoid government regulation when buying black market goods back when the silk road was still a thing.

But I think you're absolutely bonkers if you think that any crypto today is actually a real solution to your lack of trust.

Here's my take:

You think that by using crypto, you're avoiding trust in governmental and financial institutions - and in some (incredibly limited - aka drug/gun) markets you are, but the exchange that you are making (intentionally or not) is not trivial, and not acceptable for most people most of the time.

What you are giving up is the power of the governmental institutions to enforce any sort of agreement or contract you make using crypto. Not their currency, not their problem. It's now your problem to resolve scams and fraud, and you have to do it using your limited powers.

And to be clear - you have really, REALLY fucking limited powers here. Unless you are so wealthy that those "entities" that you so dislike are mere nuisances dealt with by the law firm you have on retainer, or you can fund your own black-ops team, you're living in lala land if you think you can personally enforce the contracts you make. You can't. You don't have the oomph. Full Fucking Stop.

---

So I understand your lack of trust, but hate to break it to ya, bud - crypto is not solving your problem.

Simple example: You hire a contractor to remodel your bathroom, and you pay him in crypto (and we'll ignore for a moment just how laughably absurd the chances of this actually happening are...). You agree to pay 20K for the remodel, with 10K up front. He runs off with your 10k. Now fucking what?

in crypto land, you would never do that! You'd set up a smart contract to automatically move money from your wallet to his as milestones are hit in the project! It's beautiful! Maybe they could run off with your $1k upfront, but maybe your smart contract can even get that back if a milestone isn't hit in time.

Now all you need is connected oracle that can judge completion percentage of a bathroom and communicate with the blockchain! /s

Now flip the story and you are the contractor and hit the first milestone. The customer however refuses to acknowledge that milestone and holds on to the funds demanding some extra work not in the original contract.

You are out the labor and materials with no payment and no recourse. It's not beautiful for the contractor why would he agree to this with no arbiter between the two of you. And as soon as you introduce an arbiter you are back to someone else enforcing the agreement not the blockchain. The blockchain adds nothing here that a standard court of arbitration doesn't.

Can you trust your local supermarket to accept Bitcoin if it is banned? The point of a currency is primarily to facilitate trade, everything on top of that is just there to make the process more efficient and lower transaction costs.

I personally think Bitcoin is a terrible currency for non speculative trading due to scaling problems and it's volatility.

Your own way is a deadend. There is nothing there. A currency is about relationships and trust. You can't own those things, you can at best only enforce them against people's will if they don't maintain them voluntarily.

Yet Monero isn't winning. It is very clear that this is not the dominant use case for cryptocurrencies and blockchains since we've got a system that is maximally resistant to interference and it is dwindling away.

Pretty good answer, but I’ll caveat with wealthy/elite provably bought into this a while ago. A subset of them run OpEds in NYT criticizing the space as bunk. Another large subset have been in it for years.

Some data points to support this:

- most major algorithmic hedge funds, market makers, etc are significantly involved. Not the janky crypto native one, the lethal ones from NY.

- Microstrategy had to convince a whole slew of board members and legal to convert their treasury to btc (“wealthy/elite”). Saylor is on record as saying that all but 1 of them where already on the space and fine with it, or something to that effect.

- this is old days btc lore, but there is a famous known event of Wences Cesares and I want to say Reid Hoffman having a SV get together with a few other who’s-who and sending a couple mil in btc around their phones while sitting in a living room. This And related Got most of the early day big tech people who are in it now to invest. This was years ago. Peter Thiel is the most public of this group today.

- CIA had the btc core lead Dev visit to explain the tech in 2011 (Gavin Andresen/spelling).

- Go to a digital assets event in DC that gets actual DC people to attend, and you’ll have notable elected officials discussing its use as a covert tool

- US has paid foreign fighters in it

- Bank of International Settlements is allowing member banks to hold a % of btc in reserves

- Fidelity has mined btc since early 2010s and is notably involved today.

There are a lot of examples like this out there. It’s a large wealth transfer currently benefiting really top crust people/orgs and the tinfoil hat crowd. Everyone else is reading Paul Krugman opeds and calling it a day, or missing the key so-what of the tech that’s worth committing to.

This captures some of the reasons why crypto is very big in Nigeria.

With Naira the currency being as stable as a pendulum gets on a windy day, many middle class fellows seek to store their money in some form of stable assets. Crypto seems to be the easiest to acquire for the common folks while the politicians prefer and have access to US Dollars.

I would place "trust in government" with "lives in a hegemonic superpower". You can fully understand the use cases while also believing that they aren't that compelling unless you live in global south.

The fact is there is no reason to believe holding crypto would retain value if the united states went through an country-ending economic crisis; it more likely that your crypto would also just become equally worthless and also crash in value. Treating the United States as a "future Argentina" makes no sense, especially when it's the US-based VC investors who are indirectly backing the value of Argentinian purchased bitcoin. If you end up in a situation where the USD worthless, then there is no wealthy counter party to prop up the value of your cryptocoin.

It makes no sense to look at third world countries with relatively tiny economies and believe that crypto will retain its value if the US went through a similar situation.

Also, you can fully understand the hypothetical use cases in the global south whilst being aware that crypto competes with hegemonic superpowers as a way to store wealth there too (and other stable currencies, and lots of other things that hold value and are easy to barter with) in those markets, and generally has fewer or worse on/off ramps for the average person there. People aren't sending money to Coinbase Global Inc because they haven't had access to international money transfers or the ability to store their wealth in anything other than rapidly-depreciating pesos before.

I mean, I'll happily concede that cryptocurrency was something that was actually stable in value, was widely accepted and understood in local markets in the global south so you could buy food, save for your kids education and bribe the border guard with it, then it would be even better than gold earrings, black market banknote swaps, hawala or trusting you would be able to access your offshore account in future. But it isn't, the fact that some people would dearly like it to be that way doesn't make it that way (especially not the "stable in value" part), and there isn't an obvious route for it to be that way.

I'm originally from Bosnia / Ex-Yugoslavia.

Experienced hyperinflation, experienced civil war, experienced buying bread with 200,000 dinars one year and 2,000,000 next year etc. Experienced scary people with guns knocking at your door. My family and their ancestors all lost all their money and possessions numerous times over the last 100 years, including in the mid-90's.

And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like, who think Crypto will somehow solve such problems based on their theoretical envisioning of only a specific part of dystopian future. I still believe Crypto, like anything else, survives at the mercy of your local government. It has a tremendous set of requirements, complexity, and telltale signs, to be helpful against hostile government which can and will knock at your door with a gun, or criminalize all crypto use/mining/exchange, etc.

I think you're exactly right. Cryptocurrency is built for a dystopian future where the people have access to stable, unmonitored internet (in other words, a contradictory situation that will almost certainly never exist). If the dystopian country retains the technical capacity for widespread internet, the dystopian government will have the ability to detect and crack down hard on cryptocurrency users (if they're worth the trouble). If the dystopian government lacks the ability to crack down like that, the dystopian country has almost certainly lost the technical capacity for widespread internet, making cryptocurrency moot. And in all cases, there are better alternatives to whatever problem cryptocurrency is meant to solve (e.g. gold bullion, US dollars), except in some very narrow cases.

Your story is an anecdote, and an interesting one, but not sure if your conclusions are valid. Crypto is used in China for subverting government oversight, and they are far more advanced than Bosnia at digital control.

Not always oversight, but for subverting government controls — note that these are very different.

What's the difference?

Absolutely and fair point: My story is indeed an anecdote; but it was not strictly meant to address the question of whether Crypto is useful or not in escaping government oversight, but the specific hypothesis in the post I replied to:

  "Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. "

As such, I wanted to provide a counter-point/perspective, anecdotal as it may be.

And what do you think, they are successful because the crypto schemes are so powerful, or because the CCP is letting them go with it?

I haven't lived in such a place but this is always how I think of it.

The tech is the easy part. If you're conducting illicit transactions in some kind of attempt to dodge regulations - however your (potentially) corrupt regime defines "illicit" and whether the "regulations" are just - then obfuscation isn't going to help you for very long.

The ability to use the internet at all is a function of the willingness of the people in charge of a government to 1) allow usage of the Internet by anybody and 2) the willingness of the people in charge to allow you in particular to use the Internet.

Every time I am running a mental simulation about using a different currency as medium of exchange I come to the conclusion that the moment the government bans the currency, your network of people who will openly admit to accepting the currency will shrink to nothing. Yes you can't enforce the law on the Blockchain but you can still enforce the law in the physical store.

> And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like

A lot of the arguments in this thread could apply to free speech as well. Pretty scary how many HNers feel that way.

There are a lot of people who don't understand these problems at all, and therefore distrust crypto. There are also a lot of people who understand these problems very well, and therefore distrust crypto.

In developed nations, populations who are unbanked/underbanked typically have much bigger fish to fry. In developing nations, they typically already have a solution to the banking problem... and also bigger fish to fry.

You'll notice that every article hyping up cryptocurrency as a solution for these things refers to "early adopters". The adopters are no longer early; they're now a perpetually fringe sub-population. (They're also presently experiencing inflation in crypto for the first time.)

Agreed, there are use cases, even obvious use cases. Blockchain provides guarantees that other databases do not. They're just guarantees that assume that some portion of people connecting to it are bad actors. Most people don't really care about solving that problem because they just don't give those people access, but that implies a single authority for access ie: centralization.

So blockchain only makes sense when:

a) You have bad actors

b) You need decentralization

The use cases for that are, for the most part, "subvert government authority". There are some cool other things you can do, like web of trust stuff, but the vast majority of the market is in the "subvert government authority" in one way or another, or is an outright scam.

a) isn't quite specific enough

You use blockchain if you have one very specific type of bad actor, and know for sure that they won't try bad things

I don't think this is so crazy of an idea. Many of our institutions (example: democracy, checks and balances) are designed to "subvert government authority" in exactly the same spirit. The idea is to ensure that some rules are followed regardless of who is in charge.

Try to fly with over $10,000 (Not even a lot of money these days) in cash and see what happens.

Might change your opinion of it.

What opinion? You just demonstrated an example of subverting government authority, which is exactly what I said it can be useful for.

I didn't make any judgment about doing so.

How is carrying money around subverting government authority? You can carry 500K in your wallet on your bank card but if you carry 10K in cash it's somehow different?

Because traveling with more than 10,000 dollars without declaring it is illegal.

>>These people got blocked by traditional payment providers but still received crypto.

I thought their crypto payments were tracked (open ledger) and basically nixxed? I.e. this was the grand counter-example of crypto use case :-<

We can discuss our personal opinion on the Canadian protests of Winter of 2022, but I strongly believe that for average citizen, Crypto payments leave a HUGE exposure / attack surface. YES, there's going to be a Hacker News person who can figure out how to safely transfer crypto, and maybe even do something practical with it, in duress situations; but I feel that would end up complex enough to be achievable effectively with other crypto-less, equal-complexity methods. Meanwhile, average citizen's ability to safely and anonymously and SAFELY use crypto under duress is extremely limited.

https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bi...

Personal opinions aside it is a valid use case. They can track the wallet and they will, but they cannot close/lock the wallet as they did bank accounts. As you’ve implied there are methods to achieve anonymity but they require technical knowledge. If this becomes a commonly understood use case it will likely become easier for the average person.

I believe in this case they did close/lock the wallet, as it was held by the exchange. How far they go to recoup money that did make it to individuals is up to the attorney general and courts and politicians to decide - but critically, means are extremely there. It is empathically and trivially known who the recipients are. This is the part that feels like we are intentionally ignoring - eventually crypto intersects with the real world.

There were technically superior and more anonymous ways to do that kind of particular transaction of course. But we may differ as to what "average person" is and what their technical competence will be in the near to medium future. I believe average person still has tremendous phishing and scam risk with a regular, regulated, fairly static, designed for ease of use, documented, go-to-branch-and-we'll-guide-you-through-it electronic banking. I am skeptical of our ability to create a safe path for the average person through the dynamic, unregulated, ever-changing, technically complex, myriad-clients-and-zillion-methods-and-gazillion-exchanges all chock-full of scammers world of crypto.

That's not a trait of crypto in general, just bitcoin (and ETH, and most other non privacy-focused coins). Take a look at Monero or ZCash to see how untraceable the trucker convoy (or similar) donations would have been if they had just used a different cryptocurrency.

The problem with 1-3 is that they only work because regulators haven't tried very hard to stop them. If you require crypto exchanges to verify that funds in accounts are not coming from these types of sources before allowing you to take fiat out you've now vastly reduced their usefulness to the degree that only sophisticated criminal participants have any chance of actually getting usable money out of their schemes.

Re:3) If I remember correctly a lot of the "support scammers" also use crypto for laundering. Since getting straight into bank accounts and actually doing transfers often fails - even with the "help" of the victim - another way for them to get their money is having the victim buy gift cards, and then they'll sell on the scammed gift cards (at a loss, of course) for crypto and then cash that out.

You also forget 5) Outright scams, like rugpulls or boiler room-style scams.

> I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain

I don't think "censorship resistance" is the correct term. I think what you're really describing is "law enforcement resistance" (e.g. your activities are illegal).

And even in those cases, unless cryptocurrency is circulating as actual currency in the economy (which it isn't), most of the law-enforcement resistance is fatally compromised by the need for onramps and offramps.

Calling it a scheme seems a bit rough. It's a market mostly unencumbered by regulation (not true of on/offramps), online 24x7 and not directly controlled by governments -- an entirely new asset class with unique properties. It allows for new business/cause funding models. Anyone can participate regardless of "credit rating" or ideology and no one needs a custodian.

The reason you don't need a credit rating is because you need collateral.

Want a $5000 loan from crypto? Better have at least $20000 in crypto assets.

How anyone is expected to get credit funding from this strange system is unclear.

Also the no custodian part is especially strange considering that most people who have crypto keep it on some exchangebank

The whole crypto lending to me seems like having a cake and eating it too. Which surprisingly kinda works for a while. Have crypto and let it appreciate, but at the same time use it to gamble for even more appreciation...

> Want a $5000 loan from crypto? Better have at least $20000 in crypto assets.

Yup. That's potentially useful for speculators to earn expected gains from one cryptocurrency whilst also trading with another one.

But it's utterly useless for the common cases to borrow money (i.e. you don't have enough of it to buy what you need to buy)

Three of these are just money laundering and then the 4th is "and maybe some cool ideas." I really don't see how the money laundering is a long term niche. They'll get regulated eventually.

I do think the whole event has dredged up some interesting ideas and desires that were being ignored, but of lot of those "cool promise here" ideas could probably work without a blockchain.

Let's take a modern example of the canadian truckers. How would you get money to them when Canada was able to get US companies to block their funding with fiat?

Use a different company and hope another few million doesn't get locked up? That seems like the only alternative and I'm not sure many people would think that's a viable alternative.

Again, I'm not sure "temporarily skirt the law" is all that viable long term.

Personally I hope it is and I don't see how it couldn't be. Bitcoin is uncensorable as far as I can tell. Countries have not proven themselves capable of stopping internet traffic and thus countries have shown they do not have the power to censor bitcoin transactions.

I am sure countries will want to censor it, but I don't believe they will be able to, as such the only risk to bitcoins long term viability is the markets demand. There are numerous examples of illicit goods that governments have proven incapable of reducing the demand for, e.g. drugs. So I don't think bitcoin is going anywhere.

I think bitcoin will take a different censorable form and we'll start seeing companies on top of the blockchain that can do things like refund unauthorized transactions and things of that nature, but the base layer will remain uncensorable and thus bitcoin could become both convenient enough (although not better, in my opinion) for rich countries to use as currency while holding the characteristic of providing tremendous benefits to citizens in oppressed poor countries.

it's a little disingenuous not to put remittance on this list as it's one of the few legitimate and not morally dubious ones. I have gotten screwed on exchange fees and wire fees remitting and using crypto is much easier.

You're in a very small minority. https://www.saveonsend.com/bitcoin-blockchain-money-transfer...

don't have time to read the article so I'll take your word for it, but I will note that upon skimming it seems to really look at bitcoin a lot. Bitcoin might be one of the worst cryptocurrencies to remit.

I will concede international transfers is not a very large use case, and definitely doesn't justify the market capitalization of the blockchain base currencies FWIW

Most people receiving remittances need fiat money.

For amounts under ~$500, cryptocurrency off-ramps are often less convenient and more expensive than an international cash-to-cash remittance with Western Union or Moneygram.

I have no problem with properly regulated stablecoins (and hoping they come about soon). Blockchains are only necessary for one thing and that is cryptocurrency. Doesn't matter if that currency happens to be a digital representation of EUR or USD or whatever.

If you think they're more expensive to use than centralized providers, you're probably using ethereum or bitcoin. I can send USDC on Algorand in any quantity for less than a cent

When I said 'fiat money', I meant stuff that you can use to buy things in a store. I live in a city that has a large blockchain community, but I'm not aware of any physical retailers that accept payment in USDC.

I imagine folks receiving remittances in Manila, Mexico City, Nairobi, Delhi etc. would have difficulty using stablecoins (whether backed or algorithmic) to buy food and other necessities.

I didn't mention remittance because from people I personally know who send money back home they are getting much lower fees using traditional finance rails

So illegal stuff. Ok.

While there might be cases you consider moral or ethical even though they’re illegal I’m not sure I’d consider this a net positive or any reason to think crypto will enjoy mass adoption.

Yes. It's not a compelling argument that something can be used well for crimes. If cryptocurrency is just John Wick tokens, it not only isn't useful to most people, but further it's anti-useful to society in general and will likely be suppressed.

It's also hard for me to understand these "payment outside of X authority system" ideas when the value shifts so wildly and so unpredictably. No one wants to get paid, not even criminals, in a currency that might be worth 20% less tomorrow, depending on what's going on with Matt Damon's Super Bowl ad for the criminal currency or whatever.

Right, doing illegal stuff is the killer app is my point. I don't know if it's a net positive either, but it's a positive for some users. I hope it's clear I wasn't advocating for any of these things just pointing to successful applications of the technology

I think there's a conflict here though:

>If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain

If the wasteful people doing non-crime activities on the blockchain weren't there it'd be incredibly easy for the authorities to crack down. In other words, if the only legitimate use cases of crypto is facilitating crime, it can only even achieve that goal as long as many people are using crypto for the other stuff you think is wasteful.

There is a gradient of “being censored”, and not all of it involved being illegal.

In Vietnam, the government does capital control by limiting what bank can do with my money (I can’t request them to send 20k to the US unless I have an approved list of reasons). However, it is not illegal for me to send the money abroad, providing I can do it legally myself. So bitcoin is useful to me

This is true. "Virtuous liquidity" is the term I've heard used. The same thing is true of Tor right? if the _only_ people using it are bad the usage itself is what gets criminalized. The speculators on crypto likely provide a lot of this

the #1 use case by far is as a pyramidal pump-and-dump scheme. it may not be what anyone considers a legitimate/palatable use case, but it is objectively what cryptocurrencies are being enthusiastically used for, and they work well for the purpose. the people who got in early have typically gotten rich off it, and the people who have not either play the (necessary) role of the sucker, or catch on and try to start their own coin where they are in at the start.

5) Running various investment scams such as Ponzis, and pump-and-dumps (AKA rug pulls) in an anonymous fashion. There is a lot of money to made doing this right now...

It's useful for illegal stuff so far. But if it's the only real use case, governments can and will just outlaw exchange into fiat. Beside that, you still need to trust the developers. Sure, you can not partake in a fork but so you can decide to not do business with certain corporations or governments.

Apparently Lego sets are used for money laundering. Since they hold value well.

https://nosafebets.com/2020/06/05/legos-the-new-gold-standar...

The biggest use case for Bitcoin is of it being an escape from arbitrary printing of money by central banks. The richer your home country, the further you are from intuitively grasping how catastrophic printing is in the long run.

The problem with Bitcoin is that it is a pain to transact any business with it.

I agree but please expand on the pain so I can respond.

Bitcoin's price is primarily driven by market manipulation fueled by arbitrary Tether-tron printing. Tether-tron is used entirely internally by a criminal syndicate in order to create fraudulent chinese 'cookie cutter' exchanges, in a manner similar to casino chips - ie - "Here's $100 million for your new exchange, that you can only use to buy crypto within 'the family', incidentally pumping up their prices along the way'".

This is in addition to the arbitrary Tether-eth printing that you ought to be well aware of.

Why is it catastrophic then? Isn’t it exactly this property that allows us to have a more or less stable currency?

Stable against what? TVs? Food? Healthcare? Education? Real estate? https://static.seekingalpha.com/uploads/2017/5/29/saupload_i...

Bitcoin isn't immune to money printing at all. The value of Bitcoin comes from people using it as a speculatory vehicle rather than a medium of exchange of goods and services. If the price of a commodity like rice hyperinflates, this does nothing to the price of Bitcoin because nobody uses Bitcoin to buy rice. As a result, the price of Bitcoin would inflate at the same rate as the underlying fiat used to exchange Bitcoin.

Price of Bitcoin inflating at the same rate as fiat printing = Bitcoin deflating while fiat inflates. That's good right?

My point is that there is no reason for the price of Bitcoin to inflate alongside actual commodities, which is validated by the fact that BTC fell while inflation rose. Gold similarly has a low correlation with inflation.

In the short term, absolutely no asset class is immune to fed monetary policy ie interest rates, QE/QT. In the long run, fiat has only lost value relative to all hard assets (gold, RE, Bitcoin etc) I'm not sure how what you're saying is an indictment of Bitcoin or gold.

The problem is the only situations where crypto is more effective than the alternative (a well operated SQL database owned by a bank headquartered in a geopolitically secure jurisdiction with stable courts) is a really shitty one: when you live in a Mad Max world with no stable rule of law.

In other words, it just so happens that the exact situations where crypto is useful, are the same situations where it is very hard for capitalists to earn a good return on their capital. Unstable places or illegal markets.

It's not that the existence of crypto doesn't make sense. It's that investing in it makes no sense, because it will only be successful in scenarios where "investing in things" at all is a lost cause.

The article directly addresses this. These use cases vanish as soon as the government regulates the onramps and offramps.

i'd start with "porn and nudity". The financial system is extremely hostile to them

Crypto doesn't even pass the grocery test.

5) Stalking horse for CBDCs.

Proof of Stake seems like it could have a lot of interesting use cases.

I'm imagining you want to run a server in which you want to prove a given open-source version of the code is processing the inputs, and the outputs are available for anyone to observe, verify, & store.

I imagine there's some ways to do this already, though.

Proof of Stake just seems like a protocol that isn't too wasteful and inefficient and could make for a decent standard.

I used to think there were use cases but not anymore. Currency is the only possible one but since it is digital, it leads to the same but different centralization. The days of mining bitcoin in the background and "winning" a full bitcoin are gone.

There is no need for crypto for money laundering when it can be done at scale at Deutsche Bank.

The anonymous use cases are a chicken/egg problem because you still need on/off ramps. but the other issues make global crypto currency a no go.

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