For some people here everything is about how crypto is bad.
Look, there are plenty of technologists who are very into crypto. You can find lots of them here.
But to many, it reeks of some long-reviled parts of the tech scene: vaporware and marketing hype. And that's before you get into the astounding levels of fraud and waste.
At this point, crypto is much more of a social phenomenon than a technological one. That's not a problem in itself. The issue is that foundation is one where legimately interesting technology is neither necessary nor sufficient to solve very many real-world problems, but the financialization at the core of it facilitates these collective delusions that it is.
Everyone's LARPing the original dotcom bubble, but the world's entirely different. The dotcom bubble certainly had its crackpots, but it also had a lot of people who accurately saw that pervasive networking was going to unlock massive opportunity. But the low hanging fruit has been plucked over the past 25 years.
Web3 people are trying to tell the world that a decentralized permissionless log is as the same magnitude of technological impact, and it simply isn't.
One of the reasons why everything about crypto is bad is because the technologists who are into it can tell you what the code does, but the "business people" who are into it can't tell you why this crypto use case couldn't/shouldn't be backed by a centralized database. Literally name a use case and I will tell you how a centralized database would be better.
Even if the Internet boom of the late90's was full of grifters, at least most could explain why an email is better than a letter,
Money laundering, purchasing illegal substances, or paying ransom.
The advantage crypto has is that noone will set up that centralized database (because it would be stupid too!).
This type of investing has long been done on paper, but the blockchain makes it much more liquid. Selling your fractional ownership in a property was onerous at best, and took a long time and a lot of fees.
Now it's just sending a token to someone else in exchange for money (fiat or crypto).
Another advantage is that it doesn't matter if the facilitator goes out of business, because all the ownership records are on a public blockchain instead of their secret central database.
I generally agree with you, A LOT of crypto is crap and could be better solved with a central database. But there are valid use cases.
Also, this comment nails it: https://news.ycombinator.com/item?id=33002963
And yes it’s backed by a paper contract. That’s why I’m ok with it. But it’s still gives me liquidity and ownership security I couldn’t get with a central database.
For everything you want a c corporation provides the exact same guarantees while not becoming a money laundering hotspot
> backed by a paper contract
So.... What's the point of blockchain in this case? Other than "hey, we have blockchain"?
> But it’s still gives me liquidity and ownership security
What gives you ownership security is the paper contract, not some bytes in some database.
Fractional ownership in real estate has a long history of scams.
Being digital makes it much more liquid. There's literally nothing about fractional real estate ownership that needs distributed consensus.
>Another advantage is that it doesn't matter if the facilitator goes out of business, because all the ownership records are on a public blockchain instead of their secret central database.
You could solve that problem by only working with companies that have publicly readable centralized databases? Again no need for distributed consensus.
But I think that the distributed-public-database thing has real value. Companies come and companies go, and opening up data to the scrutiny of daylight is sorta a prisoner’s dilemma problem much of the time. Building a long-lived business on top of a by-design-public data store seems like a really cool thing.
Sure, any company could decide to host a Postgres instance on AWS with world-readable creds. But does that happen? And what happens when the company goes under? Who keeps paying the AWS bills?
The thing blockchains _can_ be better at than a classic SQL database is tamper-evidence, but that's also possible with less overhead using classic PKI and/or Merkle trees. Using trusted third-parties to sign things could be better if something came to a court or other public form because then you'd be able to have some institutional weight rather than random internet strangers: “My filing record was signed by the USPTO and their signature was notarized by the DPMA before the date when the other party claimed…” sounds better than having to explain to a court why it's unlikely that you were able to suborn miners to favor your transaction.
The problem is that a blockchain can only trustlessly and verifiably encode things that are wholly represented on-chain. As soon as you bridge it to anything in the real world you're relying on some degree of trust, and trustlessness is all-or-nothing.
That's why only proper un-backed-by-anything cryptocurrencies actually make any sense - they're wholly on-chain. On the other hand their value flails around wildly like a balloon you forgot to tie off and that limits their practical value to basically nothing. Their monetary policy is in the hands of some un-elected group of randos accountable only to their own enrichment.
Stablecoins: who knows whether they're redeemable? You just have to trust the issuer and the legal system. They also get frozen all the time - Tether freezes more tokens than anyone and there's zero process and probably zero backing. Even Circle/USDC lied about their backing.
Deeds on the blockchain: not your keys not your house? Ok, no thanks? If you have to rely on the court to have final say then the real world diverges from the chain and of course then why even have a chain?
The iron law of blockchain is "if you think the blockchain is a good solution to any given problem you either don't know enough about the blockchain or you don't know enough about the problem."
It's not clear they're anything more than a technological curiosity that's been coopted by anarchocapitalist libertarian grifters.
Except the legal system doesn't have to go after the blockchain per se, they go after the users who still have to have some way to access the value in it.
Maybe, with absolute perfect OpSec, you can use a "censorship resistant blockchain" to finance your ($politically_unpopular_activity), but it's going to be very difficult to get mainstream users involved in a platform that could become increasingly radioactive.
Eventually it becomes a legal death spiral-- as mainstream opportunities leave the network, so does the legal fig leaf for participation.
People bring this up a lot.
1) In practice, blockchains get censored and edited all the time when mistakes happen.
2) I don't see the advantage vs. a publicly readable database that a distributed set of users can archive in a cryptographically secure way. Again, blockchain's main failure point is that it does what centralized databases (which can be cryptographically secure, some even are!) do, but it takes 200x more effort to do it.
If I read an article about people artificially inflating the price of something in a pump and dump scheme, I pattern match that to crypto. I’m tired of hearing about it, too, but I to stop hearing about it because someone regulated the fraudsters out of business, not because defrauding unsophisticated people became a norm we don’t criticize.
Fraud is not exclusive to crypto, it's just laughably easy.
I didn't originally despise crypto. I remember reading the original bitcoin whitepaper and thinking how genius it was. But I did come to loath crypto over time for 3 reasons:
1. As has been abundantly clear, crypto seems to be a haven for all sorts of hucksters and fraudsters looking for an easy way to commit their fraud, while adding nothing of value.
2. Crypto has developed into this weird cult where people actually believe the meme-y nonsense of r/Bitcoin.
3. Most importantly, though, I came to understand that the fundamental reason for crypto to exist, that you can have irreversible transactions without needing a trusted middle man, is a horrible idea. My favorite very recent simple example of this: Crypto.com is suing a woman to recoup $7 million they accidentally refunded to her because an employee put the account number into the amount field. I.e., they made a payment mistake, and to rectify that mistake they are using the time-honored court system to make judgements about who actually deserves the funds. Crypto.com should be thanking their lucky stars they didn't refund her in actual crypto...
Kinda a pessimistic view, and there is some value to centralization (e.g. Apple and Google probably contributed more innovation than a sea of small startups) but there's also a cost.
Businesses in general tend to consolidate over time.