Cryptocurrencies are not "useless except for criminals"... Blockchain is also not useless. It's just much less useful than the hype makes it out to be.
Making absolute statements like this isn't helpful, it makes it easy to demolish the argument for the actual scammers.
The other part is the article already comes in at something like 3800 words. I could write five, ten times that on the subject and still not be done. I have to pick and choose what I cover and in what detail.
The primary use case of cryptocurrencies (and in particular Bitcoin) today, when used directly as currency, as a means of purchase, is criminal activity. The article glossed over that there are other niche use cases where coins are used as currencies but they are very much a niche, particularly when weighed against the biggest use of crypto today which is simply as a form of something analogous to stock trading only without the regulation.
But this is almost a secondary point; the article is about "Web 3" hype, these points are relevant insofar as the thing which is really being challenged is this idea that crypto and blockchain will be the foundation of a major new era in the web.
I'll certainly take it as constructive feedback on my writing if that isn't clear enough. Thanks.
The only exception you mentioned is ENS, but there isn't anything special about that. It's just a DNS system but centralized into a smart contract instead, and because it's on ethereum you have to pay gas fees in addition to the registrar fess. No actual benefit to using it versus real DNS.
“Centralized into a [decentralized] protocol” is an oxymoron. The benefit of ENS over DNS is that there is no centralized actor that can control, censor and manipulate the namespace.
No, I understand it perfectly. The only purpose of stablecoins is to provide liquidity in the crypto markets for these defi apps where all the trading action happens. They don't have any other purpose and there isn't any other reason to hold them. If it wasn't for the crypto markets you would just be using USD and trading against that directly. Seriously, if you go to the DAI website and you click the big "Use DAI" button it literally just takes you to another crypto investing app.
In the future please avoid falling for this trap that web3 tech pushers set. They claim there is "innovation" in the space but almost all of it is just clones of existing financial services with crypto instead of real money. The fact that there's even something call "stablecoins" should demonstrate to you how bogus this all is. The rest of cryptos are so volatile the only way they can make anything resembling a market out of it is by pegging other cryptos to the USD and doing all their trading against that. It's just adding more middlemen to reach the ultimate goal which, as always, is to eventually cash out into USD. Because everybody knows cryptos by themselves are useless for anything besides speculative gambling.
>“Centralized into a [decentralized] protocol” is an oxymoron. The benefit of ENS over DNS is that there is no centralized actor that can control, censor and manipulate the namespace.
Nope, you're wrong about this in the context of most things implemented in smart contracts. You should be extremely wary of anyone making these claims. Since the "smart contract" is actually just a piece of code, typically the smart contract will have an update mechanism that only a centralized actor can use to upload patches and updates to the code. IIRC this is still how ENS works last time I checked. Like almost everything in crypto, it's a centralized service that the authors lie about and masquerade it as decentralized.
Sometimes they'll do an even worse thing by having "governance tokens" that grant you powers to update the smart contract, and someone with a lot of money can just come in and buy all the tokens and take it over. So these "smart contracts" are not really decentralized in any sense. If anyone says "we are making this thing that can't be controlled, censored or manipulated" then that's a massive red flag.
There's also the question of why anyone actually wants that. What other industry would this be ok in? If someone had a company that made self-driving cars advertised as being "uncontrollable and uncensorable by driving laws", nobody would want that. We'd recognize that company is actually just selling unstoppable killing machines. So why do people for some bizarre reason think this is a good thing in financial markets where the super-rich already have extreme power consolidation? It makes absolutely no sense at all.
> They don't have any other purpose and there isn't any other reason to hold them.
A claim that is easily refuted. Send 1000 DAI to an individual and they can now hold a USD pegged asset non custodially, without a USD bank account, and transfer any amount to other individuals.
Smart contracts can be made immutable and locked. The ENS root multisig owners have locked .eth TLD and have minimal ability to affect any existing .eth ENS name. Since the contracts are open source, if the ENS team went rogue and against the community’s wishes, the protocol could be forked. You can read about it here: https://docs.ens.domains/frequently-asked-questions
Nope, this is wrong. Any stablecoin is necessarily centralized in order to maintain the peg, in the case of DAI it has a "custodian" in the form of MakerDAO. Look it up, this is how they all work. When they say the words "non-custodial" it's a blatant lie. Everything in crypto has a custodian, some projects are just aggressive about trying to conceal them.
>Without a USD bank account, and transfer any amount to other individuals.
But this isn't a reason to hold them nor is it an innovation. You could also just do that with moneygram or a similar service, no blockchains required. The only thing you can meaningfully do with this that you can't do with another cash-only service or a bank is to trade other cryptos with it, but that also isn't even for any technical reason. If the banks decided to start exchanging cryptos directly, they could. And that would totally remove the reason for any stablecoins to exist.
This is coming back to the same problem with any of these questions like "but what about the web3 tech?" There isn't any new tech here. You just described an existing thing you can do (send money) but with some buzzwords attached. If you dig into it there's never any actual explanation as to why the "web3 tech" makes it better, because it doesn't. So please just don't ask those types of questions, find some better ones.
>Smart contracts can be made immutable and locked.
Well that isn't how ENS works. And that's a universally bad idea anyway because that means it can never get any upgrades or bug fixes ever again. It's like saying your data center is "decentralized" and therefore better because you encased it in a block of concrete so one can get in to upgrade the servers ever again. Well no, it's not, it's still centralized, you just made it worse for no reason.
>if the ENS team went rogue and against the community’s wishes, the protocol could be forked
This is exactly how DNS works as well. There is no practical difference, and yet no one forks the DNS root because doing so would be extremely expensive and pointless. Because it's not just about forking the protocol, you also need to fork the whole network and overcome network effects, and that's the actual hard part. ENS offers absolutely nothing to fix this compared to DNS. It's the same thing. I should also point you to this sentence in the FAQ:
>The root node is presently owned by a multisig contract, with keys held by trustworthy individuals in the Ethereum community
Which is a random, centralized group of people hand picked by the ENS founder, acting similarly to a corporate board of directors. There's absolutely nothing "decentralized" about it in any way. I'm completely serious when I say this whole thing is a blatant scam built on lies. If you find yourself trying to look for positives in this system, you're doing something wrong. It's literally all bad.
> But this isn't a reason to hold them.
The person now has DAI, an asset that has value, and that they can send to another person. They received the DAI in 30 seconds, without needing a bank, and can send it to another person in 30 seconds, also without them needing a bank. The closest comparison is cash, but you cannot securely send cash around the world in 30 seconds without a bank.
There are many contracts and protocols that are designed to be immutable-only with forking as the only mode of governance, I would advise doing a little more research into the development practices.
> This is exactly how DNS works as well. There is no practical difference
Except that domain name registrars are centralized entities with complete custody over their owned domains, unlike .eth names which are not owned by any central party, and cannot even be revoked or controlled by the root node multisig owners.
A lot of your writing seems like a sort of zealotry against crypto, which is understandable as we are on HN, but it does not mean it is accurate.
Nope, they actually can do all of this by just updating the smart contracts. And even if this were true, it would be an anti-feature. I don't want to use a system where the illegitimate transactions of thieves and hackers can't be blocked. Just look at how many smart contracts get hacked to see what a bad idea it is to say "we never block any bad actors". It just makes no sense at all to try to spin that as a selling point. It's not in any way a good thing.
>The person now has DAI, an asset that has value, and that they can send to another person. They received the DAI in 30 seconds, without needing a bank, and can send it to another person in 30 seconds, also without them needing a bank. The closest comparison is cash, but you cannot securely send cash around the world in 30 seconds without a bank.
Yes you can, I already addressed this. Moneygram and similar services literally does this, without cryptos or blockchains. All you need to do in order to accomplish this is to have someone else who has some funds (or a bank account) that is offering to make the transfer for you and gives you a code (or lets you use your own personal code, like a private key) to redeem the funds on the other end. No blockchains are required at all to do this, adding blockchains to this only makes it worse because it unnecessarily adds more extra steps.
>There are many contracts and protocols that are designed to be immutable-only with forking as the only mode of governance, I would advise doing a little more research into the development practices.
I've done plenty of research and I'd say that's a universally bad idea, and whoever is saying that has no idea what they're talking about and should be discredited. Forking is an extreme method of last resort that has a lot of friction, it isn't something you want to encourage people to do just because of some small easily-fixable bug. Especially when people stand to lose a lot of money because of those bugs. This is just another instance where this stuff is like the wild west with no regard for normal development practices used in financial software.
>Except that domain name registrars are centralized entities with complete custody over their owned domains, unlike .eth names which are not owned by any central party, and cannot even be revoked or controlled by the root node multisig owners.
Ok but you just said some other party could fork and replace the protocol as governance, which one is it? If there turns out to be some nasty bug in that contract the developers will just say "whoops, everyone use this new contract instead" and then everyone will be frustrated but will still switch over to it because they have no other choice. Or for the nuclear option, if the ethereum developers really wanted to, they could just change the ethereum code itself to mess with that smart contract, just like they already did in 2016 and they could easily do again if they decided to. "Non-custodial" in crypto is a complete lie. I'll say it again, there is always custody. This is still inherently a network service that has to run on physical computers and has to get updated by humans who need to perform customer service and all that jazz. In crypto it's just intentionally obfuscated who actually controls what.
Even assuming for a moment that all this works like you say it does, it still would be a bad thing that isn't innovative at all, it's just lazy! I would absolutely not use a domain name service that refuses to block terrorists and criminals and refuses to come up with any way to effectively block them. I don't want to be on the same network as them at all, everything you're saying is an anti-feature.
>A lot of your writing seems like a sort of zealotry against crypto
It's not. What I actually do have zealotry against is liars and thieves. Crypto just happens to be overloaded with those types. The entirety of it is a fraud based on faulty technology that can't actually do any of what is promised in any meaningful way that is different from existing systems. The core of your comment seems to be saying "if you don't like it then just fork" but this is the whole problem cryptos were pitched to solve in the first place! They wanted to "fork" the banking system because they were angry about bank baliouts but now they've gone and done the exact same stuff over and over again!
> if the ethereum developers really wanted to, they could just change the ethereum code itself to mess with that smart contract
Forking is a user activated decision. If an honest majority users of the chain wanted to point to a new ENS contract to resolve names to addresses, they could come to that consensus regardless of the will of core devs or root multisig owners.
If an honest majority of users would like GoDaddy to stop censoring X.com domain, or PayPal to stop blocking funds, they cannot fork the centralized private protocol. If a dishonest MakerDAO actor manages to push an unwanted change in DAI contracts to block a user’s funds, the honest majority could easily reject the change by following the old protocol.
Is this not what you were asking for though? I'm addressing all the concerns about these random web3 and defi projects, yes they're tangents but so is the whole conversation as it relates to the original article. None of that fundamentally changes the game, crypto is still a big fraud.
>Forking is a user activated decision. If an honest majority users of the chain wanted to point to a new ENS contract to resolve names to addresses, they could come to that consensus regardless of the will of core devs or root multisig owners.
Ok, with DNS you could also just do this by spinning up some new DNS root servers and trying to get everyone to use that. People have already tried to do this multiple times: https://en.wikipedia.org/wiki/Alternative_DNS_root
Again you're not saying anything new here. None of this changes just because someone decided to write the name resolution code in ethereum solidity instead of C++.
>If an honest majority of users would like GoDaddy to stop censoring X.com domain, or PayPal to stop blocking funds, they cannot fork the centralized private protocol.
I'm sorry what? This whole sentence makes no sense. DNS is an open protocol, and Paypal isn't a protocol. No you can't convince Paypal to do business with someone they don't want to do business with (unless you force them legally) but the same is also true of the big crypto companies like Binance. If they decide some customer is bad for business they can just block their wallet and force them to go somewhere else. It's the same exact thing. Also I should remind you, Paypal is now literally a crypto company that offers crypto services.
>If a dishonest actor manages to push an unwanted change in DAI contracts to block a user’s funds, the honest majority could easily reject the change by following the old protocol.
How would they do this when their tokens are already gone because the original smart contract was looted? This isn't a theoretical, this stuff happens constantly all the time, another big one just happened last week: https://www.investopedia.com/mango-markets-got-hacked-675007...
Like, I get people's reluctance to seem biased, but how long are we going to let this charade continue? How long before we can say enough is enough? "Enterprise blockchain" is a marketing buzzword. Nobody actually wants them except to tick a box on a checklist. They never gained any real traction, because they're useless. They have to be managed by a centralized admin anyway, so what's the point? There just isn't one. Part of this is intentional confusion on the part of promoters, people labeling anything that uses paxos or merkle trees as "blockchain" for marketing reasons, but I hope people also start pushing back against that for what they are: obvious attempts to cash in on the crypto hype by using the word blockchain.
You say this, and yet fail to mention a legitimate use case, which is exactly what a big part of the article is about.
Do you also require an example of why anonymous payments are useful to non-criminals?
What other mean of online anonymous payments exist? I'm not very up to date on this front.
Edit: Going through MobileCoin info it’s not super clear to me how you deposit/withdraw currency but keep in mind that this is historically a plenty sufficient amount of information to put your entire transaction’s privacy at risk (from certain adversaries anyway). I.e. if you are suspected of a crime but the only info available to prosecutors is you deposited $N and then your alleged conspirator withdrew $N out the other end, the fact the transaction itself was private is not going to save you.
These UX problems can be solved. An example is Aztec protocol[1] which makes it easy to send and receive anonymous payments without running a private blockchain node.
That isn't a legitimate use case. Cash is still largely superior at anonymous transactions, and it always will be because every crypto transaction inherently leaves a rather large paper trail. This can be obfuscated with cryptography techniques but can't be totally eliminated, traditional network tracking still goes a long way.
>Do you also require an example of why anonymous payments are useful to non-criminals?
No because they largely aren't. Any activist use case you think you have is disproportionately benefiting criminals. The larger the sum of money they're trying to launder, the more they gain from this. The problem with your line of thinking is that "anonymous payments" isn't actually a feature, it's the default state of things. Big corporations and shady governments would absolutely love to not tell anybody anything about what they're spending money on unless they can put a marketing spin on it. The transparency, accounting and reporting requirements are things that society built because we acknowledge that those who have large amounts of money have more power and therefore deserve more scrutiny.