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Comment by gorgoiler | Hacker News Reader

As an outsider to cryptocurrencies it seems completely transparent to me that there is no value in these systems — neither in terms of either capital or in generating ongoing revenue — other than the ability to exchange them back out for US dollars.

There’s only so many years of being told “soon you’ll be able to buy pizza with yeetcoin!” before you have to accept that this supposed endgame just ain’t gonna happen.

…ah but if it did, that yeetcoin is going to be worth a hell of a lot! Maybe you should buy one, just in case!

I must resist the demon on my shoulder telling me such things.

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> the ability to exchange them back out for US dollars.

Crypto is extensively used to bypass capital controls imposed by many countries precisely because it's so easy send it to a foreign country and exchange them for a currency other than dollars. Think Lira, South African Rand etc.

There's certainly value in the systems. It's the value of the tokens that's uncertain.

I'm not sure if you are for or against cryptocurrencies, since you here explicitly say that the value in the systems is to break (capital control) laws.

I honestly can't tell if your comment is satire, because there are actually people making this argument and meaning it.

I don't think their comment is supposed to be for or against, they're just explaining that there is at least one value to it. It might not be a good thing, but it is still a pretty serious value.

Someone bought pizza once…

https://www.coindesk.com/markets/2020/05/22/10-years-after-l...

I bought pizza probably a couple hundred times directly with cryptocurrency.

The payment flow was easier than using my card (because I didn't have to go find my card, authenticate the purchase in my banks shitty app as per "SCA", etc)

Most people order their pizza on an app like DoorDash / Grubhub / Deliveroo / etc. Your credit card is saved once and then it's just one click to order.

I've used one of those (Deliveroo), and every time I order I have to go through the seven flaming hoops of strong customer authentication bullshit (opening my banking app, waiting for the thing to pop up, entering a code, accepting, going back to deliveroo...).

The UX is terrible. Unless you are in a country with poor credit card security like America.

Also, a lot of the better takeout places are moving off deliveroo/etc and just doing their own delivery drivers now.

I live in Finland now and use Wolt (a Doordash subsidiary). They store my credit card and are able to always charge without the authentication flow.

So it’s certainly possible in countries where strong authentication is the norm.

You’d probably like ApplePay. A great payment flow and the protections of being able to charge back or rectify problems.

Also, no need to deal with insane price fluctuations and collapsing exchanges impacting the price of pizza.

There’s still an outside possibility that at some point in the future that pizza will have been free based on then present values.

The hype and drama kind of drowns out all the great progress these past few years and there's been plenty. Programmable money is a cool and obvious thing that's not going anywhere no matter all the scams and bad actors. In this case a centralized exchange much closer to lehman brothers than crypto. It's like saying houses doesn't work or have value because of the ponzi's you can build on top of it.

The basic ability to transfer funds instantly has already been working flawlessly since inception. That's a real problem, buying a hotdog with bitcoin, less so.

Dunno, top voted comment didn't take a look before dismissing? Sounds like yc alright.

How does a centralized custodian like FTX or BlockFi failing change the fundamentals of Ethereum and DeFi? The promise of these systems is decentralization and removing counterparty risk. Everything is still going pretty smoothly in Uniswap and Aave protocols.

> The promise of these systems...

That's really the whole problem - understanding how all of this stuff works requires a master's degree in cryptocurrency. Being smart enough to vet that it's actually implemented the way its proponents claim is even harder.

You can point at some hypothetical future you imagined from the pure crypto first principles, but then I have to trust you. And so, ultimately all of this comes down to trust. Not "mathematical" trust but rather real, human vetting process that require actual work to be done by humans.

The problem then, becomes that regardless of the foundations of your system, if enough bad actors take advantage of the systems inherently confusing nature, then no one will trust the people who are using it for good. And what point is there in a system that is only used for idealistic side-projects and deception?

It doesn’t take a genius to understand how CEX and DEX handle your coins and withdrawals differently. It might take some years to educate the masses, even much of tech crowd on HN is not well informed on these differences.

And trusting experts who distill and educate us on these things is fine, it’s how math, science, physics works. But we can verify the claims in these fields, instead of blindly trusting a single mathematician. That’s the idea of crypto too: don’t trust, verify. FTX was a case of trusting one entity with no verifiable proof of their actions. Uniswap is the case of trusting the code and protocol, and many people coming to consensus to verify it.

Executing on these platforms is so incredibly expensive compared to FTX and Binance. Availability is an issue - when chain is congested, fees skyrocket and it takes forever to get out. You can't short or leverage.

Of course, in reality, you can't get your money from FTX either. But in current shape of crypto, there is certainly a point to having centralised exchanges.

yes you can. Use Kwenta, Dydx, etc. Shorting, leverage, L2 so low fees (in pennies)... all supported.

Under load it might take a few minutes to execute a trade, which is better than just losing your asset because the exchange went insolvent.

This is why L2 is actively being developed on Ethereum, and already processing a lot of volume. Same trustless withdrawals, but higher bandwidth and lower fees.

If you are outside then probably you've missed the numerous companies offering plastic cards with crypto backing which you can use just like a debit card.

My brokerage sent me a debit card that's backed by the automatic margin loan on the shares I own. That doesn't mean I'm paying for pizza with AAPL shares.

The "crypto debit card" is exactly the same thing.

I'm not a financial expert, but that does sound like you are paying with shares. If you didn't have shares you wouldn't have the balance or if you refuse to pay it back you'll lose some shares.

Sure, the shares are collateral. If their value drops, the brokerage will sell them to cover the expenses I racked up on the Visa card.

But it's not like the pizza I bought was priced in AAPL shares! It was priced in dollars. The margin loan isn't material to the payment system.

It's the same situation with crypto debit cards. Anything you buy with such a card is priced in USD/EUR/whatever. The crypto behind the scenes makes no difference, just like the AAPL shares in my brokerage account. Hence these crypto-backed cards are not crypto payments in any sense — they're a financial product that already existed.

I have one of those (Binance) and there is literally 0 benefit to them, and OP comments' statement still holds true. The settlement is still in fiat currency, when you use the card it exchanges your crypto for fiat for settlement. It's not real cryptocurrency payment, neither will it probably ever be.

I have been on the inside for a while, and completely agree that there is zero fundamental value to anything, it is purely, 100% speculation and most of it (especially DeFi) is borderline illegal and useless.

I had to buy a flight urgently. But my credit/debit cards had to low of a balance. Topping ul via bank transfer would have taken 4 days over the weekend. Used a crypto backed card, transferrred tokens, and 30min later booked my flight.

You seeing zero benefit doesn't mean nobody can benefit from having it.

> The settlement is still in fiat currency

Who cares how it's done on the bookkeeping side? I care about my account being lowered by the amount of crypto something has cost me and getting the service / goods I want.

Again, you seeing zero value is your perspective. Many people see zero value in abstract art.

> Who cares how it's done on the bookkeeping side? I care about my account being lowered by the amount of crypto something has cost me and getting the service / goods I want.

Anybody who understands what cryptocurrency is supposed to be should definitely care about it. There is nothing crypto about these cards, they just liquidate some of your crypto collateral to settle in fiat. You could do this yourself, or use any other random credit card. It's a convenience, but is literally the anti-thesis of cryptocurrency, and/or has nothing to do with cryptocurrency in the first place. The cards are ran by a financial institute or bank and the collateral could be anything.

Sure, the card and its convenience and functionality has value. Cryptocurrency plays zero part in it. Funnily enough, what you see as value here is provided by the fiat system and not by cryptocurrency.

I know the tech very well, but I really don't care about how it's settled under the hood.

> Cryptocurrency plays zero part in it.

Except backing your payment, it really doesn't.

> It's a convenience

And convenience is value. Not inherently by crypto, but the fact it's possible is an extra benefit.

Would you also object that if I spend EUR for a product online in GBP then the seller is not getting EUR?

> Except backing your payment, it really doesn't.

I think this is the point I was trying to make as well. Obviously this service has value, but not because of cryptocurrency, which was the matter of discussion

So where does the value come from? The service has an additional value to convert my crypto to fiat quickly, but as transaction fees goes it's marginal.

The service has the fundamental value, not cryptocurrency. That's just collateral

The service definitely is an enabler, but to which degree it's up the crypto asset.

Crypto like all financial assets is a tool for extracting wealth from others.

what a giant scam

1. btc = king ponzi (not by intent)

2. eth = enabler of all other ponzis

3. every other token is a straight ponzi

Some tokens are there to solve problems that eth did not or could not solve. For example Solana is geared towards building contracts in rust and executing their functions at %0.001 the cost of solidity+eth.

The token ponzi telegram culture is overshadowing the real world problems we can solve (such as absolving trust based contracts)

Cryptocurrency, specially when holding the keys of your wallet, prevents:

- bank runs

- currency debasement

- arbitrary seizures

xkcd 538

Anonymity.

This is rapidly vanishing

Only if using the wrong crypto.

Also prevents:

- changing or rotating those keys (basic infosec)

Generate new keys then transfer.

And pay a fee, just to change your keys. Remind me of the benefits of this system again?

> currency debasement

Currency debasement is the act of lowering the intrinsic value of money, e.g lowering the gold content of a coin.

Since the intrinsic value of a bunch of numbers on a computer is 0, this is technically true, but only cause it can't go any lower.

> - arbitrary seizures

It also prevents non-arbitrary seizures as part of legitimate law enforcement action. Child porn rings, organized crime, etc etc

Fiat is also a bunch of numbers in a computer. This is a very old argument against crypto, need to brush up.

I'm not saying this as argument against crypto. I'm saying that the "debasement" claim is nonsense because it doesn't apply here.

It absolutely does not prevent bank runs, because that's what just happened to FTX.

Sure, you can keep it under your bed and assume all the risk yourself and not earn interest; that was OK while it was an appreciating asset, but that's not something you can rely on.

There's no bank in DeFi. There's no bank with self-custody.

There’s so many little nuances that are technical and economic red flags to me that just elicit vacant expressions when I speak to zealots.

Take these exchanges. Set aside for a second the lack of regulations/protections/security checks that they’d be subject to if they were above board.

Just from a technical perspective: there are N tokens trading on the exchange. For each token, there is 1 logical implementation of that chain and there are P implementations of that logic (also often 1, sometimes more). You have X clients, with their own balances of each token B.

So, even beyond your own code/risk management/security systems, you have (N * P) other blocks of code that you’ve never audited, that would cause you (X * B) liabilities to your customers that you didn’t cause and have no ability to prevent on an ongoing basis.

The more successful your exchange is, the more those risks and liabilities grow - presumably exponentially.

All I get back is vacant stares when I point this out. Or get told “I just don’t get it” or “have fun staying poor”.

Sigh.

> Or get told “I just don’t get it” or “have fun staying poor”.

Most moonboys or people on the inside are in absolute denial. Don't take it personally. I have an acquaintance who is a "DeFi" investor, you wouldn't believe how much incredibly, utterly stupid "projects" this rather smart intelligent man "invests" in. 95% of DeFi are simply cash grabs, and I have not yet seen ONE project that actually profits off being on a blockchain or would be worse off not being on one. It is absolute insanity and like the Dotcom bubble all over again, and the pop is going to hurt like never before.

I'm not sure it'll hurt that much. The dotcom bust affected the entire economy and a vast number of people were directly invested in these companies.

The impact of a complete implosion of the entirety of the cryptocurrency economy will not have anything close to that effect.

yes and no. Almost everyone I know never talks about crypto until they've had a couple of drinks or have run out of chat, then suddenly they're talking about their favourite tokens.

I suspect the numbers of people invested are every bit as widespread as the media would have you believe. I'd be willing to bet it reaches even further into places you wouldn't expect (e.g. largely opaque pensions and company "cash" balances).

The majority of these tokens are just ERC20 contracts running on Ethereum, not some custom one-off chain and service; and the reputable exchanges actually do run their own audits on the code they have to interface with (which I know from firsthand experience having a token listed on Coinbase). I also think it is entirely fair that if you buy a token and you can't withdraw that token due to a bug in that token, that's part of the risk of owning that token and that issue shouldn't infect any other behaviors or any other tokens at the exchange. (So, maybe "you just don't get it"? But if you aren't willing to hear such feedback then maybe you are yourself overly confident in your understanding?)

Even in your example given above, if we assume (and it's a big if) that the exchanges are genuinely and thoroughly auditing every one of these tokens and their respective implementations - they're still at the mercy of any and all future bugs that might be introduced non-maliciously in the future. Sure, they can delist a token if they want to, but that's far from an instant switch and they most certainly would have an off-boarding process for their customer's balances that would not keep pace with a critical exploit in the wild.

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