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Comment by braingenious | Hacker News Reader

This has been some of the funniest few days in recent memory. Even my crypto true-believer HODL maximalist friends are questioning the entire ecosystem and its value.

I think it’s funny that so many people have been hypnotized by get-rich-quick schemes and promises of a utopian monetary system while forgetting what the original —actual— value proposition of crypto was: Buying heroin.

As a corollary to “not your keys not your coins” I submit “if you can’t confidently exchange it for illegal drugs, it’s not a currency”

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> the original —actual— value proposition of crypto was: Buying heroin.

That's totally unfair.

It was buying all kinds of drugs, and weapons, and child porn, and stolen credit cards, and hiring assassins.

The assassins invariably turned out to be working for the FBI, of course.

The value proposition was uncensorability, irreversibility, non-inflationary nature, and permissionless nature.

It's a tool that can be used for good or evil, just like the personal automobile, which was also abused in early years for malicious ends - just as telephony, the internet, and a number of other technologies were.

Criminals are early adopters of new & emerging technologies, that doesn't make those technologies inherently evil.

Also, why lump drug transactions in with weapons / CSAM / cc fraud / assassinations? Most drug buyers are not hurting anyone.

> Also, why lump drug transactions in with weapons / CSAM / cc fraud / assassinations? Most drug buyers are not hurting anyone.

The marketplace for all of the above (except assassination) was the same - Silk Road. I remember seeing different sections for weapons, credit cards, fake ids and drugs, but I don't remember seeing a section for CSAM unless it was masquerading as something else.

That's a fair point. But what was on that platform was there because it was illegal, not necessarily immoral (drugs for responsible, personal consumption). I am simply contesting the use of drug transactions (especially small ones for personal use) as an example of an undesirable use case of a new technology.

The drug trade is definitely culpable for violence and human misery. Unless you're perhaps talking exclusively about psychedelics (and even that isn't squeaky clean, but production and distribution is less violent due to the origin and effort required in distribution), the users while not directly responsible, are absolutely funding some grotesque stuff behind the scenes that they usually brush under the rug.

None of this means that the war on drugs etc was justified or that its implementation did not have serious flaws, just that the drug trade isn't a manufacturer of purely victimless crimes.

> The value proposition was uncensorability, irreversibility, non-inflationary nature, and permissionless nature.

This boils down to two things, really: 1. To skirt the law (aka regulatory arbitrage) and 2. Act as a techno-libertarian “sound money” experiment.

Ghost guns can be used for good. But it’d be pretty silly to suggest that criminals use them because they’re early adopters. Criminals use them because they’re criminals. Sometimes the laws they’re breaking are unjust—but these are just tools for breaking the law.

And just because you can use crypto to buy things legally, there’s virtually no reason to do so, like taking a ghost gun to your local firing range.

I'd disagree on your first point. A critical component of systems that should skirt the law would be untraceability. A cryptocurrency like Monero or Zcash has this property (or attempts to, at least), and they are much stronger candidates for that use case.

Uncensorability is a desireable property for legal adult content producers, who are locked out of many payment platforms despite operating entirely within the law.

Irreversibility is a desireable property for merchants, who are the ones left holding the back when chargeback fraud occurs.

Permissionless nature is a desireable property for those at risk of discrimination from traditional financial institutions. While rare in the developed world for law-abiding customers, there are plenty of countries where people of certain races, religions, and ethnic groups are denied access to financial resources like a bank account because of such factors.

While these traits may be attractive to criminals, especially ransomware authors, they aren't only attractive to criminals, and all of them find demand in law-abiding users, as detailed above.

Why would this make someone question crypto? FTX was not a blockchain. It was a website run by one guy which (incorrectly) told you that he was holding some crypto for you. FTX could have been an exchange for anything, and it would have been the same outcome, had the CEO gambled with customer deposits like SBF did

Because “believing in crypto” (for most people) doesn’t just mean believing that the math works. It means believing that we can build a sociopolitical ecosystem that allows crypto to be a useful part of our lives in the future. To many, SBF seemed like an important visionary working to make that future happen. The fact that he turned out to be YET ANOTHER scumbag scam artist, fraudulently trading customer deposits like all the rest, will incinerate any goodwill the crypto community was starting to build in the eyes of regulators, politicians and the non-tech-world at large.

Human behaviour.

But also, it's predicting human behaviour, like a trader attempting to get in front of the trade flood. There's going to be pain as a result of further dominoes falling that were propped up against FTX, and this will result in a shark-like media feeding frenzy that will scare off, for years, any (potential) retail traders that weren't already in the game.

You're not wrong, it's just that humans are more emotion driven than logic driven. Logic requires effort and second-order thinking, emotion is passive; involuntary.

There's also the very real distinction between Bitcoin (and Ethereum) and "the rest"; the other fucking thousands of 'projects' that has VC / insider distributions and haven't had the time to decentralise and / spread themselves amongst a large group and still have the ability to be controlled by a central entity.

I'm no Bitcoin maxi, but I'm inching closer, which is not the direction that progress should be taking me, and it's due to fraudsters corrupting the ideals, and seemingly being in The majority as it relates to founding projects and services in the cryptocurrency space.

Because there's crypto, and then there's "crypto".

While FTX & co. don't match the technical blockchain-based definition of crypto, they are what people think of when they talk about the crypto ecosystem, and are part of the crypto hype chain.

If we filter the crypto market to only the true not-my-keys-not-my-coin crowd, the market wouldn't be anywhere near as large and influential as it is today.

> Why would this make someone question crypto?

I don’t know, I am not into crypto. I assume you might have to ask one of the many thousands of people that have lost untold quantities of money to a nearly infinite number of scams why they might question the practical value of the crypto ecosystem.

Any other exchange for "anything" would be under regulation. Crypto folks like to think they are not. That's the issue here.

>> —actual— value proposition of crypto was: Buying heroin.

>> “if you can’t confidently exchange it for illegal drugs, it’s not a currency”

What?

Heroin is an illegal drug.

Amusingly, what drove the development of internet video was - wait for it - porn.

The other driver of internet adoption in general was online stock brokerages and banks.

And in the 1970s, people thought the only use for a personal computer was storing recipes.

Even funnier is the fact that people don't buy heroin using Bitcoin on the darknet anymore, bitcoin's transaction fees are now too high for the average drug user.

In 2012 I found out about Bitcoin (founded 2009) and Ripplepay (founded 2004). I thought the former could go up in value a lot but I liked the latter much more as an actual peer to peer payment system.

Here is one of my posts from that time.. looking back on it , I encouraged Bitcoin as an investment back then, but cautioned at the end of my blog post about its prospects as a currency: https://magarshak.com/blog/?p=148

My cofounder tried to get me heavily into building on crypto and smart contracts since 2014. I told him I was already building a decentralized network since 2011 (qbix.com) and so stop pestering me.

Eventually, I looked at the space and saw many problems. Including lack of real adoption as a currency. So in late 2017 we started Intercoin.org to solve them… and followed all the regulations. As a result we raised “only” $555K, filed a Reg D with the SEC, etc.

Crypto and Web3 Smart Contracts have so much potential to do to world finance what the Web 1.0 did to publishing and Web 2.0 did to communities socializing online. It has the power to enable decision making and governance and tokens and contests and much more. But first it has to grow up. NFTs and Memecoins are first-generation crap, like <blink> and <marquee> tags, and myspace profiles, or Pong / Arkanoid.

In the same time that Bitcoin and crypto has existed, WeChat has rolled out a payment system that has the most mainstream adoption of any on the planet - millions of merchants in China. Here is what a decentralized version of that would look like:

https://intercoin.org/presentation.pdf

And there are many more applications:

https://intercoin.org/applications

We aren’t the only ones. FileCoin is working on the FVM and MaidSAFE is next-generation. The Web 3.0 world has been corrupted by centralized privately owned entities, just like the Web 2.0 world. Some of them were actually funded by YC and the VC industry, such as OpenSea. In a world where Elon owns Twitter and Zuck owns Facebook, people are looking for viable alternatives.

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