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Comment by monero-xmr | Hacker News Reader

Cryptocurrency in its purest is money not issued or controlled by a government. Instead the supply inflation is controlled by transparent rules that are plain to see. “Protocol-based finance” vs. the existing government-based finance.

Now there are all manner of divergences from the above paragraph. Coins that are totally controlled and issued by a small group or company. Black box rules rather than transparent.

There are also huge trade offs with not having a central entity - lose your private key and lose your money for example.

Does this make the entire industry a Ponzi? No. There are legitimate uses for crypto, and even if I listed a whole bunch here the HN skeptics would disagree, but certainly buying drugs online is a real use case, which crypto excels at. You may say that’s morally wrong but it is still a use case, for better or worse.

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It isn't money. Money can be easily exchanged for goods and services. It is a digital "asset" whose only meaningful application is speculative trading...of itself. If something only has value because you think you can sell it to the next sucker for more, it is a ponzi scheme.

Cryptocurrency can easily be exchanged for a whole lot of goods and services.

If your definition of money = using something for goods and services, the crypto has certainly exceeded that definition.

Yes that's why they accept it at Amazon and Alibaba right?

Here is a list of services that accept crypto directly

https://kycnot.me/

Thank you for proving my point.

I can buy 4 VPNs with my crypto yay.

It's like we're living in the future.

It's like a who's who of cryptocurrency-based black markets and facilitators.

A crypto exchange or vpn is not quite the same as a store that sells goods like groceries, clothes or electronics or services like a lawyer's time, a doctor's visit or a haircut. I don't see any mainstream websites listed on that website. Regular people are unable to use crypto as money for regular things.

VPN industry is multi-billion, crypto exchanges are multi-billion, hosting is multi-billion. These are real industries - I mean a lot of people on HN are employed in companies that support and provide data / server hosting.

It starts with digital services and it spiders out from there. Enthusiasts who own retail stores accept crypto as a novelty or marketing strategy, but in 25 years it could be much more common.

>> "It starts with digital services and it spiders out from there."

Silk Road was 11 years ago.

When?

The first electric car was made over 100 years ago and they are still only a fraction of all the cars on the road. Revolutionary tech doesn’t always take over in 10 years let alone 100.

You're pushing a fake, invented history. Electric cars existed in the 1830's - about 200 years ago and 52 prior to gasoline powered cars. Electric cars were supplanted by gasoline powered cars. It's NOT that they just haven't caught on, yet.

None of that actually applies to this discussion, which is about crypto not being money. The example given for crypto being money was a website that listed things that are not goods and services people use to live their lives. The goods that people use to live are not vpns and secret crypto exchanges but groceries, automobiles, clothing, doctor appointments, etc.

If you have some other list of goods and services that people can repeatedly and reliably purchase using crypto, you can provide that to show that crypto is money. The earlier list is almost entirely crypto exchanges and vpns, which is hardly a useful list of goods and services for normal day to day products that people use.

If you can't purchase goods and services with crypto, crypto is not money.

Amazon doesn't accept cash. Is cash not money? They don't accept $foreignCurrency either, is that no longer money when you cross the border?

Or do you mean "money is what you can use to pay your taxes"? That works to exclude crypto, at least for most of the world.

Funny, Amazon does accept cash on delivery, so you are factually wrong.

Doubly wrong since Amazon also accepts gift cards which can be bought with cash.

Where does Amazon accept cash on delivery? Also, by this logic Amazon accepts electronic cash that can be "bought" with crypto, right? Maybe dollars are just gift cards for bitcoin :P

https://www.amazon.eg/-/en/gp/help/customer/display.html?nod...

> Cash on Delivery is available as a payment method for fulfilled by Amazon and some seller fulfilled items. If you have Gift Card balance in your account, you can redeem it and pay the remaining amount using Cash on Delivery payment method.

It’s quite easy to convert crypto into Amazon gift cards, which can then be used to buy stuff on Amazon. So it’s not exactly a big hop to go from crypto to Amazon.

I imagine they’re more than happy to take your cash at their 4-star and pop-up physical locations.

Of course Amazon accepts cash. Cash on Delivery is one way. [1] Other ways are listed on Amazon's webpage entitled "Shop on Amazon, pay in cash". [2] Also, Amazon has teamed up with Western Union for your cash oriented shopping needs. [3]

[1] https://www.amazon.eg/-/en/gp/help/customer/display.html?nod...

[2] https://smile.amazon.com/b?ie=UTF8&node=19428273011&sa-no-re...

[3] https://www.usatoday.com/story/money/2019/09/18/can-you-shop...

So, it's "in egypt", and "yeah, you can use your cash at a bank that will send it to us digitally, because we don't take cash".

Obviously Amazon supports system that let you convert cash into digital, but that's something else.

No, it's not just "in Egypt". That's completely wrong.

> Amazon doesn't accept cash. Is cash not money?

Cash is one form of USD, which is money.

In case you're wondering, a cash-only business accepts money too.

If you've ever used Alibaba you'd know that many sellers do accept it there.

> If something only has value because you think you can sell it to the next sucker for more, it is a ponzi scheme.

Careful with that sentence. It is applicable to paintings, stamps, and collecting in general. True that on those other cases you have a physical object, so it has a value (as opposed to nft) but usually it's far less. A Pokemon card costs almost nothing, but some people are willing to pay millions for it, so it "costs" millions.

Disclaimer: I still agree with your comment, I just think that the reason is more complex than that sentence.

Paintings are nice to look at.

Stamps and other collections are fun to collect and to have, regardless of their monetary value. (After all, people collect otherwise-worthless things like bottle caps, too.)

Cryptocurrencies have no substance to them, they are not interesting to look at, and while I suppose one could get a thrill out of simply knowing one has them, I very much doubt that there's more than a tiny handful of people for whom that would remain true if they were worth $0.

> I very much doubt that there's more than a tiny handful of people for whom that would remain true if they were worth $0

By now they’re a part of our history. I keep a professionally made, empty paper wallet as a souvenir from the 2010s. It’s a lot more tangible than some scrap of paper with 24 random words on it.

This seems like a good point. I'm not sure I agree about paintings, but sure let's take Pokemon cards. These have only a little bit of intrinsic value - you can use them to play a game that is fun for 8 year olds. They only become more valuable because people speculate that their value may increase in the future. Why do they think that?

Well, it happened with baseball cards and comics, and then everything else. But let's go back to baseball cards. Why did some of them become so valuable? Just a guess but maybe its because they became rare, yet retained nostalgia value. Kids who bought them in the 20s and 30s treated them like the worthless scraps of cardboard that they were. Most were lost or destroyed. But decades later if they came across some they evoked a powerful emotion, maybe the sort of emotion I feel when see the login prompt on a Vic-20 maybe. So they started collecting them, and of course they had the most demand for the legendary players who they idolized as kids, so the value of those went up. After that, its mostly just people speculating. But there was a kernel of real value there to begin.

Here is a valid use-case for crypto (Monero): https://news.ycombinator.com/item?id=31996612

> Here is a valid use-case for crypto (Monero): https://news.ycombinator.com/item?id=31996612

The very first comment on that use case is, "Please allow me to offer you a free rsync.net account, in perpetuity, for the backup portion of your requirements." [1] Saying that the use case for Monero is to compete with zero-cost services doesn't offer a compelling use-case for Monero.

[1] https://news.ycombinator.com/item?id=31998255

>It isn't money. Money can be easily exchanged for goods and services.

And people do. There's a bitcoin ATM at my local liquor store. And a strip club downtown that takes bitcoin.

You (but not many other people) can purchase liquor and sex, but you can't go to a grocery store the next morning and buy coffee for your hangover. You can't replace your totaled car that was lost during your escapades, either.

> If something only has value because you think you can sell it to the next sucker for more, it is a ponzi scheme.

That's not what a ponzi scheme is.

In a ponzi scheme, there is a fictitious business model that's purported to be turning a profit, and its lack of profit is hidden by secretly using new inflows to pay off old investors.

In crypto, none of that is hidden. It's widely known that dollars cashed out by earlier investors come from the coffers of later investors. Since e.g. Bitcoin doesn't deceive people about being a profitable company, it's by definition not a ponzi scheme.

Edit: This is a discussion section. If you disagree with my comment, let's respectfully discuss it. I see a lot of voting and no replying.

Since clearly you can buy things for Bitcoin, it is money.

You can speculate on the value of any currency. I’ve earned thousands extra this year by invoicing foreign currencies at the right time, at no loss of my customers.

Bitcoin only has value for me because of the things I can buy with Bitcoin. (Privacy preserving technology, online services, drugs, helping friends of friends get out of Ukraine.)

> It isn't money.

And it is somehow 'money' only when it suits projects and places like HN. [0] I'm sure any of you would immediately rush to sell 299 Ethereum right now, even if it ran through a Tornado.cash mixer, otherwise you would leave it alone if you believe that it isn't money or worth anything.

> If something only has value because you think you can sell it to the next sucker for more, it is a ponzi scheme.

That is not what a ponzi scheme is.

[0] https://news.ycombinator.com/item?id=32923693

What would you do if you had 193k Argentinian pesos? Probably convert them to USD, too. Is it because you believe it's not money?

> Does this make the entire industry a Ponzi?

No, the things you mentioned don’t. The argument the article made, that almost all the dollars and euros and yen crypto spits out come from investment, does.

That some people are buying drugs and financing terrorism or Pyongyang dilutes the Ponzi case. Those are examples of utility. But I’m not sure that’s the defence crypto was looking for.

Stablecoins such as USDC and Tether (although despised by many) are used for non-criminal cross border transfers and savings accounts. Here is a recent episode of EconTalk that explains the use case in Argentina https://podcasts.apple.com/us/podcast/econtalk/id135066958?i...

> USDC and Tether (although despised by many) are used for non-criminal cross border transfers and savings accounts

One of these is almost certainly a fraud. The other provides utility, but largely in sidestepping money-laundering and banking rules.

Crypto doesn't even excel at buying drugs online. The fact that it's a permanent ledger of transactions means the purchase could be trivially linked to you by law enforcement, unless you jumped through all the necessary hoops to also anonymize it. Which most people don't.

Have you looked into monero? https://getmonero.org/

So are you saying monero can solve the planetary crisis of users not being able to buy illicit drugs online?

Monero is digital cash. Cash is also used to buy drugs, but we do not ban it. I feel that financial privacy is a human right just like any other form of privacy. If you disagree then please post your last month’s bank statement in response to this comment.

I think parent commenter's argument is that it's hard to get excited about crypto just based on the fact that it allows some people buy drugs online. While millions of investors lose a ton of money to crypto scams.

The problem is HN is an exhausting circular firing squad when it comes to crypto. I could extol the benefits of private currency on philosophical and moral grounds but this won’t convince a lot of people. So I try to put it in more concrete terms and then it’s either criticized or brushed off.

If you believe as I do that government control of money is a mistake for many different reasons, then crypto is a revolutionary technology. If you say “Bitcoin has all the problems” then I refer you to monero.

No, that's not the issue. The problem with crypto is the grift -- and the inability to see what's a grift and what's not. I believe the term "rug pull" is the vernacular in the crypto community you may be familiar with.

Nikola (US public company) was a grift and thousands of retail traders lost money despite all the protections of the SEC and other regulators. The CEO is going to jail but most people will get very little in compensation, if anything.

If the current system is so flawless, why does this keep happening? Clearly the system is not flawless.

I myself am extremely technical and able to understand the crypto industry. I can separate scams from not-scams.

Similarly, the Machine Learning / AI industry is chock full of charlatans and scammers who have stolen billions from investors. For example, Watson from IBM is a hyped technology and product that has now been shuttered.

The unique element of crypto is a retail investor can put their life savings into a scam. This is unfortunate but not a reason to ban the tech.

Nothing stops a lower-class person from entering a casino or using a sports betting app and losing their house. The pearl clutching on HN is legendary.

Let's assume XMR takes over the world and is the only currency in use.

Who pays taxes?

Who pays taxes on cash income?

1. Because of this grey area salary in cash is something extraordinary, in the West at least.

2. There is a cap on how much cash you can use in a transaction, in the West at least.

3. If XMR replaced fiat, ALL transactions would be anonymous.

Anyone who doesn’t want to risk jail, at least in the US.

Exactly, that doesn't change with crypto-currencies.

That is partially a false equivalence.

By many accounts moving around and dealing with large values in cash is inconvenient and cumbersome compared with the relative ease of moving crytpo between holders.

To the point where cartels end up with literal huge piles of money in warehouses and resort to complicated operations to try and move it across borders.

If you generalize from drugs example, crypto (may) help you do things governments do not want you to do. Drugs are just one widespread restriction; and you may view Western governments as generally competent and benevolent (to be clear, I do not), and drug prohibition as necessary evil.

But it's hard to claim that most governments around the world and competent and benevolent, and easy to get excited about people being able to bypass things from capital controls and ruinous inflation, to outright censorship and confiscations. Not that I think crypto would actually succeed, but I hope it does.

I would love to agree with this argument. And maybe 5 years ago I would have. But so far crypto has not demonstrated that it can really solve the issues you are listing. Yes, it can result in some capital outflow from oppressive countries, but that does not have a big impact on these people or the regimes. The stories that are being written are not of a hard-working farmer who was able to save some monero and move it to a different country anonymously. Instead, we are seeing millions of people lose their savings and/or investments. I acknowledge that things might change in the future. But as of now I am not optimistic.

The main difference here precisely "not your keys not your coins". Replacing govt-influenced/controlled banks with some rando pseudo-bank is only a net positive for a really terrible govt...

And because of the complexity, I doubt crypto will succeed in its goal. It might get regulated but then it's probably no better than banks, since it would be restricted from the uses a govt doesn't like similarly to money in a bank.

This is why I invested in Monero years ago, when it was under a dollar. I concluded that since the only actual application of crypto up to that time was selling illegal goods and services on black markets like silk road, that it was really the only coin that made sense at the time (I'm sure others replicated it). AFAIK it is still considered untraceable, but the value peeked years ago around $400 IIRC. I made some decent money on it though and still HODL some.

One might have some questions about the ethics of profiting from drug trafficking and money laundering.

Yeah, but I didn't. I profited from speculators who thought the same way but got in late.

Many people would think it's ethical, if anything morally positive. Do your part in demonstrating to the govt that if it plays stupid games (in this case, seeing if Prohibition would work better the 2nd time around), it would win stupid prizes!

> unless you jumped through all the necessary hoops to also anonymize it

There's a single hoop, and it's Monero.

It always confuses me when people say that crypto doesn't excel at buying drugs online. Out of all the things crypto does and does not do well, that one shouldn't be in dispute.

Then Monero is good at buying drugs, not crypto in general

The milk section of the supermarket is a good place to buy milk. Not the supermarket in general.

That analogy only works if milk is the only useful thing in the entire supermarket

No, that has nothing to do with the analogy.

I used to agree with you; but I think this line of thinking takes a (core) feature of money (trust in its value) and reduces the whole thing down to just it. Fiat money has another core feature in its definition: that you can pay taxes to a government using that currency. Similarly, equity in a company comes with dividends: a core cashflow that you can predict based on P&L. Trust in their current (and most importantly future) value, is a (big) aspect of it, but not the only one: there's actually a predictable "base" value that you can use to calculate a floor to that value. The future value is just the ceiling to that prediction.

Crypto is only trust. Without that social trust, there's no minimum value. That doesn't mean there is no value, just that the floor can go away, that the entire thing is much more volatile. So basically, gambling. This is not a value judgement btw, gambling and volatile assets can be fun and profitable; they are just not currencies.

The counterpoint to the “fiat mindset” (not to criticize you, but how I categorize it) is gold. There is no reason why gold is valued so highly other than historical and traditional reasons - its industrial utility is far lower than its monetized value.

IMO Bitcoin is superior to gold in nearly every single aspect. The only thing it doesn’t have is 5000 years of human belief in its worth.

If you understand logically why gold in 2022 has a monetary premium above its industrial value, then you can logically reason about Bitcoin and its value.

If you accept that Bitcoin has long term utility and value, then it isn’t a stretch to start analyzing other coins on similar valuation heuristics.

That's a good counter; but gold does have a minimum value separate from trust in its future value: it can be used for jewelry / metallurgical applications, etc. and it won't rust / oxidize. And gold is a lousy currency: risky, expensive to store, tied to natural resources, etc.; I guess just like BC :-)

It has a minimal value but it’s far less than its monetary premium. If you are investing in gold (as many mainstream wealth managers and central banks do) then you aren’t assessing “what is the minimum my investment can fall to based on fundamental industrial utility?” The investment thesis for gold completely ignores any potential for demonetization or else the investment is suicidal.

That's fair. But then your investment thesis is based on the value given to gold by large institutions that can/will create a price floor. Which yes, is absolutely based on trust-in-future-value, but in the case of gold that trust is widespread and tied to large, centralized financial institutions and thus regulations and eventually fiat (because in the end you will have to convert to fiat).

I can see that getting replicated for BC, but other crypto, not so much. A better, digital, asset than gold makes sense, but distributed, slow, state machines? Still don't get those...

Despite my username I am not a maximalist on any technology. Ethereum is very interesting and there are a number of scaling solutions (referred to as “layer 2s” or L2s) that have the same guarantees as the main chain but are far cheaper and faster (see Optimism and Arbitrum).

In Bitcoin the lightning network is slowly but steadily making progress amongst the faithful. It is also a faster and cheaper network.

Monero is the currency I recommend heavily because it is privacy-by-default - anyone who uses Monero is not broadcasting their intentions. This is an extremely valuable aspect of financial freedom and it gives me long term faith in its utility.

The key thing to remember is that all value is subjective. Someone will pay infinite money for a glass of water when they are dying of thirst and no money when they are drowning.

If a large portion of society values digital assets, then they have value. There is really nothing more complex than this for anyone to understand.

Your username makes you wanna add a disclaimer here? Your judgment might be coloured by your own involvement in crypto.

If anything a bigger part of the chaos in the cryptocurrency-space comes from people who want to believe.

> buying drugs online is a real use case

It's a use case that doesn't solve the problem with trust. Parties have to trust each other or use escrow. So, it solves only the "government control" problem.

But I agree, crypto is not just a Ponzi scheme. It's an enormous investment into the world of criminals - individuals and organizations.

Splitting hairs could be a reasonable expectation but at this point right after the FTX debacle it's not warranted.

Any sufficiently complex system can have minor benefits while overall be considered extremely harmful. Cancer can make you lose weight. Nazi Germany built great highways.

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