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With projects like blockfi, users get all the disadvantages of the centralized traditional financial system without any of the regulatory protections that have built up over centuries. Terrible for the people with assets in blockfi but extremely predictable. The point of defi is that you can use financial services without a centralized counterparty. People who can’t handle their own keys should be using traditional banks, at least until the technology is improved. Compare to Aave and other actually decentralized lending protocols which are not at risk of bankruptcy.

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What's the cryptocurrency endgame? Everyone has keys in cold storage waiting for the day we have the mathematics that destroys them?

> What's the cryptocurrency endgame?

To not be the one stuck holding the bag.

The Greater Fool theory of investing

and Tulip Mainia! (did we cover all the tired crypto takes?)

watching marks get fleeced is never tiring.

The endgame is a payments system as originally described in the Bitcoin whitepaper.

99.9% of all "advances" and developments in the space hasn't moved us towards the endgame, if anything it's taking us further away.

> The endgame is a payments system as originally described in the Bitcoin whitepaper.

This seems to be contradicted by the deflationary design of Bitcoin. The fact that Bitcoin is deflationary probably also exacerbates the speculative interest from investors that makes Bitcoin more volatile and less useful as a currency. It's possible that Bitcoin was technological sound, but economically destined to fail at its stated goals.

I agree. I held Bitcoin Cash since it forked, because it is superior technically. But I am disappointed with its limited adoption.

BCH allows more transactions. BTC would take 18 years for 4B people to perform a single transaction each. And it costs ridiculous amounts of resources for a ridiculous amount of constant security.

BCH is just kicking the can down the road a bit further. If it were to gain massive adoption rapidly, the only way it could scale if they follow their current ideology is by hosting the nodes on bigger and bigger server racks, eventually reaching the point where there is only one or two real nodes hosted in a cloud provider datacenter somewhere. I don't know what the perfect block size is, but quadrupling down on on block size and turning down all alternatives is not a good long term plan.

> I don't know what the perfect block size is, but quadrupling down on on block size and turning down all alternatives is not a good long term plan.

BTC's 1 MB (or a bit more with segwit accounting) is just hopelessly obsolote, we could easily handle multiples without any issue whatsoever, and it would require a massive increase there after to reach the state of "one or two nodes".

Further, BCH isn't "turning down alternatives". It's a permissionless system after all, and it does have malleability fixes if you want to have layer two for it.

It's BTC who is blocking any on-chain scaling and bet everything on the experimental Lightning Network (that's still experimental mind you).

BCH's block size is also hopelessly obsolete. You simply cannot fix the system by making the blocksize bigger, so BCH is a pointless exercise.

It's not pointless, it's necessary although not sufficient on its own.

eventually reaching the point where there is only one or two real nodes hosted in a cloud provider datacenter somewhere

Ironically this is what is described in the original bitcoin satoshi whitepaper (not 'one or two' obviously), but the math doesn't work out.

Right now bitcoin has a throughput of about 1 KB/s, which is slower than a 14.4 dialup modem. The entire 13 year chain fits on a $40 thumb drive with room to spare. Even 32MB blocks (53 KB/s) maxed out for another 7 years would fit on single $220 12TB hard drive.

Running a node is only really necessary for miners, exchanges or any other major service but it will be trivial for anyone who can watch a youtube video or stream netflix for at least another decade.

Hopefully we won't end up on the slippery slope of centralization.

But even if there were a reduction in the amount of nodes, and in security vs. 51% attacks (looking at miners' profitability), BCH has shown its willingness to consider tradeoffs and changes.

There will be opportunity to backpedal if the community considers centralization is a bigger risk than adoption difficulty.

I fear BTC's downfall will be caused by its brittleness resulting from the fixed rules.

BCH had slow block times and slow transfer times just like BTC. ETH and many altcoins were more performant.

The endgame is regulation. The US Treasury launches a digital dollar and declares other USD-demoninated stablecoins as illegal, crushing the on and off ramps for most exchanges. Adoption by banks and brokerages removes the need for separate crypto exchanges. KYC/AML requirements crush whatever remains.

... and assuming that is successful: something else emerges.

The emergence of crypto coincided with the final snuffing of bearer bonds and certificates and most anonymous bank accounts. The death of crypto will coincide with something else. The regulators of the world continue to pick and choose where to place their fingers in the cracks of the dam. Money that cannot efficiently or legally pass through KYC/AML will find a way.

> crushing the on and off ramps for most exchanges

That exchanges don't need help with that

There is no end game. You use it in your daily life to obtain or achieve things then you die.

On the one hand, I can understand this. On the other: as a US citizen, I use it in my daily life, then I file an 8949 every year listing every single purchase I made that year, along with tracking of cost bases? I realize that this is a legal, rather than fundamental, aspect of cryptocurrency, but it does make the idea of using cryptocurrency as a quotidian currency rather frustrating compared to essentially any other method, like cash or a credit card.

No need to. Luckily every transaction has been recorded for you on a public blockchain that is easily traceable to your RL identity! Makes life a lot easier for the IRS and also means your employer can check whethee you've developed a penchant for donkey porn!

That fact that they can find it out doesn't mean you don't have to report it accurately. Most countries around the world know how much salaried employees make and still require them to declare it in a yearly tax submission and if they do it wrong, they'll get fined. The government knowing has nothing to do with you still needing to accurately report it.

I don’t know if “most countries” is correct. The USA certainly does this, but most European countries will prepare an automatic tax return for everyone based on the data they receive from employers, banks and brokerages.

Hold my beer I'll build a tool to track that

Then the end game would be to be something useful that people use in their daily lives.

I think that's what was meant when calling it digital currency.

But now it's heading down a different path.

Having a savings account is not useful in daily life?

A savings account is generally a no-risk or low-risk investment vehicle. This usually means that you could withdraw the balance on any given day and not suffer a realized loss. Even if you assume that Bitcoin's value will always recover long-term, having short term volatility in the 50% range might mean that the money in a Bitcoin "savings account" will not be available when you actually need it.

Cryptocurrencies look to be a particularly bad substitute for a savings account to me. Or even just keeping cash in a shoebox under your bed.

Don't you keep it in cold storage so three generations from now you offspring can bring it back out for significant wealth gains or alternatively a reminder of funny things humans do?

Why crypto v dollars or another existing currency?

There is no real benefit besides instant* cross border settlement.

Your doomsday scenario affects all online security equally. The only outcome you are partially vindicated in is one with a quantum miracle in the short term, which even then is not catastrophic for protocols which make the necessary hard forks.

Currently in development is decentralized social recovery systems. A lite version of this already exists with gnosis safes where one wallet has multiple key holders and n/m voting.

There are already multisig wallets, both Bitcoin and Ethereum. You do not need Gnosis for that.

What's the endgame of a savings account? Are folks just going to sit on their money until it eventually collapses?

The endgame is the same as Beenie Babies (or tulip bulbs). Everyone realises it was just a mania and goes home. No more money goes into the system, so no more money goes out. People forget about it.

Sure, but you can't use DeFi to trade fiat for crypto. You can use DeFi to trade crypto for crypto, or for crypto that pretends to be fiat.

Saying "centralised exchanges bad, DeFi good" misses the point that the main use case of centralised exchanges is not covered by DeFi.

> Sure, but you can't use DeFi to trade fiat for crypto.

Of course you can, both ways.

- https://bisq.network

- https://learn.robosats.com

https://learn.robosats.com/docs/trade-pipeline/

> On a private chat, Bob tells Alice how to send him fiat.

https://learn.robosats.com/docs/payment-methods/

> You can pay with any method that both you and your peer agree on. This includes the higher risk method such as PayPal, Venmo, and Cash apps.

C'mon, that's not trading fiat for crypto. That's "PayPal me some money".

What's interesting is it seems they're only putting up a a 3% bond from what I can see [1]. So it looks like people could just take 97% of your money and run.

Whenever a big exchange fails, we see a lot of people say "of course, this is why decentralization is better." But I'm not convinced people are less likely to lose money in decentralized exchanges. It seems like it would actually be easier, it's just that a bunch of small scale scams aren't going to get the same attention as a huge exchange collapsing.

[1] https://bitcoinmagazine.com/business/robosats-private-bitcoi...

I love crypto! It's Decentralised! It's Trustless! De-fi is the future!

Then it turns out that the promised future involves trusting someone to honour a paypal and pray you're not being scammed.

Neither Robotsat or Bisq is that. The core functionality of these systems is to handle automated escrows.

Bisq is a really impressive project. Upon first hearing about it I was a bit skeptical at how a decentralized peer to peer exchange would work in practice, but now that I've used it a few times with no issues, it really does seem like the best way to do fiat <--> crypto exchanges. Really hope that bisq and other similar services get the recognition they deserve now that the trust in cex's has taken a fall.

Bisq v2 is going to be an interesting release: https://github.com/bisq-network/bisq2/blob/main/docs/aims.md

They're currently a little short on manpower. If you're a Java dev, you might consider giving a hand.

> - https://bisq.network

The last time I looked into this it required a security deposit in BTC.

Blockfi isn’t primarily an exchange, it is a crypto lending platform. Centralized exchanges are a viable target for regulation as the state has the capacity to do so if it chooses to. But these regulated exchanges should never be holding your crypto on your behalf. It should be purely fiat for crypto with minimal custody. However it will be difficult for that regulation to occur as dark hybrid exchange-banks are benefitting key political actors.

You can, using stablecoins like USDC. These also involve counterparty risk, but they are extremely simple to audit and regulate.

> they are extremely simple to audit

Tether's audit has been promised since 2016. Still hasn't happened yet.

Stablecoins are cryptofiat. There's no compelling reason to use a stablecoin over using USD.

But transferring to stablecoins means you don't have a taxable event and thus don't have to pay cap gains /s

it's fascinating how nobody learned from history. Banks and bankers have been heavily regulated as you said, "over centuries".

Still today, we get lured by the same businesses (because all these lenders were just banks/financial operators) but without any of the safety nets we have in place when we work with "old school" banks.

Learning from history typically requires opening a book…

Ah, but reading a book requires taking time away from “changing the world”.

It's really worse than you say the amount of ignorance it takes to store crypto in one of these institutions, when one of its motivating and zeitgeist driving features is that third parties are no longer the most secure method of storage.

The cynic in me thinks they did learn from history, and spotted a way to adapt the old scams to a new playing field. Much easier than coming up with brand new scams.

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