The only use-case for it now is for the criminal underworld (who have to somehow convert to fiat privately using novel techniques, and that gets harder with regulation and sanctions and outright banning of tumbler systems).
Hasn’t it been? I mean, aren’t the other stories largely just the things you say in polite company because “we are engaging in the business deliberately to enable and profit from the criminal underworld” has…potentially adverse social consequences.
That and moving cash out of China / Russia / Saudi. You can see changes in the price to BTC (and housing in Vancouver, etc.) every time big moves like that happen, such as MBS taking over in Saudi, and Xi's anti-corruption purges in China.
You must not have a need to send money to recipients in other countries.
I tried every option I could find until giving up in frustration and sending crypto instead.
Not denying the negative aspects but it's a privileged position to assert criminality is the only use case.
But I imagine your specifics are quite rare. We've had a long time for crypto get significant market share for retail money transfer and it hasn't happened yet.
I’ve only ever really transacted with big countries’ currencies (EUR, USD, GBP, etc.), and I’ve found that the ordinary banking systems (especially with fintech like Wise) serve me quite well for this use case. I’d love to hear more about the flipside of that.
It could've been my fault, I don't frequently send internationally. But the experience sending crypto was far and away easier and is now my default choice.
https://blog.chainalysis.com/reports/2023-crypto-crime-repor...
There are different kinds of anonymity, I think. There's anonymity of the identity of people, and anonymity of the nature of the transaction. Most cryptocurrency is bad at the former and good at the latter.
Those are detectable by analyzing the order book of exchanges for instance. No identity is needed
[1] Notes on our illicit transaction volume chart:
These are lower bound estimates that will likely rise over time as additional illicit activity is discovered.
This does not include off-chain criminal activity where proceeds may have been moved into crypto for laundering, though that activity can still be traced.
This does not include volumes associated with centralized services that collapsed in 2022, some of which are facing charges of fraud, given lack of off-chain insights.
Funds received by sanctioned entity Garantex accounts for much of 2022’s illicit volume. While most of that activity is likely Russian users using a Russian exchange, most compliance professionals treat this as illicit activity.
Money transfers, goods purchases, etc. as opposed to converting BTC into USDC.
Not so ironic ; wolf of wall street was funded by the billions stolen from Malaysia's pension funds and they threw huge parties and orgies in Vegas and paid off massive amount of douche-bag celebrities, including DiCaprio (who himself was a victim of trafficking in hollwood as a kid) as well as a bunch of other actors....
The wolf of wallstreet is basically the Inception of fraud IRL.
At least that added validity to the currency; but over time it's become increasingly less useful for any of the criminal underground other than middleweight tax dodgers, embezzlers, and people trying to beat embargoes or currency controls.
My suspicion is that these generally elite crimes (by volume, not by incident count) are tolerable to elite decisionmakers, and the network enables covert transfer of funds to "freedom fighter" groups, informants, and politicians - so the US covert community can hide their activities within the swarm. They surely have the tools and funds to track and unmask everything going on in the network in real time, and if they see something they're truly bothered by, they can use a parallel construction to go after it. Bitcoin becomes Tor.
edit: Back in the day you had to fill a plane with cash and fly it to the Contras. Hell, you had to fill a plane with drugs, fly the drugs to where you could sell them for cash, then fly the cash back. The CIA were very early victims of the cashless society.
Speak for yourself.
Some of us saw right away it wasn't a solution looking for a problem, it was a scam looking for a mark.
I mean, plenty of people were pointing out that trying to rewind finance to the era of privately-issued money without controls would lead to a recurrence of all the problems that that has historically produced and is the reason why that’s no longer a norm, while the entusiasts were just chanting “zero-trust” and “outside of government control”. We weren’t all enthused, or surprised with “the Wolf of Wall Street types”. (And I doubt very much the pioneers in the field were historically ignorant enough to not know exactly what they were creating.)
2. There was nothing sophisticated about crypto Ponzi schemes. It was always trivially obvious that if X money is used to purchase or prop-up crypto then X is all that is ever coming back out.
That's hilariously false.
https://www.reuters.com/article/argentina-dollars/argentina-...
Perhaps that was the only use case for it all along
I used to work for traders on the Chicago Mercantile Exchange, a privately held marketplace for commodities and derivatives. It was an extremely capitalist place, and over the years it had evolved extremely tight internal regulations. You just did not fuck with the exchange or with your clearing firm. If you did, could end up a grease spot on the pavement.
All the extreme capitalists I worked with were fine with that. They wanted to keep on making lots of money, and strong regulation created something where people felt safe engaging. That meant high-volume, high-velocity money flows. They were all greedy, but long-term greedy.
I feel bad for the sweet summer children who were like, "We'll invent a money with no regulation and it will be utopia!"
Greed has never been good, but the entire premise of the US form of capitalism is that greed is inevitable, so we should try our best to make it as close to a force for good as possible. Even if the greedy people don't care about that.
> The only use-case for it now is for the criminal underworld
This conclusion doesn't follow, neither logically nor empirically. [1] The exact opposite actually happened: we went from the vast majority of the volume being a darknet market, to most volume being saving/speculation and non-criminal e-commerce settlements.
[1]: https://twitter.com/malekanoms/status/1626583628099784705
Here are some stats for any passerby who might be convinced to think crypto really has ~zero non-criminal usage [1]. Surely calling 5-25% of many countries' populations criminals (including the US), should be relegated to a fringe extremist view.
There was never a hope for Bitcoin replacing or even competing with regulated currencies. It had its fun in the sun, but now it (and just about every altcoin) will bleed their values from the layman's wallet while opportunists and whales exploit an already-broken economy. Depending on who you ask (or what chain you trade on) we're already there.
Simply owning digital tokens is not a real world usage of those tokens, full stop.
That being said, I can fully accept that 5-25% of a countries population is gullible enough to buy cryptocurrency.
It's as much real world usage, as people owning stocks and precious metals is.
> I can fully accept that 5-25% of a countries population is gullible enough to buy cryptocurrency.
In many countries, it's the 75% of the population saving in their local fiat currency that are the gullible ones. I know we all love United States Dollars, but in many local economies, there aren't enough of them to go around. Acquiring, storing and transacting with cryptocurrencies can be easier, and more secure and discrete than going to your local black market USD dealer and stashing stacks of bills under your mattress.
Nobody is supposed to save fiat except as a liquidity cushion against personal tail risk for which you pay the spread between interest rates and inflation. Nobody has ever advised people to save fiat anywhere. They advice is to keep an emergency savings account and invest the rest.
The number of people actually using it on a daily basis is probably somewhat lower.
It's a hobby, I promise :)
> Surely your motives can't simply be the fear of being out of a job if bigtech fades into irrelevance. AI would logically be a way bigger threat to your occupation.
In my role as a critic (or I suspect you'd say cynic) whether crypto succeeds or fails doesn't matter. If it finds a killer use case and makes my life better I win because my life is better. I'll be the first to use any technology that makes my life better, or the things I do faster or cheaper. As I am not invested, it doesn't hurt me if it fails. The stock I own is broadly agnostic to the success or failure of crypto and the idea that any FAANG company is under threat from crypto is silly. If it takes off, the FAANGs would quickly find a way to profit.
> Surely calling 5-25% of many countries' populations criminals (including the US), should be relegated to a fringe extremist view.
They're not using it, they're speculating on its price. That's not the same thing. To use it they'd have to be exchanging it for goods and services and they're simply not because it's a bad store of value and a worse medium of exchange.
The title of that page is "Cryptocurrency Ownership Data" not "Cryptocurrency Use Data."
In re your reply down the line:
> It's as much real world usage, as people owning stocks and precious metals is.
Stocks are productive investments because their appreciation is derived from non-investor participants. Crypto doesn't derive it's value from non-investor participants. Crypto is only re-arranging the wealth in fiat terms, distributing money from later entrants to earlier ones. A better analogy would be to other zero-sum products like options or futures contracts but of course those have use as a hedge against risk which oviously crypto does not as it's simply correlated to the bubble stocks in the NASDAQ.
It is a lot like owning gold (well, except that gold actually is used industrially) but generally owning shiny pebbles has been a fringe sport dominated by William Devane and his 2am coin commercials on Fox. I think gold is a silly investment too and I don't hear anyone selling it as the future of anything.
Triple A is a crypto payments company with much more self-interest than those of us who are skeptical towards crypto. The base methodology for all of their statistics is ridiculous: "Let's take a cherry-picked dubious survey of crypto adoption done by the Bank of Canada and extrapolate those numbers to the entire world POPULATION". Bonus points for their "creativity" with this methodology - worldwide population is roughly 8 billion while internet users (the real TAM for crypto) is closer to 5 billion. So already you need to shave at least 35% off their numbers.
Their baseline "420m crypto users worldwide" estimate (which is already bad considering TAM is > 5 billion internet users) can be easily debunked to at least 1/3 of that number (100m - which is still incredibly optimistic) by spending an hour looking at block explorers across the top 10 chains (evaluating daily/monthly transaction counts, tx/rx address pairs actually used for daily/monthly transactions, etc). When I last did it to get to the 100m number I was VERY fair to crypto - round up everywhere, assume address = user (it doesn't), count each address as a unique user per chain, etc. If crypto had anything resembling the legit DAU/MAU metrics you see from publicly traded companies the total for the entire crypto space would likely be closer to 50m (or less).
I'm always fascinated by this - crypto advocates constantly talk about the transparency, openness, etc provided by blockchain while simultaneously touting those absurd Triple-A statistics. You will never see them do a real (yet still easy) analysis like I have because the real numbers look terrible.
If there was any real interest in the crypto ecosystem succeeding crypto enthusiasts would take a real hard look at the real stats, acknowledge they have a problem with adoption, and try to fix it. They're just too personally invested financially and thus spend their time "pumping their bags".
I doubt a FAANG or other non-crypto employee is worried in the slightest by the "threat" of an entire ecosystem that has acquired a whopping 50m-100m users over 14 years.
One nitpick - it’s easily $10s of billions of in investment, more than likely approaching or surpassing $100s of billions.
A16Z alone has raised roughly $10b. Throw in other big VCs, a bunch of coin/crypto specific funds, likely thousands or tens of thousands of angel/seed rounds we’ve never heard of capitalizing on the hype (or just outright frauds), initial coin allocations (the Ethereum foundation alone had over $1b last I looked), etc, etc. Then there’s trying to figure how to “value” “investment” in things like ICOs and ICO 2.0 stuff like NFTs, etc.
Not to mention the tendency for crypto projects to be outright frauds from the start. OneCoin alone brought in $4b in what could be characterized as “investment” from the perspective of the victims. One incomplete analysis[0] shows this specific category of frauds (of which there are many in crypto) to be at least $26b in total.
It’s been 14 years, hundreds of billions in investment and roughly speaking zero non-criminal usage and no real-world killer use cases. That’s just fact. Time to move on.
[0] - https://www.comparitech.com/crypto/cryptocurrency-scams/
Yes, people pouring their savings in tulips, fake railroad companies, and beanie babies is absurd. Does it follow that tulips, railroad companies, and baby plushies are scams and criminal in nature? The grifters and their victims moved on, and the underlying objects of speculation seem to exist and do their respective jobs just fine now.
Crypto is doing its job just fine of being a trustless and permissionless way of transferring value. It doesn't care if grifters hype, pump, and dump its tokens. The few actual decentralized networks in existence just keep running and securing their immutable ledgers. The few actual peer-to-peer researchers and developers keep improving them.
At the time that those things were happening? Definitely scams. Not necessarily criminal, though.
> It doesn't care if grifters hype, pump, and dump its tokens.
True. But, as I think you've noticed, a whole lot of people do care, and don't want to have anything to do with the whole idea. Maybe even most people.
It doesn't help that pro-cryptocurrency people cannot articulate a real, practical use case (outside of one or two niche things, like moving money across contested national borders) that isn't already done at least as well by the existing monetary system and also isn't scammy.
Consider Theranos as a non-crypto example. Fraud, yes, with two people convicted under those charges. Holmes was charged with defrauding investors and not convicted on those counts (IIRC). Balwani was.
I think it's relatively safe to say the parallel between people investing in what ended up being a bubble, fraud, etc (from tulips on) was considered as investment from the source of funds - the investors. It's why they call it "speculative investment". Speculative but investment nonetheless. Any early money on moonshot tech companies could be characterized the same way. Just turns out for Facebook, Google, etc it worked out because the founders and team weren't defrauding from the start, executed well, etc. It helps that the fundamental premise of these companies didn't go against human nature and demonstrated tremendous value and therefore significant user adoption from day 1.
Where it gets more complicated is going back to the original argument - money poured into the space for what ostensibly should have been work to legitimately further the ecosystem. Frankly I'm not entirely sure how to characterize it but the other issue here are situations like FTX (which I didn't include or mention). They did a lot of legitimate work for a while. How would this be accounted for in this distinction? What about companies like Coinbase that have had wildly swinging valuations? The other scary thing - what about companies/projects/etc that have taken investment but just haven't collapsed yet (due to outright fraud or otherwise)?
So... Very complex scenario but I think it's safe to say the core point remains - there's been a ton of money, effort, and time (over the course of 14 years) committed to this space with essentially nothing to show in the real world. I've spent a lot of time analyzing on chain data and at best there are MAYBE 100m crypto "users" worldwide. If we say $100b of investment that's a user acquisition cost of $1000 - and investors can't even fully capitalize on those users due to the decentralized nature of crypto. Hell, let's call if $50b of non-fraud "legit" investment. That's still $500/user which is at least one order of magnitude beyond anything you see in the non-crypto space.
If the entire crypto space was a tech startup funded by VCs they would have cut their loses, exited years ago, and crypto would essentially be back at the "investment" model of early Bitcoin (which IMO is perfectly fine and even preferred by many). Even the early web investment period (with the 2000 bubble burst) saw enough successes and returns within the span of a decade (1995-2005) to keep the money pouring in (and returning) to this day.