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Comment by nonethewiser | Hacker News Reader

This is totally an aside, but Im not into crypto and have a fairly negative connotation with it but I don’t necessarily think crypto is bullshit. I think the problem with crypto is that it misjudges the world, or is at least positioned for a very cynical version of the world that doesn’t currently exist.

Is crypto kept alive on evangelism? Yes.

Not really that useful at the moment (and maybe never will be)? Yes.

Has lots of pump and dump, scams, bad people doing bad stuff? People who have no clue what they’re talking about spewing bullshit? Resounding yes.

But I don’t think it’s bullshit because it does solve a real problem - verifying transactions independently. But of course there are trade offs with this, such as bitcoin’s power consumption. The disconnect comes from crypto people misjudging the world. The current financial system simply isn’t so bad to require all the weird trade offs of crypto.

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We detached this subthread from https://news.ycombinator.com/item?id=35538174.

> But I don’t think it’s bullshit because it does solve a real problem - verifying transactions independently. But of course there are trade offs with this, such as bitcoin’s power consumption. The disconnect comes from crypto people misjudging the world. The current financial system simply isn’t so bad to require all the weird trade offs of crypto.

If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient.

When you say it would not be possible, do you mean that it couldn’t handle the volume? That hardly means it’s worthless. And I already granted it’s worth less than the current financial system. So I believe we’re in agreement.

We would not use Bitcoin for ordinary transactions, at least not Layer 1. That would be the equivalent of transporting your money in an armored truck. There is plenty of ways to scale with Layer 2, but Layer 1 fees on Bitcoin Cash or other smaller cryptos are currently so low that this is not necessary.

So what you're saying is we will have some kind of central system, like a bank, that issues Bitcoin, and then a bunch of spoke systems that issue currency based on the value of the Bitcoin holdings?

How is that different from what we do now?

I'm pretty sure that's not at all what he's saying, he's just saying that the existing bitcoin network would serve as a net settlement layer for L2 systems, which handle the much higher volume of everyday transactions. My understanding is that net settlement between banks is much less frequent than the capacity of BTC.

Lightning (an L2 system on Bitcoin) is essentially a system of peer to peer exchange of signed BTC transactions, which supersede previous ones, but don't get committed to the main net. In that way, you can keep a running tab between counterparties with effectively no marginal cost until one of you decides to close the tab by committing it.

There were 4,746 FDIC insured banks as of the end of Q3 2022, and 5,099 NCUA insured credit unions as of the end of 2020. If each of those institutions does net settlement with 200 other institutions daily, you've got roughly 1 million settlements a day (each settlement has two parties, so 100 * 10,000). Earlier in the thread, someone said BTC can do 3-7 transactions a second, which doesn't quite make it to 1 million transactions per day.

Of course, I just made a wild guess about how many net settlements between banks would happen; maybe banks don't settle up from check clearing daily, but in a world where transactions are difficult to reverse and nobody trusts anyone, you'd want to settle up regularly.

Thanks for running the numbers. The amounts in the channels are committed with those signed transactions, there’s no opportunity to double spend, so it’s fine to settle much less than daily, as long as the net flows are well balanced (big if). Transactions hop through the graph, you don’t have to have a running tab with more than a few other nodes.

Again, how many armored trucks are used for settlement each day? Probably not a million. The transaction limit on Bitcoin is artificial, the result of a negotiation between the miners, who provide the security and the users, who implicitly demand that security, by choosing Bitcoin over any other cryptocurrency. Ethereum on the other hand already processes a million transactions per day on L1.

> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible. Cryptocurrencies don't scale, because the way they work is extremely inefficient.

What exactly do you mean? This is exactly the one use case where cryptocurrencies do work, compared to all the other bullshit use cases cryptocurrency hypists have came up with. Doing non-centralized transactions is what it excels at.

Unclear if you're talking about Bitcoin specifically or cryptocurrencies in general, but there are cryptocurrencies that handle transactions quickly and at scale in a secure and decentralized manner. Algorand is one of those, but there are plenty of others out there that fits the requirements.

In what situation does the entire financial system shut down, and we still all have reliable electricity and Internet to use crypto with?

Also most market cap isn't in those "more efficient" and "more decentralized" coins.

HN hates crypto for no apparent reason other than hive-mind. Not even worth arguing around here.

Hate crypto for no apparent reason? There are so many reasons to hate it! Fraud and waste are the main problems for me personally. The entire enterprise is rotten.

I'd be curious where you're gathering your information about how much fraud and waste exists in the current system.

HN thinks crypto is scams and speculation.

Crypto people think it’s getting rid of visa, Western Union, and government censorship.

> no apparent reason

That's an oversight of the year.

For some reason I'm reminded of the famous essay "The Missing Missing Reasons", which is about the group behavior of parents who are estranged from their adult children: https://www.issendai.com/psychology/estrangement/missing-mis...

I’ve never seen crypto hate on HN which isn’t followed by a laundry list of specific complaints about crypto.

Arguably it’s even more annoying than if we just had posts that only say “I hate crypto”. But the idea that there is no apparent reason is laughably wrong. People give a lot of reasons.

> HN hates crypto for no apparent reason other than hive-mind.

To give you an example of a HN reader with reasons to dislike most cryptocoin stuff:

- cryptocurrencies, particularly those mineable on CPUs and/or easily laundrable, provide a serious financial incentive for scriptkiddies and other hackers to go and hack systems to have them mine for coins, encrypt them in coin-extortion schemes, or steal the content of wallets they find. Basically, it's like the absence of STIR/SHAKEN on a phone network - it invites scammers to robocall people and pull scams on them.

- mining of cryptocurrencies, especially on Bitcoin and other ASIC based coins, consumes an awful lot of electricity, which has been incentive enough for multiple operators to reactivate fossil fuel plants that had already been shut.

- cryptocurrency mines of everything but proof-of-stake coins produce an awful lot of e-waste. Some of that can be repurposed (e.g. CPUs, RAM, GPUs, FPGAs) which has serious side effects on its own (such as enormous gluts in the used markets when miners drop their rigs), some of that is uneconomical to repurpose (HDDs/SSDs for proof-of-storage coins, the mining process eats through them at an insane pace) and some of that is impossible to reuse (ASICs).

- cryptocurrency mines can lock up large parts of the hardware supply because miners pay so much more than even the richest gamer can afford. One might argue that that's a natural function of a capitalist economy, but sorry when you can't get a new halfway-decent GPU for years because scalpers buy up all the stock then the market has fucking failed.

- cryptocurrencies invite undesirable people and events. There have been almost infinite amounts of these, documented on [1] - legitimate hacks, legitimate coding issues that sent coins to null addresses, rug-pulls disguised as hacks, shoddy accounting or general business practices by people who got in way over their head (MtGox) or had no idea WTF they were doing (FTX). Or NFTs which all went down the drain once the free money spigot and the novelty wore off (on top of the OG NFT Bored Ape copying and thus promoting outright Third Reich Nazi symbols and edgy far-right memes [2]).

- cryptocurrencies invite those who think it's a good idea to use them as a proxy to evade securities laws or KYC rules, luring in gullible morons in the process and leading to loss of money.

tl;dr: too much money lures in too many morons and everyone but the original "investors" loses.

[1] https://web3isgoinggreat.com/

[2] https://gordongoner.com/

All of this is basically:

* shitty people scamming other people: Yes, everyone knows. It happens with normal money as well. I regularly get "How to avoid scammers" emails from my bank too. As long as something has value someone will try to use it to scam someone else.

* mining: Yes we know, mining is bad. Nobody wants it, it's going away. Could it go away faster? Yes, but it will happen eventually. Ban mining for all I care, nobody really needs it.

> shitty people scamming other people: Yes, everyone knows. It happens with normal money as well.

The thing is, governments don't want people to get scammed, and so they act to prevent scam avenues. But unlike, say, the trad-bank system the percentage of "scam" vs "legit" operations in cryptocurrencies is drastically skewed to the "scam" side, made easier by the anonymity that cryptocurrencies provide by design.

> cryptocurrencies invite undesirable people and events.

Many early adopters are salty that nobody would listen to us and investigate the criminals we were pointing out all along.

> cryptocurrencies invite those who think it's a good idea to use them as a proxy to evade securities laws or KYC rules, luring in gullible morons in the process and leading to loss of money

Generally the criminal schemes that actually took everyone's money were so simple as to not even be securities scams. The complex non-deliverable defi contracts were something people were playing around with to make prediction markets and other useful things.

> when you can't get a new halfway-decent GPU for years because scalpers buy up all the stock then the market has fucking failed

Okay, seriously, what system would actually create more cards here, some command economy where gaming is allocated a higher value than other activities? How does the company know how many fabs to buy/lease to prepare?

> promoting outright Third Reich Nazi symbols and edgy far-right memes

I don't see a lot of value in some censorship system that makes that enforceable. Should books not have been invented until we developed a technology to make it impossible to say mean things?

> Okay, seriously, what system would actually create more cards here, some command economy where gaming is allocated a higher value than other activities? How does the company know how many fabs to buy/lease to prepare?

I don't claim to have a solution that benefits everyone, but at least personally I prefer actual people having GPUs to have fun with them over some miners polluting the environment for a ponzi scheme with them that brings benefit to no one but a select very few.

> I don't see a lot of value in some censorship system that makes that enforceable. Should books not have been invented until we developed a technology to make it impossible to say mean things?

The Nazi crap was just the cherry on the cake. It just speaks volumes about just what kind of ideological toxicity was freely allowed to spread. Or, to use an older analogy, when a Nazi walks into a bar and isn't kicked out, well guess what you have? A Nazi bar.

> personally I prefer actual people having GPUs

I think Nvidia/etc missed some serious PR by not giving out tickets to buy cards via gaming and hardware sites, to be rewarded with more tickets if those cards ended up being used for gaming. However, I think it's unrealistic and unhelpful to call prices "scalping" when there are conflicting markets for a product.

> a Nazi walks into a bar and isn't kicked out

A bar is a private entity with a target clientele and limited availability. It makes sense that the patrons can be and should be curated.

> ideological toxicity was freely allowed to spread.

Now we're talking about NFTs, literally DeFi. How would you make NFTs that would allow for pro-Tibet messages, etc, and not also allow any other text/image that people want?

The correct filter is in which markets list it, and which customers buy it. It's like a disgusting book - it doesn't invalidate the very concept of libraries.

> hive-mind

Relevant: https://en.wikipedia.org/wiki/Psychological_projection

>This is exactly the one use case where cryptocurrencies do work, ... Doing non-centralized transactions is what it excels at.

Isn't it backwards? If I have a few (officially issued) colored pieces of paper in my pocket, I can give them away in exchange for other stuff, but if I have a cryptocoin in my pocket, there is no way I can exchange it for anything unless another party (or a majority) agrees to that exchange.

You're begging the question.* Both cases rely on the network effects of the currency. I am not convinced that a government-backed piece of paper will still have value when "the current financial system stopped working." That financial system is part and parcel of the government.

*https://begthequestion.info/

Bitcoin is c. 3-7 transactions/sec for the entire electricity useage of a medium sized country.

Ethereum is about 20 for the electricity usage of a few steel plants.

Cryptocurrencies have one use: to evade regulation. As soon as that use disappears so will cryptocurrencies.

Crime isnt a side-effect, it's the point.

> Ethereum is about 20 for the electricity usage of a few steel plants.

Does this take the migration to proof of stake last year into account?

Yes, I would imagine PoW for Ethereum was millions of GPUs at least

It doesn't. A steel mill produces 200,000 tons of steel per year (at the low end) and consumes 770 Kwh of energy per ton, which works out to 0.154 Twh per year. Post-merge ethereum uses 0.0026 Twh, so about 1% the energy usage of one steel mill

Some produce up to 3,000,000 tons, so the ethereum network would consume about 0.1% as much energy as one of those

edit: Bitcoin for comparison consumes somewhere around 100 Twh, so is comparable to 1000 steel mills (which might be more than the number of actual steel mills in operation globally?)

> Cryptocurrencies have one use: to evade regulation. As soon as that use disappears so will cryptocurrencies. Crime isnt a side-effect, it's the point.

Sometimes, HN appears to have the collective memory of a goldfish.

On HackerNews over the years, we've seen hundreds, maybe even thousands of sob stories from people like "X payment provider has locked my account and is not giving me access to my funds"

In every case, it's pointed out that crypto might be a way for people to reduce risk of this kind of thing happening.

Yet there's some people who continue to insist with a straight face that crime is the only conceivable use of crypto.

Also, I support sci-hub through crypto. That's pretty much my only use case for it, but it is one. Wish we lived in a world where we didn't have to bypass regulations to get free access to journals... but cryptocurrency is a solution for now.

Morally speaking, it's a laudable use case to spread knowledge.

But one could make the argument that this site is technically an example of "crime", at least legally speaking.

The moment you start letting laws define your morals, you have lost what it means to be human.

As some flavor of libertarian, I understand the concept of the NAP (non-aggression principle) and make the distinction between morality and legality and would like to have a different definition of "crime". That said, as we operate under a legal system that is forced on us, we do have to make references to the legislation that exists.

I'm aware that under the status quo a person can be denied banking, online payments, etc. without appropriate systems of redress.

In blockchain, redress is impossible. That's part of why it's so lucrative for fraudsters.

The failure modes in monetary systems are human, not technological -- and blockchains fuck humans. They make the problem worse.

The sales pitch for blockchains is a lie. The problem is real, but this isnt the solution. This solves only the needs of criminals in the strongest sense: people out to get other people.

Regulation will pop these schemes and nothing will be left -- it took 10-30 years to regulate credit cards. Hopefully regulators will step in sooner here.

The following is clearly labeled as an opinion and a purely subjective value judgment, but here's one thing about crypto that I can't shake my head from.

I notice that disgusting, wicked authoritarians that relish in their desire to achieve control over other human beings absolutely despise crypto.

If I knew absolutely nothing about crypto other than the fact that enemies of humanity hate it truly vehemently, what should my judgement of crypto be?

That you're a sucker for a sales pitch which begins, "You know those people you hate, we hate them to!"

Is the person with an opinion that isn't aligned with the establishment media the sucker for a sales pitch?

Or is the sucker for a sales pitch the person who parrots whatever the nice funny man on the TV tells him to think about any given issue?

People who think they're smarter than everyone else tend to be very gullible. It's not about TV, its about you.

If you want to be smart, don't judges technologies based on supposed virtues signalled; judge them by understanding how they work independent of how their salesmen say they work. Learn, know and understand.

Your entire world view is pretty dumb: who is signalling what I should be allied to?

That's a dumb question; and it signals that you're ripe for abuse. All you need to be sold an idea is to have it associated, by signals of virtue, with what you hate.

You're not alone. This type of gullibility is the mentality of most victims of crypto; and indeed, many scams.

80% of the crypto community is people who think they're smarter than the people scamming them -- that's the other 20%, and they're winning

The enegry usage is not proportional to the transaction rate, it's a security margin so it's only weakly related.

Payment channels allow arbitrarily high transaction rates w/ bitcoin, I've seen demonstrations sustaining hundreds of transactions per second. A side effect of their scalability is that no one knows the actual transaction rate-- only the few transactions related to opening and closing channels are broadcast the bulk is only seen by the participants in the channel, which is what makes it scalable to begin with.

[And, as an aside,-- 5 tx/sec is roughly fedwire's average transaction rate]

> Crime isnt a side-effect, it's the point.

That is false and defamatory towards anyone whos used or worked on Bitcoin. Please withdraw this point, the hyperbole doesn't illuminate the subject or add to the discussion.

If you want to argue that the only use you have for it would be to commit crimes, feel free but jumping from the fact that the only thing you can think to do with Bitcoin is commit crimes with it to crimes being the point is a bridge too far.

> That is false and defamatory towards anyone whos used or worked on Bitcoin

I will not withdraw this point. It isn't hyperbole.

Cryptocurrency technology has the economic and social incentive structures of ponzi and pyramid schemes; and primarily enables fraud. The purpose is avoiding the law.

The best that can be said, about the unwitting, is they aren't conscious of the incentive structures they participate in; and hence spread scams without realising it. This is indeed, how pyramid schemes work.

These libertarian ideological projects prove Hobbes point: absent governance, life in society is "nasty, brutish, and short".

The properties of these systems ruin people's lives for the sake of providing, at its "most noble", and ideological casino for people to cosplay a financial system. And that nobility is really just a pyramid scheme framing device for spreading the scam around.

The ideological window dressing is nothing more than "hey, maybe these vitmins will cure cancer. Dont you want to cure cancer?! Don't you think BigPharma is terrible?! Dont you think the healthcare system is broken?! Here, take 100 boxes of these vitamins -- everyone wants them!"

> The purpose is avoiding the law.

Your prior statement claimed that that "Crime [is] the point", have you weakened your position or are you just saying it another way?

How is "avoiding the law" the purpose of Bitcoin? Please connect your argument to supporting materials.

> Unclear if you're talking about Bitcoin specifically or cryptocurrencies in general, but there are cryptocurrencies that handle transactions quickly and at scale in a secure and decentralized manner. Algorand is one of those, but there are plenty of others out there that fits the requirements.

In general. Every time I heard a cryptocurrency claiming to be fast and decentralized, it either didn't live up to performance expectations or there were major caveats to decentralization. I can't comment on Algorand specifically as I gave up on following crypto.

Not because the way they work is inefficient, but because if the financial system collapsed that badly, we would not have an internet, or power, or food, most likely.

> If the current financial system stopped working and for some reason we needed to actually use Bitcoin to pay stuff, it would not be possible.

This is... not true [1]. We'd need to use something like the Lightning Network. The traditional financial system also has layers build on top of it, so it makes sense that you wouldn't only use the Bitcoin base layer.

[1] https://voltage.cloud/blog/bitcoin-education/how-many-transa...

Agreed with all of the above, but crypto !== bitcoin, and bitcoin is basically one of the few last holdouts using Proof of Work consensus at this point.

I don't know if it will ever be displaced because there are so many irrational people in the space, but whatever happens with crypto, I hope consensus mechanisms that aren't energy-hungry displace proof of work.

> The disconnect comes from crypto people misjudging the world.

The operative word here is "people". People are better judges of what other people want. And what people want is to make a quick profit in cryptobucks, and convert it into something they can buy real things with, preferably without a lot of transaction fees.

Crypto does not understand this, because it is a rigid top-down system that only works on the assumption that there is no fiat off-ramp, and crypto is the only currency being used. But that's not reality; in reality, people would not care about crypto if they didn't think it would make them rich in 'real money' terms.

Crypto, at least as someone who once hoped at a cyberpunk future (for reasons), had one and only one thing to do: kill the middle-men: banks, payment processors, credit/debit card operators, SWIFT, and so forth.

I want to send money to someone: I should be able to do so (i) instantly (message passing at light speed), (ii) at 0 cost (price of electricity), and (iii) without asking anyone for permission. Crypto failed miserably to achieve this. Furthermore, it has allied (or been rallied) with the "enemy"; crypto enthusiasts regard it as "good for Bitcoin"™ when banks announce investment in the crypto space. It is now a project unable to dream a future for itself beyond "hodl".

I am a crypto skeptic but some of the pegged cryptos have come close to solving that use case.* A lot of money changers in Argentina will accept USDT which you can send from anywhere in the world. Of course you can’t get rich off speculatively trading a pegged currency so it largely goes unnoticed. Obvious caveats: sketchy backing of these currencies, legality of all that, but it is already being used for that purpose. A US government backed coin could effectively kill credit cards and money orders but they no doubt also want some form of KYC to make sure you aren’t funding ISIS or whatever. Of course that is anathema to crypto bros who hold decentralization above all else.

Sure, at least one major benefit of KYC (which is also completely broken with crypto) is the "Undo button". Plenty of times you need to phone a bank and they will sometimes, begrudgingly, press the Undo button. What's Mr. Nakamoto's number if something goes wrong in a crypto transaction?

To give credit where it’s due, crypto spurred the Fed to launch FedNOW.

Just by the look of it [1] and the menacing hero question "Is your organization ready?" I fear something similar to the IRS tax filing [2] will happen: instead of having an open API usable by any easily-authenticable entity, only a few backroom deals will grant access to it.

[1] https://www.frbservices.org/financial-services/fednow

[2] https://www.irs.gov/tax-professionals/choosing-a-tax-profess...

> instead of having an open API usable by any easily-authenticable entity

It’s intentionally mediated through banks. We don’t want to create a money-laundering system—that is an explicit lesson learned from crypto. (We also want a layer that can absorb fraud. Another lesson from crypto.) But there are banks who will API it for KYC’d clients.

I don't think using a refrigerator to crush a fly is bullshit.

Is it too difficult to do by yourself? Yes.

Will it damage your floor? Yes.

Will it damage the refrigerator? Yes.

But I don’t think it’s bullshit because it does solve a real problem - killing the fly.

It is bullshit because it only works in theory, the big refrigerator will crush the tiny fly ... in reality the fly escapes with ease

the bullshit part refers to just that, pretending that the refrigerator could be an appropriate good solution, when in fact can't actually even perform the task

nitpicky. would you prefer an insect that can't fly away?

It doesn't solve a real problem, it solves an academic problem.

I believe this is why a lot of people fall for the blockchain trap, it's interesting on an academic level, so they come to the conclusion that there must be value in there in there somewhere.

It might not solve a real problem that you have, but it does solve the following real problem:

How do you create a shared transaction ledger without a central point of failure and control?

That is a question, not a problem.

> How do you create a shared transaction ledger without a central point of failure and control?

How is this not exactly what I was referring to? (solving an academic problem rather than a real world problem)

I'm walking through my last 30 years on thus planet and that thought hasn't ever entered my mind. What were you doing in your life that prompted that desire to express itself?

How many people thought a centralized VCS was just fine, and why would you even need distributed features?

That would be a good argument, except this is a thread about crypto and doing a Humpty Dumptyism that we're actually talking about VCS doesn't really make the point. I'm not getting baited into a discussion about how crypto-currencies and DVCS are abstractly the same thing and should be treated as such.

Very few people use the distributed features of git. It's almost always centralized at a corporate repository, a git forge, or there's not actually any collaboration.

It's almost always pull from my branch on the centralized repo, not pull from my repo at this unrelated host.

> it does solve a real problem - verifying transactions independently

Yeah, but who actually needs that "problem" solved? Money launderers? Drug dealers? Scam artists? Adolescent boys whacking off to Ayn Rand books in their mother's basement?

Yea, all of the above. And that's a pretty big market, enough to support its current price (around $30k I believe)

Put down the Atlas Shrugged and step away from the computer.

I think the main demographic supporting the current price is people who bought it as a speculative investment.

The problem is central banks devaluing currency. It's an esoteric topic to many people, so crypto turned into a blinking pinball machine of tech, but the problem was always the devaluing of currency by the Fed.

The point of central banks is to control their monetary policy. Like, that's why they exist.

Plus while a bank may devalue its currency, the point of it is to keep it stable -- something we haven't seen from crypto in any meaningful sense. Even the so-called "stable coins" are anything but.

> The point of central banks is to control their monetary policy.

There's plenty of people out there who disagree with central bank's existence and policy. I don't know if I'd call a currency "stable" when it's lost 80% of it's own value since being introduced and can have new liquidity created with little due process. All currency is an illusion, it's just about which illusion makes you more comfortable.

It's all just money, and money isn't entirely rational to begin with.

>I don't know if I'd call a currency "stable" when it's lost 80% of it's own value since being introduced and can have new liquidity created with little due process.

Something that depreciates can still be stable. The US dollar loses value at a relatively predictable rate. We can see what an unstable currency looks like right now by looking at Argentina, where the peso has lost 47% of its value in a year.

BitCoin is more like the peso than the dollar, hence why its called unstable.

> All currency is an illusion, it's just about which illusion makes you more comfortable.

Currency isn't an illusion, it's a social construct, and its a deeply embedded social construct.

>> "I don't know if I'd call a currency "stable" when it's lost 80% of it's own value since being introduced and can have new liquidity created with little due process."

By that logic, Earth is tilting dangerously out of control and the moon is hurtling off into deep space.

> The point of central banks is to control their monetary policy.

This is exactly the issue that a lot of people have with them. Not to mention that the people in charge of adjusting the value of your life savings aren't even voted in...

Cryptocurrency aims to give you complete autonomy over your money. Something 99.99% of people don't currently have.

> Cryptocurrency aims to give you complete autonomy over your money.

That sounds nice, but it doesn’t come for free. Price volatility, trust issues, etc. to name a few.

I think a key issue is that credit, money, wealth, currency, while related, are really different things but for many people all of it is “money”.

> Price volatility, trust issues, etc. to name a few.

These are not specific to cryptocurrency. The trust issues are primarily a result of crypto scams and not innate to crypto. Just as scams involving dollars, euros etc., have nothing to do with the currency itself.

Where crypto shines on the trust aspect is that you don't have some guy in an ivory tower deciding to devalue your crypto by 5%/year. You can choose to buy into inflationary cryptos (doge coin for instance), or you can choose to buy into crypto's with fixed supply. No one can take your share of the supply away from you or change the rules on a whim. That's absolutely huge.

"Compound interest is the most powerful force in the universe" - Albert Einstein, supposedly. Central banks use that force against citizens and everyone just accepts it because it's been that way for so long.

Maybe you should be happy they’re not voted in, voting is a popularity contest that completely ignores capabilities. I want the people in charge to know what they’re doing.

As opposed to currency being devalued by the latest scandal in the crypto space? Crypto prices swing wildly based on news, and news can be manipulated by a small number of actors. Just because the transactions are validated in a secure and distributed way doesn't mean that the underlying value is safe.

Devaluation is a widely discussed topic with decades of scholarly economic input as to why it helps generate more wealth in the long run. There’s a reason we have target rates etc. Crypto bros just want to replace the 1% not build a better financial system, it’s obvious because they don’t understand the financial system to begin with.

Devaluing money doesn't create wealth, increased in productivity does. Devaluing money in many instances lowers productivity because people have to invest time into protecting the value of their labor instead of making more stuff they are good at. I haven't read a single convincing explanation as to why encouraging consumption somehow generates more wealth on the long run.

> There’s a reason we have target rates

In an interview Powell admitted no one really knows why the target is 2%. Why is 2% better than 10%, why not 0%? We don't need to encourage consumption with artificial money devaluation, humans already discount the future because of the finiteness of our lives

Countries that don't want to be tied to the US dollar for trade between themselves outside of the US hegonomy.

In abstract terms, independant trade without ties to a dominant financial gorilla (once a time the pound sterling and perhaps one day the Yen (or other)).

That was a clean enough goal from the outset, my personal objections (expressed in cypher forums back in the day circa the bitcoin paper dropping) are wrapped in the failure to tie the OG bitcoin to some form of verified "energy used to mine" signature (a curly one) and the high energy cost of verifying OG bitcoin transactions.

With 20/20 hindsight it was likely a premature release, in fairness it was more of a proof of concept begining that lasted longer than expected and then took off.

> Countries that don't want to be tied to the US dollar for trade between themselves outside of the US hegonomy.

What currency do you propose people, companies, and countries trade in? And why that currency?

Pairs of people | companies | countries can directly trade in goods and services by some agreed ratio if that can be satisfied (eg: Australian Iron Ore + Rare Earth Concentrates in exchange for Chinese electronics is an ongoing tade at some agreed ratio)

A currency is abstraction for trade in wider circles where (the common case) trade between two parties isn't sufficient ( typically parties supply | demand a basket of various resources, various energies, various intermediate and finished goods ) and for trade to take place the guarantors must have faith in the agreed abstraction for transfer of credit; additional mechanism that verify transactions are an added bonus.

Both now and through history many currencies have been used and are being used.

I've given examples of US dollars, the Pound Sterling, in the context of this sub thread bitcoin is an obvious example of a currency that has been used to facilitate trade; less obvious but important examples of currency are the word of a trusted person of faith (as used historically along the original Silk Road and today throughout Hawala and similar mechnaisms).

What strikes me as odd about your question is the implicit assumption that I favour one singular currency over all others.

People not privileged enough to have access to western banking

Yet somehow sophisticated and well informed enough to keep their keys secure and not get scammed.

I don’t understand your point. Are you implying that people don’t have access to western finance because they are not sophisticated enough? If you don’t luck into being born with good citizenship lots of things you might take for granted are inaccessible. It has nothing to do with level of sophistication

The point is that people who were the most impacted of the fall of FTX and all those others exchanges are actually people in developing countries that lost ALL their savings. It was perhaps a few thousands dollar for people in the western world, an alternative way to do some investing, but lots of people in countries with bad financial systems (lets say Argentina or Venezuela) tried to use crypto as their stable banking system and it failed them miserably and now lost almost everything.

So while in theory crypto offers that alternative that should be better than those shitty countries economic policies, in practice, this gave them something worse than their local bank.

Yes Yes, you can use a hardware wallet and would have avoided all of that, the reality is that a very high percentage of people were just using the tools offered to them and didn't think it was all a giant fraud.

Fair. Crypto is not just ftx/investment tho. It’s also a mean to transfer wealth outside of your country. It might be risky but any option is better than none

SVB depositors were almost in the same boat. Maybe not this time, but there is no guarantee the government will bail you out. In fact, Janet Yellen (who has a lost any credibility she may have had imho) even said they don't intend to extend that protection to all banks. They prefer to pick & choose who they extend the protection to (especially rich liberal donors).

Only depositors who had more than 500k deposited. For SVB, a high number for sure, but its not a counterpoint to someone posting how putting trust in crypto bankrupted a large number of people in developing countries when they mistakenly thought they could trust crypto more than a bank.

FDIC insurance is 250k, not 500k. It's not Apples to Apples, but it demonstrates that the banking system is not rock solid either.

Not only that, if you really want to look at exploitation of the poor look no further than our large banks in America.

"Western finance" is heavily regulated (well, consumer banking anyway) and for the most part is pretty secure. Crypto is completely unregulated and chalk full of bad actors distracting you with grandiose promises while fleecing you behind your back. Every other month there's a report of some massive theft/data breach at an exchange.

Conversely, part of those regulations involves excluding whole countries from the system, most of them for purely political reasons.

Banking is doing just fine with cell phones in places like Africa.

This argument comes up so often, it needs a name like the "think of the children" mantra politicians use to promote bad policies.

Well that’s useful for everyone, just not useful ENOUGH. Everyone needs to know the system they are using has integrity. Let me be clear, this does not mean the regular financial system doesn’t have integrity.

As I said the current system is better so I don’t see your point as some sort of counterpoint to my observation that crypto has utility, it’s just relatively low or tuned to less in demand needs.

Soon enough, governments will attempt to eliminate cash transactions, control every financial transaction, and limit the ways money can be spent on undesirable products, i.e. put quotas on fossil fuel or meat.

Whether crypto can actually mitigate that is an open question. Arguably, a society that accepts strict financial controls would also prosecute crypto users.

Fortunately, the US Supreme Court has already decided that money is speech deserving of 1A protection: https://en.wikipedia.org/wiki/Citizens_United_v._FEC

I don't believe for a minute that today's Court would expand that reasoning to digital currencies, but it is a foot in the door.

Who needs privacy? Drug dealers and scam artists...

Crypto solves (to a degree) the problem of a huge amoount of power belonging to the few people who run the financial system. Huge consentration of power is not a good thing. Power corrupts and so on. Crypto puts everyone on equal footing - rather than say the people/companies who have a banking license enjoying an unfair advantage over everyone else (like the power to create money from thin air in the fractional reserve system).

The credit card companies, PayPal and the like get to decide which companies are worthy to exist and which not. If they don't like a business, they can just cut them off from receiving money. E.g. VPN provides who don't keep logs are all banned from receiving credit/debit card payment, PayPal, etc. - they have to resort to receiving cash by post and crypto.

That's an awful lot of workaround to solve the social problem of "my regulatory agencies aren't regulating well enough" -- a problem which will still exist afterwards.

It's not to solve that problem. It's to have the option to route around it.

It certainly can't route around it.

US: https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

CA: https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/20221116...

EU: https://www.bafin.de/EN/Aufsicht/FinTech/Geschaeftsmodelle/D...

and so on.

Fraud existed long before digital currencies, and nobody is seriously advocating to legitimize it.

I hope that even if you love the current financial system, you'd still be in favor of giving its competitors a chance to exist.

Never ceases to surprise me when folks align cryptocurrency with these things.

Money laundering, drug dealing, scamming old people, these things have all existed well before cryptocurrency.

Arguing that central banks and a few other non-elected decision makers should be able to influence our lives by devaluing our savings is... insane. It's Stockholm syndrome really.

A few wealthy people decide your money should be worth less because a bunch of other wealthy people have made bad decisions for decades and now there's too much money floating around. Coincidentally, the interest rate adjustments won't tangibly affect the wealthy people! That's not something I want to continue to support.

> That's not something I want to continue to support.

What’s your solution?

Not the parent but buying assets and not holding more fiat than I need personally.

Yeah.

Each medium of wealth storage has tradeoffs, so being categorically opposed to one type because of ideological principles seems suboptimal to me.

For example, fiat may be subject to devaluation, but is stable, widely accepted, highly liquid and (cash) is anonymous.

Bitcoin is subject to speculation, so prices are highly volatile, amongst other downsides.

Land tends to maintain or grow in value, subject to interest rates, tax environment, and adjacent developments, and is very illiquid.

> Arguing that central banks and a few other non-elected decision makers should be able to influence our lives by devaluing our savings is... insane

Perhaps, but a currency that devalues based on news, scams, pump & dump schemes, and so forth isn't the solution. Crypto doesn't transfer the power of value to you, it transfers to people with a big enough following - or botnet - to amplify whatever news (false or not) that impacts their crypto the way they want it, up or down.

Your premise is reasonable, but your conclusion doesn't logically follow from it.

> Perhaps, but a currency that devalues based on news, scams, pump & dump schemes, and so forth isn't the solution.

This is an accurate characterization of the dollar as well.

A common theme in all the cryptocurrency hate is that crypto enables scams, drug deals, etc. It's value fluctuates because of the decisions of a few bad actors. The dollar and every other central bank currency also have these issues.

The dollar recently peaked around a 9% inflation rate.

The euro peaked around 10%.

I could also make an argument that these numbers are actually understated but that's not the point. These are supposedly stable currencies. A person who has saved up ~100K Euros by January 2022 now only has ~90k Euros in January 2023. That's some pretty significant volatility. Unfortunately, the central bank currency's never go back up in terms of purchasing power. They only go down.

> This is an accurate characterization of the dollar as well.

Not in the way you're saying - it's a matter of degree. When Theranos scammed hundreds of millions, the dollar didn't drop in value, nor has that ever happened.

You seem to have unconventional definitions of "stable" and "volatile". Calling a 10% devaluation in 1 year volatile is laughable compared to crypto. For example BTC -65% in 1 month (1/6/18 to 2/6/18) or how about TerraUSD, -80% in less than 1 week, 5/9-5/14/22.

Fiat and crypto aren't even in the same galaxy when it comes to volatility.

I think one of the best cases against crypto, is just how much the volatility in Crypto is a feature not a bug. Crypto is how people will make it rich, and rising 7% in a year doesn't enable that. Imagine a world where crypto routinely beat the major indexes by a point, so bitcoin being worth now around $1500, Eth $200. They would have been one of the most fantastic investments you could have made, and still a robust currency, but how much hype would they have made?

> I could also make an argument that these numbers are actually understated but that's not the point. These are supposedly stable currencies. A person who has saved up ~100K Euros by January 2022 now only has ~90k Euros in January 2023. That's some pretty significant volatility.

And? Is it even coming close to the volatility of the most popular coins?

> Unfortunately, the central bank currency's never go back up in terms of purchasing power. They only go down.

With good reason! Deflation is one of the greatest worries in any economy.

Rome wasn't built in one day, as the total market cap grows, price fluctuation will become irrelevant.

They'll be aligned with those things as long as crypto is the "other" network where people go to do things you can't do with existing payment processors. Without a killer app to drive "normal" people it will stay this way.

It's the same reason why free-as-in-anarchy speech social networks become far right cesspools [1], you have little reason to switch unless you're someone who's been kicked off the major platforms.

[1] I really don't mean to pick on the right wing nutjobs, it's just that the "far left" doesn't exist in the US so you don't find groups pushing for violent worker uprisings, seizing control of industry, and significant wealth redistribution, I'm sure they would split off the mainstream too.

Who needs free speech except for assholes?

Who needs freedom of association except for troublemakers?

Who needs the fourth amendment except for criminals?

A totally legitimate use case for crypto is moving money into countries that have bogus official exchange rates (e.g. Argentina). I've got multiple friends that hire developers in Argentina and pay them using crypto in order to avoid the 90% haircut.

Drug dealers would be a good example, yes, especially in a society that bans so many things for such utterly stupid reasons.

This applies to both kinds of drugs, by the way. Online black market shops selling generics from India also use crypto heavily.

The real issue with cryptocurrency is that it's not scaleable.

If they had some magic way of handling transactions so every node didn't need to keep all history, and nodes could be sharded in a hierarchy like DNS, etc. transactions times were near-instant and almost-free, etc. then it'd be a lot more useful.

> The real issue with cryptocurrency is that it's not scaleable.

This is very outdated commentary. Cryptocurrency's get better at scaling every year.

Bitcoin was the first, so naturally it is the slowest. Transactions per second (TPS) is around 5.

Ethereum, which released a few years after Bitcoin is around 30 TPS.

There are newer crypto's like Loopring that can currently do 500 TPS.

Ethereum 2.0, is aiming for 100,000 TPS. If they meet this goal, they'll be capable of more TPS than Visa.

And Solana has already proven to handle up to at least 8,453 TPS[1]. There might be others that can get higher, not sure.

[1]: https://crypto.news/solana-transactions-per-second-hit-an-al...

Bitcoin's power consumption isn't a "tradeoff". It's just as centralized as proof of stake systems.

Bitcoin's power consumption is just appealing to the religious aspect of the network : if we changed it, it would go against the original design. Even though it burns 1% of world energy consumption for that stupidity.

> Not really that useful at the moment (and maybe never will be)? Yes.

One of the only valid points of crypto is separating money from the government.

However, its proponents emphasize obscure benefits that make it look more obtuse than it should. As they stand, cryptocurrencies, in the eye of the general public, look either like a Ponzi scheme, free money, or too convoluted to bother, as they solve nothing other technologies don't solve already.

How is separating money from government a valid point? Money is inextricably bound up with fundamental governmental issues including a monopoly over violence and the ability to levy taxes. Cryptocurrency might have some temporary utility for people physically stuck inside failed states like Venezuela but those situations are by nature unlikely to persist long term.

> How is separating money from government a valid point? Money is inextricably bound up with fundamental governmental issues including a monopoly over violence and the ability to levy taxes.

It looks like you've just answered your question right there.

> > How is separating money from government a valid point? Money is inextricably bound up with fundamental governmental issues including a monopoly over violence and the ability to levy taxes.

> It looks like you've just answered your question right there.

Eh... Yes, indeed they did. Only, not in the way it appears you thought they did: Look up the word “inextricably”. Yup, money can't be separated from government – if it could be, whoever now ran money in stead of the old government would in effect be the new government.

Hard to say if even trying is more evil than stupid or the other way around, vut that doesn't matter much, now does it?

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