Hacker News Reader

I think it's more a case that anyone who was involved in crypto early, and who has actually taken the time to understand the technology, has realised about a decade ago that crypto currencies are mostly useless.

But then people had they idea that they could still make money from it by grifting people if they just added layer upon layer of complexity in order to disguise the ultimate uselessness of the underlying technology. That is where all of your Ponzis, rugpulls, NFTs and everything else comes into the picture.

Meh, I'm no bull but I also don't think "cryptos are mostly useless" is accurate. I believe there are solid use cases for distributed global ledger and digital replacement for cash. Is Bitcoin the winning/best manifestation? I doubt it, we likely need something much more energy efficient (like Chia is trying to be). But I don't think the idea is bust. It just isn't as overwhelmingly applicable as people dreamed it might be. We're trying out use cases, vetting the good ones and sometimes painfully learning the which ones were stupid or bad ideas. And once all the speculation settles, I do think true currency is still a viable one. Logistics and markets are another, etc.

I don't think anyone here is arguing that digital cash or a global ledger is bad they are arguing that the specific structures and incentives of crypto are bad.

Bring on the digital cash IMO but bearer instruments underpinning any large scale finance is a recipe for disaster.

I think that it's still unproven that a distributed global ledger is actually a fundamentally useful thing, outside of speculation. We're 15 years out from the invention of Bitcoin, and if all of blockchain technology snapped out of existence today, there are very few people, other than speculators, who would be impacted. It has comprehensively failed to be adopted into any value chains.

Which is why I'm extremely long on crypto and patient. It takes more than 15 years to fundamentally change the type of things crypto might really be useful for. And as a currency it's already shown traction, just not ubiquitous adoption. The currency use case requires people to stop creating volatility by hyper speculating with it, so I welcomed the crypto winter. I remember when people bought pizza with bitcoin. It wasn't that long ago, as you point out.

I agree. For comparison, here's how the Web was going as the WWW white paper approached its fifteenth birthday.

https://www.pewresearch.org/internet/2005/03/06/part-2-the-r...

> I think it's more a case that anyone who was involved in crypto early, and who has actually taken the time to understand the technology, has realised about a decade ago that crypto currencies are mostly useless.

I don't know what it is about crypto that makes HN commentators want to make the most ridiculous, put-downy statements without evidence to back it up.

Crypto is not mostly useless, it is just that people don't like the uses. crypto is absolutely massive for avoiding capital controls in countries with inflation, etc.

> Crypto is not mostly useless, it is just that people don't like the uses

Crypto has legitimate use as a rebel medium. It’s also plagued with criminality. Its promoters had a decade to clean up its act and refuse to self regulate.

That’s soured the public’s mood towards the whole enterprise. If crypto’s benefits are niche, its development should be niche. And if its sole beneficiaries are people in failing foreign countries, it might make sense to put the whole thing under the aegis of State versus continuing to create chaos from the private sector.

> Crypto has legitimate use as a rebel medium.

This only applies to literally one or two cryptocurrencies, stuff like Monero. They're very much the exception to the rule. Most cryptocurrencies like Bitcoin and Ethereum just publish the entire ledger which is constantly being pulled in by the PLA, the SEC, the FBI and myriad other law enforcement authorities the world over. Not to mention Chainalysis.

If the government that's oppressing you is capable enough to oppress you they're more than capable enough to, in the fullness of time, deanonymize your transactions and send you directly to jail for them. You're not just defending against the current start of the art tech but all future improvements - against an adversary with dramatically more resources than you have.

Illicit transactions on public ledgers are simply prosecution futures. People get jail time constantly for crypto transactions.

If I were a dissident in a country like the PRC hypothetically, I'd run like hell from crypto. Talk about asking for trouble.

That's before we even get to the point of how you plan to acquire these currencies without the government noticing.

They have a use: gambling and speculation at a massive decentralized offshore casino. Coinbase and Kraken are the cage. Binance, for example, and DeFi are the table games.

> > crypto is absolutely massive for avoiding capital controls in countries with inflation

Inflation hedge means mantaining parity against a weighted basket of stable currencies such as USD/EUR/CHF/JPY. Maybe gold?

Bitcoin didn't mantain parity at all, it's up some 20,000% since 2013 and +∞ since its inception.

So crypto failed as inflation hedge too, because the world of finance is very specific, you can't say 'this asset is an inflation hedge' and then it's up 20,000%

It also failed as a tool for capital controls and tax evasion because if you do that sort of things you don't want publicity...what happened is that crypto-bros and crypto-enthusiast went on to scream off the top of their lungs and it resulted in the death of the largest capital control avoidance use case: getting money out of China.

Nobody uses Crypto for getting money out of China anymore.

> Bitcoin didn't mantain parity at all, it's up some 20,000% since 2013 and +∞ since its inception.

Dai and other stablecoins maintain parity and are what is mostly used.

> It also failed as a tool for capital controls and tax evasion because if you do that sort of things you don't want publicity...what happened is that crypto-bros and crypto-enthusiast went on to scream off the top of their lungs and it resulted in the death of the largest capital control avoidance use case: getting money out of China.

I don't know what to tell you, these are heavily used behind-the-scenes in the dollar black market in places like Argentina, etc.

> Nobody uses Crypto for getting money out of China anymore.

Yeah, the informal economy is not actually very large in China, it's not a good example.

> > Dai and other stablecoins maintain parity and are what is mostly used.

Dai and stablecoins are currencies issued by private companies, if the private company sponsoring it were to disappear, the decentralized and federated (or whatever) community won't be able to support such a huge undertaking.

Besides the whole thing is pointless because whatever authority or control system you are evading with crypto sooner or later you'd have to come back into it, because nobody sells food, water, shelter, houses for crypto. Nor bitcoin nor stablecoins. Actually it's worse because the authorities will be waiting for you at on and off ramps.

Wrong from the jump about Dai, and I don't think you know about how black market cash economies work - there are plenty of informal economy places you can exchange local currency for dollar, dollar for crypto, etc.

> I don't know what it is about crypto that makes HN commentators want to make the most ridiculous, put-downy statements without evidence to back it up.

HN has many people who understand how technology work and a smaller but still large number of people who understand economics. Cryptocurrency has a few people like that but also a ton of get-rich-quick types who think their best work is making random claims until someone buys whatever they’re selling. We’re a decade and a half into that, with billions of dollars of real money pumped in and almost no benefit outside of some early investors being able to cash out before the inevitable dip.

At this point, the onus is on anyone promoting cryptocurrencies to show up front why they’re different than their waves of predecessors. One big challenge here is the inherent conflict of interest: unlike other things which have come in and out of popularity, someone who tries cryptocurrency but realizes it’s not really useful to them doesn’t have an option for getting out without a financial loss which doesn’t involve finding a buyer for something they know isn’t really worth the price. If you backed MongoDB a decade ago, you can just switch to Postgres without either eating a loss or finding someone to buy your old Mongo server.

This also leads me to your next sentence: for years, the claim was that cryptocurrency was going to transform the financial world and beyond. Sales guys went on at length about how you’d use blockchains to buy coffee and a ride to work, make sure the farmer who grew your coffee beans was organic, store your software licenses, record the deed to your house, etc. They couldn’t explain how any of that would work and dismissed criticism, and were especially upset if people said the only real use cases seemed to be illegal transactions. Now, in 2023 we’re back to the primary use being breaking laws, hoping that the government in question chooses not to monitor cryptocurrencies?

> Crypto is not mostly useless, it is just that people don't like the uses. crypto is absolutely massive for avoiding capital controls in countries with inflation, etc.

>Cryptocurrency has a few people like that but also a ton of get-rich-quick types

There are literally hundreds of millions of people who're into cryptocurrencies...and you clearly don't have a clue what kind of people are into it and to what degree. I'd suggest not to make up statements like this if you want your opinion to be taken seriously. FYI bypassing capital controls with cryptos does not necessarily mean "breaking the law". Learn a thing or two if you're going to spout nonsense.

>bypassing capital controls with cryptos does not necessarily mean breaking the law

Can you cite an example where evading capital controls is legal?

What an elegant description! I completely agree with you. Back in 2013, I looked at the massive number of financial middlemen on Wall Street and thought Bitcoin (or a future blockchain) could help lubricate the system. It took a few years for me to realize that blockchains are fundamentally flawed and cannot compete at scale with other technologies.

> crypto is absolutely massive for avoiding capital controls in countries with inflation, etc

etc doing some heavy lifting here. The article is about US-based crypto company. How is your list of massive uses applicable to US specifically? (I actually have sympathy for coinbase for at least trying to follow some rules)

I think people are latching on to the magnitude of your claim rather than the direction and therein missing the point. FWIW, as somebody who meets your criteria, myself and my network of people from that time offer much credence to your claim.

Even back in 2016/17, many people involved were openly bemoaning how 80+% of ICOs were unregistered security offerings to vaporware.

You can almost pinpoint the inflection point at which Coinbase decided their goal was short-term profit maximization vs developing a healthy ecosystem. The company in the last 5 years is completely unrecognizable in contrast to when there were only 3 coins you could buy from them (USDT, BTC, ETH).

Coinbase tried to be the good guy in crypto. They lost money. Then they tried to be the good guy with a sideline in shitcoins. They lost money.

No matter how this case winds up, Coinbase is in a terrible financial position. If you were a Wall Street bank, would you give them financing right now?

But what on earth is a digital commodity? I think the whole concept of digital commodity is nonsensical.

A commodity is a product. Products are either consumed or used as raw materials. A digital commodity is not a product. It can't be consumed or used, because it's entirely imaginary.

I think a better term is "abstract unit of account".

Respectfully, I think your understanding is behind the curve. Even the SEC says BTC itself is a commodity.

You consume a BTC by using/trading it. You consume gold or maple syrup by using/trading it. Just because the uses are a little different doesn't mean it's incompatible with the definition of commodity. If I started using gold in a nonsensical way you wouldn't start saying "oh now it's a security", would you?

I think the hangup with BTC as a commodity is that I can make a loaf of bread with wheat and eat it and the amount of wheat in the world is depleted as a result. Similarly I can use gold to build a cell phone or some jewelry and while it is possible to recover it isn't as simple as trading BTC. How is a BTC consumed?

The majority of gold usage is in investment/central bank reserve. Technology applications are a fraction of the usage. Jewelry is a major usage, however part of the reason for its use in jewelry is a hybrid combination of its store of value properties (ex. in Indian culture afaik, gold jewelry plays a large part in passing down wealth, families gift gold jewelry at weddings etc.).

So you consume bitcoin the same way a central bank consumes gold: by sitting on it, selling it when you need to, or buying more in times of expected turmoil.

Bitcoin is far younger than gold (12 years vs thousands), so its obviously more volatile.

https://www.statista.com/statistics/299609/gold-demand-by-in...

Trading something doesn’t consume it. That’s a very confusing overloading of terminology.

Well consumer comes from the base word consume, which by definition includes the buying of a good or service, which is essentially a trade.

Consume:

- eat, drink, or ingest (food or drink).

- buy (goods or services).

- use up (a resource).

- (especially of a fire) completely destroy.

- (of a feeling) absorb all of the attention and energy of (someone).

I was asking an honest question but I don't like being trolled. Have a nice day.

Not sure why you think you're being trolled. Have a good one.

You’re not bing trolled? Wat.

How would you be trolled? You asked and you got answered. What are you disagreeing with?

None of these responses answer the question.

BTC is consumed when someone forgets their password.

Technically the thing you hold and use is a transaction output, and once an unspent transaction output (UTXO) is spent it can't be spent again. So from that perspective it is consumed!

shaping gold into jewelry doesn't consume it. One of the reasons its been currency for 5k years is because you can melt it down and re-use it as coins or other jewelry etc. Gold isn't consumed, for the most part.

Commodities are usually raw/close-to-raw inputs into some process. Bitcoin doesn’t really meet that, but again the whole point is recent technological innovations haven’t really settled into the language yet.

And again, that is by design of both the instruments themselves and the massive PR campaigns/grifts around them.

The whole trick is attempting to position these things as “the half of the definition of commodity that means this has intrinsic value but not the other half of the definition which says it’s a raw input,” or “the half of the definition of a security that means You Can Make Money, but not the other half that says I can be regulated as someone selling a You Can Make Money instrument.”

This is my read as well. However,I think if you regulate the security like stuff in the same way we regulate existing financial instruments the whole thing collapses anyways, so who really cares what we call this specific coin.

You can consume a Fortnite skin or a Call of Duty weapon.

The point is that you cannot consume crypto, it's a problem which is understood inside the community, that's why the push for NFTs which started as legitimate art to enjoy on huge 8K screens or VR headsets but quickly ended up becoming Twitter avatars built for the purpose of trading and offloading to a bigger fool.

You consume it by trading it or, for a direct analog to your example, by showing off your wallet balance. Your Fortnite skin is no more consumable than a BTC. It just has a different value and use.

> > You consume it by trading

Hence the SEC is right to clampdown on crypto for violations of securities law, in order to prevent bubbles that emerge when the only use for something is trading it for something else. We already have that, people who want to participate in that game know where to go, the stock market.

> > for a direct analog to your example, by showing off your wallet balance

That's the most circular thought I've ever heard.

1st, you need to read up on how commodities and securities are regulated. 2nd, showing off your wallet balance is the same as showing off your NFT, and NFTs, digital skins, etc. are all obviously consumables.

Trading a commodity doesn't consume it. If I trade a hamburger, the hamburger isn't consumed. It's only consumed when I eat it.

> Then a bunch of crypto anarchists showed up

they literally started bitcoin and were the guys mapping out what they wanted from a digital currency over the previous twenty years, this is well known history

My point is simply that crypto requiring a nuanced legal treatment is not implicitly by design even if it was promoted as a feature early on by grifters and anarchists. It’s a technology like any other and it’s the regulators’ job to create fair and appropriate treatment for it (and our job to elect ones who will).

Bitcoin was literally designed to circumvent state monetary systems and their affiliated controls. Almost all the crypto descendants follow this path as well.

So yes, it was by design that it’s hard to regulate.

What about bitcoin makes it any harder to regulate than cash?

First of all, the actual difficulty is not really material since we're debating whether it was a design goal. Bitcoin came out of a long line of libertarian/anarchist projects to circumvent state controls. I don't know why you're pretending like this is some unique interpretation of history. E.g. the problem that the Satoshi whitepaper sets out to solve was (as cited in the whitepaper, source [1] in the footnotes) laid out with this preamble:

> I am fascinated by Tim May's crypto-anarchy. Unlike the communities traditionally associated with the word "anarchy", in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary.

Secondly, a lot of features make it harder to regulate than cash. Off the top of my head, being able to transport it over national borders via the Internet. Storing arbitrarily large amounts of it in zero physical square meters. Keeping it relatively secure without having to rely on third parties (banks) gaining knowledge of your ownership, etc. etc.

Bitcoin isn't any different than cash except it’s got a decentralized public immutable ledger and therefore isn't a bearer currency. But like cash its transactions are not governed by an authoritative financial institution that can repudiate and/or reverse them. (It’s proven effectively easier to regulate than cash on the tracking transactions front, though.)

That’s the “anarchy” the paper refers to.

In the paper, the goal was not to topple governments. It was to build a digital cash equivalent where the payment processing happened in a distributed and ultimately trust-less “anarchist” manner. Thus allowing people to transact as they do in cash, but digitally.

All this anti-regulation no laws style of anarchist stuff is downstream. Sure it’s adjacent, but also easily conflated.

Anyway, to be super clear, being resistant to the rule of law is a very different property than being resistant to centralized control.

Cash is decentralized.

Credit, debit, ACH, are centralized.

Crypto is decentralized.

All are subject to the rule of law. But only centralized transactions can be manipulated without coercion or use of force against a one of the parties involved (if they are unwilling to abide).

I don't know any technology that fundamentally cannot have laws created governing its use. It’s just not possible to prevent someone from legally regulating something. But it is possible to design systems that don't require 3rd parties to mediate transactions and do require an actual authoritative monopoly on violence to manipulate, as we’ve seen with cash and as is the case with BTC.

this thread is about your claim:

> Then a bunch of crypto anarchists showed up

you've just posted a pile of opinions that aren't about the actual history, which you were just wrong about

Care to explain? FWIW I was around when crypto was born and know very well the initial scene and motives. The crypto anarchists showed up pretty quickly, sure, but they weren't the seeds of the technology.

Where the definition gets confusing is when a cryptocurrency gives you voting rights to modify the underlying protocol, or determine the direction of an entity that manages the underlying protocol, etc.

There isn't (AFAIK) a commodity that operates in this manner. Owning a lot of gold doesn't mean that I'm able to unilaterally adjust how gold is mined or obtained, for example.

Or when a cryptocurrency has bizarre rules controlling how it can be traded -- for instance, a number of Ethereum tokens like Safemoon had rules enforcing a "tax" on all transfers, ostensibly to reduce volatility.

Do you mean libertarians or the contradictory “ancaps”? What does anarchist mean to you in your writing? Or why use that word?

Any examples of anarchists doing what you’re saying for extended periods of time like cryptobros would be helpful to understand.

Thanks.