darawk

I'll give this a shot. I've written variants of this comment a billion times on HN, but I sort of enjoy trying to create the perfect articulation of what it is that I like about crypto, so I'll try again:

Crypto is an alternative financial system. Financial systems, on their own, are castles in the air. They provide no value to anyone. Financial systems derive their fundamental economic value by being wired to the real world in some way. That is, efficiently allocating capital to productive enterprises, cheaply translating capital between different forms (e.g. currencies, but also product <-> currency), and transferring risk from those who don't want it to those who do. This is why finance exists, and what it is for.

The cryptocurrency financial system as it exists now is only very weakly connected to the real economy, and only in a few places of marginal or possibly negative social value (e.g. drugs, gambling, prostitution, ransomware). However, there are a few places that actually use crypto fairly heavily for legitimate, socially useful transactions, such as Vietnam, Ukraine and Venezuela. Most people here tend not to find those examples particularly convincing, and neither do I - but they are important to mention.

But what crypto represents is an alternative model for how a financial system could operate. It is a financial system that offers many of the same features that our existing system does, but is different in some ways. Asking "What good is crypto?" is a bit like asking "What good is Linux when we already have Windows?". They both do very similar things, but they do them differently, and most critically, they imply different distributions of power.

If you build your business around Microsoft products, that's fine, but in several important senses that makes you beholden to Microsoft. If you want to build a financial business in the traditional financial economy, you will probably have to go to one of the major money center banks, hat in hand, and ask them to let you do whatever it is that you want to do (or an intermediary that has done this). Depending on what it is you want to do, you may have to go to all of them and ask this.

Crypto is different. If you want to build a financial business in crypto, you simply write the code and deploy it. You don't ask anyone for permission, and there is nobody on earth that can tell you "no". Even the US Treasury hasn't shut down Tornado cash, they've merely sanctioned it. The drawbacks of this approach should be obvious, but so too should the benefits. Whether you like the approach crypto offers is simply a question of values. But it is, in my opinion, undeniable that it is meaningfully different while being capable (in principle) of offering most of what traditional finance does.

The fact that crypto has not yet been wired to the real economy is the reason that it has not yet provided much in the way of concrete utility in most developed markets. The reason it hasn't been wired to the real economy is that regulators and lawmakers mostly have not allowed it. And I agree with them! I would like to see a little more experimentation in that direction, but crypto is fairly obviously not ready for prime time in this sense - not yet, and maybe never. Many things would need to happen first. However, don't mistake the absence of this connection for the theoretical inability to create it. It hasn't been created because people are cautious about things this important, as they should be.

There is nothing in principle right now preventing anyone from tokenizing a house, or a corporate debt instrument. And even if you think "nobody has done those things because they're stupid and crypto is just worse than traditional finance", you may be right! But it should be obvious that there are enough crypto believers out there that this would have been done if it were legal to do so, even if it were a bad idea. Hence, given their total non-existence, it should be clear that the reason it hasn't happened is regulatory, not fundamental capability.

You will know crypto has failed if and when there are a few real estate titles, car titles, equity shares, bond instruments, and other assorted things from the traditional financial realm that have been tokenized, but nobody cares about them. Assets placed there by a few true believers, traded for a bit, and then forgotten. That is how you will know crypto has nothing to offer. But for now nobody has done those things, because the traditional legal system (correctly!) won't respect them sufficiently.

EDIT: To extend the Linux metaphor a bit, Linux was created in the early 90s, but I would argue it didn't become clearly economically significant until the late 2000s. Prior to that it was a toy for nerds and anyone serious used "real products" built by "real companies" and purchased for money[1]. Crypto is FOSS for finance, and maybe the traditional world is right this time, and when it comes to money walled gardens and closed ecosystems are best. But it's not the world that I personally want to live in.

[1] The exact timelines here are obviously fuzzy and certainly you can argue with whether it was late or mid or early 2000s, but what is inarguable is that Linux went through a long "just a toy" phase in the minds of most people

> Liquidity is not a property of h2o molecules but it is of water

The ability to speak English is not a property of floating points, but it is of certain, very specific large tensors of them. What's the difference?

> Emergence is an ontological relationship between properties of objects --- it isn't a mathematical property of a data distribution nor of an approximation function.

I don't see a hard distinction between ontological relationships and data distributions. All information is fundamentally statistical. Our access to ontology is forever and always mediated by "data distributions".

One could, of course posit that there are fundamental, non-statistical ontological things out there. However, the liquidity of water being an ontological relationship while the English-speaking of GPT not being so is merely a hypothesis, not an objective fact of the universe, at least not as far as I can tell.

Let's make this concrete. What in your mind is a specific example of a concrete system with an emergent property, then?

> Consider a researcher putting a book on a thin ice-sheet, and then putting a car on it. Here, they're concluding the ice has different properties in each case -- but it doesnt.

This is just a linguistic shell game with the meaning of the word "property". You could just as easily say the difference between the mind of a human and a monkey is a matter of degree, and therefore going from one to the other does not gain any novel "property".

It should be obvious that the degree of a property can fundamentally change its nature, and that there is no hard distinction between "properties" and degrees of things. The difference between a tickle and a gunshot are matters of "degree", but that fact is of near zero semantic utility.

> There’s nothing wrong with asking for evidence, but as we can see from your other comments, there is no way for anyone outside of Twitter to definitively prove what the accounts tweeted before they were banned.

That's not entirely true, if someone had a copy of all of the recent tweets from one of the banned accounts, then it'd be relatively easy to check if any of them violated the new policy in any reasonable sense.

> A certain amount of skepticism is healthy, but allowing people to flood the water with BS allows them to get away with lying more often than not (people just throw their hands up and say “who knows!”). Ties go to the liar.

However, I agree with you completely here. What I disagree with was the original comment I was responding to simply declaring that he had banned them despite them not violating the policy. That statement may end up being true, and maybe that person has evidence for it, but if so they should provide it. And if they don't have evidence for it, they should say something much more like what you've said here.

I think Elon should provide evidence for his claims as well, and I'd make the same criticism of him. If you're going to ban high profile journalists who are critical of you en masse with a new rule you just enacted, you'd better publish receipts along with it, at the very least.

I'm annoyed by everyone just making things up that they find ideologically convenient. I'm annoyed when Elon does it, I'm annoyed when his enemies do it.

I don't necessarily believe him without evidence. But i'm not going to believe anyone else who doesn't provide evidence either. It'd be great if people would just stop making things up all around.

I think it's fair not to draw conclusions either way without confirmation. But if that's what's happening here the statements should be framed in those terms, not as a declarations that he banned people who didn't even violate his new rule.

Why do you think he was banned for that tweet?

I'm not defending his choice to ban it. The person I was responding to made the claim that the journalists were banned without even having posted the banned information. If that's true, that's bad in a different way than the choice to ban the information in the first place.

My position is that I don't like his decision to ban this information, but I understand it. If, however, he is using this as an excuse to capriciously ban his enemies, that is something I don't like a lot more.

> Those journalists weren't reporting specific locations of his jet...they were reporting on a legit news story about it.

Do you have evidence of that? He claims they were reporting the location.

> At a deeper level, the criticism fails to appreciate how people use citations as a measure for academic promotion. In most cases tenure committees care about aggregate statistics like total citations, h-index or i10-index. If a researcher publishes a work that receives hundreds citations for ten years and then fails to replicate, then it basically doesn't matter if the work stops receiving future citations. A retraction might matter. Reports of the failed replication might matter. But nobody is going to lose out on a promotion specifically because some random paper receives 8,000 citations in the first ten years and then zero citations after the failed replication.

This is his point, though. Not only are authors still getting tenure after failed replication, they're still getting citations! Citations that don't even mention the failure to replicate!

The fact that citations are used as a metric to get tenure is the problem. There are two solutions to that problem: Change the culture around citing things, or change the metrics people use. That is the whole point of the post.

Bahamas said that they did it in response to a US extradition request. So, it seems like he's getting extradited.

> TFA is extremely clear that the presence of citations (in the aggregate, as a count) on “weak” papers is something the author considers a problem and a perhaps a moral failure on the part of citing authors. The author also believes that citations should be “allocated” to true claims.

As I see it, there are two independent properties that the author is saying ought to be dependent. And I think you (and I) actually think the same. If citations are going to be treated as a metric, then the way they are written (without regard for quality or accuracy) is bad. If citations are not going to be written without regard for quality and accuracy, then they shouldn't be used as a metric. Either one of these models would be fine. What is not fine is the present reality: Citations are written without regard for quality and accuracy, and then still used as a metric ubiquitously! Impact factors, the most common method of ranking journals, are literally measures of citations.

> Yes, after extensively complaining about the fact that citations aren’t used by authors in a manner that reflects the way they’re used as a metric, then complaining further about the fact that authors do not use them this way and repeatedly urging them to change the way citations are used — the author then admits that their use of a metric is problematic and should be ended.

The crux of your point though seems to be that nobody uses them as a metric, and I'm just going to have to fundamentally disagree with that. It's true that authors, when writing papers, appear not to give them the care that a metric would deserve. What is not true is that citations aren't used as prima facie evidence of quality/importance throughout academia.

1. He addresses this repeatedly throughout the piece. Journal impact factor is (largely) uncorrelated to replication probability.

2. Yes, but this hardly seems like a defense of citing something false (without comment), or something that has literally been retracted years ago, which is a large part of his complaint.

He is not suggesting the use of citation count as a metric for quality. I have no idea how you could have possibly gotten that from reading this article. A bullet point in his "what to do" section is literally "ignore citation counts".

You don't need to be able to perfectly describe something in your head. That's what you hire an artist for. Almost nobody hires an artist to produce the exact thing they are imagining - they have a general idea of what they want, and the artist works with them in a back and forth way to find something they like. These image models seem quite capable of doing that to me. You enter your vague description, and iterate from there until you get something you like.

> Then, for 14 years, tons of money was dumped into it, and not much happened. It's still mainly used for black market goods. It still has terrible user interface. The transaction rate is still low. The transaction fees are high. And, it's too easy to have your coins stolen.

I agree that, in the case of Bitcoin specifically, it's still primarily used for black market goods (excluding speculation, of course), among relatively wealthy developed market users. However, there are a non-trivial number of genuine users among economies with less stable banking systems, as the OP points out. And it isn't true that fees are still high and tx rate is still low, the lightning network solves that problem. It hasn't seen super widespread adoption yet, but the technical problem, as far as fees and transaction rates, is essentially solved. What you are correct about though is that the UX is still pretty terrible for the average person. However, in some places, that UX is a better alternative than the one they have access to locally.

Thanks, agree with 1 and 2.

For 3, I think his statement as written "big crypto projects are very rarely scams" is clearly not literally true in a meaningful sense, and it's right to criticize him for that. However, I think a weaker statement like "The people that complain that crypto projects are scams are overstating how dense the space is with scams" is probably more accurate.

It's sort of hard to determine how to weight an analysis of the density of scams in a space. Certainly if you weight by project count, it'll be quite high. If you weight by market cap, it'll be considerably lower. But to your actual point, I agree worrying about scams in crypto is very important, and I read the OP as (admittedly, somewhat carelessly) trying to argue against the view that "all" or "nearly all" crypto projects are scams.

I think a better way to state it might be something like: Post dotcom bubble pop a lot of people were saying "those internet companies were all scams", and they were right in some kind of media-attention-weighted sense, and maybe even some other senses. But there were certainly a lot of real and important companies there, and even a lot of near-real-and-important companies that were just a little ahead of their time and didn't make it, and I don't think it's fair to dismiss most of them as scams.

I'd definitely say crypto is still in the pre-making-it stage of its lifecycle, and it remains to be seen whether any of these projects will end up being say, the Google or Amazon of this space, that survives the winter and goes on to do meaningful things. However, even if they all die, I think it's fair to say that e.g. Ethereum and Bitcoin were sincere attempts at building novel technology.

1) Large numbers of people on this site regularly argue that the entire conceptual foundation of crypto is fraudulent and/or without merit, not simply overstated.

2) I don't think he's arguing that everyone who thinks crypto is a scam is that sort of person, he was saying that most people who have been scammed are.

3) Molly White's number's agree with OP's. $12 billion vs a market cap of $858B is roughly the same percentage identified in the article. And before you complain about the use of market cap as denominator, market cap is also the numerator being used by Molly White's analysis, so it's the correct denominator.

I suppose I'm thinking more about data science / engineering oriented things, since that's what I tend to use Python for.

That list actually seems genuinely pretty minimal. Reading your comment I was expecting a long major list of changes, but it's only 3 things, most of which seem relatively unlikely to impact most programs, with the possible exception of dictionary sort order.

I think one thing to keep in mind here is that, while everything you said is true for most ordinary defendants, Sam's parents are both highly regarded Stanford law professors. They have both been spotted in the Bahamas with him, and are certainly giving him counsel here, not to mention any whiteshoe legal team he's hired. Sam may be a lot of things, but he's not an idiot. There is no doubt that what he's doing is part of a calculated strategy, and it is a virtual certainty that that strategy has been approved of by legally serious elements of his defense team.

Whether or not it works time will tell, but it's a mistake to think that he's just a fool running his mouth.

Would we actually? If so, doesn't this imply that the probability of earth just having been destroyed by one of these things was roughly a coin flip, and therefore gives us a (much higher) rough estimate of how likely such an event might be?

I think the true answer to this question is that it was/is a gold rush with low interest rates that led large amounts of capital to be allocated to less than competent people. In particular, the companies and operators that look the smartest when a bubble is inflating are the ones that genuinely hedge downside risk the least, while pretending to enough to fool people with capital to allocate. This only becomes apparent, of course, when the bubble pops.

As you may notice, this also describes the tech VC bubble of the last decade, too. However, where normal tech has already found its use cases and does real things for real people in the real economy, downside is a little more capped. If you want to be generous to crypto, it's currently tech in 2000, where almost everyone has a total nonsense business model, but that a lot of the vague ideas will eventually find some variant with product-market fit. If you want to be less generous, it's all a house of cards.

EDIT: I'll also add that, of course, thinking very carefully about which narrative is true here and being right is the stuff fortunes and careers are made of. The people that weren't dissuaded by the tech crash in 2000 profited handsomely by thinking carefully for themselves about what was actually true and what information was actually latent in the financial crash. Of course, the tulip true believers in 1638 didn't fare nearly as well.

Then you didn't read very carefully:

> Several letters noted the fact that the derivatives market had become concentrated in a dwindling number of players, and argued that it would be safer to trust middleman-free operations such as Bankman-Fried’s. “In the traditional intermediated model, a dependence on a limited number of clearing organizations creates a systematic concentration of risk,” Richard J. McDonald, chief regulatory counsel for Susquehanna International Group, wrote “The CFTC has an opportunity to minimize market risk by enabling platforms, such as FTX, to provide direct access to trading on margin without required intermediation.”

Susquehana is a very well respected tradfi quant firm: https://sig.com/

> FTX’s plan would “protect and empower” US investors, permitting retail investors access to products “previously available only to the small subset of well-resourced and powerful investors able to connect to the complex, traditional market infrastructure,” Peter L. Briger, CEO of investment manager Fortress Investment Group, wrote to the CFTC

Fortress Investment Group is a very well respected tradfi firm.

They're all right there. And this isn't even a complete list. If you search around, plenty of other traditional quant/HFT firms strongly supported the move. Basically the only two entities that opposed it were CME and Binance.

If the CO2 emissions produce energy that funges against carbon intensive energy, it is a net benefit. The arithmetic here really isn't hard.

As they should. That's the whole point of carbon credits. If you produce energy without producing CO2, you should get credit for that.

Yes, it was:

https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-...

> The author claims that it had previously been explored and found not to be worth it.

The author isn't an unbiased observer here.

> That could be puffery of course. But I have worked in several fields. A big advantage I bring is that I have an outsider's perspective and experience from a different domain ("Hey, why don't we try it this way?"). But a very big disadvantage is that when exploring something I find out that people often have thought of it and don't do things that way for good reason. For me that means I look before I speak.

For all their fault's the principals at FTX were not pure outsiders here. They were all ex Jane Street employees (traditional finance HFT firm) who ran a futures exchange in crypto. And if you don't accept those credentials, have a look at who else signed off on their proposal in the above article.

The reason CME didn't like their proposal is that it would have forced them to innovate and stop lazily rent seeking off their past efforts.

> A lot of the bomb-throwing suggestions of crypto revolutionaries is similar, and I have no reason to believe SBF was any different. In fact there's good reason to believe that SBF and his colleagues lacked adequate perspective, from their statements, their actions in retrospect, and frankly because of his MIT background. I'm also an MIT grad and was also an arrogant know-it-all into my late 20s (at least!) and am simply lucky that I got a few things right along the way so people were still talking to me by the time I grew up.

Somewhat ironically given your argument, everything you've said here is an "outside view" perspective on why they might be wrong. Look at the content of their proposal, and I think you'll change your mind pretty quick. Or just trust the dozens of traditional finance firms that supported them against CME.

If you want a similarly "outside view" argument in favor of their proposal, basically everyone in finance supported it except the incumbent commodity futures exchange, which should tell you everything you need to know.

Many of the TradFi HFT firms were in support of FTX's proposal. The people that ran FTX were generally reasonably competent at finance (ex Jane Street), but extremely cavalier about risk with other people's money, and extremely poor at operational management.

This is not a defense of them in any sense, other than to say that they were perfectly capable of being scumbags while also producing a good alternative to CME's futures products.

You can read about all of the people that thought FTX's proposal was good here:

https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-...

That's a red herring though. FTX's proposal was good - it was just contrary to CME's profit interests.