randomran01234

The sanctions are not targeting a human or a group of humans, they target an open source project and its autonomous smart contracts. Look up the sanctions and project source code yourself.

The only fees taken are relay fees, which can be anybody - not necessarily the developers. The conversation steers back to whether it is illegal to run a Tor exit node and whether it is illegal to develop Tor the open source project. Tornado Cash can be republished without relay fees, with zero governance, no token, would that be acceptable?

Huh? It does execute on Ethereum, and the contracts are still accessible at the same addresses if you run your own node. This is where it was first deployed. It also runs on other EVM chains and L2s including Optimism, Avalanche and others.

The first reports on this situation originated from non-crypto sources so it should be easy to find them. A lot of the more in depth discussion is coming from crypto camp because it negatively affects all those users and their privacy.

Legally yes, with legal precedent set in court. Morally depends on your perspective. Some people advocate for privacy, others advocate for surveillance.

Very familiar with the situation, the tornado cash code, and the details of the case that are public so far.

I appreciate your optimism about freedom of speech being unaffected but this is not as cut and dry as an individual running a money laundering business, if that is what you think Tornado Cash is. We do not hold Tor exit nodes responsible for the illicit activity on the dark web and we definitely do not hold Tor developers responsible.

Some talking points raised here:

https://www.youtube.com/watch?v=XpTrCA3tEKM

Code is free speech though. The rules and expectations the western world has set around speech doesn’t align with sanctions that target code and open source software. The sanctions are not against an individual person, and it isn’t clear yet why the developer was arrested. If it was for knowingly publishing open source software, that would be scary.

If you view all crypto activity as only imaginary or fraudulent, I doubt either of us will be able to change each other’s minds.

The NFTs that artists minted in the boom in early 2021 are still being traded across different platforms, curated in physical exhibitions, indexed and hosted by multiple competing companies, and talked about in online magazines and podcasts. Sales on OpenSea and other platforms continue to pay royalties back to creators and sometimes non profit charities that they set in splits. Hundred-year-old art auction houses are now in competition with open source platforms that take nearly a hundred percent less commission on sales, have a lower barrier to entry, and provide higher artist royalties.

Blockchain hasn’t given us flying cars or replaced corporations or whatever boosters say, but it has given us some new tools to imagine transactions and ownership differently than just whatever Stripe is doing.

This is why Tornado Cash was built, to provide privacy. But oops, government does not want you to have that freedom. Users are now forced to mix with a centralized service at cost of giving up privacy to them.

Considering they still make up a significant portion of Ethereum’s daily activity, I would say pretty well! The NFTs are “here to stay” as long as Ethereum continues to fill blocks, which might be years or decades.

DeFi is holding up just fine.

“without bothering to understand how this works I will assume it doesn’t.”

> And yeah "there's no one controlling this" except, you know, the people who program the protocol.

Which can be anybody as there is no single group of developers - it is governed by social consensus, and if enough users want to change the protocol they can do so with EIPs or a fork.

> Bitcoin is the popular cryptocurrency.

By price - not usage or fee expenditure, aka block space demand.

> "Except there isn’t a centralized actor manipulating the supply and issuance" and "distributed to block producers as a reward" are mutually exclusive

No. The protocol defines the supply, issuance and inflation rate, but - assuming we are talking about a decentralized network - a single actor cannot manipulate it. Solana is an example of a centralized crypto currency upheld by a single entity.

> whoever got hold of the initial supply will be richer (in Solana) than anyone who didn't get there in time

The same happens with US dollars. It has a limited supply, but more is printed and entered into circulation each year, creating inflation. This is like a decentralized crypto currency, but in US dollars a single country controls the circulation, and users of the currency cannot fork the protocol.

Bitcoin is one of the few popular crypto currencies that aims to have a hard limit in total supply with no plans for adaptive issuance or inflation.

> So, no different than any current currency

Except there isn’t a centralized actor manipulating the supply and issuance, and it’s distributed to block producers as a reward for securing the network.

> It's not a thesis. It's a fact of life aka reality

So a single BTC will be worth millions in 50 years, got it. If that is a known fact, we all better start buying.

They didn’t remove blockchain, they moved to their own blockchain with a proof of authority mechanism. It turns out it was a terrible idea as it didn’t meet the security of Ethereum, and was pretty quickly hacked for $600 million. A rollup would have achieved the same scalability while inheriting the security and trust assumptions from the underlying Ethereum chain.

Files are free in web3 too.. lots of NFTs are using Creative Commons and you can just right click save. the “assets” in web3 are not files but things like domains and records of purchase and ownership , which are not free in web2 and usually come with strings attached like a company revoking your asset on a whim.

Ethereum and DOGE unlike Bitcoin have no fixed supply cap. Many other cryptocurrencies like Cosmos and Tezos are inflationary and have adaptive inflation rates built into the protocol.

> It means that if I get as much as a single coin now, it will be many magnitudes more valuable than fractions of a fraction of a coin available to anyone born 50 years from now.

This is an investment thesis that may not prove to be true. If it was a factual statement that was certain, everybody would just move all their funds to Bitcoin.

Only if they need to exchange to fiat, as I said previously.

> Depending on the use case, there may not be a fiat exchange. Another user might be happy to receive 1000 DAI, in which case there is no centralized exchange needed.

It’s true though, if you want to use the traditional financial system you are basically stuck uploading your photo ID to a private company’s website and hoping they won’t leak it. In many cases users are forced into this - paying taxes. We can only hope this won’t always be the case.

> The protocol isn't promising anything. The people promoting it are, however.

Anchor's whitepaper and protocol promises ridiculous yield on USD pegged assets, and it is the basis for the entire Terra/Luna crash.[1] Nobody designing the ETH protocol is claiming that it provides USD pegged yield or will double or triple your investment. The closest thing written into the protocol is a return on the native ETH token for block producers - miners or stakers - receiving block rewards from the protocol and tips from user transactions.

Ignore the laser eye Michael Saylor's of the world who make ridiculous claims about these protocols that are unsubstantiated - try to look at the protocol design and spec.

> Here's what you said: “without the beneficiary needing to set up a USD bank account or disclose private data to a third party.” How is that true if you're not breaking KYC?

The sender sets up an account, the receiver only needs a 24 word seed phrase to receive the tokens. Maybe the receiver will need to declare this as a gift or income depending on context and their country's tax laws, sharing details with their government, but they are not having to share details to PayPal or another private company that would typically facilitate an international transaction like this.

> You surely meant 0% plus the transaction and currency conversion fees on both ends, right?

Depending on the use case, there may not be a fiat exchange. Another user might be happy to receive 1000 DAI, in which case there is no centralized exchange needed.

The transaction fees can be minimal through L2 - in cents - and are different than commissions and take-rates of processors like Western Union or PayPal. In ETH, most of the fee is burned, reducing total supply and providing value to the entire network. Another part of the fee is a tip to the block producers, which in a permissionless system can be any entity with enough capital at stake. Finally the fee is a fixed amount, not a percentage of total value being sent. Transaction fees are not perfect - a fee-free permissionless network is not possible - but some will find it preferable and more fairly distributed worldwide compared to how private payment processors currently extract rent.

[1] https://www.anchorprotocol.com/docs/anchor-v1.1.pdf

20% returns as you see in Terra is probably ponzi-like, but ETH protocol is not promising free yield for doing nothing, or doubling or tripling your investments.

> You do in fact have to deal with legal requirements - it’s a requirement for converting into useful money and tax evasion has serious consequences in most of the world.

I never said otherwise. Buyer can purchase the DAI on a KYC exchange that is regulated by their government. The beneficiary can report taxes on income and capital gains as they do with other assets.

> Replacing Western Union has some appeals but it’s not enough to justify the returns which blockchain salespeople have been claiming, especially when the established player can cut margins easily and blockchain users need a fairly large just to compensate for currency conversion and increased risk.

This is now a subjective argument about what you feel is better or more valuable. To some people, reducing commission for global transfers to 0%, with 30-60s finality and better privacy features is all desirable and valuable.

> My dividend income suggests you might be leaving something out here too.

Not very compelling when you compare dividend income over the last 5 or 10 year period between crypto and stocks. The point is that just having an asset that generates yield based on speculative investments is not that useful, and it’s the sort of zero-sum game that everybody is mocking Terra and crypto for.

Is it really a good way to evade taxes? Each transaction is recorded publicly on-chain forever. User would have to be very careful with their on-chain privacy and very determined to skirt the legal system. The average crypto user will begrudgingly pay their crypto taxes to avoid having to live the life of a criminal, and would happily welcome more frictionless ways of having taxes recorded and collected on-chain.

> Cryptocurrency is a zero-sum ponzi scheme

This is repeated a lot on HN but it is easy to refute. A user can purchase $1000 of DAI and send this to another person in the world within 30-60 seconds, without the beneficiary needing to set up a USD bank account or disclose private data to a third party. The beneficiary can decide to hold this asset or exchange it to another asset such as fiat, gold, ETH, food. These are not zero-sum games - they are more comparable to a PayPal exchange than a zero-sum game.

> With stocks, there are on average more winners than losers because new value is being created.

This is questionable. Many stocks are overpriced far beyond their intrinsic value. The expectation that they will continue to go up forever and provide returns depends on people continuing to buy them at higher and higher prices, just like crypto. Some investors do not feel that NFLX and META will continue to go up in value forever, as the price already exceeds their value.

And when you own stock, you cannot do much except hodl and sell. When you own ETH, you can hodl and sell, but also use the token to send transactions to the network and interact with smart contracts.

So we can establish that Terra's ridiculously high 20% yield was only sustainable so long as investors continued to put massive amounts of money into the protocol, but if a de-peg ever occurred it would create a death spiral that would send it nearly to zero and collapse the entire system. Let this be a signpost for future investors to avoid high yield promises and assume it comes with extreme risk.

But the comments here are wrongly equating Terra to the rest of crypto such as ETH, and assuming everything will collapse just the same. The value of ETH is not that the price will go up or provide predictable yield - its primary use is as a gas token in order to interact with the network, like trading any token or depositing value in a smart contract. The price of this fuel can go up and down, but the asset will always remain in demand for as long as people still wish to continue to do these things on the network.

They are both volatile and unpredictable, any investment could easily be wiped out in a day or week, and there is the added challenge of having to maintain and secure one’s own keys and use privacy preserving tools and techniques.

But if you are OK with all that, ETH and BTC are fine investments for those seeking to self-manage a high risk high reward portfolio, and ofc. for only a small percentage of net wealth

but I would argue against BTC on the grounds of PoW energy waste - keeping your portfolio greener - and the fact that ETH is able to achieve the same international digital-gold-like properties but with better cryptographic tech, interoperability and privacy features. It is hard to see the long term 10 years BTC thesis - maybe only scenario where it continues to surpass ETH is if PoS proves to be an untenable consensus mechanism.

> There's no fundamental belief in blockchain technology.

For skeptics, sure. But there are many investors who hold crypto precisely because they believe in the technology.

> Put your money in a broad index fund and don't look at it for 10 years.

This is a good safe and low risk bet. It doesn’t invalidate an investment thesis based on crypto currencies and blockchain tech. Crypto is higher risk and higher maintenance, potentially higher returns, and better suited to those who want to manage their own portfolios.

That is true. Probably by pure volume of trades the CEX order books will always be able to facilitate an order of magnitude more than DEX as they can fulfill orders instantly with almost no fees at all, and many beginners and casual traders with crypto will not bother with or even understand what it means to transact on-chain.

But there is a very significant amount of crypto trading occurring on-chain, to the tune of multiple billions of dollars per day.

The goal of modern crypto like Ethereum is to provide a secure, predictable, open source, and decentralized network that many higher-level applications can flourish on top of and co-exist within.

USDC exists with reversibility but not all users in the network are forced to use it. There are other protocols like DAI that have different features and considerations. And in many cases these are open source protocols that can be forked as desired.

Probably the closest thing we have like this is the web, which is more or less a decentralized protocol, atop which we have built a lot of centralized platforms.

It probably is not solved without a central authority that distributes and revoked identity tokens, like we have with passports. Decentralized proof of personhood is a pipe dream.

ZK Rollups effectively solve this problem by moving computation and data storage off chain without sacrificing security. These protocols include on-chain exit mechanisms so that tokens are never at risk of being taken by the sequencer.

There can be multiple VISA protocols running in L2 on top of a permissionless DLT like ethereum. Users can exit one protocol and enter another, like zkSync or Optimism which are not at all like VISA. Or they can use a not-so-centralized L1 protocol like DAI. Or they can just use the base tokens on L1 at the expense of volatility and fees.

Crypto attempts to solve the problem in the same way that web protocols and web standards do. Define a single shared spec that spans all geographic borders, rather than a spec that is reinvented at each jurisdiction.

Your statement isn’t really accurate.

https://blog.chainalysis.com/reports/defi-dexs-web3/

Switch to proof of stake which has better defense mechanisms against 51% attacks.