whatisweb3

Stablecoins are used for a variety of reasons. Using them to skirt taxes or laws is a poor choice. USDC for example will freeze funds at the request of authorities, Circle's goal is to design a regulatory compliant stablecoin.

A user might decide to use a stablecoin as a fast and low-fee transfer mechanism for remittances and donations, or to manage a multisignatory account, or to hedge against the falling price of a crypto asset, or for some application of escrow in a smart contract.

SEC uses Howey test to classify an asset as security, which includes “expectation of profits.”

USDC, DAI, EUROC.

Merchants can also accept volatile base tokens like ETH and have it converted through a processor to fiat or stablecoin for income purposes. This gives the consumer the choice to pay with ETH instead of a stablecoin.

Why? Securities include a reasonable expectation of profit. Investors in a stablecoin expect their dollar investment to hold stable and remain unchanged.

I don’t see any reference to zero knowledge proof in there.

Look into modern research around succinct and generalized ZK proofs. SNARKs, STARKs, PLONK, zkVMs, MPC and secure setup ceremonies. All of this is coming from blockchain and crypto space and will transform some ways we manage privacy in the future. It does not need to be used with a blockchain but pairs well as the choices of arithmetic are often optimized to EVM.

“Apple is faster at delivering than a decentralized group of developers and researchers creating novel cryptographic protocols and open source software” - well, no shit.

In the long term I hope Apple does not win. The idea that we should just submit the world’s private data to Apple for the next century is… terrible.

Zero knowledge proofs are one of the more promising things starting to emerge from crypto and decentralized blockchain space. If desired, you can still trust Apple for the ZK proof generation and verification without having to store any private details on their servers.

This only regulates on and off ramps to CEX. Other situations like trying to force a decentralized stablecoin to block accounts or add regulation to an ownerless DEX protocol are harder to regulate. Privacy features like TornadoCash and Aztec could make it harder still.

In some of these cases the old laws do not fit well within new blockchain technological capabilities and how it is being used.

A centralized exchange is not a blockchain. Depositing dollars into Coinbase is similar to depositing dollars into PayPal. The company can and should be regulated as a legal entity in order to protect user's funds and minimize fraud.

Regulating a blockchain or smart contract is a harder matter.

They are similar in that they both deal with "assets" that are volatile and not equal to real dollars. It is easier for authorities to control and regulate the stock market than it is a decentralized global ledger.

But overall there are many differences in how these assets are owned and used, and how this market is accessed - it is apples and oranges.

Ethereum, like USD but unlike Bitcoin, does not have a fixed supply cap. The protocol 'prints' new currency every minute. The EIP 1559 document even made this point clear: Ethereum no longer has a strictly deflationary or inflationary design - it depends on the current block space demand and issuance rate. At the moment there is more Eth being issued than burned, so it is inflationary[1].

> rules being set ... by wealth

I'm not sure where you got that. Depending on what you mean, in PoS some rules are set by node operators - software that can be run by anybody for free - and the hard rules of the protocol are set by social consensus.

I think this discussion also misses the forest for the trees: Eth tokens are not coupled to dollar wealth. Ethers are not "up-only" and they do not need to be for the network to function. A boom or bust in the price of Eth does not change the price of DAI or USDC, and pegged stablecoin tokens is what users would be transacting with if we are entertaining the idea of a crypto alternative to VISA.

[1] https://watchtheburn.com/insights

"Pay $1 to a single private company" is not the same as "pay $1 toward every circulating token in the network." If you consider this a tax, it is a tax distributed to all current and future holders of the currency, including the user doing the transaction.

If "changing of the guard" means replacing VISA with thousands of VISAs in a decentralized network, where any non-VISA can become yet another VISA through permissionless software, that is far better in my opinion.

If you have another economic model than EIP 1559 that you feel is superior, you have the power to propose that as an EIP and start to develop consensus around it. EIP 1559 was first proposed in 2019 and it took some years for consensus to build around it.

Poor technical and legal frameworks for digital payment processors is how we have gotten to this point. Strict AML, KYC, copyright protection, and anti-adult requirements forces payment processors to err on the side of caution and deploy mass automated systems to flag and lock accounts that trigger the slightest internal alarm bells, even if this leads to some false positives and destroys a few small businesses along the way.

Lol this comment reveals a lot of ignorance. My last transaction fee on Eth was in the range of $1, most of that value is burned and not sent to a miner, and anyone who wants to participate in protocol rewards can do so through delegation.

PoS is not perfect but far better than current norm of “pay a billion dollar corporation a fixed fee and also give them total control of the world’s payment rails.”

Imagining either crypto to crypto, or a permissioned rollup handling crypto to fiat that lets the sequencer block a users address for KYC purposes, but user can still trustlessly withdraw funds to mainnet.

That’s my point. A system where your funds are locked unless your complaint goes viral is a terrible system.

Hopefully making enough noise on HN and social media will help your case move quickly. That appears to be the only way to get a response these days.

Maybe one day non-custodial and permissionless payment rails will prevent this situation, for those services that choose to use it. Shame that HN is so polarized about blockchain that they refuse to entertain the idea.

True, even though a current "light client" can run on Raspberry Pi, really there should be even lighter clients for validating on-chain state. See [1] which is an area of development.

[1] https://nimbus.team/docs/fluffy.html

Application-level protocols should not be attempting to secure their own consensus mechanisms - it ties the security of the application to the base token.

If you are seeking decentralized naming and certificate authorities you can look at Ethereum and ENS. Besides the eventual transition to Proof-of-Stake, building an application on top of an existing consensus mechanism means that your application will inherit the security of that blockchain.

The irony is that Minecraft and its players have no problem with virtual tokens known as Minecoins that are used to buy game assets and mods.

Instead of allowing this sort of pattern to be decentralized and permissionless, they are forcing it to remain on a centralized and permissioned stack that allows them to consistently extract rent, exert control over what kind of sales happen, and limit how users can dispose of these assets.

You can’t even sell back your Minecoins, you are only given license to use them for the Minecraft Marketplace. Had this been a standard ERC20 token the company would have no way to block you from reselling unwanted coins on a secondary market.

Not entirely surprising. Minecraft gets to maintain full control and custody, including extracting rent from any marketplace and assets selling on its platform, and at the same time look like the hero to the game community that so fervently hates NFTs.

IPFS is basically similar to BitTorrent, it does not solve the problem of "who will host this data" that PirateBay and similar sites struggle with.

> There's no reason a blockchain stands a better chance of surviving 100 years than any other distributed, decentralized, cryptographically-verified database.

BitTorrent and IPFS are not distributed databases, they are mechanisms for peer-to-peer transfer. It is very likely the blockchains will stand better chance at long-term survival than centralized databases because:

1. There is economic incentive to keep the network alive, as long as the token price remains above a small value. Ethereum could drop back down to $1 and block producers would still be incentivized to continue securing the network.

2. These networks are censorship-resistant. The data posted on-chain is replicated across all nodes, it cannot be blocked or taken down like you would see with the Pirate Bay database or even Tor which is only secured by 10 directory nodes and is regularly attacked.

3. These networks are permissionless - any user in the world can download a full node that helps secure the network. This makes it possible for anybody to search the on-chain data without the need to go through a permissioned search engine such as Google, and without needing to find a permissioned website such as ThePirateBay clones which are regularly taken down by hosting services.

There should not be a stigma on the desire to use crypto mixers to preserve anonymity. Saying it is only used for crime is like saying end-to-end encrypted chat apps are only used for crime.

ETH or USDC are as much “assets” as stocks, gold, bonds, property, domain names. Humans and social consensus made all of this up.

Crypto is doing layoffs? It is a decentralized network; nobody is being “laid off” of Bitcoin or Ethereum.

The value fluctuates but this is where users would typically send USDC or DAI which is pegged to the dollar.

My crypto transfers also arrive in seconds and there is no US company extracting rent, blocking my funds, asking for third party data, or dictating how a payment protocol should operate.

Yes, once you have 23 words, there is a finite set of possible words that can be used as the 24th to make checksum valid, and you could pick one at random.

But as I understand the private key can be any number, so you do not need to even use the seed phrase technique to create a private key, or if you do it isn’t required that it has a valid checksum in order to operate on the network.

All currency is worth nothing until it is worth something, and even that will change over human history. Crypto is as artificially scarce as any currency, except the scarcity is baked into clear rules in the protocol that cannot be arbitrarily changed by a single centralized actor. Some people actually like this model.

Some people want USDC, some people want non fungible assets, some people want ETH, some people want an ERC20 that backs an idea or organization. DeFi let’s these users manage these assets without placing them in the hands of a single actor.

Saying nobody wants ETH or USDC is like saying nobody wants AMZN or AAPL shares. What you really mean is that you are not interested in those assets.

I am not sure any of this is accurate since you can directly on-ramp to L2s and also purchase L1 and L2 assets off-chain.

An L2 like zk-rollup - assuming the protocol is implemented correctly - has same security guarantees as Ethereum since the validity proof is posted to L1. Most of them include an escape hatch, a L1 function that lets users withdraw funds in a permissionless way.

Ethereum can certainly theoretically scale to millions of users and a far higher order of magnitude than VISA. It presents an open source, verifiable, and permissionless alternative with better programmability and cryptographic primitives. Regarding privacy: see zk proof based L2s such as Aztec.

Old and clunky. Try setting up a multisig on the weekend with a few friends around the world, who all use different banks. It usually involves a lot of time, paperwork, lock-in to a single bank, monthly fees, sharing private data, and strict limitations on use.

In comparison you and several friends can set up a m-of-n account in a couple of transactions, closer to the flow and ease of setting up a new WhatsApp group.

What is your preferred way to transfer funds that can be received instantly in Canada, US, South America, UK and Europe?

Transferability is a basic primitive of crypto but not the only feature. Others like decentralized escrow and multi-signatory wallets achieve new functionality that is non trivial in traditional banking system.