Crypto cannot create wealth, only move it around. If too many people become crypto-rich and try to spend it on real-world assets, the assets will just inflate in price.
What can happen is that crypto could replace other forms of money. Governments will likely fight this tooth and nail however, because crypto is currently an anti-government technology.
Perhaps you are an American. Whenever your government prints more dollars, because the rest of the world holds dollar reserves, the value of those reserves go down. So everyone else in the world basically finances the US money printing.
So, if you are an American, the dollar is not bad. Its actually very, very good.
But for the rest of the world (96% of the world population), its pretty bad. It is used as means to transfer their wealth to US.
When your bank goes under, the FDIC uses your money to pay creditors, same as Coinbase. You get a new account with money funded from the Deposit Insurance Fund. You have already paid for this insurance. You are also free to purchase insurance for your Coinbase deposits. There’s not a difference except one’s compulsory.
While this is true, and should be taken into account ...
I can't help feeling that by the time that becomes relevant, those cryptocurrencies are quite likely to be worth very little anyway, as coinbase going under is (IMHO) quite likely to be correlated with a general cryptocurrency market crash.
> correlated with a general cryptocurrency market crash.
Which will be correlated with a general market crash.
As we are going through one now, it seems to follow that cryptocurrencies should crash more as a lot of tech companies have actual value and make/offer things we want while cryptocurrencies do not.
Wow you actually think Coinbase is the apt comparison here? You really believe that the peak use case of Bitcoin is leaving it on Coinbase? I think you should educate yourself.
> The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. [1]
Spread it around in multiple banks and it's more money then I'm ever likely to accumulate in my savings. Although if you have that much money in the bank arguably you're missing out on much better returns in the market if you're young and have time on your side.
Same reason you don’t keep all your savings under the mattress. There have been a number of stories about people losing or corrupting their crypto wallets. Once it’s gone, it’s gone.
Would you keep all your cash in the bank? Frankly I feel terrified if I don't have enough cash on hand to last at least a month. For instance the IRS has been known to freeze bank accounts of completely innocent business owners on wild goose chase accusations that small deposits are structured, for instance.
It's also worth noting there are certain unique risks to exchanges that aren't really applicable to most bank accounts.
Not sure if it’s my circle, but you seem an exception. I live in a tiny village and haven’t touched cash for years (somewhere 2018), nor has anyone I know. Personally I hear what you are saying as I had my accounts frozen (in my country, you can basically sue a company and start by freezing the assets of the company and their owners without any proof) a long time ago, so I always have a lot of accounts no one knows about (the tax office does but they are not allowed to provide those to lawyers). However, cash… Nah. I can kind of see that someone might put gold somewhere just in case the entire system collapses (which will end cash too), but outside that…
Gold isn't really for when the entire system collapses. It's for when your own country collapses but some other place where gold is valuable doesn't. It's easier to shove a few grams of gold up your ass and make it to somewhere stable than to shove a roll of hundreds up your ass. This is actually what happened in Vietnam, as I understand, as some individuals bribed their way out with fisherman's boats using what gold they had.
Which raises an interesting question: what fraction of Bitcoin, for example, is effectively lost forever? I assume minuscule, but like entropy it never decreases?
I'm not rich enough to own 'bricks' of gold, but if I was I would be a bit more creative than keeping them all naively stored under a bed or something at home. In any case having been subjected to various government fuckery in my life, I'm keenly aware of the need for wealth diversification. Self custody of (some fraction of) wealth is a means of diversification against risks of thugs in various official capacities.
And to say nobody keeps bricks of gold at home, well just peruse reddit [0].
Your house burns down. Your house floods. You put your hardware wallet on the kitchen bench after adding/withdrawing crypto and the dog grabs it and chews it up.
Don’t forget about the risk of your brain naturally forgetting a password that isn’t in active use. Especially considering your cold storage solution probably doesn’t share a password you use anywhere else.
Because the only practical way to spend the magical decentralized internet money is to trust a centralized intermediary to not only mediate transactions but hold your entire account with no accountability, regulation, or oversight.
Crypto lets governments track every citizen's purchase ever made, forever. KYC ensures that a wallet is tied to a person. I am surprised governments haven't yet jumped on this fully (without proof of work, just a government run digital currency and a blockchain).
No, I disagree. That’s like saying an isp can’t create information, only move it around. Metadata is value, such as on-chain data being an expression of trade volumes etc, and this itself is a second order value, beyond the utility of trustless censorship resistant payments, that in itself is worth percents of the total value transacted.
Yes, it is a protocol, but TCP/IP made many fortunes also. Even though it just moves bits around the globe.
> Governments will likely fight this tooth and nail however, because crypto is currently an anti-government technology.
Democratic governments represent the will of the people, and I don't think a technology can be pro-government or anti-government, it ultimately depends on what the people what. I think you are correct though for autocratic governments. Would you for example say that guns are clearly anti-government or pro-government?
How are people still this naive and indoctrinated. Me, earlier:
> You vote what you're told to vote by the media that the state and capital dominate entirely (Think about it: how would enough people even hear about an alternative idea or candidate that they don't deem in their interest?) If you're American you get to choose between two millionaires (or sometimes billionaires) with virtually identical economic politics chosen in advanced for you who can safely ignore you once they get elected. "Democracy."
Truly democratic governments would represent the will of the people. Representative democracy, on the other hand, often ends up being an elective aristocracy -- just like you say.
Once we elect a small set of people to make decisions for us, a political class tends to emerge (those with resources and time to spend their days wooing people) and it is their will who is represented by government. The people simply select the least worst of those options.
Europe's no different, just more expensive to lobby. We have the exact same media structure. America's just a joke and seemingly filled with the most fanatic people of the idea I was responding to, which is why I used it as an example.
>Democratic governments represent the will of the people
Such as the will of the people for pot to remain technically illegal throughout the entire nation, or the will of the people for a president to be elected with a minority vote?
>Would you for example say that guns are clearly anti-government or pro-government?
Neither. Guns are a tool usable by a variety of actors for a variety of purposes. Banning guns (or restricting them in a way that isn't restricted to the government such as implementing a burdensome taxation scheme for automatic weapons or short barreled rifles/shotguns) in non-government hands is firmly pro-government, however. Banning guns for 'felons' who are only that way because they are enemies of the state (such as pot dealers or someone who 'vandalized' a government owned wall with a work of art a la California felony vandalism laws) is firmly pro-government.
I do think governments will eventually turn against (at least anonymized like XMR) crypto, the same way they turned against bearer bonds/shares. Governments in the past 50 years have been extremely resistant to bearer-like certificates with extraordinarily high value density.
Bitcoin was created from scratch and is worth >500B today. And by worth, I mean you can literally sell your bitcoin on one of the crypto exchanges and get real dollars back. If that is not wealth creation, I don't know what your definition of wealth creation is.
When we look at all the crypto coins, the combines value creation is >1.2 Trillion USD as per https://coinmarketcap.com/.
Wealth is the stuff that people value. Money is one of the measures we use to measure that value, particularly when talking about "wealth creation". So if public stock market valuation is considered a good measure for wealth creation, why not crypto market cap?
The “too many" part is obviously subjective, but cryptocurrencies are all just zero-sum trading vehicles similar to Ponzi schemes. Unlike real businesses which expect natural resources or build things, there is no new wealth being created in cryptocurrency. Mathematically, only a minority of participants can ever get rich. The majority of participants are suckers who will be left holding worthless coins when bubbles pop. Of course that could take many years, so in the meantime traders who are lucky enough to time the markets correctly can make huge profits.
>If too many people become crypto-rich and try to spend it on real-world assets, the assets will just inflate in price.
My point was that your logic is flawed. If crypto just moves wealth around vs creating it, as you also assert, then it won't materially change the number of wealthy people. Hence, it wouldn't be a mechanism for causing the inflation you predict.
Employers other than banks don't create money, but they do create new value which never existed before. Most companies that extract natural resources or build things that people want increase the net wealth in our society. That wealth is denominated in currency, but in principle the wealth would still exist even if we eliminated money or switched to some other medium of exchange.
The issue here is actually pretty easy to grok. Crypto is a new market, so there is a historical amount of information asymmetry between consumers and producers. This brings a lot of scammers to the space. A lot of crypto is definitely bullshit, but there are some use-cases that I admire that aren’t just gambling on Shit coins.
That's certainly not true. P2P file transfer systems have long provided cryptographic guarantees that the file you receive hasn't been modified by anyone, even though you're fetching it from multiple untrusted sources simultaneously.
Merkle trees have made this more efficient and offered maybe more guarantees, but being able to have files be transferred in a distributed fashion but impervious to corruption is not a new invention.
The one thing cryptocurrencies have not figured out how to solve is the root problem of all PKI systems, which is establishing trust of identity.
> How would I prove that a file existed without a middlemen?
How are you defining "middleman"? You can do this with any basic commitment scheme: take a cryptographically secure hash of your file and publish it somewhere that's either (1) trivially copyable, or (2) difficult to tamper with. Alternatively, you could do an online scheme where someone asks you for your proof and you present them with your hash after being challenged. That's a gross oversimplification, but it's the general idea.
(In general, "prove that a file existed" is not something that you often want to do in the real world. What is it you're actually trying to accomplish?)
I work with ALOT of documents that have a deadline / need to be finished at a certain time.
The blockchain helps me to proof mathematical in front of a curt that the file already existed at a given date. It is the most secure way that I know.
A simple example of what I need without a middlemen.
A student writes a thesis. The last time he is allowed to modify the file is friday evening. He can now send the file via mail or deliver in person to prove that the thesis was finished by then. However he then trusts either the mail server administration or the person at the front desk.
This is fine in most cases and works like this since decades.
I however do not want to trust a person or company. I do not want ANY possible explanation how I could have archived it in a different way.
It’s accepted in court that a simple email showing the file as an attachment is acceptable.
Certainly blockchains are more trustworthy, but acceptableness in court is a pretty low bar. I mean having something signed on paper in front of a notary is acceptable.
What cases are you involved with where a notary isn’t acceptable? Or a non-blockchain digital signature?
I’m involved in really high dollar amount contracts and we just use pki-based digital signatures with a time stamp. Of course the time stamp could be fraudulent, but so could the notary’s stamp. But its acceptable in court and stands up to litigation.
I also teach a class and would accept an email from the student as proof. To me that’s more reliable than me having to research some blockchain signature that I’m unfamiliar with.
These are hypothetical use cases and don’t solve a real problem. And they certainly don’t justify paying transaction fees as they are now. It’s cheaper to just pay DocuSign.
A good place to look for middleman that can be cut with blockchain is the exchange between two random people that a third party needs to trust.
The example with the email in the court is a bad example because it is not the court's job to prove whether or not an email is fraudulent. It is the opposing counsel. Non digital evidence works the same way. This is why you have expert witnesses to verify or invalidate some evidence.
A better example would be real estate transactions. It would be best for everyone involved to move real estate transactions to the blockchain. I want to know that John Doe is the real owner of a house when I pay him $500k for the house. The government handles this with paper and their databases now but it would be far more efficient to do this on the blockchain.
> The example with the email in the court is a bad example because it is not the court's job to prove whether or not an email is fraudulent.
But it’s good because it is acceptable, predictable, durable, and low cost. Blockchain is solving for a problem that doesn’t exist as there aren’t a ton of fraud cases in this area (accused nor proven). So perhaps there’s an argument for the new uses that would be possible without the risk of fraud but they aren’t brought up.
Blockchain is more expensive than PKI and digital signatures so why propose it over a simple government PKI issuer? If the goal is to be useful in courts then certainly a government issuer is better as it’s trusted.
In this case blockchain is inferior to just including PKI with every drivers license, passport, and government id.
> A better example would be real estate transactions. It would be best for everyone involved to move real estate transactions to the blockchain.
Not better for the consumer who has to pay more for this new feature.
This is already done by closing attorneys and title search companies. Forcing local counties in the US to provide APIs is much more effective than a blockchain because the county deed office is the legal authority. The issue isn’t trust, the issue is assess. In a world where counties aren’t the source of truth for deeds a blockchain would be nice, although having a single, National registrar would be better. But since you have to ask the county if John Doe is the real owner, blockchains don’t help with this. A simple free, http, unencrypted, rest api is needed.
As an engineer this bugs me because these problems are better solved with technologies other than blockchain.
You've run into a person here who has confused "a blockchain would fix this" with "better systems, standards and openness would fix this, the exact implementation doesn't matter so much".
I ran into one last week talking about concert tickets. Apparently we could fix the problems of ticketmaster dominance by using a blockchain. When I proposed that an API+DB system would do the job just as well, and we have an authority in the picture already (the venue operator) so distributed trust was overkill, I was told "good luck getting ticketmaster to use your API system".
Because apparently the data-structure and trust model now dictate how the market works, and if we just chant "blockchain" loud enough, that'll magically fix monopoly issues. It's very weird thinking.
I mean, sure, if we force ticket issuing, or the land registry or whatever onto a public blockchain solution, that would address some of the issues. But the improvement comes from the forcing, not the specific tech...
I’d love to see Tickmaster’s blockchain+NFT system for how horrible and anti-user it would be.
I agree with both points. For a while it seemed like small venues were using indie $1 ticket processing services that would basically just generate a QR code and keep everything cheap. But those seem to be going away as Ticketmaster just takes over and turns a $1 transaction into a $20 transaction.
If venues just used Shopify then they’d have their db+api solution. But I think vendors like being able to 1) reduce their work, 2) blame Ticketmaster for all fees, and 3) make more money.
For the same reason vendors don’t use api+db, I don’t see them using a blockchain.
Another reason is that blockchains are forever and I don’t see the value in a huge blockchain with mostly garbage data of tickets sold 50 years ago. This seems like a really unnecessary expense for something simple like temporal transactions that are meaningless after the event.
An api+db can be flushed out so the storage costs are very low.
I'm still not convinced blockchain is a good solution here. Why is a cryptographic signature by each party that they acknowledge the transfer insufficient?
About the only arguable place is maybe escrow but the marginal increase in cost of traditional escrow vs blockchain seems insignificant vs the magnitudes of monies being discussed. Additionally, if I make a mistake and send things to the wrong account, with escrow & traditional banking I probably can unwind that transaction. With blockchain, not so much.
to me a blockchain is very similar to a cryptographic signature used in a recursive manner, meaning that a new document which is based on the previous document history includes the signatures for all those documents and signs it all in order to prove that the chain has not been tampered with.
im not at all a blockchain proponent but i really see a usecase here. but then again i see even git as a blockchain so its not that it would be expensive or exciting to get it working. (Dubai reportedly uses blockchain for their property register)
this is actually a common attack vector in countries like Pakistan were someone falsifies a stamped court document that actually the current owner of a certain property is not valid because he bought it from someone who did not actually own the property. the rightful owner is therefor me. (called qabza in urdu)
Naive response here, but that particular use case seems solved by a central authority, where the school is the entity that (1) cares the most and (2) should other students or decentralised entities be involved in observing student progress?
Could you share you use-case and current method? I have no advice for you I'm just interested in how this is being used and who is providing said services.
Now we trust mining pools which can become monopolies instead... Everyone seems to not see the positive feedback loops somehow. It results in the same system in the end.
Summary for other people who might not know what this is:
Nicholas Weaver, Lecturer at UC Berkeley after 9 years of research in cryptocurrency, lectures on Cryptocurrency as part of CS161: Computer Security. He explains the history of the data structures, some implementation choices, then a bunch of obvious lies from Bitcoin hucksters debunked, security problems, more history/lies debunked, the fraud and bs, computational power, power consumption, blah blah, everything is there in one hour.
I think it could be a good thing to send to people so that they either come out of it knowing bitcoin is braindead or have to admit they're not capable of understanding it because they don't have the basic computer science knowledge :P
There’s a reason HN largely misses the innovation behind crypto, and it’s fairly simple. Bitcoin is not a technical innovation; Bitcoin’s value does not come from being an interesting data structure. Bitcoins value and genius is almost entirely economic in nature and hand waiving the (very simple) cryptography and computer science involved to analyze the economics is where the sophistication and avenue for critiques would come in.
Technical knowledge gives you a menial job of auditing when it comes to Bitcoin. If you don’t have the economic sophistication and approach when discussing Bitcoin it only proves you are ignorant to what’s relevant.
I can see that you didn't watch the video. More than half of it was about economics. No, the reason HN thinks shitcoins are a pyramid scheme is because it's trivially obvious that they are and people here aren't braindead.
"economic sophistication" This is just a baseless ad hominem and you have no knowledge about anyone's economic knowledge.
A bit hypocritical to complain about alleged hand-waving with hand-waving, no?
There are multiple, independent entities both maintaining and submitting to the logs. The short answer: CAs submit precertificates to the logs; the logs respond with signed certificate timestamps that are embedded within the ultimate certificate rendered to the user. User agents (i.e., browsers) cross-check against the logs using the SCTs. Third parties ("monitors") additionally watch the logs for suspicious events (unexpected issuances, unusual certificates being signed for, etc.)
For 30+ year olds who learned by cracking video games, used eMule/limewire and partipated in crypto CTF, crypto is still cryptography, but let's be honest, this usage is loosing.
Aging kinda sucks too, but alas it is biological reality.
"Political power grows out of the barrel of a gun" - Mao
The infrastructure required to support these schemes - networks, energy, hardware - are all firmly under the control of those who have a firmer grasp on political realities on planet Earth than 'crypto' enthusiasts.
Seriously hate to break these facts to you, but past/present/future reality is about systems of "authority", and not systems of "trust". An 'authority' gives you a digital ID, a social security card, a driver's license, etc. And this authority has political power and as to how it maintains its power, what Mao said.
[p.s. Let's grant that Unicorns are 'prettier' than generic horses. Fine. That does not alter the fact that unicorns are fictional. And no, sticking a paper mache horn colored in hashes on a horse does not make it a unicorn. (see 'scam', 'fraud', 'snake oil' for related matters.)]
The thing to keep in mind for crypto is that the inherent inefficiency leads to high transaction costs that tend to make it a less viable option for legal activities.
You can have virtual game worlds (like a MMORPG) that can't ever be turned off, by nobody. That means your items will last forever. 50 years from now, your sword will still be on your backpack. Can't say that for company-hosted MMORPGs like World of Warcraft, because these companies might go bankrupt, close servers, update items, etc. Not a cure-the-cancer colonize-mars hype level, of course, but it is still an interesting neat thing you can do with blockchains.
In 50 years who's running the servers that are required for the game.
It's not like the characters movement will be on the block chain. You're not spending eth every time you attack a mob. It's not like everyone else's computers are running the ai for mobs. Are all the cinematics on the blockchain?
How the hell do you use an item from one game in another. It's not like the functionality from game in another. Whats to stop someone from publishing their own super-OP sword to the block chain and just ruining any game that supports it.
This makes zero sense when you spend any thought on it.
I guess they meant that you can have a persistent and eternal database of the game state stored in a blockchain which everybody could host a game server with.
I guess you might be able to find a way to handle non-player actions but I think performance is going to be unresolvably terrible and scale quite limited.
over the internet. And I’m only being slightly facetious, these are serious industries. Bringing the coordination and scale of the internet to these activities is big business.
Super weird reading comments like this, when you're saying that being opposed to these industries is "morality policing":
- illegal drug trafficking/sales
- sex trafficking
- immigration trafficking
- child sexual abuse material sales
- contract killing
If being opposed to these industries makes me into the "morality police", then I think you're delusional. You could make the same argument for any crime; that all laws are "morality policing".
These industries destroy an enormous number of lives and we should be crushing the people who profit from them.
Smart contracts, DAOs, payments, self-sovereign identity, tokenization of real world assets, a few security use-cases, operating markets for prediction and asset-trade outside the control of external authorities (libertarian wet dream stuff), insurance and legal arbitration outside of the control of external authorities (more wet dreaming, but it’s happening), supply chain / provenance of assets…
All of these could probably be done using a database, but it’s more about the trust aspect than the mechanics of storing data.
Crypto will succeed because the rich among us want it to. Crypto will succeed because the corrupt among us want it to.
Crypto will succeed because the libertarians among us want it to.
Crypto will succeed because it makes exit a reality.
>Crypto will succeed because the rich...corrupt...liberarians want it to
Just because you want something to happen doesn't mean it will. Especially when you have to assume that we live in some fantasy world where nobody can be trusted and everything has to be done outside the influence of government (i.e. illegally) so we have to use a decentralized append-only database where nothing can be reversed because while you can trust nobody you also can trust people to not do decisions which need to be reversed.
>Crypto will succeed because it makes exit a reality
What does this even mean?
>Smart contracts, DAOs, payments, self-sovereign identity, tokenization of real world assets, a few security use-cases
these are all buzzwords or further tech that actually needs explaining as to what it's useful for (hint: it's nothing)
> Especially when you have to assume that we live in some fantasy world where nobody can be trusted
I think the value of crypto is that trust is not required to participate in the system and transact. You don't need to be second guessing every single person to benefit from this. It doesn't hurt to have a system that minimizes the consequences when trust is abused. It is a bit like the adage of wanting privacy even if you have nothing to hide. I might not want someone to have the option of stealing my money in a transaction, even if I don't think that they actually will.
Society will evolve towards being trustless as the moneyed-class pursue sovereign citizenship and shop for preferential territory on a global scale. They will need a secure way to trustlessly store and exchange funds. Cryptocurrency literally exists nearly entirely for this reason.
Thanks for the recommendation. Having skimmed the book, yes, it would be fantastic to give the material the same treatment Paul Verhoeven gave to Starship Troopers specifically in its reappraised interpretation.
Oh lord, a hybrid cross of "sovereign citizen" and "cryptocurrency geek". This is an unholy combination. No, none of your fantasies are correct or true in any way. Rich people don't need to escape government, they can influence it just fine.
Regulation of the cryptocurrency space, for example, such that huge amounts of funds can't be kept and moved anonymously and without consideration of (for instance) local taxes in these countries the rich shop between.
Those who do so must be held to the same standards as those already resident.
In the UK recently we have seen (yet another) backlash against this in the form of the outcry against the wife of the Chancellor of the Exchequer, who was using "non-Domiciled" status to avoid masses of tax, despite having been resident in the country for multiple years.
I've no issue with people moving around, but moving around specifically to avoid contributing to the country you're actually residing in needs to be ended, and regulating cryptocurrency may have to be part of that.
You have a good heart, and I’m not saying I entirely disagree with you, but think of it this way:
If I’m paying taxes, I want it to go to something I care about. “Non-dom” status is blatant fraud for sure and I can’t entirely support that. But, shopping around for preferential territories is kind of what everyone is already doing, right? Imagine if your town made it illegal or expensive for you to move to a neighboring town? That’s the problem cryptocurrency is solving for the rich
If my town did that, and did that for everyone, I would be trying to change the system rather than raising my middle finger to others who live there and who don't have my resources to avoid the consequences.
Sure, it's solving a 'problem' for them, the 'problem' is that they have to follow the same rules as the little people. I can see why they might pursue such a thing, and as I say - it's incumbent upon the rest of us to stop that behaviour, and force them to contribute as others do.
I'm not aware of any serious supply chain or asset provenance efforts that rely on cryptocurrencies or DeFi. Lots of serious work uses Merkle constructions, but it would be a remarkable distortion to spin something like Certificate Transparency as a form of DeFi.
I’m aware of a use case where person/asset location is being determined using a distributively owned set of radio transmitters so that proof-of-location can be established without use of GPS.
Plenty of supply chain use cases already exist using private chains/ledgers — this will skew more toward public chains or hybrid solutions as demands for transparency amp up.
> I’m aware of a use case where person/asset location is being determined using a distributively owned set of radio transmitters so that proof-of-location can be established without use of GPS.
Yes, I am. I'm not aware of a threat model in which you can't trust the frequencies GPS is on but you can trust the frequencies that the FCC allows personal radio transmissions to be on. Seems like a lot of added complexity (and, notably, no legal recourse) for essentially the same failure mode.
Yes, GPS is not particularly secure. But I don't think that addresses the threat model above.
(In general, jamming is always a possibility with anything wireless. That is just not going to change. What might change is spoof resistance, which can be accomplished with schemes that are a lot simpler than anything DeFi can conjure. There's a decent amount of work on related schemes in the vehicle-to-vehicle communication space.)
Aren't those use cases mentioned for blockchain not crypto which seem the original article seem to be about
The so called rich people are trying to get more rich by investing in dog coin, cat coin and other crazy stuff instead of using the brains for greater good of humanity like CRISPR etc
Beyond issues of PoW and energy consumption, the bigger crime is the brain cycles wasted getting rich trying to find the next shitty coin and chest thumping that they are rich.
I know it can be hard for even the most equanimous individual but See crypto rich as a lottery which was earned without much hardwork. only thump your chest when it is put to use for greater good
It has only one use. To circumvent the global fiat currency system and artificially blow up the value of an arbitrary data point in a get rich quick scheme
> Smart contracts, DAOs, payments, self-sovereign identity, tokenization of real world assets, a few security use-cases, operating markets for prediction and asset-trade outside the control of external authorities (libertarian wet dream stuff), insurance and legal arbitration outside of the control of external authorities (more wet dreaming, but it’s happening), supply chain / provenance of assets…
None of this has proven any value in the real world.
Libertarian wet dreams are the other side of the coin of communists' wet dreams: utopian, not based on reality, not feasible in our current reality.
Legal arbitration is only possible under a legal system, that is under a government, that has a military and other enforcement powers. Some bits proving that a contract is valid won't change that...
As usual from the cryptospace, it's all techno-babble built on a house of cards that hasn't given anything to reality except an easier way to transfer funds without KYC, so basically it's a wet dream for criminal activities: scams, drug deals and so on.
Ring me up when all these wet dreams become a reality, they've been repeated ad nauseam for quite a few years already and nothing has really materialised.
Well said. This encapsulates a mature position most crypto skeptics will continue ignoring in favor of harping on tired arguments and cherry picked stories from centralized disasters which larp as open and decentralized.
> On Monday, the Financial Times published an interview with Sam Bankman-Fried, the founder of the FTX crypto-trading exchange, in which he said bitcoin doesn’t have a future as a means of payment because it is too complicated and environmentally costly.
Was that intended as a reply to something I said? I don’t know how that addresses my point. Edit: My comment was intended to refute the claim that he’s just pushing people toward his investments by saying he still earns money from the popularity of BTC. I don’t see what it adds to the conversation to bring up his past earnings, at least where you out the comment.
1. He invested heavily in BTC and literally created an exchange to take profits from future BTC trading.
2. Investing in his vision is laudable, but a third party presenting said efforts as proof of BTC having no future should be called out due to the obvious conflict of interest.
If crypto goes down in value to ten percent, or one percent of its current value, will people who believe in it admit it was a grift?
If it goes up in value again, 2x or 10x its current value, will people who said it was a grift admit it was more than that?
I would bet money (fiat or digital) that, in either case, most people on either side will just say "I haven't been proven right yet", because it's just camps yelling at each other at this point.
how is BTC not fundamentally sound. You can literally take 1 Billion dollars worth of BTC and cross the border without anyone questioning you. How does that not change how you see things ?
- As a currency, it's garbage. Currencies are inflationary to incentivize spending. A deflationary currency incentives hoarding, and harms the economy by dropping velocity. All the worst periods in history have been deflationary, not inflationary. Currencies benefit from being able to respond to changes in population, to shocks, to changing demographics. And they shouldn't cost a fully-realized (inc. block reward) $200+ to transact.
- As a 'hedge against inflation,' it's garbage. In the most inflationary period in decades, it went from 69K to 28K. That's a drop of 60% in nominal terms. While the dollar dropped 9%. That means it dropped 69% in real dollar terms in a few months. RIP.
- As a 'store of value,' it's garbage. A store of value must be predictable. You should have a reasonable expectation that you can extract the same amount of value from it in the future. See above.
- It's an environmental catastrophe, wasting as much power as an entire nation (and yielding kilotons of e-waste per year) to achieve 6tps. Millions of times less efficient than Visa, or FedNow or RTP.
It has sufficient throughput at the L1 level to service a large flea market or a mid-sized Costco, not the world economy. Lightning is a nothing burger. It would take 75 years, 2/3 of a trillion dollars in fees, and the entire rest of the block reward to open a channel for everyone on earth. And LN has quadratic routing complexity meaning even if you did, it wouldn't be functional in the first place.
Even your example of smuggling money across the border doesn't make sense - you need to buy Bitcoin at one exchange in one country, then sell it at another exchange in another country in order to spend the value. That takes days, costs percentage points, exposes you to huge counter party risk and massive forex swings ... and KYC. And being a public ledger, both governments can fire up chainalysis and see exactly who moved it where. So even if they don't ask you questions as you move across the border, they'll follow up. Just give it time.
In exactly what narrative does it come across as 'fundamentally sound'?
> Do people hoard value shares which have predictable returns that beat inflation?
Of course, but those aren't currencies they're equities. That's what they're there for.
> Is most gold or property hoarded, or is it traded? (Either is expected to rise in “value” over time, expected that is by the average person).
Gold is shiny pebbles.
It's fundamentally not worth much more than its industrial value (a tiny fraction of it's market value) and I wouldn't recommend anyone hold that either. It's not productive. It doesn't do anything but sit there, shiny, until consumed for industrial purposes.
> Hoarding might occur in a depression, but otherwise the concept is questionable?
Why would you spend something today if it's going to buy you more tomorrow? You wouldn't, to the extent possible. Thats why we separate short-term intentionally lossy store of value and medium of exchange (currency) and long-term store of value (equity, real estate, etc). We don't combine them due to their antithetical goals. Trying to do so is regressive.
> Currencies are inflationary to incentivize spending
Really? Doesn't seem like getting off the gold standard was so miraculous in preventing recessions. Spending is great for consumerist societies, but people who are allowed to save are allowed to make far better economic votes on what is valuable past short term pleasure. Inflation doesn't encourage spending, it kills saving and makes storing wealth something only the sophisticated and wealthy can achieve.
> As a 'hedge against inflation,' it's garbage. In the most inflationary period in decades, it went from 69K to 28K. That's a drop of 60% in nominal terms. While the dollar dropped 9%. That means it dropped 69% in real dollar terms in a few months. RIP.
Pathetic cherry picking. How about I do the same thing and I start in 2013 and end anytime in the past 8 years? Price discovery is an obvious reason you as a laymen should be aware of. On chain security scaling with price is one you could be forgiven for being ignorant of. Price and security do not greatly separate and Bitcoin actually needs time for adoption for fundamental reasons (not just waiting for people to understand it).
> - As a 'store of value,' it's garbage. A store of value must be predictable. You should have a reasonable expectation that you can extract the same amount of value from it in the future. See above.
Redundant and addressed.
> It's an environmental catastrophe, wasting as much power as an entire nation (and yielding kilotons of e-waste per year) to achieve 6tps. Millions of times less efficient than Visa, or FedNow or RTP
Bitcoin is not comparable to Visa. Bitcoin is final settlement. Huge banks and financial institutions only do final settlement once a week for a reason - its slow and expensive. Bitcoin is actually faster cheaper and easier than a wire transfer and it uses far, far less energy to do so securely.
> Lightning
Lightning isn't the only layer-2, and it isn't killed by routing complexity, it simply requires more centralized routing hubs, users don't just connect to all their friends directly. This is fine for payments small enough to justify it.
Other layer 2 solutions are custodial and semi-custodial, which, just like financial systems now, settle large amounts of transactions at one time. Even a fully custodied Bitcoin bank (with insurance) fulfills the promise of secure and sound money. It also makes that bank highly auditable and accountable.
Fundamentally sound means what it says. It means the most basic function is the best in its class, and that once the market realizes it the world will build around it.
> Really? Doesn't seem like getting off the gold standard was so miraculous in preventing recessions.
I'd look back at the graphs. The wild inflationary and deflationary swings were dramatically worse on the gold standard. Because inflation doesn't depend on supply of currency but instead it is calculated from the price of goods.
> Inflation doesn't encourage spending, it kills saving and makes storing wealth something only the sophisticated and wealthy can achieve.
Same thing bud. And no, thanks for roboadvisors, anyone can save any spare capital via investments. Or series I bonds.
> Pathetic cherry picking. How about I do the same thing and I start in 2013 and end anytime in the past 8 years?
Pathetic cherry picking. How about you do it based on the percentage of people underwater. 40% of all bitcoin investors are now underwater. Unless you have a time machine, my number is far more relevant than yours. The entire country of El Salvador is down 40% from their investments.
How many people are underwater on the Series I bonds - an actual hedge against inflation? Nobody.
> Lightning isn't the only layer-2, and it isn't killed by routing complexity, it simply requires more centralized routing hubs, users don't just connect to all their friends directly. This is fine for payments small enough to justify it.
So you solve scaling with centralization, fundamentally invalidating the core value proposition of Bitcoin as per the whitepaper. I can do that too, with my dollars.
> Fundamentally sound means what it says. It means the most basic function is the best in its class, and that once the market realizes it the world will build around it.
Cool, but their assertion was garbage, and Bitcoin is fundamentally worse than pretty much everything it competes against, in every measurable way.
> Same thing bud. And no, thanks for roboadvisors, anyone can save any spare capital via investments. Or series I bonds.
Not risk free. Plenty of people making conventional investments lost their savings and retirement during 2008. It's all dependent on the Fed and their discretion. Real stores of value are not.
> Pathetic cherry picking. How about you do it based on the percentage of people underwater. 40% of all bitcoin investors are now underwater. Unless you have a time machine, my number is far more relevant than yours. The entire country of El Salvador is down 40% from their investments. How many people are underwater on the Series I bonds - an actual hedge against inflation? Nobody.
Measured in dollar value? Of course people aren't underwater on their bonds against the dollar nominally - do you know what inflation means?
The rest of your garbage can be refuted by reminding you that Bitcoin is in price discovery mode. No shit an asset with a tenth the market cap of gold, that's only been around ten and a half years, that hasn't reached adoption, and whose security scales slowly with market cap is more volatile. The majority of investors throughout Bitcoin's history have enjoyed that volatility as the majority are in profit. But feel free to cherry pick the short term losers who are holding their coins at record highs.
Funny. The day is yours arctic, and I feel I have no power to argue. Still, I lost a larger percentage in stonks today, so I don’t really know where we should be putting our fiat.
heh, I was overexposed to high-growth tech stocks the whole time, so I probably lost just as much over the same period of time. If somebody won, it sure wasn't me! I've also watched this space long enough to know that crypto is the T-1000 of financial schemes. I've no doubt she'll be back - probably stronger than ever - no matter what I think. This is my third crypto boom/bust cycle.
I'm not dancing on graves here, so I hope it didn't come across that way.
I want us all to win.
These market conditions suck. But they'll be over soon.
[edit] what frustrates me the most is I feel like the crypto folks often really want to make the world better, and I just wish we were all pointed in the same direction.
- there are at least 12 people that could absolutely destroy BTC in a variety of ways. Elon, some developers, some mining coop, whatever whoever, it’s not impossible. For example, what do you think would happen if the original Satoahi coins started to get used? Look how many / how much is there, it would be pandemonium. It’s a weak system that people want to trust, but there are no guns backing it up.
The best crypto grift was the neobank startups that were front ends for investing in anchor, a 20%APY crypto ponzi. Anchor crashed with Luna and all those startups kept their money in failed stable coins and have folded and failed to make payroll. They lost all of their money and all of their customers money. Woof
How are the founders of these apps not in prison? I remember getting hundreds of “replace your savings account” ads that abruptly ended with the Luna collapse.
IANAL. When an entity takes customer deposits it gets hyper regulated, a notch or two below commercial bank. These apps circumvent those regulations by accepting deposits in crypto.
Regulators are are also in bit of a spot because it's an entirely new beast. For most of the current use case crypto acts like unregistered security but in in some minor way it's also a currency. So regulators are biding their time because coming down with a heavy hand will attract a bad rep as big hedge funds are also getting into crypto.
Also, IMO current legal codes aren't good enough to tackle crypto at the moment, see this[1] for example. It's an active area of legal research so will take time to crystallise.
So these apps are slipping through this regulatory crack. Do they deserve to go to jail? I'm not so sure. But they do know what they are doing.
The thing with crypto is it's getting rapidly enmeshed with main-street finance. For instance one can take loans against crypto, retirement accounts are offering crypto exposure and so on.
It's relatively easy to deal with money-like substances that are precisely confined (closed-loop as they are called sometimes) such as carnival tokens, or Starbuck reward points. Problem starts when they start leaking into day-to-day finances.
In the U.S. at least, anyone dealing in things financial has to be very careful not to violate any number of laws involving money handling, banking, insurance, securities etc. It's not enough to say 'we don't do that' or 'we're not a registered X and therefore not required to do Y'. If a relevant government agency decides you are an unregistered X, or otherwise violating the law, be prepared for an expensive multi-year legal fight and most likely to lose unless you are really doing something completely new that actually isn't like the old thing[1] they are tasked with regulating/enforcing.
I'm actually quite surprised that some of these scams (stablecoins being one example[2]) have been allowed to go on as long as they have.
[1] i.e. buying you at least a temporary reprieve as all you're winning is the argument that that particular law doesn't apply to you, not that they won't pass a new law and come after you using it.
[2] It sure looks to me like they're pretending to be defacto banks issuing their own defacto dollars and not so subtly assuring 'investors' a rate of return. The combination of these factors have historically been all but guaranteed to get damn near every agency of the govt on your ass.
> How are the founders of these apps not in prison?
These are private losses. We have lots of problems. It’s ludicrous to prioritise public resources for prosecuting those while led others into a bonfire.
Put a tax in place and yes, I would fully support public enforcement.
While part of me agrees, part of me also thinks we have all these security laws for a reason, and allowing people to claim they don't have to follow them because of what is effective just a fancy ledger doesn't sit right. I am not a securities law expert by any means but some of the tactics used in the crypto world seemed directly contrary to the intent, if not the letter, to me. I would not be surprised if we see a couple lawsuits filed sometime later this year by the state.
That ruling stated that the SEC isn't allowed to enforce rules _without_ a jury. They can still take people to court but there needs to be a jury involved.
If there isn't criminal enforcement these scams will continue to grow and amplify.
Risk of private action can be mitigated by making sure the victim's best recovery comes from selling their position along to a greater fool. At the end of this process the last bag holders individual losses are enough to not justify the cost of litigation. Costs which are all the greater for private individuals because they lack the governments power to investigate.
(and if fools run out a bit too soon, a bit of the initial income can be used to vacuum up the remainder)
I think cryptocurrencies/nfts are crap and have no value, but to play devil’s advocate here; for all the people saying this is all doomed, the top cryptocurrency assets seem to more or less look like the tech market and BTC is doing better than, say Netflix. Netflix actually makes things and is 76% down from ath, while btc only 66%. So why is it so resilient? When will it die if it indeed has no value? Are we just grumpy tech people who are kicking ‘evil’ things that will never change or go away?
Cannot read your mind but I'll make a guess based on the fact that you are comparing it to a tech stock and the fact that most people on this website make this mistake: You are viewing Bitcoin as a technical project rather than an economic one.
Bitcoin is not technically interesting - it is economically genius. Undergrad cryptographers have learnt enough to re-implement the Bitcoin protocol, but understanding the genius of the composition of those simple primitives is a practice of game theory and economics. Historians of money who know not how to program have far more authority than a bitter techie when it comes to analyzing Bitcoin.
Which is to say, never? I mean, sure there is a chance after Xi some open market president will appear, however, it is more likely, as all opposition is no longer in play, that it will get more closed and there will be more use for cryptocurrencies from that perspective.
Crypto crashes every couple years and of course it has grown immensely since the last crash so the scale and scope of these kinds of “analyses” grow with it. I’d imagine in 5 years in the next big crash it will be the top news around the global for many weeks.
No, I think there is a natural limit - eventually you have enough people burned by the scams, crashes, hacks etc. who will keep away, to the point that you don't have enough new entrants to put enough money in to have continuing growth.
Unless there was an actual crypto economy, but at this point, there's not much more than speculation.
Thinking you can lump together the centralized scams and true crypto (of which Bitcoin is clearly the winner) forever will get you burned. The excited laymen will certainly be turned off as they make that same mistake in thinking, but the narrative will change and I can promise you nobody hates the scammers and grifters more than the 'crypto community' themselves.
It boomed and busted in 2017. Then wasn't going anywhere for years until central banks generated massive liquidity and all assets jumped (because cash went to zero and pushed everyone out on the risk curve). That's direct cause and effect.
Given the liquidity is being taken away, what is going to save the day for Crypto next? What would cause it to recover to previous highs? I don't think recovery is predestined.
Anyway, what is to say bitcoin shouldn't be $10,000? Or $1000? Or $1?
Bitcoin's price action has always been related to the relative supply of Bitcoin and fiat, but the fed is not the primary driver of this supply disparity - Bitcoin itself is. Bitcoin's inflation rate is cut in half every four years and consistently marks a new market cycle. The fed obviously has power over those relative supplies as well, but lower liquidity has no preference for up or down when it comes to price.
Making predictions about something that’s only been around in any significant way for a decade and is subject to so many social, political, and economic pressures (extremely chaotic in themselves) is probably pretty fraught.
Interesting economic theory… “What happened yesterday will happen tomorrow”… hang on, I have a lot of money to move around before markets open tomorrow!
This is like the 5th or 6th cycle, at a certain point you realize high volatility is the nature of crypto, and it’s not crazy to presume there will continue to be cycles.
The latest crash is overhyped anyway, BTC is 30k and BAYC NFTs still have a ~200k floor. This isn’t some kind of capitulation to a new fundamental thesis, at least not yet. It feels far less wintery than some prior crashes that felt like BTC or ETH was on death’s door.
> As an inevitable crash occurs, many of the swindles and alleged swindles are coming to light.
Yeah, bubbles make overvalued prices. Crashes occur. Losers fail. Winners gain bigger marketshare and mindshare.
Spectacular failures are actually a sign of a functioning market. The worst possible thing that could have happened last week would be the federal reserve offering Do Kwon a very cheap bridge loan to stabilize his section of the crypto economy, lest we risk broader market contagion.
Crypto failures are fast and painful as opposed to long and corrupt. This is a feature, not a bug.
Also, ironically, this author has spilled a fair amount of ink over all the market crises of the years. He wrote a whole book on the dot-com bust. The Luna saga was over in about 3 days.
> The list includes some traditional tactics for illicitly relieving rubes of their money, such as pump-and-dump schemes and phishing for passwords. It also describes new, more novel schemes, including the “pig butchering” crypto scam, which often involves an attractive person approaching you online and offering you spectacularly lucrative crypto investments.
Sure, I get these DMs on discord too. Don't fall for scammers. They were doing the same nonsense with "Double your Square Cash!" scams shortly before the crypto boom. Or offering great deals on "GPUs" during the shortage. This is not a crypto problem in the slightest and crypto probably makes these lower end scammers easy to prosecute.
> The over-all aim was to make crypto investing seem mainstream and draw in gullible investors who feared they were being left on the sidelines.
Does anyone seriously believe that etrade or robinhood advertising options trading to me is somehow different? There are constant commercials for precious metals and ETFs and all kinds of things.
I know a fair amount of bitcoin millionaires, all of whom were called "gullible investors" at the time.
What really bothers me is the incredible amount of ignorance I see in the comments section about crypto, blockchain technologies, poor understandings of economics, etc.
Wtf HN. Do better. I feel like I'm watching my peers get old and resistant to change and dismissive of new technologies and exciting possibilities.
Also, if you appreciate my contrarian (for HN?) view and are looking to take on more risk, now is the time to build for web3. The people chasing easy money will give up and the people moving the tech forward will build while no one is watching.
>Does anyone seriously believe that etrade or robinhood advertising options trading to me is somehow different? There are constant commercials for precious metals and ETFs and all kinds of things.
Well they're equally bad in terms of being a scam, unless you are a hedge fund that has enough liquidity to even need options trading in the first place. Not sure what other conclusion you could come up with there.
>What really bothers me is the incredible amount of ignorance I see in the comments section about crypto, blockchain technologies, poor understandings of economics, etc.
Being bothered by the flaws of crypto does not equate to being uninformed. That kind of logic is what I expect from a car salesman, not HN.
Yes, that wasn't nice of me, but being told I'm old and resistant to change because I disagree with someone doesn't engender friendly interpretations.
No asset is a pure force for good nor evil, but there are material issues with crypto and pretending they're ONLY a technicality is convincing no-one.
The reason is because it's very closely related to gambling and triggers the same obsessive thinking as gambling does - based on my observations of how I felt and thought when I did some crypto investing - I found myself constantly checking prices and devoting huge amounts of thought to it - I even wrote a crypto trading bot to analyse strategies. If you know anyone into crypto you would know they talk about it non stop.
There are HUGE numbers of people who's brains are deeply involved with crypto. They'll be back for more.
Crypto had a big crash only recently - about 12 to 18 months ago I think, when Elon Musk made some comments that crashed the market. That crash was rapidly forgotten and people piled back in. Same thing will happen here.
Logic is not the driver of people's behavior.
Crypto is essentially legal, consensual large scale ponzi scheme participation - if you understand that then you might be able to win big.
> If you know anyone into crypto you would know they talk about it non stop.
Not really. There are a lot of people holding, mining, DCA'ing into projects they believe in who have no trouble at all keeping it to themselves.
Your remarks about gambling are similarly projecting a portion of the community onto the rest. Those traders who treat it as a speculative asset are gambling as you say, and tend to be obsessive in the way you describe, but you seem not to be aware of everyone who deals with crypto differently than you did.
There are a lot of crypto projects that people don't expect to moon, that effectively serve their purpose right now, and will just get better at it in the future. None of what you wrote is nearly as generally true as you made it out to be.
Yep, exactly. I've been working in crypto for 4 years and counting, still haven't purchased a single token as an investment. I don't like downside risk, I like to build product. We've weathered one bear market, we'll weather another.
Thankfully there's cool stuff in the ecosystem that isn't a scam, but it's not newsworthy, so it doesn't go viral.
One of the cool parts of crypto is that it enables new forms of social coordination that take place entirely within an online context. We haven't even scratched the surface of what could be possible with DAOs; the UIs and educational materials don't exist yet.
But given how online people are in general (and they're only likely to become more online in the future), it's natural they'll want digitally-native ways to organize themselves, represent ownership, qualify membership, etc.
The shift in concept required here is from viewing a token as "an investment" to viewing it as a form of legible social proof within its community context, which becomes more meaningful as communities grow beyond the "tipping point" where interpersonal proof (think webs-of-trust) is sufficient for coordination. NFTs (yes, they're still around!) are already serving this function for certain experimental communities (and even in less experimental ones, see POAPs).
In general, everything above is still in the experimental, live or die phase. We don't quite know where it's going. But it's pretty damn cool to watch if you're deeply invested in the internet as a medium (and as someone who "grew up online", I absolutely am).
I'm curious to dig into this a bit more. In general, I'm skeptical about those use cases.
* If it's a governance token system where more money == more power...well, I just don't think it's a good idea in general.
* If it's a system that tries to replicate the idea of one person/one vote, you have to have KYC (and re-KYC upon membership transfer) or it devolves into the first case. Then the entity doing KYC has centralized control over membership, so it seems like storing membership info on a ledger doesn't offer any benefits compared to just having a central membership database.
To address the latter case first: what you gain is standardization and interoperability, where the crypto toolbox acts as a protocol. Even if you're doing KYC in a centralized way, you can plug your token/DAO into any tool that supports it and use their interfaces. At least in theory. Good interfaces don't quite exist yet (it's being worked on). I'm sure there's already web2 tools out there, but the ideal web3 case is far lower friction, requiring no web hosting, deployment, trusted middlemen, etc. The proof of this will be in its success or failure, I'm still not sure how it'll play out.
Regarding the former case, of money and power... this one is a little harder. In theory, if you're a part of some community, and a very rich person wanted to fuck up or infiltrate your community by leveraging their wealth, they could probably figure out a way to do it, crypto or not. At least in this case, the existing community members stand to reap some sort of benefit from it, in the sense that a new whale's buy-in will increase the value of their existing holdings. Then they can all cash out and start a new thing someplace else. It has a similar form and moral valence as neighborhood gentrification (but without the racialized element).
I tend to think most communities will solve this by having some external aim of coordination that discourages people from just speculating (which makes sense given that social proof exists relative to the community in question), even if the balance of power is determined based on buy-in. But again, I don't really know how it will play out in practice, if more regular people will actually take up these tools for non-speculation reasons, etc.
Interesting. Do you have some resources or recommended reading you can suggest for crypto in the context of social coordination or these other shifts in concept you mentioned? I don't doubt there's interesting applications for some of this tech that have nothing do with the usual hype. I would be curious to read up on some of these developments.
To be completely honest--and I don't mean to sound mean--that doesn't seem very cool at all to me. That's a lot of words to say that with crypto you can own a token that signifies you're a part of a community. And that's the coolest thing you can think of. The iPhone is much cooler than that, I use it all day. And Steve Jobs didn't talk about it nearly as much before it started being used widely.
The potential is way beyond just "proof of membership", but that's the only tool that's currently out there and in active usage, as far as I know.
When I say coordination, I mean all sorts of collective decision-making and agency can take place using crypto as a medium, if someone has a vision and enough people are invested in making it happen, see: https://otherinter.net/research/squad-wealth/. Basically, if you need to get groups of people to align themselves and act in concert, and it's happening over the internet, crypto has the potential to make that happen. The technology is fundamentally social in nature, whereas an iPhone is fundamentally a personal object that happens to include some social tooling.
I don't know how it's going to look. Maybe groups will work together to purchase and maintain land. Maybe you'll see digital guilds or unions forming around creative niches. Regen (https://www.regen.network/) is working on communities for landowners who want to get carbon credits. It's really early. Maybe nothing will happen at all, and I'll look back on these posts with embarrassment. But it's exciting to work on projects building stuff that really doesn't exist yet, if only to see what happens.
(oh, and, people really aren't talking about this side of crypto at all. this is an entirely separate thing from bitcoin and defi)
I'm extremely skeptical that this silent majority exists because I don't see crypto being used for anything other than hodl-ing. Do you have indicators you can point to of cryptocurrency being used as a real currency?
Whether or not you think NFTs are stupid and totally worthless, there's a fairly extensive economy based around fine art NFTs where collectors (who view them more as consumption goods than investments) buy and sell in ETH. And despite wild fluctuations in ETH<>USD, people's mental accounting is generally denominated in ETH.
I'm unconvinced that most people who buy NFTs are doing it for non-gambling reasons. Where's the market in smart displays you can hook up to your wallet and show you your NFTs? Other than Twitter hexagons, are people doing anything with their NFTs?
I have seen very few people talking about the price of something in ETH without a parenthetical giving the current USD value.
As I said, I'm not trying to convince you that they aren't stupid and worthless here -- just that there's a flourishing and highly functioning ecosystem built around them, which couldn't really exist in any other context.
Also, there are plenty of smart display companies popping up. Check out Infinite Objects or Atomic Forms.
At the same time, I assume that most of the liquidity in the markets come from professionals and the people described in GP, whereas the casual retail/investors you describe tend to not keep their assets on orderbooks or in liquidity pools.
This is a great point: even above speculation, a core part of cryptocurrency's "stickiness" is that it's effectively unregulated gambling with extremely large upsides.
I think that points to the best recourse we have, after the next crash: it needs to be regulated into the dirt.
Luckily for the world, regulators tend to step in right after collapses. Crypto is finally large enough to have the eye of regulators, and if a real collapse materializes this time - they may pounce.
I suspect they'll aggressively take out stablecoins. They are the only real source of liquidity in crypto. Price action follows liquidity, so hopefully, any future swings will be much much smaller.
I can assure you that, to my vague displeasure, I am somewhat of the opposite of "generally ignorant" of cryptocurrencies. And I haven't stated any assumptions, other than the relatively bland claim that "people gamble with it."
More to the point, consumer protection in the form of regulation is what makes a currency and banking system real. There's far too much risk for the average person to consider using cryptocurrency the way they currently use EUR or USD without such a regime.
It seems rash to wish for regulation to be weaponized to the effect of banning something, rather the actual meaning of regulation to define and enforce orderly, fair, predictable functioning of something.
Much like a puppy-kicking machine, the "orderly, fair, predictable" functioning of cryptocurrencies is something much closer to "nonexistence" than to the current state of affairs.
Less facetiously: there is nothing orderly about our current schemes. There is nothing particularly fair about them either, unless your definition of fairness is something closer to Thucydides' than a modern one. And predictable? Cryptocurrencies handily defeat our stock market in unpredictability. Not a great set of qualifications.
You do understand that banning something is a form of regulation, correct? I don't know how much more explicit I can be with a phrase like "regulate into the dirt."
> I don't know how much more explicit I can be with a phrase like "regulate into the dirt."
"regulate it into the dirt" is commonly understood to mean the very real practice of placing so many restrictions/conditions on something that it becomes impractical to operate within the industry of whatever "it" is while explicitly not actually banning it outright.
I tend to agree that there's no reason it should exist, but I'm open to the idea that maybe there's a worthy purpose out there that I'm missing.
Normally if the policy outcome you wish for is for X to be non-existent, then it would be more precise and explicit to say "we should ban X". The word regulate implies to some degree that we want X to exist, just in a way that is more constrained for better outcomes. Think about the mechanical meaning of the word regulate. To try to ban something under the guise of regulation makes it seem like you are wishing for a bad-faith effort to use regulation to make something fail rather than function.
It is not misinterpretation, and the precision matters. For example, discourse on abortion that is favorable to abortion rights would not talk about the opposition "regulating" abortion, but only in terms of banning it. With crypto, it is clearly not politically favorable to have a complete ban, so to get an effective ban under the guise of regulation is basically hoping for authority to act in bad faith.
I think it CAN come to an end.
The backbone of crypto and the blockchain is the willingness to maintain it which has a cost.
The reason why this maintenance is cost effective is because the major holders are few and at a < 1/2 of the entire base.
As long as the "right" people are winning, there will be enough justification to keep the ball rolling.
If there will come a day, in which the ammount of holders become so dilluted that there stops being any clear (lets say) influencers at the top, then the "cool boy's club" will be no more.
This is when exchanges will no longer have any skin in the game.
Massive runs and "outages" until a few weird naive dreamers are left at the helm of the sinking ship.
I, unfortunately, agree with this. Different generations of digital assets will continuously be used to grift certain demographics, with the potential for even larger bubbles and busts in the future.
I think people are more rational than you give them credit, but, yes, emotion often informs and overrides our logic. Feelings, emotional intuition, biases, and prejudices color the lens of the eyes through which we see the world. Logic can be like prescription glasses or like Stevie Wonder glasses depending on how we check our priors.
> The reason is because it's very closely related to gambling and triggers the same obsessive thinking as gambling does - based on my observations of how I felt and thought when I did some crypto investing.
I noticed the same obsessive feeling and learned more about myself through that day trading. It was an expensive lesson however.
I was also flooded with some really obvious bullshit... this crash is going to sweep the table clean. There is a chance it might come back cleaner and stronger than before.
More mainstream maybe, with some regulation.
Crypto shills have always just sat in the background out of mind for a while before they come out with their next rebrand of the same scam. NFTs and Web3 have had their moment and likely collected a fortune, now they have to come up with the next branding. For some reason the general public doesn't learn.
The most amusing part is how the general public instinctively reacted to NFTs as thinking they were a scam, but they had so much news coverage and big numbers behind them that it became an Emperor has no clothes situation where it can't be a scam because too many people are agreeing with it. Only for it all to unravel and the public opinion returning to its just a scam.
Crypto shills have the problem that this is now in the money-losing phase. This is when people start complaining to enforcement agencies. Then prosecutors, the SEC, and courts start doing their thing.
The SEC just doubled their "cyber" enforcement staff. They're still working down the backlog from the ICO boom of 2018-2019, at the rate of about two scams per month.
I expect the hammer to come down on a number of Metaverse schemes which collected money, promised a fancy 3D virtual world, and failed to ship. That's where an unregistered public offering becomes fraud.
> For some reason the general public doesn't learn.
The type of person who tries their hand at cryptocurrency speculation isn't much interested in learning or responsible investment. They are trying to get rich, thinking they will get ahead of the rest of the FOMO idiots. Most don't have the financial resources to consider low-return "safe" investments in mutual funds or the stock market, but they can buy a few *coins for a little bit of nothing and hope it goes up. The crypto-libertarians who see it as a solution to perceived problems with fiat currencies and/or government economic power doesn't seem to have much overlap with the "get rich quick" group.
> Crypto had a big crash only recently - about 12 to 18 months ago I think, when Elon Musk made some comments that crashed the market. That crash was rapidly forgotten and people piled back in. Same thing will happen here.
Except 12-18 months ago we weren't entering into a recession. So, although I am generally bullish on crypto, I am not so optimistic on things coming back to normal any time soon.
Remember the old adage folks - "the market can stay irrational longer than you can stay solvent".
The Great Finance/Startup/Stock/Housing/Everything Grift May Be Unwinding. They will bottom, then all wind up again. The same structure will generate the same outputs again and again.
There is absolutely zero legal usecase for cryptocurrencies. None. "oh but it might be useful for doing-" you are wrong. Full stop.
"but what about censorship" Circumventing government censorship is, by definition, illegal.
"but what about trustless" We do not live in a world where there is nobody that can be trusted. And if we did, why the hell would you want a currency where nothing can ever be reversed?
"but what about NFTs/smart contracts/DAO" All of these are useless and have resulted in nothing but blatant scams and illegal activity (because that's all cryptocurrency is useful for)
Cryptocurrencies have many great uses. You can gamble with them, you can buy drugs with them, you can pay ransom on software that just locked down your entire business for a day, as well as many other illegal activities. EVERY SINGLE OTHER USE, WITHOUT EXCEPTION, is something that centralized systems already do well. And if someone is trying to convince you otherwise, they are either trying to pass the bag to you or make you a part of their scam.
> There is absolutely zero legal usecase for cryptocurrencies. None. "oh but it might be useful for doing-" you are wrong. Full stop.
What's with the dismissive, ignorant and hostile attitude? There are plenty of legal businesses that will accept cryptocurrencies - Mullvad VPN for example.
> Cryptocurrencies have many great uses. You can gamble with them, you can buy drugs with them [...]
Why are you surprised? Replace "cryptocurrencies" with "cash" and the same use cases apply, it's a currency after all, facilitating transactions is the core purpose of cryptocurrencies.
> EVERY SINGLE OTHER USE, WITHOUT EXCEPTION, is something that centralized systems already do well.
Yes, centralized systems handle most of our transactions just fine, most of the time. Do you expect people to have to argue in favor of choice while setting an impossibly high bar for any kind of competition?
there aren’t any that have been here a while and bother to chime in any more because every comment section on a crypto related story here is essentially exactly the same and has been for about 6 years, maybe more.
If this is the obit that sticks, the HN crypto commentariat can line up for their certificates of honor from the Being Right After All Foundation. Unfortunately, these will be distributed as NFTs
I mostly don’t bother commenting on crypto news. The same ignorant hot takes get trotted out and no one (on either side) is really interested in a discussion of the merits of the other side’s position. It’s one of those topics that is a bit perplexing to see how the HN community responds to it.
If you really believe it doesn't have "any value at all" then I invite you to sell it short. That's a free $30,000. The nice thing about markets is that you can express your opinion, and that market opinions without corresponding positions can be ignored.
The fact that I've seen many, many rejoinders to "crypto has no long term value" in the "well, just short it then" vein makes me think these talking points must be what the cool kids on r/Bitcoin or somewhere are spewing.
I don't necessarily believe all crypto is going to zero, but for Bitcoin specifically I believe (a) that proof of work is definitely unsustainable as the market cap grows and (b) given the power of miners in the BTC protocol, I have a difficult time believing they'll ever transition off PoW (e.g. compared to what ETH has done).
But, of course, shorting an asset requires conviction not just that its value is going down, but when. I would easily bet that within some decent extended time period, say 15 years, that the value of BTC will be zero or near zero. I am unaware how to short an asset feasibly over that long of a time period.
I don't use Reddit or any other social networks. This is the only site I post anything on. My suggestion to put a trade on instead of just saying stupid things on the Internet comes from institutional trading culture.
Anyone can say anything. Almost nobody backs it up with money.
There's a difference between having a price and having value. I could order a truck load of glitter and dump it on my lawn. It has no value to anyone but it still cost me money to obtain it.
It's questionable that Bitcoin has any value but there is enough money sunk into that ecosystem and propping it up that it's unlikely to ever fall away completely. There are billionaires' egos at stake here!
The market can stay irrational longer than you can stay solvent. Shorting for any decent stretch of time is not free, and you more or less have to do it on one of the many rigged casinos operating in the crypto space. It's a fool's game.
Banks and large investment firms are more than happy to create exotic instruments. With enough money at stake, you can definitely find an institution willing to take the other side of a bet against crypto (specifically BTC or ETH).
If you want proof, refer to what happened in the lead-up to the 2008 Sub-Prime Mortgage crisis (or check out the movie The Big Short if you want somewhere to begin).
Just watching all this collegial self-agreement among people who don't fully understand the subject, because what they know, they learned from writers who don't understand the subject, like the author of the laughable media piece posted here.
> John Cassidy has been a staff writer at The New Yorker since 1995. He has written many articles for the magazine, on topics ranging from Alan Greenspan and Ben Bernanke to the intelligence failures before the Iraqi War and the economics of John Maynard Keynes. He is the author of two books: “How Markets Fail: The Logic of Economic Calamities” and “Dot.Con: How America Lost Its Mind and Money in the Internet Era.” Before joining The New Yorker, he worked for the Sunday Times of London and the Post. He graduated from Oxford University in 1984 and from the Columbia School of Journalism in 1986. He grew up in Leeds, West Yorkshire.
BTC is down 53% from ATH. NFLX is down almost 75%. PTON is down over 91%. You'd actually be better off investing in BTC than in many tech darlings. I don't own any crypto, but I don't think it's fair to single out crypto in the middle of a broad tech downturn.
Yeah. The difference is you don't have people claiming the SPY or Netflix will triple each year for the next ten years. People have literally commented that about BTC and other crypto. The thought process people have regarding crypto is entirely different. It's a completely different beast. Closer to something like GME, but at least with GME GameStop was able to sell stock and pay off their debts...
Cathie Wood has said she expects ARKK to get 50% annual returns[0] despite being down 57% YTD and over 30% since she made the statement (more than BTC). Pointing to what "others" have said as some type of broad argument about an underlying security doesn't make sense. There are charlatans everywhere.
Tangentially related, I think it's interesting that people used to cite VOO pretty often, and IVV sometimes, but now I almost exclusively see SPY as an analog for the S&P 500.
I wonder how much of it's high volume is just that it has the letters "s" and "p" in it?
EDIT: let me elaborate before you downvote: the value of a US dollar is not "intrinsic", it's the result of the strength of the US government and military, i.e. due to social factors that cause it to be accepted as a medium for exchange.
Crypto is no different: any crypto asset that has an exchange value (i.e. for which there's a liquid market) is backed by social proof of some kind, although likely on not nearly as large a scale or with as much force as the US military.
I highly doubt crypto is going to replace the dollar, because then it's internet communities vs the US government, and the US government has a lot more material power than internet communities, but there's no good reason why a cryptocurrency can't have some value as a legible unit of social proof, especially if the social relations involved have some material stakes (hence the DAO).
The idea that "money = intrinsic value" is a naive view of the world; Marx didn't believe that (he saw value as based on labor added), nor did Hayek, etc.
The answer to this question does not demonstrate that USD has any intrinsic value, it merely demonstrates that USD is the most valuable and well circulated of the currencies. These currencies still have zero intrinsic value.
Yes, fiat currencies don't have intrinsic value, they have network value as the primary unit of exchange.
A good investment does need intrinsic value, which BTC does not have. It's also not a feasible payment system.
The fact that cryptos are only referenced in USD terms proves that the only real use people have for them is a vehicle of speculation. Investment without intrinsic value = speculation
The second there's a gov backed USD stable coin, the argument for any crypto as a payment system evaporates.
> A good investment does need intrinsic value, which BTC does not have.
Agree, USD is also not a good investment but it is still widespread to have some USD.
> It's also not a feasible payment system.
Disagree, it is used (not widely) but without issue for payments all the time. It isn't a feasible payment system for every single transaction, but that is a ridiculous goal. There is no payment system that is feasible for every payment.
> The fact that cryptos are only referenced in USD terms proves that the only real use people have for them is a vehicle of speculation
No, it just proves that they haven't succeeded in taking over the incumbent fiat currencies. Stocks are also most commonly referenced in USD prices, and they are not merely vehicles of speculation.
Bitcoin’s “killer app” and underlying utility is illegal transactions. Money laundering and drug purchasing. As long as the government allows it; crypto will have a base value in that.
What can happen is that crypto could replace other forms of money. Governments will likely fight this tooth and nail however, because crypto is currently an anti-government technology.