The Handwavy Technobabble Nothingburger of Crypto

https://www.stephendiehl.com/blog/nothing-burger.html

by louwrentius • 5 years ago

418 671 5 years ago

guscost• 5 years ago

bitcoin is a meme token for gambling on a fantasy about living in a cyberpunk dystopia.

Ok, thanks.

It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.

This sure sounds like “a fantasy about living in a cyberpunk dystopia” too. Maybe the author should diversify a little into Bitcoin, and relax.

mandmandam5• 5 years ago

Another rant about crypto which ignores Nano, which has been around for 6 years now.

*y*a*w*n*.

There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.

Nano just got its own currency ticker - XNO - and avoids every fault this author finds in the rest of the field.

Mr. Diehl went far enough to pick out some flaws, and then generalized them onto every variant of the technology without going that little bit further to actually check if he's right or not. Laziness.

There's so many 'Edisons' out there who have decided that because 9,999 filaments don't work that well, lightbulbs are a dead technology. And it's so tiresome - because there's a feckin LED lighthouse beaming photons across the planet as we speak.

rvz3• 5 years ago

Another rant about crypto which ignores Nano, which has been around for 6 years now.

And also something like Stellar or Hedera which isn't mineable at all and are used for CBDCs.

mandmandam5• 5 years ago

Or Algorand, etc.

I get that this is all 'new' and confusing, but the know-it-all condescension really rubs me the wrong way - do they clone these people or what? Where do they all come from?

Ologn• 5 years ago

There is immediate and obvious utility in being able to send value instantly with no fees, with no dependence on a centralized authority.

There is, the problem is you are not sending value, you are sending the modern equivalent of Charles Ponzi's postal reply coupons.

mandmandam5• 5 years ago

Yawn.

Yes, there are straight Ponzi schemes in crypto. I seem to remember that 'PonziCoin' actually did quite well. Twice. Like, a quarter million dollars in eight hours well.

But there is also utility. Huge utility, recognized by multiple governments by now. And people working relentlessly to free us from depending on the beyond-evil bankers strip-mining every facet of existence on this planet for their own short-term gain.

coralreef7• 5 years ago

This entire post seems to avoid or lack the understanding of the basic reasons blockchain were created; that is, to offer a decentralized, permissionless, censorship-resistant network.

This was Satoshi's vision, and those values are a blockchain's express priority over scale and efficiency.

Centralization is great for speed and efficiency, not so great for protection against authoritarian actors (governments or central banks).

jrd259• 5 years ago

We have one already: cash.

As for protection against authoritarian actors. If your state has already gone full panopticon, crypto won't save you, indeed the state will mandate exclusive use of their chosen crypto, gaining even more visibility into your life. If your state has not yet done so, you should fight to preserve liberty and the rule of law. If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.

I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency. I regret that the only business I know to be benefiting from bitcoin is ransomware.

coralreef7• 5 years ago

We have one already: cash.

Cash is awful if you live in Turkey, Venezuela, Zimbabwe, Lebanon, etc. The USD has lost 90% of its purchasing power since the 1950's, meaning cash is toxic over longer time horizons. You cannot have a society where everyone seeks to get rid of the reserve asset over time.

If your country turns into a full-out surveillance state, you are not going to overthrow it by buying things with Bitcoin.

You're going to have much better chances anonymizing yourself, compared to say a bank account.

I would like to see some data on what actually valuable applications or businesses have been enabled (or simply improved) by crypto currency.

Bitcoin is a savings account in a world where Bank of America's Savings account yields you 0.01% APY, or up to 0.04% if you have more money. We are increasingly forced to take on more risk simply to maintain the purchasing power of our wealth.

tanseydavid2• 5 years ago

No one in the thread has mentioned "overthrowing a state" except for you.

zwiek• 5 years ago

But what is it actually used for?

Okay, you can donate to WikiLeaks ... But probably 99.999% of people who have possessed cryptocurrency are just speculators: buy low, sell high. And ironically, the exchanges are centralized entities :p

coralreef7• 5 years ago

Bitcoin in particular is used as a store of value, or a form of "digital gold".

Everything is speculation (you hope it goes up in the future, but no one knows for sure), but large corporations are increasingly keeping a balance in Bitcoin, as are wealthy individuals and fund managers.

To understand its place in the world, you need to be a bit more familiar with government bond yield and risks, money creation/monetary policy, the macroeconomics of perpetually rising debt and negative interest rates.

Gold has a $11 trillion market cap, and its not because of industrial use or because it sells well as jewelry.

flenserboy• 5 years ago

What's most hated about Satoshi's vision is how it prevents, and at the same time, theft through intentional inflation and easily picking/rewarding winners. The lifeblood of contemporary governments is cheating, and thus it makes sense that they will have strong immune responses against anything getting between them and their nutrients.

wizardofdos• 5 years ago

> censorship-resistant

As in impossible to influence via regulation. Once you realize that proper regulation is a good thing and a must in a functioning society, you realize something that can not be regulated can't be allowed to exist as it will undermine said society.

coralreef7• 5 years ago

I've yet to see the demise of the movie industry thanks to BitTorrent.

throwaway213325• 5 years ago

Using the word "regulation" does not give you a moral pass for taking other people's money.

Nobody forces you to use Bitcoin. Just keep using fiat if it's such a good thing for you.

todd8• 5 years ago

From the article:

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

Governments, world-wide, may end up emulating China, which is planning to outlaw other crypto-currencies while providing its own. The information gathered by a national government monopolizing crypto-currency is simply too appealing to those that would like to deter crime, stop tax-avoidance, or even understand in real-time what is going on in their economies. After China, I believe that other nations are likely to do the same thing and outlaw or heavily regulate crypto.

CTDOCodebases11• 5 years ago

They will just try to turn crypto into the existing banking network by forcing citizen coin holders onto the exchanges, banning transactions from non custodial addresses and continuing to control the on-ramps and off-ramps. This way they can monitor transaction and if they don’t like something or are suspicious they can just seize the funds once they hit an on-ramp/off-ramp.

A CBDC will be introduced and all other USD stable coins will be banned and consider counterfeit currency. The US CBDC will replace stable coins and allow the US to continue exporting its currency abolishing other currencies in the process while gathering intelligence.

Jerrrry2• 5 years ago

This.

https://en.wikipedia.org/wiki/Executive_Order_6102

Remember, the use of encryption above a certain keyspace is still considered exporting arms, and subject to ITAR.

They will let more suffer from the bubble to allow swift legal reform.

IronIvan• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

After all as we all know: If you've got nothing to hide, you've got nothing to fear.

And look at how inefficient all these permissionless, trustless protocols are! What a waste! Let's just all trust a central authority and think of the savings and the children.

padobson• 5 years ago

Yeah, this is what I don't understand from the naysayers. Anyone who says blockchain-driven assets don't have intrinsic value seems to ignore the value of trust - the ability to trust that the ledger is accurate seems extremely valuable.

The author of the article skips over the question entirely, maybe he's addressed it elsewhere, but if the crypto skeptics continue to ignore one of its primary value propositions, I have to assume either ignorance or bad faith.

swenger• 5 years ago

A blockchain doesn’t provide trust, though. A person who doesn’t understand technology doesn’t trust a distributed ledger, but they do trust their centralised bank because it’s regulated.

the_gastropod4• 5 years ago

Is trust in bank records generally low? Especially in moderately modernized countries?

horsawlarway18• 5 years ago

But that ledger isn't accurate. It's just distributed and difficult to change.

I technically am the owner of (quite a few) bitcoin that were being processed by MtGox when they imploded.

The wallet they were in at the time was emptied and no longer exists.

I still receive the relevant court documents as the case continues still.

As far as the ledger is concerned - they are no longer mine.

---

So question to you: How do you reconcile the theft of my property with the ledger at this point?

It turns out I have no ability to do so at all. The ledger is distributed and impossible to meaningfully change.

So while I trust that the ledger can't be changed easily - I don't trust the ledger to accurately reflect ownership (it can only represent possession, not true ownership).

So now what?

Now it turns out I have to turn around and trust a central authority anyways! That authority being the government that is handling the prosecution of MtGox for fraud and theft.

keyanp3• 5 years ago

the ability to trust that the ledger is accurate seems extremely valuable

Maybe it "seems" valuable, but why exactly is it valuable? For what use case and which situation (besides crime)?

I think the issue is that many don't see value in its "primary value proposition" because the features they want from banks are already there (stability, FDIC insurance). The only thing I personally see missing is no/low-fee instant transfers, but crypto hasn't solved that either (too slow and/or high fees).

HelloNurse• 5 years ago

The article discusses pseudo-money, not generic decentralized databases. The main point is that even if a blockchain distributed database technically "works" it is highly inadequate for many practical money-like applications, particularly because trust has to include the real world.

AnIdiotOnTheNet5• 5 years ago

In some context I would agree, there is theoretical value to a decentralized trustless ledger[0]. What I can't agree with, however, is that entries in a decentralized trustless ledger are inherently valuable as cryptocurrency proponents would like us to believe. The entries in the ledger have no inherent meaning, they're just a number associated with another number and the only reason anyone equates that with a monetary value is that, for the moment, they can find someone else[1] to give them money to shuffle those numbers around. I think that, at best, one could say that BTC is backed by hype and speculation. I am not convinced that is a useful basis for a currency[2].

This is in contrast to fiat currencies which their various governments offer guarantees that they will honor.

NFTs, on the other hand, make even less sense to me. They seem like they are just cryptocurrency in disguise trying to fool people who otherwise question the concept of inherent value by claiming (falsely) that they are equivalent to ownership of digital goods[3].

[0] I have yet to hear a use case for which they are actually better than traditional alternatives, but I can imagine that one might exists.

[1] read: greater fool.

[2] Leaving aside all the energy wasted on PoW.

[3] And that's before we get into my conviction that attempts to force artificial scarcity into a post-scarcity space are backward and perverted.

gfodor2• 5 years ago

It turns out in history lots of people committed crimes where the evil party was not the criminal, but the state deeming their actions criminal.

maneesh4• 5 years ago

This is why I always have thought that election voting would be a perfect use case for a blockchain.

Imagine a way that you could look up the blockchain with your key (SSN?) that is somehow one-way-hashed to show you the result of your vote. The value param would be plain-text. Someone else wouldn't be able to see your vote without your key, but you could confirm yours was recorded properly. Anyone could tally the values to get the final value.

Because the blockchain is trustless and distributed, you wouldn't have to worry about an election machine flipping your vote.

Apart from currency, this seems like a great use-case! Are there any flaws in this basic structure?

Nursie2• 5 years ago

You also need a way to use your key to show a false result, or someone can use rubber-hose cryptanalysis to see your vote.

keyanp3• 5 years ago

There are a number of attempts to accomplish this goal by using homomorphic encryption, without needing blockchain. For example, https://en.wikipedia.org/wiki/Helios_Voting

ninjanomnom• 5 years ago

Voting is intentionally designed for it to be impossible to verify what your final vote is so that it's impossible for someone to use that to hold you to a particular vote. A classic example being a household all being forced to vote one way by the head of that household. With no verification possible you can freely vote without influence from others who would use that verification for their own ends.

This is also why taking a picture of your ballot will nullify it if you're caught doing so. Not as punishment, but so you can vote again with potentially different choices and a valid excuse for having no verification.

andrewla5• 5 years ago

First of all, what you're talking about more resembles a Merkle Tree rather than a blockchain, because the "chaining" property is really useless in this scenario. Each election can publish the Merkle Tree of its results and you can be sure that your vote was properly registered. Or frankly, just publish the list of one-way hashes and their vote, and you can dispense with all the Merkle-ing.

But what about a Sybil attack? How do you ensure "one person == one or zero votes"? I could submit a jillion votes for Donald Duck and how would you ever know that those votes were all cast by the same person? Any sort of election scheme has to deal with messy real-world identity, and there's no cryptographic solution to that, only various weak social network approaches that are pretty much the norm.

pron3• 5 years ago

This is why I always have thought that election voting would be a perfect use case for a blockchain.

You mean, other than trusting elected representatives to oversee the election you'd rather trust miners?

brazzy3• 5 years ago

Of all the things you could do with a blockchain, it's probably the worst.

The legitimacy of voting outcomes depends critically on everyone understanding and in principle being able to verify how it works, and it being resistant to tampering at scale.

Very few people would understand a blockchain based voting mechanism well enough to really verify, and any implementation error could give an attacker complete and untraceable control over the results.

Relevant XKCD: https://xkcd.com/2030/

andrewla5• 5 years ago

Exactly -- "except crime".

Practically speaking these can just be anything from conflicting jurisdictions (buying weed in a state where it's legal but the Federal government is skeptical), to "crimes" like circumventing KYC or AML -- things that look like structuring (like sending > $10k) even if they are not in furtherance of criminal activity.

pron3• 5 years ago

That argument doesn't work with currency, because money requires trust by definition (as opposed to immediate barter), and, as a backup -- enforcement.

In the end, it's just a question of whether you trust a centralised authority that's ultimate accountable, however imperfectly, or decentralised authorities that are accountable only to themselves and have no enforcement power.

If you give me bitcoin and I don't give you goods in exchange, or vice-versa, aren't you going to run to that central authority?

soco2• 5 years ago

The same can be said about NFTs: you must verify their authenticity off-chain, you must trust that off-chain authority, or sue people off-chain if they infringe on your off-chain property rights...

etherael2• 5 years ago

I'll give you a bad review in a venue where your reputation is more valuable than the trade or I wouldn't trade with you to begin with. Or I would insist on an escrowed bond.

There's many other ways than inserting a monopoly on violence dispensing political authority into the loop and still ensuring that transactions are suitably reliable.

Big sticks just aren't a very efficient solution.

h2odragon• 5 years ago

Dogecoin started out as an explicitly value-free "let's play with this without risk or seriousness" fork of Bitcoin. The speed with which the scams took it over was instructive and I think indicative of everything that's played out since then... In that sense, Dogecoin was a rousing, complete, wonderful success.

can16358p4• 5 years ago

I remember reports telling Dogecoin was one of the safest cryptos to invest in, as it doesn't promise anything, accepts itself existing only for a meme, and all the reports were underlying its honesty, telling "it is what it is". Then it skyrocketed and became a purely speculative one, of course it's not Dogecoin's fault but more like Elon's.

anonymoushn4• 5 years ago

This particular source is extremely low quality and is motivated by the author's undisclosed competing product. I would like to see higher quality sources on the front page of hacker news one day.

traeregan• 5 years ago

the author's undisclosed competing product

Which is: http://adjoint.io

"Adjoint digitises cash and settlement processes for multinational corporates."

yannoninator• 5 years ago

Interesting! What advantage does Adjoint have over all the cryptocurrencies in existence can it handle payments without your bank declining your payment or chargebacks?

adamgordonbell• 5 years ago

I always assumed his anti-crypto writing was related to being in the Haskell community and a lot of Haskell community really going all-in for crypto at some point several years ago. I think because the problems were interesting and the type of hard that Haskell people like.

It's news to me he has other reasons to dislike crypto. I didn't know about adjoint, but that is very curious. I wonder which came first, the distaste or the financial company.

I suspect his opinion would be the same regardless of adjoint.

louwrentius7• 5 years ago

It is a business-to-business product that doesn't seem to have anything to do with crypto.

It's not like crypto is a thread for this business.

mkeeter• 5 years ago

It's even funnier than that – back in 2019, Adjoint was bragging about "delivering blockchain technology built specifically for the needs of the financial industry" [1]

No idea if they pivoted away from blockchain or just stopped saying it on their website, but it makes me take this with several grains of salt.

[1] https://web.archive.org/web/20190502154457/https://www.adjoi...

bhouston7• 5 years ago

Can you point out what is low quality about it? Right now it seems that you are just making that claim because you disagree with the thesis of the article.

e.g. https://www.txstate.edu/philosophy/resources/fallacy-definit...

briantakita• 5 years ago

Using the phrase "woo woo" along with various strawmen & many omissions of why crypto is being adopted was the extent of his criticism, hence low quality. He does not understand crypto & is trying to sell his competing product.

If he were to talk about decentralization/distribution vs centralization along with who controls the fiat money supply & who benefits & who does not benefit from the fiat central bank policies, then he would at least begin to broach the subject of why crypto currencies are being adopted.

Accujack• 5 years ago

I agree. Just the fact that he lumps Doge and Bitcoin together into "meme coins" tells me he has no idea what he's talking about or that he has an ulterior motive.

Whatever you think about those two coins, they are not really similar, especially given that some nations have made Bitcoin legal tender at this point.

pcthrowaway5• 5 years ago

I'm very much looking forward to seeing the way cryptocurrency revolutionizes the world in the next 20-50 years, but even I don't see any difference between Dogecoin and Bitcoin other than Doge having a dog on it.

Yes, it's pretty unorthodox to consider Bitcoin a memecoin, but it is fundamentally nearly identical to doge, but with even less energy efficiency.

The fact that it's a more established asset class with wider adoption does make it more useful to most people, but this isn't due to anything intrinsic to bitcoin or dogecoin

louwrentius7• 5 years ago

Thank you for sharing in detail why you think the article is so low quality. What can be stated without evidence, can be dismissed without evidence.

anonymoushn4• 5 years ago

No problem. Let's have a look at a high-qualify evidence-backed paragraph of the fine article:

A stablecoin bank would be subject to exactly the same FinCEN and OFAC money movement restrictions and compliance checks as banks; so know your customer gating, counter-terrorism financing, sanctions enforcement, and anti-money laundering enforcement. And these compliance requirements are the almost always the bottleneck consumers may encounter when doing cross-border transactions, and it’s not a technology issue.

I'm not sure what the fine author means by "A stablecoin bank," and he doesn't really tell us, but it seems like he means a stablecoin issuer who processes creations and redemptions, but doesn't control the use of stablecoins otherwise. In this case, an example of "a completely legal and above-board stablecoin (which doesn’t exist today)" might be GUSD. I'm also not sure why he thinks DAI is illegal, because again he just throws out a bunch of claims without substantiating them.

Anyway, he was actually talking about how stablecoins don't provide any benefit for international settlements. For whatever reason, I have bank accounts in the US and Japan, and I often have to move funds to Japan to pay bills. This takes about a week and costs about 50 basis points. The fine author would like us to know that the 1-week delay and 50 basis point charge are required by law. While this is not my area of expertise, my impression is that none of the regulations mentioned by the author require this process to take 1 week and cost 50 basis points when I am remitting funds *to myself*. I am under the impression, which may be wrong, that I am not breaking the law if I pay for goods in SPL USDC instead of waiting a week to move dollars from FTX to account at Shinsei bank via my US bank and Transferwise at the cost of taking a phone call at 2am and paying 50 basis points plus 20 dollars.

Nothing about stablecoins is either necessary nor desirable, and any alleged improvement these systems may offer at the moment are purely illusory and derived only from the unstable situation that they temporarily inhabit a yet-unregulated shadow banking system that is either non-compliant or entirely scofflawing.

This seems like an unsubstantiated claim that it's a crime to pay for goods and services using SPL USDC in every country. I don't think that's true, but maybe if the fine author could elaborate I could learn more here.

A regulated stablecoin bank is just a bank, but with a core ledger built on a terribly inefficient and bizarre piece of software not built for that purpose. All this while guzzling entire nation states worth of energy for no reason. Using inefficient blockchain as core banking software makes old legacy core banking solutions like Jack Henry look like a Ferrari by comparison. Our European allies all built extremely reliable real time payments like SEPA that work marvelously and they didn’t need any stablecoins.

The fine author seems unaware that there are currently deployed blockchains that can process the transaction volume of Visa and use less energy than Visa. That's discouraging, given that the fine author has chosen to write in such an authoritative tone about these technologies.

SEPA might be fine if you live in Europe and everyone you ever need to pay or accept payments from lives in Europe and has never lived anywhere else. It just doesn't do much for me personally when I have to move money from the US to Japan to pay living expenses, my lawyer is in Dubai and wants to get paid in Switzerland, and my developer in Japan wants to get paid in Hong Kong. So I just keep paying like $60 and taking phone calls at 2am to send wire transfers to my lawyer and dreaming of the day I can pay less than a penny and not take any phone calls at 2am if my lawyer adopts existing technology. The fine author would like me to know that this isn't actually a problem and I'm just delusional. That's not particularly helpful.

For the rest of the things the fine author has ever written, see here: https://en.wikipedia.org/wiki/Brandolini%27s_law

nice_byte3• 5 years ago

explains why that particular person's entire personality seemed to be based around anti-cryptocurrency sentiment.

ur-whale2• 5 years ago

motivated by the author's undisclosed competing product

Thank you for this, I have been wondering why Diehl has been spewing so much hate and disinformation about cryptos.

The least he could have done if he had even a shred of intellectual honesty would have been to disclose it indeed.

[EDIT]: It's even sadder when you go check the site.

The look is exactly that of a scamcoin site, all the way to the animated triangulation and the (two suits and a tech guy) pictures.

dvh1990• 5 years ago

"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."

So you're saying there IS a use case :)

nikanj3• 5 years ago

And that use case is HUGE. Cryptos are really enabling unprecedented efficiency in a wide variety of crime

Scarblac2• 5 years ago

Imagine when ransoms had to be paid in suitcases full of dollar bills with non-sequential serial numbers. Bitcoin has made it all so much easier.

throwawayffffas3• 5 years ago

Actually I think he is wrong about that, crime can be done better on a centralized infrastructure. See all crime before cryptocurrencies were a thing.

soco2• 5 years ago

For some reason all ransoms are requested in cryptocurrencies as of late. There must be a reason, hmm...

chias• 5 years ago

I think the thing that bothers me most about using "crypto" to mean "cryptocurrency" is when people write articles deriding the "nothingburger of crypto", I feel conflicted.

Part of me wonders how many non-tech people we're conditioning to assume cryptography is worthless in 2021.

jcbrand• 5 years ago

I'd say about zero.

nikanj3• 5 years ago

I think the biggest lesson here is that people really, really love unregulated gambling. The same way they love doing drugs, making narcotics an extremely profitable business.

If we don’t legalize the things our population deeply desire, the criminal elements are more than happy to step up and provide said services.

motohagiography2• 5 years ago

The authors example use cases about a database doing everything except crime summarizes it well. One persons crime is another persons freedom. If you rephrased it as saying, the only thing blockchains provide that a database doesn't is freedom, I think the resounding response would be: Yes.

What I think anti-crypto people object to is the freedom of others, because it represents a limit and undermines the necessary absolute and total Hobbesian sovereignty and dominion of the systems that provide them with their own status, which is based on something other than consent and desire, and when I read these objections, most of what I interpret is that implicit humiliation.

Gambling provides opportunity for people to live independent of being subordinate to an employer, as if your employees suddenly don't have to work for you, it's hard to build and scale social stability and wealth. I sympathize with the morality of reducing gambling as being appropriate for over a thousand years ago, but today? You also can't use shame to control people who can afford to walk away.

The current financial system is designed by-and-for creditors as a means of leverage over debtors, and crypto is explicitly not. The only problems of gambling are really problems with debts, and better laws limiting the power of creditors would solve that. The interests behind the criticisms are clear, but to me dressing them up and carting them around as moral is a bit much.

nikanj3• 5 years ago

The very same people complain about Nanny State when they’re stopped from getting scammed, and scream for justice and legal action once they manage to get scammed after all.

See also: people getting absolutely furious when the bank stops them from wiring money to Nigerian scammers for their million-dollar lottery win - and then demanding the same bank reverses the transactions after the jig is up.

They want to freely gamble with cryptos now that everything is going to the moon, but are going to be demanding answers once the bubble pops and the casino takes their life savings

MrMan5• 5 years ago

The problem of gambling is ruin maybe

ufo• 5 years ago

I'd add another sub-category: the so-called algorithmic stablecoins. Their biggest flaws being that they can blow up catastrophically in extreme events, something which may be hidden between a veneer of convoluted logic.

romille• 5 years ago

This guy has a personal brand by now for putting down crypto.

Like stop writing about it if you don’t like it!

the_gastropod4• 5 years ago

Beginning in the 1960s, Clair Cameron Patterson was very vocal against the widespread use of leaded gasolines. He was ignored and mocked for over 20 years, but kept going because he knew it was damaging, and fought to end its use. He didn't just "not like it", he was compelled to improve the world.

Whether you agree with him or not, Stephen believes crypto is damaging to society. As such, he is driven to help root it out.

mechanical_bear2• 5 years ago

Stephen has a competing product, and a hidden financial motive for slagging cryptocurrency.

dqpb6• 5 years ago

This is the sound someone makes when they realizing they're slowing down and everyone around them is speeding up.

Update: It seems I've triggered some sensitive HN'rs

Here's how to tell when someone has a real argument - they pick the best possible interpretation of the theoretical foundation of a system and then they disprove it.

Here's how to tell when someone is full of shit - they complain about meme coins.

bradhe2• 5 years ago

Author's not wrong. I've seen some seriously cringe-inducing "talks" about what blockchain is and is not, and what it can or cannot unlock for you. I also find NFTs to be just...just...confusing.

But mostly I don't care. Do whatever you like as long as you're not hurting anyone. On average people are getting misinformed about some technologies, at worst willingly grifted. But I've seen worse technology trends come (and, by the way, go).

bgroat2• 5 years ago

The problem is that PoW is hurting everyone via greenhouse emissions.

dqpb6• 5 years ago

Algorand is carbon negative.

RobertRies• 5 years ago

Not to mention an important vehicle in enabling NK's nuclear program: https://www.bbc.com/news/technology-58719884

And all the other crimes that are made much more efficient/difficult to detect.

Scarblac2• 5 years ago

I wonder how much of the Crypto hype is because the US banking system still lives in the 1980s or thereabouts.

If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?

rchowe• 5 years ago

Most Bitcoin transactions have a quite high transaction cost, and I would argue that chargebacks are an important consumer protection.

tommek4077• 5 years ago

Only if you do your transaction on the blockchain. Most are done internally. It's like your bank is not sending someone with a suitcase full of money just because you pay your phone bill.

WanderPanda2• 5 years ago

Tx cost on BTC main layer has been ~7ct for months, what are you talking about?

rawtxapp16• 5 years ago

Then you would expect people in the EU to not be interested in crypto, yet it's the opposite. You can pull up search volume for "Bitcoin" across the world (using Google Trends), many European nations are at the top.

As a matter of fact, their search volume is higher than US.

kmmlng2• 5 years ago

easy electronic transfers within 5 seconds for no charge

This is certainly not the case everywhere in the EU. In Germany for example it usually takes days. Not sure about other countries.

bildung8• 5 years ago

The difference is that those people can honestly see and use crypto as speculative assets, which is fine (if we ignore externalities for a second), not making up use cases.

freewilly1040• 5 years ago

I’m unsure what you mean by “no chargebacks” - chargebacks are provide the consumer recourse in the event of a dispute.

Robotbeat2• 5 years ago

Yeah, that whole no chargebacks concept as a “feature” of cryptocurrency has always been a head scratcher to me. I mean, yes, businesses may like that, but crooks like that even more, and it’s almost purely a negative to the vast majority of people, i.e. consumers.

And it’s a core motivation for cryptocurrency, in the original Satoshi paper.

mitchdoogle5• 5 years ago

It's beneficial for consumers because businesses can charge less for their products since they're don't have to account for as much shrinkage. I know at least one business that charges substantially less for crypto transactions because of this.

JackFr2• 5 years ago

So the US has an antiquated payments system vis-a-vis Europe, but crypto solves none of those problems. I don't see it. I see FOMO, groupthink and greed.

rawtxapp16• 5 years ago

You fail to see people who lost trust in their governments and organizations? You don't see how people are unhappy with getting their savings diluted by unlimited money printing?

Robotbeat2• 5 years ago

Cryptocurrency actually does solve that if you kinda ignore the scalability limitations of blockchain.

Of course, the minute you add another transaction layer or exchanges or other third parties, then that wipes out most of that advantage and generally the more it facilitates cheap and fast transactions the more power is given to the third party and/or more fee is taken.

I’m still a fan of first layer transactions and just making the blockchain much faster using brute force increases in block frequency and block size. Might be able to keep transaction fees low enough to be a useful alternative. But as long as more people are interested in cryptocurrency (and related tech) as a Ponzi get rich quick scheme than as a practical way to facilitate transactions, I don’t see it making a significant dent in the regular financial system.

ravenstine2• 5 years ago

I think that's certainly a part of it, but it's not the whole story, and I suspect it's perhaps responsible for 1/3 of the story.

A bigger motivation, and perhaps the most quixotic one, is financial security.

No, I don't mean that cryptocurrencies haven't been highly unstable in value.

But the more that the cabal chooses to truly enter the 21st century, the greater the danger of that technology being used as a means of coercion. This has already been seen in the porn industry (both amateur and commercial) and, say what you want about the possible ethical issues with it, but people have the right to produce pornography in the United States and also participate in the same economic system as everyone else. The danger of companies like Visa and Paypal exercising political control over their customers for other reasons is non-zero, and I would even predict that the danger is at least moderate.

Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men. If that wasn't the case, there wouldn't be a big push to create the Lightning network.

The other part of the desire for crypto, from my perspective, is a desire to be a part of a new frontier. We had the personal computing revolution, the internet, the web, web 2.0... and for those who missed out on those or merely miss them, crypto fills that void and provides a new realm of possibilities to explore.

AnIdiotOnTheNet5• 5 years ago

Whether you agree with that perspective is another thing. Many crypto enthusiasts, whether they are explicit about it or not, like the idea of creating an economic system that everyone can participate in that doesn't involve countless middle-men.

Correct me if I'm wrong, but doesn't the whole blockchain thing depend on an uncountable number of middlemen to verify transactions? They just don't have to trust them. Not to mention they have to count on a market existing for the coins to give them value.

roughly• 5 years ago

This is a genuinely important point - there’s a strain of Puritanism baked into American (& more broadly western) culture that’s getting exported and enforced via our corporate dominance. Apple doesn’t allow porn on the App Store, Tumblr killed porn because of advertiser squeamishness, Onlyfans nearly killed itself because of bank pressure. Say what you will about porn, but 30 years ago gay rights would’ve fallen afoul of the same corporate conservatism - I’m broadly liberal and generally don’t believe a corporation lacks social responsibility, but I’m extremely uncomfortable with the degree to which our cultural values are encoded in especially our financial system.

mitchdoogle5• 5 years ago

The problem with bank accounts is the banks. The promise of crypto is that you don't need to trust any institution, such as a bank, to keep track of your money.

blacksmith_tb3• 5 years ago

Which could be compelling if you lived in a society where the banks were extremely unstable, but looks terrible if you live in one with regulation, deposit insurance and and other account protections.

floatboth9• 5 years ago

Now you need to trust developers who wrote the client code, trust large mining(/staking whatever) pools not to collude and 51% you, and uhhhh trust yourself to not lose the fucking keys, or to be an expert in all the various "protection" schemes like multi-signature wallets (until they explode because there's a bug in them)… You also have to 100% trust yourself to not get scammed — there's no chargeback if you do.

rm445• 5 years ago

The promise of crypto(currency) is that you buy some and then you get rich.

I'm not even trying to be super-negative here - after all, if it does become a lasting store of value, accepted as money in the long term, then early adopters will be holding something valuable. It could happen. But right now the hype is self-perpetuating.

mountainb2• 5 years ago

The technology doesn't really matter that much. If the US banking system wants to compete, it could try paying yield on savings. That's one weird trick that has made banking attractive for well over 1,000 years. A banking system that does not pay yields to savers is just a glorified collection of ledgers.

toomuchtodo• 5 years ago

A crypto system that pays yields on monopoly money is just a glorified collection of ledgers moving fake money around, no?

What are yields a product of with crypto? If not productivity of underlying assets, it must be speculation, which isn't sustainable. You eventually run out of greater fools.

Kaytaro• 5 years ago

I doubt it, that's what Venmo, PayPal, Cash app, and a thousand other services solve. Crypto isn't nearly as convenient as any of those.

stevebmark• 5 years ago

Crypto is used as a commodity and for scams, very rarely as a currency. Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.

MildlySerious• 5 years ago

Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking, I don’t see why these would be related.

This is partially true, but I think a bad blanket statement.

Bitcoin has outperformed all other asset classes over the last decade.

You can get crypto credit cards that remove all complexity you aren't forced to deal with anyway. And even if that wasn't the case. Banking is hard, too, so that's a moot argument.

Ethereum and others are moving away from proof-of-work.

Upgrades like taproot and zkrollups improve privacy and can be used today.

koonsolo21• 5 years ago

I don't think you are up to date. There are "cash" crypto's out there such as Nano, with sub second transactions, 0 fees, and can run the network on the power of a single windmill.

wyager8• 5 years ago

Given that transferring crypto is hard, slower, more expensive, riskier, public, and more wasteful than real banking

Literally none of this is true except maybe "riskier".

rrrrrrrrrrrryan• 5 years ago

You're right that our existing digital payment systems are far better than crypto for most transactions, and that crypto (and cold hard cash) dominate black market transactions, but there's a really interesting class of transactions that don't fall into either of these groups: stuff that's technically legal, but sketchy enough that no big corporations want to touch them.

Crypto is increasingly being used as a digital payment workaround for areas that Visa and MasterCard try to avoid, like pornography and donations to controversial organizations. It's probably just a sliver of overall crypto transactions, but this is very much the use case that justifies the bitcoin-as-a-currency model.

Pornography is to Bitcoin as "Linux ISOs" are to BitTorrent.

anonymoushn4• 5 years ago

Transferring SPL USDC is easier, faster, less wasteful, and less expensive than transferring dollars in a bank account.

CPLX• 5 years ago

Yes of course they'd be excited about it. It's gambling, and people really like gambling.

To be blunt, they fucking love it. Like they’ll build an entire city in the middle of an uninhabitable desert just to do it. They’ll give up their kids future for it. People making $7.25 an hour will spend hundreds of dollars a week on scratch off lottery tickets in order to participate in it.

An endless demand for new ways to gamble is the least fucking confusing cultural development to ever happen.

Put people in a prison and they’ll do it with cigarettes. Give a bunch of construction workers a lunch break and they’ll bet on which pigeon is gonna to take off first. Hand a group of people a round ball or a deck of cards and they’ll figure out how to do it.

Beanie babies, little ceramic figures, baseball cards, coins. The desire for people to speculate on synthetically created scarcity is boundless, spanning generations.

Speculation is common to every culture in every era of human history. It's an amazing use case for a new technology with billions and billions of dollars in pent-up demand.

Crypto (and NFT's) are a gambling fad. People will keep doing it until it’s banned, matures, or gets replaced by the next gambling craze.

wsc9812• 5 years ago

If everybody in the US had access to bank accounts with easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU, would people still be excited about Bitcoin?

As someone born in the EU (now living in South-East Asia) I am still excited about Bitcoin. Because I feel it's the only safe haven for my honestly earned money out of reach of governments and banks. I feel Bitcoin is a too important technology to fail, especially as the world will slowly move towards Central Bank Digital Currencies that will have the same problems as fiat right now.

I view inflation as something bad for society (a hidden tax and form of theft) and CBDCs will be inflationary currencies. I also don't like that governments and central banks will get even more control over people's lives once physical currencies are gone. If you behave bad through the eyes of governments or banks (e.g. using too much electricity, eat too much meat, work as a prostitute, etc...) they might be able to take restrict your earning potential or spending. That is not a world that I'd like to live in.

dsr_• 5 years ago

Why do you consider it a safe haven for your money when the volatility is so high?

azth• 5 years ago

Quite a bit of it also comes from the fact that people are tired from the fed printing money at will, devaluing people's hard work they put in for years to save some money.

Secondly, people in the EU are also excited about bitcoin regardless of the fact that they have what you mentioned.

koonsolo21• 5 years ago

If PayPal would have realized the vision of Elon Musk, there would be no banks anymore. In that scenario, it would be really hard for crypto to emerge.

But right now, that market is fully open.

wyager8• 5 years ago

"Modern" banking systems still suck if you want to move large amounts of money, move money globally, move money without asking for regulatory permission and waiting for regulatory delays, avoid having your assets temporarily seized because the comptroller makes a paperwork error, etc. etc.

Eduard• 5 years ago

easy electronic transfers within 5 seconds for no charge, no chargebacks and so on, as people are used to in the EU

Um, no. I'm not used to that. My latest online German-bank-to-German-bank giro transfer took the usual two-to-three business days.

tim3337• 5 years ago

Not much. The hype is mostly gambling, ponzi schemes and the like.

flignats• 5 years ago

It's the world's first globally accessible, decentralized, transparent, immutable ledger. Lots of value and future value that is being unlocked.

kobieyc• 5 years ago

Excellent straw-manning 10/10

bhouston7• 5 years ago

Stephen is mostly likely right that the decentralized nature of Crypto is not really a benefit. That said digital cash and tokens and NFTs do have value and I expect them to get even more popular.

I am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution.

Napter's P2P infrastructure (and later Gnutelle and Bittorrent) allowed it to operate in a legal gray zone or at least have deniability. But Napster's lasting innovation wasn't P2P, it was showing how popular digital music was when it was being fought by the powers that be (and Bittorrent showed how popular digital films would be.)

BitTorrent is still around, primarily for pirating content. It is no where near as popular as the legal means of accessing and distributing digital music and video though -- Netflix, Apple Music, Spotify, Disney+ have grabbed the main innovation and separated it from the decentralized P2P infrastructure that first enabled it.

I think crypto is likely going in that direction. People want digital cash. People want NFTs. But they do not need this wasteful decentralized infrastructure and the complete anonymity that it is designed around.

That said, I think the criminal needs will keep decentralized crypto around forever, even after it is likely banned in most places, just like BitTorrent continues today.

Crypto servers a great purpose just like Napster/Gnutella and Bitorrent did -- it is forcing us to modernize our traditional banking infrastructure to compete with these wildcat currencies.

Digital cash versions of each major currency will exist, be formally blessed by the powers that be, they will probably have at least semi-centralized infrastructure, KYC and rollback capabilities and near 0 gas fees. KYC and rollback capabilities are key for reducing crime.

__alexs3• 5 years ago

That said digital cash and tokens and NFTs do have value and I expect them to get even more popular.

Literally all my cash is already digital.

bhouston7• 5 years ago

You are referring to Google Pay/Apple Pay/VISA. This is correct and it is mostly what people use these days.

But it isn't on a block chain and it isn't extensible. With our current digital cash I can not create NFTs and trade then around. It also doesn't allow for arbitrarily large transfers. It doesn't replace ACH or Interac. There are no public ledgers.

I think that digital cash with the features I described above will come into existence, as parallel structures to the existing ones, but probably will see significantly more adoption.

Right now we are seeing fracturing of the cash system with PayPal, Stripe, Venmo, etc. I think there could easily be a consolidation period around block chain official state currencies at some point.

koonsolo21• 5 years ago

That is impossible: the numbers on your bankaccount are multiplied, thanks to fractional reserve. The cash in your hand is not. Maybe not a big deal now, but at some point it might be. And then it's "surprise! The numbers on your account != cash in your hand"

grlass• 5 years ago

Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.

I suppose much like with BitTorrent, the criminal needs will be both good and bad; allows routing around unjust laws (of which there are many), as well as routing around just laws (of which there are many).

bhouston7• 5 years ago

Most of these systems are designed around pseudonymity, not anonymity. Only things like Zcash, and Monero set out with that explicit goal.

I agree. There are regular +100M bitcoin transfers happening between pseudonymity accounts, which could easily be money laundering / tax avoidance by billionaires: https://twitter.com/whale_alert

I think in the fully legal system, all accounts would likely be tied to real identities.

AnIdiotOnTheNet5• 5 years ago

Bittorrent and Napster took advantage of post-scarcity space created by the information age and made distribution of non-scarce resources easier. NFTs, at best, do the opposite by intentionally trying to force scarcity back into a post-scarcity system. For this reason, I do not believe they have value or much of a future.

moolcool7• 5 years ago

am reminded of the P2P/decentralized nature of Napster and how it was going to be a revolution

Torrents still account for a massive share of internet traffic. Furthermore, I think it's reductive to just consider it a tool for piracy. Blizzard uses (used?) BitTorrent in their game launcher to alleviate server costs. Not to mention that a lot of bittorrent traffic lives in the fuzzy area of sharing lost media and abandonware. Gabe Newell famously referred to piracy as a service problem, and the success of services like Spotify, Steam and Netflix undoubtedly prove that to some extent. Like yes, the easiest way to dive into the Disney back catalog is through Disney+, but there's also Disney content which, for various reasons, you can't access through the service but still has historical value.

TheProbes4• 5 years ago

I think that the main problem with this logic is that Bittorrent is a tech designed to illegally distribute a consumer good, ie a movie. Once the movie has made it's final stop, your eyeballs, that's it. It's been consumed. Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.

Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?

TheProbes4• 5 years ago

Cryptocurrency only has value if you can sell it on to someone else, and it's value is entirely dependent on what value you think you will be able to sell it for.

Once the number starts to go down as fiat on/off ramps start to get squeezed, it will be come much much less attractive to everyone, including, and maybe especially, to criminals. It only have value to them currently because they can store value in it and exchange it for fiat with non-criminals. If it becomes criminalized everywhere, and their only option is exchanging it with other criminals......well. It's not the same as Bittorrent is it?

CTDOCodebases11• 5 years ago

Funny how he fails to mention that Tether regardless of how dodgy it is provides a lifeline to people in countries undergoing massive inflation like Lebanon.

Legal or not a back up option to a failed currency has real utility. This is why I suspect countries will push ahead with CBDCs and seek to export their use for financial and intelligence reasons.

tanseydavid2• 5 years ago

I stopped at "decentralized woo woo".

c7DJTLrn2• 5 years ago

I wish I could have discussions about cryptocurrency as a technology rather than a "get rich quick" scheme. Back in 2017 I was really excited about Ethereum and the promises of scalability not just from Vitalik B. but from other developers too. I still think that cryptocurrency could do good for the world if the issues can be resolved but for now everybody's got their eyes on the price, not the technology's horizon.

bob3312• 5 years ago

It has no use case. Zero

ravenstine2• 5 years ago

Case closed. /s

That's not a particularly valuable contribution to the discussion, nor is it even true.

A use case for crypto is to be independent of the establishment financial system. This isn't important to that many people, but it is a use case, and there are valid reasons for it.

dsco• 5 years ago

What if you’re stuck in Turkey with its current inflation and want to hedge against it? Or what if you’re someone who would like to in a permissionless way buy Bitcoin options?

What the Hacker News crowd generally misses about crypto is that it’s technology, ideology and finance in one package. They keep on arguing against the storage model itself (centralized vs decentralized) and miss the bigger picture.

So many of these anti blockchain comments remind me of the initial HN reaction to Dropbox and people saying that “hey, you can just set this up yourself on a Linux machine”.

You’re missing the point. A 3 trillion dollar industry doesn’t give a shit about your database takes and how it’s all a bubble - we’re way beyond that.

c7DJTLrn2• 5 years ago

Check out Monero. Untraceable, decentralised transactions have no use case?

tigereyeTO2• 5 years ago

It has an incredibly useful case.

Uncensorable, unstoppable, unseizable, frictionless money.

Have you ever tried withdrawing all of your money from your bank? They will fight tooth and nail to stop you.

Have you ever tried sending money with a wire? Your bank may say "No" you aren't allowed to send your money to who you want. This happened to Wikileaks in 2008.

Have you ever fought with PayPal to get access to your money on their platform? They've shut down millions of legitimate accounts barring people from accessing their own money.

With cryptocurrencies like Bitcoin, you are always in control of your own money because you have not deposited it into someone else's system. It's yours.

If you still call that "zero use case" I can't force you to drink the water I brought you to.

LocalH• 5 years ago

"Cryptocurrency", not "Crypto". Title should be updated to correct this.

floatboth9• 5 years ago

Unfortunately that battle is lost :/

timbit42• 5 years ago

It is for you because you've given up.

nathias• 5 years ago

Any application that could be done on a blockchain could be better done on my centralized database. Buy now.

SubiculumCode• 5 years ago

I submitted this recently, as a counterpoint to this article: Yes, You May Need a Blockchain (coindesk.com) https://news.ycombinator.com/item?id=29319205

andrewla5• 5 years ago

If anything, I think stablecoins are way more dangerous than the author indicates.

People talk about things like Bitcoin as a threat to sovereign currencies, and they are, as competitors, of sorts. But stablecoins are another matter entirely. One huge aspect of the value of sovereign currencies is that they are instruments of law -- courts will settle in them as a lowest common denominator, and it is safe to use them in all sorts of settings as a result.

When dollar-denominated assets appear, they always run the risk of being considered a dollar-equivalent. For example, bank deposits are dollar-denominated, and are considered dollar-equivalent (even dollar-superior, in the sense that there are transactions that you can't legally do with specie, only with bank deposits, like buy stocks). That means that if banks (which are businesses) are not good at doing business, the government is essentially forced to treat them as dollar-equivalents by making them whole. See Savings & Loan Crisis, the GFC, LTCG, etc., etc.

Stablecoins piggyback on the legal aspects of dollars, and as long as you treat them as dollar-denominated assets, you're fine. The second you treat them as dollar-equivalents, you run the risk of a change in the value of that asset being something that the government is forced into supporting.

JuliusBranson4• 5 years ago

Stablecoins are dangerous because they have the potential to change the current selection effects on the elite. For one thing, stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al --- normally this is supposed to result in their friends have a larger fraction of money than they previously had. You start with 1 dollar, David at Goldman Sachs starts with 1 dollar, you each have 50% of the wealth in the "nation." David and his friends start printing themselves money, soon they have 99 dollars and you have 1, and you can't compete because they'll lock you up with violence for being a "counterfeiter." That's how inflation works.

When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair.

This obviously curtails the ability of the ruling class to reproduce itself. More than that, if the pool of people getting billions through stablecoins is more random than the pool of people who got rich on the dollar, then the ruling class will change to be more representative of the population as a whole.

This could cause massive cultural changes, consequently.

ethbr03• 5 years ago

It seems like there's another side to this story you're not mentioning... I think I read about it in history of the 19th and 20th centuries?

paulgb3• 5 years ago

Leaving aside the dubious idea that the Federal Reserve can give their friends the ability to print money, stablecoins don't subvert any party's ability to print money if they are pegged to that money. If you can print USD, and I have a stablecoin pegged to $1 USD, you can just print $1 USD and buy my stablecoin on the open market.

betwixthewires10• 5 years ago

When there's stablecoin, you just put your dollar in bitcoin before they print the money, the dollar inflates, bitcoin goes up proportionately, you spend the bitcoin and things remain fair.

Alright, exactly where do stablecoins come into play in this scenario?

ineptech9• 5 years ago

That's how inflation works.

May I recommend https://www.lynalden.com/quantitative-easing-mmt-inflation/

user-the-name3• 5 years ago

When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately, you spend the stablecoin and things remain fair.

This makes absolutely no sense whatsoever.

dragonwriter2• 5 years ago

When there's stablecoin, you just put your dollar in stablecoin before they print the money, the dollar inflates, stablecoin goes up proportionately,

Printing fiat makes stablecoins denominated in the currency lose real value, not gain in it. (Stablecoins denominated in a different currency would gain nominal value in the printed currency, the same way direct holdings in the alternative currency would.)

So, no, to the extent easy money policy makes people rich fairly directly, holders of stablecoins denominated in the currency would not be among the beneficiaries.

remote-dev• 5 years ago

stablecoins subvert the ability of the Federal Reserve to print money and give it to their friends at Goldman Sachs et al

... and now the owners of the stablecoin can print money and give it to friends of the stablecoin.

I don't see how stablecoins are any better than the Federal Reserve. If anything they are strictly worse. The owners of the stablecoin are semi-anonymous and have no governing body. I get that "no governing body" might be a good thing in some people's minds, and I think the OP highlights exactly who those people are.

AnimalMuppet• 5 years ago

Wait, you can't legally buy stocks with cash? Why not?

wayoutthere• 5 years ago

KYC laws aimed at anti-money laundering; any large movement of money has to be between trusted parties. Which means a verification process that is more thorough the more money you move around.

danielmarkbruce6• 5 years ago

I can buy stocks from you, with cash. It's cumbersome as hell. No one does it to my knowledge. From a practical perspective you basically cannot buy stocks with cash.

weego• 5 years ago

People talk about things like Bitcoin as a threat to sovereign currencies, and they are, as competitors, of sorts

No, they're competitors for the stores of sovereign wealth that are the backing of sovereign currencies.

worik16• 5 years ago

How so? Bitcoin is not a store of value, and sovereign currencies (I think I know what that means) are not backed by stores of wealth.

HWR_14• 5 years ago

That means that if banks (which are businesses) are not good at doing business, the government is essentially forced to treat them as dollar-equivalents by making them whol

The federal government also charges the banks for that insurance. It usually is not a loss for the government.

sbierwagen• 5 years ago

The federal government prints dollars. It is never going to take a loss doing that.

spiddy4• 5 years ago

Stablecoins piggyback on the legal aspects of dollars, and as long as you treat them as dollar-denominated assets, you're fine. The second you treat them as dollar-equivalents, you run the risk of a change in the value of that asset being something that the government is forced into supporting.

Why is that scenario worse than now? Why is bank the preferred medium to support when they default?

tim3337• 5 years ago

It's getting worse because they are becoming more mainstream. The kind of scenario where the government might have to bail out is US Bank lends billions to something like Coinbase which holds lots of Tethers. Then Tether goes to zero, Coinbase bust, US Bank needs bailout. We're not there yet and it's best avoided.

TSiege• 5 years ago

I was just thinking the same thing. I was looking into [Gemini Dollar](https://www.gemini.com/dollar) yesterday. It's a stable coin that gives the patina of being FDIC secured. Their website says, "Gemini is a U.S. company regulated by the New York Department of Financial Services. GUSD reserves are eligible for FDIC insurance up to $250,000 per user while custodied with State Street Bank and Trust.¹" Furthermore, Gemini offers 8% interest deposits of their Gemini Dollar. This sounds like a safe bet to an unassuming person. Easy 8% returns with no risk since your initial deposit is FDIC insured, so it's just like any other savings account. BUT ITS NOT. The fine print reads, "FDIC insurance applies only to the USD reserve funds. GUSD exist as ERC-20 tokens on the Ethereum blockchain; tokens are under the user’s self-custody, and are not insured through Gemini."

And this is coming from a reputable backer, relative to other stable coins. Then you have Tether which is a ponzi scheme tire fire years in the making and done almost entirely in the open with no consequences. Given that stablecoins like these are used to underpin a lot of the crypto markets, if one of these were to falter I don't see how it couldn't trigger knock on effects bringing down the others and the entire crypto market with it.

aasasd• 5 years ago

Guess I've gotten better-than-average at reading fine print, since the word ‘eligible’ is immediately suspect to me.

1970-01-012• 5 years ago

Until proven otherwise it seems like the goal of the crypto ecosystem is to build an enormous unregulated casino with a crazy party scene.

The goal of crypto was to move blockchains from theory to reality. Upsetting traditional FinTech and its regulation was a side-effect of the experiment.

notpachet2• 5 years ago

This is like saying that the goal of the Manhattan project was to reach new heights in our understanding of atomic physics. The people paying for the work had very clear expectations in mind.

can16358p4• 5 years ago

Not being pegged to a centralized, state-controlled currency is a dealbreaker for me. It's still in infancy and it's true that 99% of the projects are get-rich-quick schemes with no intrinsic value. Though, I think the author lives in a country with a trustworthy government because that's not the case for many people including me. In the last two days my country's currency has shaken much more than crypto and I don't trust a single word my government says. In this case, crypto really shines. In addition, as more services get integrated into crypto ecosystem and as get-rich bubbles wear off, combined with solutions to scalability and speed problems, many will see much more value in crypto.

12 years is nothing when reinventing fundamental workings of economics is at stake. Give it more time.

3np• 5 years ago

Not being pegged to a centralized, state-controlled currency is a dealbreaker for me

Pretty sure you mean the opposite

optimalsolver2• 5 years ago

He probably did, but there's wisdom in his typo.

IggleSniggle3• 5 years ago

I don’t think so. I think they were saying there’s a benefit to being able to transact using a concurrency of a trusted govt when you’re own govt is not trusted.

rzanella4• 5 years ago

Not being pegged to a state-controlled currency means your devalued currency competes with stronger ones, at least on the fictitious transitional period, you're sure you want that ?

Assuming a stateless money, when/if someone then steals your crypto coin, which gov't backed law/judicial system are you gonna turn to ?

dinobones• 5 years ago

if you aren’t wealthy you are effectively priced out of the US law/judicial system anyway.

If I took $5,000, maybe even $10,000 from you right now there would be almost nothing you could do because the legal efforts to pursue me for that amount would likely equal or surpass that.

IggleSniggle3• 5 years ago

I think you misread their comment. They said that not being pegged to state-controlled currency is a dealbreaker, whereas you seem to be thinking they said it was something they wanted.

pcthrowaway5• 5 years ago

Assuming a stateless money, when/if someone then steals your crypto coin, which gov't backed law/judicial system are you gonna turn to ?

In many regimes where you can't trust the government, it's not really relevant what kind of currency is stolen, the police are probably not the people you'll go to for restitution.

There's an argument to be made that some cryptocurrencies (privacy-coins specifically) may also give you more protection from your finances being seized by a corrupt government, though you're generally SoL in such situations regardless of how you keep your money.

can16358p4• 5 years ago

The probability of government controlling/seizing my money or fixing foreign currency rates (effectively limiting my income severely) is more than someone compromising my crypto wallets. I don't do anything illegal, I just live in a country with an extremely corrupted government and economy.

didroe• 5 years ago

If you're going to use a different currency, why not just use USD or EUR?

photon-torpedo• 5 years ago

"If they don't have bread, let them eat cake."

Edit: I think in the kind of countries that GP mentions, access to stable foreign currencies will be very restricted, especially during times where the country's native currency is in crisis.

can16358p4• 5 years ago

Because the government is corrupted in my country and at any time they can seize my money or fix currency rates. Crypto, even in its fluctating nature, is safer than either my country's currency or keeping USD/EUR etc in a bank here (and I don't have any other option).

chuckcode3• 5 years ago

I'm a little surprised that the author is missing the critical innovation of crypto which is digital trust and observability. Sure it is easy to make an argument that one cryptocurrency or another is a bubble, but don't underestimate the importance of being able to distribute work and verify trust at scale.

Just look at how git has transformed software development by mapping code to a hash. Or how DNS + SSL has transformed how people trust and transact online. Is the scalable future one where people and organizations trust their data to the cloud or other 3rd parties with no way to verify integrity?

Do people think that the future of human agreements is signatures on little pieces of paper managed by courts and lawyers? Personally I think it will be digital. Given it is digital, do you think there will be some "centralized database" run by government or a commercial entity that can be trusted as single point of failure? Personally I sure hope that there is some way to distribute and verify data integrity even if it isn't full blown proof of work. I'd sure prefer something more like git where I can see if two branches are the same even from different sources.

yawniek• 5 years ago

Thats all true but still there is the hard to deny fact that a federated trust based system is more efficient. See tls in web. With all the flaws it works remarkably well.

AlotOfReading• 5 years ago

That sounds like regular old cryptography, which I don't think anyone would argue isn't important. It's a very different discussion than "crypto" a.k.a cryptocurrencies.

anon90012• 5 years ago

You're exactly right.

Reading this article and the other HN comments, it makes me think our community is aging and becoming stuck in old ways of thinking.

It's surprising and disappointing to see it happen to this group, but I guess it's inevitable.

kinnth• 5 years ago

Decentralisation offers the following value over centralisation:

* Control by a majority, not a minority. (democratic)

* Open ecosystem that visible and able to be analysed by anyone (transparent)

* Immutable (no one makes up assets without everyone knowing about it)

* Fair. Same price for everyone at all times, no chance of a monopoly.

Those don't exist in central systems and so the price you must pay for that is speed, scalability and anonymity (which is both used for good or bad). I don't believe crypto is the answer to everything, but I certainly don't see it as useless.

the_optimist• 5 years ago

Can you describe your anticipated role of decentralization under China or US regulation? Do you simply expect and plan a parallel black market?

brazzy3• 5 years ago

Control by a majority, not a minority. (democratic)

In what way is that even remotely true for any major cryptocurrency?

Open ecosystem that visible and able to be analysed by anyone (transparent)

Right. How is that Tether audit going again? And how did all that transparency prevent this week's multimillion dollar Oopsie?

Immutable (no one makes up assets without everyone knowing about it)

Except, you know, the entire thing being made up by people who automatically get ridiculously large shares of the pie as "early adopters".

Fair. Same price for everyone at all times, no chance of a monopoly.

See above. And do you have any idea how rampant market manipulation is?

roywiggins• 5 years ago

Proof of Work/Stake are both oligopolistic, not democratic. If you can buy yourself a larger vote, that's not democratic.

throwawayffffas3• 5 years ago

First of all decentralization is not a property solely confined to cryptocurrencies. The traditional banking system is decentralized, there are thousands of banks that are all separate entities. There is no single central bank, even central banks are not unique, every country has one. Additionally the traditional banking system and cash have a huge advantage, no global consensus is required, Iran still has a banking system much to the dismay of the American government.

*Control by a majority, not a minority. (democratic)

It's a majority of hash power in the case of PoW and a majority of capital in the case of PoS, since hash power costs capital in both cases it's a majority of capital that has control, oh and the systems devs of course a small group that essentially decides the future of the system.

* Open ecosystem that visible and able to be analysed by anyone (transparent)

That is not necessarily a good thing, the fact that all the transactions are public means that they can be analyzed to identify people, this is bad not for criminals that will use sophisticated anonymizing techniques. But casual users that don't know any better and maybe identified doing either illegal (buying drugs), compromising (paying for sex) or simply being associated with other known users. In the traditional banking paradigm these problems are usually circumvented by using cash, or relying on the institutions privacy guarantees when no law enforcement is involved.

*Immutable

All these schemes while claiming to be immutable are really not, firstly the last block is always subject to being overridden by a longer chain with more blocks, thus everyone waits for multiple blocks(confirmations) before accepting a transaction as committed, secondly even if the development team / or the majority of the miners does not like a specific transaction they can always revert it, by controlling / or being the majority as was the case with the events that lead to the existence of ethereum classic. So these schemes are not really immutable, they are only immutable when a single users tokens are stolen.

As for me, I don't believe that cryptocurrencies are completely useless. I just don't see why everyone is so excited.

lima2• 5 years ago

All these schemes while claiming to be immutable are really not, firstly the last block is always subject to being overridden by a longer chain with more blocks, thus everyone waits for multiple blocks(confirmations) before accepting a transaction as committed

Not in chains with synchronous consensus and instant finality. No forking.

bob3312• 5 years ago

it’s impossible to persuade crypto fantasists because they are in a cult

ashalhashim• 5 years ago

“Let me explain why crypto is bad by showing how it doesn’t fit neatly into the definitions of any of the monetary instruments that preceded it”

chromatin• 5 years ago

Also although I don't mention it in this article, I am the CTO of a competing fintech firm

alcio• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

In a weird way, this quote is a good explanation of why cryptos exist: they give the possibility of creating systems evading state controls.

Crime is a relative thing: moving money outside of certain countries is prohibited, in others it's owning property for certain category of people.

WanderPanda2• 5 years ago

The definition of crime is not only a relative thing, but also a moving target which is quite unpredictable and has a lot of long tail events.

gfodor2• 5 years ago

For a crypto-skeptic, this is actually a stunning admission:

"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."

If you acknowledge this, then you acknowledge that crypto has a unique value proposition of being able to shield ones financial transactions. From there, you have to pull in a lot of assumptions that the only time this will be valuable is crime, not to mention what seems to be an assumption that all crime is morally determined to be crime.

dqpb6• 5 years ago

Crime can be as simple as the delta between the desires of those with power and the desire of those without power.

yashg2• 5 years ago

When I understood the blockchain and proof of work, my first reaction was - this is nuts. It's a waste of computing power and electricity all for removing a trust provider. And immediately the next realisation was that making a blockchain private and removing proof of work made it pointless.

Blockchain is a solution for nothing.

bitwize• 5 years ago

Crypto is libertarianism-as-code: it promises freedom for all, even from the state (or "cathedral" in Moldbugese), but it's really an unworkable scam whose actual effect is to enrich the founders and the investor elite at the expense of everyone else. Oh, and as a side effect, it contributes to destroying the environment while its proponents tell us this is a good thing.

floatboth9• 5 years ago

Don't forget fueling the ransomware explosion.

optimalsolver2• 5 years ago

Crypto is libertarianism-as-code:

It was supposed to be, but that whole code-is-law thing lasted all of five minutes before the first major hack (Ethereum DAO exploit).

phektus• 5 years ago

"Any application that could be done on a blockchain could be better done on a centralized database."

The scientific community will disagree with this. The whole culture of independent peer review process assumes there is no centralized control over scientific conclusions, whose rigor stems from decentralized feedback. The time when centralized database (source of truth) became the basis of mainstream science was during the dark ages.

BoysenberryPi• 5 years ago

When it comes to crypto I am completely uninformed. In my uninformed opinion, I think there is probably something of value in crypto and the blockchain but I can't see it under the intense amount of bullshit the crypto community comes up with and I am not willing to dig through that mountain.

discordianfish• 5 years ago

I felt exactly the same, until I did some research and realized it's bullshit all the way.

davidw• 5 years ago

I'm in a similar boat. I could see ... something of value coming out of all this, perhaps something unexpected. But I certainly don't want to get involved with all the grifters, scammers, hucksters, confidence men, cryptobros and their various and sundry schemes. Knowing that I don't know much about the details of it... I think of "if you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you" and know that I'd be the sucker, so the winning move is not to play.

sweetbitter4• 5 years ago

As many in the community joke, "don't buy [currency] unless you have a use-case". If your "use-case" includes gambling at the casino and not simple transactions, it is indeed better not to play.

sweetbitter4• 5 years ago

As someone who is interested in this space, you have a proper way of looking at it. Most tokens are just scams outright, or if not scams, have communities which are totally unwilling to solve the technological problems inherent of their coins (see Bitcoin's high fees, limited block size, lack of privacy). One example of a decent currency which runs counter to this trend is privacy-focused Monero, though the developers/community don't bother to market it in the same manner as many other coins, to a point that on of the main criticisms of it is its comparable lack of volatility, amusingly enough.

tl;dr There are quite a few innovations that have been made by various actors in the cryptographic currency space, most of which are entirely drowned out by a torrent of mind-numbing get-rich-quick scams and stubborn, close-minded speculators.

rawtxapp16• 5 years ago

Exactly the same as dot-com bubble where bs companies with just a domain name were the hot thing, if you just looked at that and wrote off tech, you would have made the wrong decision. Being on HN probably means you're technical enough to sort through the noise and find the actual value for yourself until the market does it for you.

joshmarlow4• 5 years ago

I think a lot of discussions around the utility of blockchains misses (or just ignores) a really subtle but important point: smart contract networks (like Ethereum) could be thought of like public utilities that are implemented via markets. And I think that perspective can unlock a lot of innovation.

If I want to launch a startup, I have to cover hosting costs, manage infrastructure (terraform, AWS/DigitalOcean, Docker, DNS, etc) and handle lots of other complexity that is incidental to what I'm actually trying to build. It really helps to have VC money to ease that pain - but VC money is a dangerous train to get on.

But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute. I don't need to cover hosting costs or much infrastructure beyond some web interface (which I could just put on Netlify). That simplicity reduces the need for funding.

Any data or infrastructure that I put in place is - by default - still available if my startup fails, so users who put their content into the system can still get access to it even if I can't afford to pay the bills anymore.

And of course, other startups could immediately build on top of whatever I've created.

Honestly, using blockchains for money - while essential for some of this - is not the most interesting application.

Igelau• 5 years ago

I thought the article did a fairly good job pointing out:

- The only applications anyone is implementing on progcoins are exchanges and/or gambling. So far, dApps are a circular argument.

- Smart contracts aren't so smart. They are ticking time bombs waiting to get exploited DAO-style.

That doesn't leave a whole lot of room for utility.

joshmarlow4• 5 years ago

- The only applications anyone is implementing on progcoins are exchanges and/or gambling. So far, dApps are a circular argument.

There's an argument that that's okay for now - the finance applications are effectively capitalizing infrastructure construction, which will make future applications easier to build, more scalable, etc. The amount of $ in these applications incentivizes bad actors to help expose the failure modes of the infrastructure - which again would be nice to know and document before it becomes widely useful.

^ that's a prediction - I'll be the first to admit that this crypto stuff may go nowhere. But it might go to some interesting places.

moolcool7• 5 years ago

But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute. I don't need to cover hosting costs or much infrastructure beyond some web interface (which I could just put on Netlify).

So you're already using Netlify, why not take the extra step and make your entire app open source and serverless? That solves the "If my startup fails" case, and the hosting costs issue which you'd be incurring either way.

tsimionescu• 5 years ago

But if I can build my app using smart contracts, then they are always available to execute when needed - just pay to write/execute

Do you mean that you would build your app so that it entirely runs on the Ethereum network, basically using Ethereum like a cloud provider? This sounds like just a more expensive, difficult, and resource intensive way of running a lambda function...

joshmarlow4• 5 years ago

This sounds like just a more expensive, difficult, and resource intensive way of running a lambda function...

It definitely would be for some applications - but probably not all. It's all about engineering trade-offs.

There's a possibility that tools with different trade-offs will make new niches feasible.

JulianMorrison• 5 years ago

"self-automated bug bounties" is my new favourite phrase.

KKKKkkkk1• 5 years ago

I'm afraid that the war against crypto was lost once Wall Street decided to join the game. Crypto will not go away regardless of utility or externalities.

NoGravitas2• 5 years ago

Yep. We're getting Economics 2.0, complete with the Vile Offspring and making the earth uninhabitable.

betwixthewires10• 5 years ago

They're really hammering away at the narrative these days. Every one of these articles i see reference one another. If this issue is so contentious as they claim every time, why is it that they can only seem to find a handful of people to reference each other? Seems like a group of people that for whatever assortment of reasons (probably their stated ones) don't like cryptocurrency and are crafting and hammering away at a narrative.

I don't disagree with a lot of what's said in the article. But there's a lot that is ignored, and a lot that isn't put into context. Yes, this entire system is designed to put financial interaction outside the purview of regulators. This is 100% true. But that's a selling point, at least to those who see it as a positive. That doesn't equate to "crime" though (although it includes crime as a subset) unless you blanked define all financial activity outside the reach of regulation as "crime", which is circular logic.

krisrm• 5 years ago

"every economist worth their weight in salt"

Which ones might those be? I think the public's trust in economists has been rightly damaged for a long time.

bsza• 5 years ago

Posting this while the inflation rate of USD is over 6% is kind of tone deaf.

karaterobot• 5 years ago

I feel like I have a pretty good idea of Stephen Diehl's opinions on cryptocurrency markets, after reading a lot of his articles posted on HN. I'll read this one too, if there's a new argument in it. Is this one worth reading for someone who is beginning to find them a little samey?

moolcool7• 5 years ago

What about gaming? A huge problem in gaming now is that once games are no longer profitable, the servers go offline and they become unplayable. In-game assets simply disappear, and DRM servers go offline on the whim of the publisher. With the right architecture, crypto could solve both of these problems.

Disclaimer: I don't like DRM or microtransactions, I think both of them make the gaming experience in 2021 pretty terrible.

rtb• 5 years ago

How would crypto force gaming companies to keep servers for old games online?

moolcool7• 5 years ago

Instead of hitting the publisher's endpoints, they'd hit a web3 endpoint to get the list of digital assets owned by the player

somesortofthing• 5 years ago

What use are records of your in-game assets if the servers where you play the game are down?

dougSF70• 5 years ago

The Oracle problem renders the trust component of the blockchain untrustworthy. The storage expense of using a blockchain (because of the validation required) imposes the requirement of using off chain DB for storage. So you end up with the most economically viable use for Blockchain being the validation of high value digital transactions..e.g Crypto. Perhaps this is why crypto prices will continue to rise, since the validation component requires energy ($) to function and the more transactions that take place, the more validation is required - I believe it does not scale linearly even though it happens in parallel.

Since validation fees are paid in crypto, crypto prices must rise as more validation takes place. It is sort of circular.

I could be 100% wrong though.

sharemywin2• 5 years ago

So, let's all use facebook ... no that wouldn't work they sell off our data...google...apple...the government(bailouts anyone)...

as hard as I try I can't seem time find a central authority that's earn my trust..

do I use them now sure.

and if all I need it is for a couple of crypto coins to hold value long enough to buy crap until my next pay check then I could see it being stable enough for that.

file coin seems like a pretty cool protocol.

prediction markets seem like a cool way to keep truth manageable.

and if 10-40 people run a publicly verifiable block chain and they have a stake if it works then I don't see how small groups or towns couldn't run a local blockchain and it's compatible with a bunch of other ones thru defi.

To me the whole point of blockchain and Defi is that the network doesn't scale but does it really need to.

sharemywin2• 5 years ago

and as for NFT. I imagine watermarking will be added and apple made billions selling music for 99cents when pirating was at an all time high.

Most people want to see creators create and get paid.

In the long run its going to be about network transaction fees going to near 0.

so as long as distributed means fair competition baked into the networks, crypto will thrive maybe not as an investment but as a way to handle micro payments and funding creators

tigereyeTO2• 5 years ago

The author of this article makes specious claims that can each be refuted.

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

That's simply not true. First he doesn't define "better" which is incredibly important when making such a claim. I would agree that centralized databases can do things "more quickly" and "with less overhead" but you'd lose the most important quality of what make cryptocurrencies important: "without permission, consent, or control of anyone else."

Centralized systems can make changes to your data without your knowledge or consent. They can freeze/edit/delete your records without your say. Decentralized systems that use blockchains are immune to this, and for people who prioritize privacy or use of a system without consent from some over-arching 3rd party, they would definitely say blockchain-based systems are "better"

crypto assets have no claim to be currencies because their deflationary properties and volatility don’t fulfill the theoretical or even practical function of money

This is untrue. There are government-issued currencies that are far more volatile than cryptocurrencies are. There are 3 functions of money: store of value, unit of account, and medium of exchange. Cryptocurrencies like Bitcoin fulfill all 3.

They aren’t commodities because they have no non-circular economic use case.

Again untrue. ENS and Handshake allow registration of domains without a centralized DNS registrar. Helium tokens allow access to a global decentralized sensor/relay network without relying on centralized telecoms. ETH and AKT allow you to code and deploy a program that does not rely on any centralized servers in two different formats. Sentinel (DVPN) lets you pay for and access a decentralized VPN without relying on a centralized party. Each of these projects - and many many others - have economic use cases that are not circular.

The author has twisted facts to conform to his own predetermined reality.

user-the-name3• 5 years ago

There are 3 functions of money: store of value, unit of account, and medium of exchange. Cryptocurrencies like Bitcoin fulfill all 3.

Bitcoin fails miserably at all three. Come on. Bitcoin can do a measly three transactions per second for exorbitant fees, it is massively unstable and unsuitable as a store of value.

whatever1• 5 years ago

Crypto can be forked without my consent too.

TheProbes4• 5 years ago

I'm not that au fait with the other cases you mention, but Helium is a straight up scam. No-one uses it for anything at all, even in markets where they have full coverage. This is because, in the real world, companies need security. They will pay a little bit extra so that: A: The network works everywhere, and doesn't suddenly develop dead spots because Jason went scuba diving for a week and turned off his node and B: There is someone on the end of the phone they can call when things go wrong.

No-one beyond those trying to make money of their tokens cares about Helium at all, easily provable by looking at their data record. "Oh....but LIME scooters!" No, they ripped off Lime's logo and are BSing that Lime uses their network. Lime doesn't. Lime uses a non-blockchain network called Twillio, because they are a real business in the real world need the things I mentioned above. https://customers.twilio.com/2050/lime/

Helium's only business, like every blockchain business that I have ever seen, is scamming people to buy tokens and selling them hardware. Oh, and lying.

chishaku3• 5 years ago

It’s a scary but essential truth to realise that normal software engineers like us are an integral part of society’s immune system against the enormous moral hazard of technology-hyped asset bubbles metastasizing into systemic risk.

Myopic and uninformed.

Pretend crypto doesn't exist and you still have a market rife with moral hazard and technology-hyped asset bubbles that metastasize into systemic risk to the point of bringing down the real economy in increasingly shorter crash cycles.

Is crypto a cause or a symptom?

llimos• 5 years ago

Most people on HN are rational people who look at the world in a rational way. Bitcoin and friends are not operating in a rational market, therefore we don't understand them, and most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing.

But, and this is a key point, that doesn't make us right and them wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?

louwrentius7• 5 years ago

We are perfectly capable to decide what is better because it isn't magic.

For every gain, somebody literally has to lose. All crypto money is just other people's money.

The people who win are vocal. The people who lose, stay silent, often in shame

And even if you disagree, those gains are not worth the destruction of our planet.

twelve40• 5 years ago

To play devil's advocate, the fact that it's someone's money and people are losing it doesn't automatically mean better or worse. For example, Netflix bankrupted Blockbuster and people lost money but it is clearly "better". I guess we're just still waiting for a popular use case, outside of crime, speculation and money transfers to places with no infrastructure.

wyager8• 5 years ago

The people losing money to bitcoin are bagholders in inferior monetized assets like USD, real estate, etc.

It's still a net gain for society though - introducing good hard money is extremely positive-sum.

chishaku3• 5 years ago

The market aside from crypto is not rational.

The market we have today would be completely unimaginable to "traditional" market participants 12 years ago, 24 years ago and so on.

The myth of a rational market is a powerful one.

https://en.wikipedia.org/wiki/Irrational_exuberance

https://en.wikipedia.org/wiki/Greenspan_put

https://www.ft.com/content/9f7f32af-a71a-4892-b331-324aa14ff...

pphysch5• 5 years ago

Rational/irrational is a vacuous distinction. Everyone has their own perspective on time and value.

This doesn't address any of the OP's arguments, however.

mlcrypto3• 5 years ago

Bitcoin is smart engineered gold. It's perfectly rational compared to the endless printing in fiat. Most engineers just accept keynesian economics because that's what they were taught.

They have a narrow world view beyond their tech expertise. I saw somebody criticize BTC because they couldn't imagine using so much energy "just to secure money". I was like what you just took for granted is perhaps society's most important need and unsolved problem.

cormacrelf• 5 years ago

If you misquote just a little, their argument can be just as useless at supporting any shitty or illegal industry.

But, and this is a key point, that doesn't make us right and [the people who scam old ladies by extremely pushy sales tactics for vacuum cleaners] wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?

jgalt212• 5 years ago

most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing

I think those are the makings of an effective bond investor. But as far as stocks, or stonks, go you're pretty correct here.

rawtxapp16• 5 years ago

Are you implying that no rational person should ever buy Bitcoin? That seems a bit far-fetched, no?

At this point, considering that it's stronger than ever and it's pretty clear it's not going away, I would expect a rational person to allocate even a small percentage to it for diversification, in case they happen to be wrong on their conclusions or understanding of Bitcoin.

outside12342• 5 years ago

There are rational reasons for buying Bitcoin - most of them revolve around money laundering, drug trades, and ransomware.

This is the reason we should enforce "know your customer" laws on Bitcoin such that we have government ID for everyone for every transaction that hits the chain.

AlexandrB7• 5 years ago

Couldn't you make the same argument for pets.com stock in early 2000? "Diversification" is a conveniently vague reason to invest in something when there are no "fundamentals" that can be evaluated. At the very least pets.com had some assets that could be sold off after the company went under. Bitcoin can't even claim to have that.

PantaloonFlames• 5 years ago

The issue is not whether a person can make money in a Ponzi scheme. We know it is possible. The issue is, is it a good idea?

koonsolo21• 5 years ago

Buying low and selling high is not a ponzi scheme.

bradwood3• 5 years ago

And how is fiat not a Ponzi scheme?

verdverm6• 5 years ago

It's really more of MLM than Ponzi at this point.

ineptech9• 5 years ago

The anti-crypto case is not that it's "worse" than some other speculative investment asset (gold, comic books, etc), it's that crypto is a speculative asset, as opposed to the things it's sometimes claimed to be (e.g. currency, a new way to do finance, etc).

wyager8• 5 years ago

All monetized assets like USD or gold are "speculative". I speculate that my dollar probably won't lose more than 10-20% of its value in the next year.

thewarrior3• 5 years ago

This is something I’m stumped myself about. HN etc says crypto has no value and I wonder about other things in conventional finance that are of speculative value :

Gold - Sure it’s a good store of value as a metal but so is bitcoin. If Gold can be valuable because lots of people value it as a store of value so can Bitcoin. In fact bitcoin is arguably better than Gold.

The total wealth of the world is 1000 trillion. Bitcoin is easily worth 0.1 - 0.5 % of that because of its permissionless advantage. Bitcoin has a non zero floor price. I think anyone would agree with this.

This is unlike say NFTs which are not likely worth anything with a potential floor of 0.

Loss making stocks like Snapchat - A company that said in its IPO filing that we may never be profitable and is still struggling with profitability is worth 100B.

If conventional finance is 50 % a Casino based on social factors why can’t there be one more ? Are the purveyors of the current system afraid that they’ll lose their cut ?

What is the right mental model here ?

koonsolo21• 5 years ago

Sorry, but please speak for yourself.

Plenty of people here see the potential that cryptocurrencies and blockchains can offer.

Let's find out where it takes us, but at this point, we're winning :D.

secondaryacct4• 5 years ago

Winning what ? US dollards?

secondaryacct4• 5 years ago

Taxpayers, law abiders, hell even environment conscious is who we are to say our way is better.

sjtindell13• 5 years ago

HN’s attitude is very surprising to me. I would think that they could get very excited about flash loans, decentralized exchanges (automated market makers), daos, and other concrete innovations coming out of crypto asset projects.

I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. I think that because I’ve had the feeling many times.

They may not realize these are early days. The average person saw the bubbles in tech company stocks and even to this day I find myself having to argue with people who think that tech is in a bubble despite the fact that these companies are now some of the biggest, most profitable, and most powerful in the world.

Everyone on HN is asleep and a company offering a product called SushiSwap is a multi billion dollar unicorn. I think 99% of crypto projects are scams, but they are also exploratory. Even if they crash now, these decentralized apps are significantly more solid than pets.com ever was. Does HN really think that just evaporates?

I would ask anyone on HN who is doubtful to do this - go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested.

The situation on HN really feels to me like one of “live long enough, see yourself become the villain.” They are playing the role of the old men in suits in the 90’s sitting around a table in New York and looking at those internet hippies in California saying “we build real things, not these internet funny money companies”.

And what happened? It’s like Zuckerberg said to the suits in the Social Network - “I could buy Mt. Auburn Street, take the Phoenix Club, and turn it into my ping-pong room.”

beepbooptheory• 5 years ago

I am not asleep, but I'm definitely tired.

ycombobreaker2• 5 years ago

automated market makers

Are you claiming that this is an innovation associated with crypto? Can you elaborate or clarify, as the case may be?

verdverm6• 5 years ago

I was excited 4 years ago when I first discovered these crypto concepts. As time has gone on and I've learned more about them, they are less interesting and come with a ton of baggage. There are interesting things like formal verification, but I expect that these types of things will be taken without the blockchain.

You shouldn't dismiss HN attitudes as jealousy or asleep, that is derogatory.

vnchr• 5 years ago

There’s astroturfing on HN, like every other open social media platform. The tilted dissonance around crypto, whether it’s the counterintuitive market behavior or climate change advocacy, is one of lacking curiosity, a hallmark of innovative cultures.

Imnimo4• 5 years ago

go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested.

I feel like the coolness of Uniswap requires putting the cart before the horse. If I'm not convinced of the real utility of these tokens, why would I be impressed with the ability to move them around in various clever ways? I need to see a valuable external use case before I can see the value in what Uniswap enables.

koonsolo21• 5 years ago

It's like talking to an old person about computer games. They literally see 0 value and don't get why we are all excited about it. Most feel it's a net negative on society.

And yes, that's also a market that dwarfs all of its neighbors.

breuleux2• 5 years ago

I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink.

If crypto and defi live up to their promise, no one is going to "miss the boat". People at large will start getting paid in cryptocurrencies and they will start using them in transactions. If there are only a limited number of boats for this thing, that means it's a bubble and it's going to pop.

Personally, I struggle to see any real uses for cryptocurrency that are not at odds with it being deflationary. So, paradoxically, for as long as it keeps going up, I don't trust it will hold its value. Once the curve flattens and adoption picks up, then sure, I'll consider it, but at that point it doesn't matter if you get in early or not.

acjohnson554• 5 years ago

While extremely interesting and even innovative, of those innovations are only useful in the hermetic world of their own blockchain, due to the oracle problem. The idea of real-world DeFi is purely hypothetical, at this point.

TigeriusKirk• 5 years ago

It would be an extraordinary event in human history if jealousy didn't play at least some role here.

But I think more than that it's become an identity thing. A social signal. So it's not really worth arguing about. Share you own thoughts and move on, don't get invested in debating it here. Elsewhere, perhaps, but not here.

I do want to add that while I don't completely agree with all your comments in this thread, I do appreciate seeing someone express an opinion on the topic that isn't a copy/paste of countless others before it.

SuoDuanDao9• 5 years ago

I suspect that much of HN, either directly or via their backers/employers, also comes out of the angel-investment scene and has emotional ties to the more conventional funding mechanisms that were themselves disruptive to traditional finance. "You can't make someone understand something when their income depends on not understanding it" and all that.

mclightning2• 5 years ago

I have exactly the same observation and personal experience, and commented the same thing a while back on another crypto-hatred thread here on HN.

Below commenters are just switching the tables around, not seeing absolute radical cynicism towards crypto/blockchain on HN.

mamma_luvs_rust• 5 years ago

It's easy to complain and dismiss, but bitcoin literally made me rich

beervirus• 5 years ago

Yes, rationality is better than irrationality.

wyager8• 5 years ago

Bitcoin and friends are not operating in a rational market

Have you considered the possibility that your personal model (which you presumably describe as rational) is just insufficiently complete to accurately model bitcoin? I think bitcoin is perfectly rational. A lot of people confuse things like impredicativity (e.g. in the pricing of monetized goods) with irrationality, but this is just a limitation of their mental model.

TomSwirly5• 5 years ago

but it is for sure possible to make money in it.

If it's a bubble, what that means is that almost everyone is going to lose money on it.

It's just a different kind of market,

Would you say that magic is a different kind of science? I'd say that magic is simply false to the fact. I think it can convince people to do things, but it has no objective reality beyond that.

And cryptocurrencies have the same relationship to economics that magic has to science.

yung_steezy• 5 years ago

It is perfectly possible to be right for the wrong reasons. Unfortunately that can eventually catch up with you.

gbolcer• 5 years ago

Putting aside cryptoeconomics for a second, a centralized database can be manipulated in a criminal activity. A decentralized, omni-inspected one with no clear owner and no ability to take an axe to it provides a cryptographically sound public ledger (unless it's a private blockchain of course). It'd be very difficult to--independent of the activities that the technology is being used for now--criminally tamper with the history.

I think you have to split it into conceptual layers. Decentralization at the lower layer has value independently of how it's used.

Jerrrry2• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

agentultra• 5 years ago

I work in fintech and I don't see how a run on Tether will result in everyone getting their money back. The people financing it are hidden behind shell corps in shady countries with loose reporting and have not been playing ball with regulators. It's not reasonable to believe they have the reserves.

The systems of payments we have today are social systems. They're built on a system of obligations, credits, debits, and liabilities. The technology used to facilitate modern systems is merely a reflection of that system.

The entire reason for the crypto ecosystem to exist is to have a financial system free of that regulation and governance.

Zamicol2• 5 years ago

Tether is rat poison, and from the very beginning most voices in the cryptocurrency community have refused to call it a "cryptocurrency". It's a private token controlled by a private ledger. I know no one in the space that has a favorable view of Tether.

USDC is regulated and sane centralized alternative. Dai is a sane distributed alternative.

notpachet2• 5 years ago

There is a somewhat coherent proposition that crypto assets are effectively unregistered securities contracts, basically like stock in an empty company that doesn’t do anything except promote the sale of its own stock.

I sometimes think that when anthropologists from the future look back at today, the primary lessons they'll draw from us won't have to do with our technological cleverness, but rather our financial imagination. Greed is at work in the world, and it is a strong force of propulsion in terms of how the world we are living in is changing. Perhaps dramatically more so than technology, in a given period of time.

The willingness to speculate in a manner that is completely unhinged from reality: that is the dark heart of cryptocurrencies. It is rent-seeking behavior taken to its brutally logical conclusion. And it is not unique to crypto. Look at people's behavior in the stock market, or the housing market. It isn't that these assets are actually appreciating that much in the real world, so much as investors are simply trying to find a place to put their money and get a return.

In that sense, the speculative utility that <meme stonks/Vancouver condos/cryptocoins> provide, as a store of financial value, has become orthogonal to reality. In some markets, I'd argue that we're even seeing a weird parasitic effect, where the host is kept alive simply to serve as a form of blue sky contract by the force of our collective willingness to play Russian Roulette speculative games with each other. GameStop is a good example.

elif• 5 years ago

The author completely omits any mention of immutability or value storage, instead choosing to characterize crypto as an overengineered scam platform.

Really dubious analysis imo.

exdsq3• 5 years ago

This guy always writes such negative posts about crypto while working on his own centralized digital treasury settlement system https://github.com/adjoint-io - the exact thing crypto threatens.

Zamicol2• 5 years ago

The cryptocurrency world is full of endless, technical publications. Yet what gets posted on Hackernews and upvoted are low quality political panderings from a cryptocurrency competitor.

Compare this post with something from Ethereum: https://vitalik.ca/general/2021/06/18/verkle.html

colinrand• 5 years ago

I appreciate the authors sentiments but I missed perhaps the most important one to me. Crypto has really re-invigorated interest in DIY/Tinkerer/random projects with no real purpose. These may appear pointless externally, but internally to the ones working on them they are incredibly fun, educational, and sure, potentially profitable. When industry / tech is in this chaotic phase, often the major benefit is figuring out what doesn't work, what fails, etc. If things were easy, everyone would do it, but when it's hard to get right, amazing innovation can happen along the way. Don't discount the random meandering towards solutions.

outside12342• 5 years ago

http://shouldiuseablockchain.com/ is my go-to reference personally.

keyme• 5 years ago

What an obnoxious piece of drivel.

"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."

The HN California tech-bros could be forgiven for not "getting it" 2 years ago. However, when leaving your own damn house became a crime, this lack of understanding is beginning to become infuriating.

The value proposition of cryptocurrencies is not only in shielding you from the whims of bureaucrats that are in charge of monetary policies, but of idiotic changes to all policies.

When my country was in a full insane-mode covid lockdown, no centralized database helped me to get a haircut. That haircut guy took only cash or crypto.

When the next insane demand is inevitably decreed upon you, maybe cash won't do anymore either.

cwkoss5• 5 years ago

This is the second time this week I've seen an article from Diehl on the front page that is critical of cryptocurrency but has next to zero substance. Weird that people regard him as a crypto expert, he doesn't seem to understand the space very well.

- Comparing Bitcoin to doge and shiba is laughable

- Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...

- Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.

I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.

The majority of coins will eventually fail, and it's even possible all the currently popular ones will be included in that. The road to maturity has been and will continue to be bumpy. But the writing is on the wall that crypto is going to be a major force in global finance for decades to come. Pandora's box is open, anyone who thinks it will entirely flame out and disappear doesn't understand what has happened over the past decade.

medo-bear• 5 years ago

this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies

came here to say the same thing, with one addition: unregulated decentralized transfer

the author seems to brush this off as only appealing to criminals

isoprophlex• 5 years ago

The thinly veiled ad hominem stuff against Diehl is uncalled for.

louwrentius7• 5 years ago

This is the second time this week I've seen an article from Diehl on the front page that is critical of cryptocurrency but has next to zero substance. Weird that people regard him as a crypto expert, he doesn't seem to understand the space very well.

What is stated without evidence can be dismissed without evidence. These unfounded personal attacks is not what HW was about, I remember.

Comparing Bitcoin to doge and shiba is laughable

such insight!

- Re progcoins, he says "After twelve years of these technologies existing" - Ethereum is only 6 years old...

Damn, you got him! By reading the text as literally as possible... I'm impressed!

- Like most other crypto skeptics, this author doesn't understand the value of decentralized value transfer, so his analysis entirely misses the pro's of these technologies. It's like someone trying to understand why candy is popular by only looking at the nutritional information - never tasting it.

Didn't you get the memo of his article(s) that crypto is anything but decentralised? The good thing is that you yourself didn't proclaim to be a crypto expert. Fair enough!

I'd bet 1000 SHIBA that one of Diehl's friends tried to convince him to buy in years ago, and now the cognitive dissonance of that rejection costing him hundreds of thousands of dollars in potential gains is forcing him to double down: his ego cannot tolerate crypto success - or else he'd have to admit to himself he was naive and short sided by discounting it years ago.

Is this just psychological projection? Is that really all you have to offer?

cwkoss5• 5 years ago

What is stated without evidence can be dismissed without evidence.

Lol, there is no evidence in this article, it's pure conjecture.

_xnmw• 5 years ago

crypto is going to be a major force in global finance for decades to come.

Oh it'll stick around alright, and it will be a major force, just like drug dealing and insider trading and other illegal activities and scams that run rampant in the world. Ponzi schemes and promises of new riches will always exist, and there are enough suckers born every day to fall for new iterations of fancy digital woo-woo.

this author doesn't understand the value of decentralized value transfer

You know what the original "decentralized value transfer" mechanism was? Cash. Those paper bills and metal coins we've been using for thousands of years. Nobody doubts the value of decentralized value transfer. Stablecoins, which aim to replace cash, are covered in that article. Personally, I think this is where crypto offers the most promise, but then it isn't really crypto at all, it is just a digitally managed Automated Clearing House for transferring value, i.e. an improved traditional finance, like most countries in Europe have had instant transfers for decades. Nothing "cryptographic" about that.

cwkoss5• 5 years ago

The original decentralized value transfer was gold and other precious commodities.

Stablecoins are more like cash because, similarly, they are both subject to central bank's monetary policy.

Bitcoin is much more like gold, in that it can only be indirectly influenced by political policy.

pennaMan2• 5 years ago

Crypto is all about decentralized proof of trust yet somehow this eludes people who should know better. Please show me how you solve decentralized proof of trust (double spend) with postgres.

Indeed, crime did have a need for anonymous proof of trust that crypto solved. Why did crime have a need for that? Because crime lies beyond the realm of the status quo.

Criminals are to the status quo as pioneers and revolutionaries are.

In the "normal world", centralization gives us the situation where the organization in charge of authentication is the same organization that has the monopoly on violence. Indeed within the rules of this story we built crypto seems to be "a solution looking for a problem", as another stereotype argument goes. The problem is all around you.

nice_byte3• 5 years ago

you mean what payment systems and any online game with in-game currency have solved?

pennaMan2• 5 years ago

payment systems

You mean monopolisitc central payment systems like visa and mastercard that can push to deny service to a legal business like onlyfans on random religious grounds?

any online game

Last time I checked the economy of world of warcraft was owned and controlled by Activison-Blizzard, including rights to all in-game currencies, so I don't even know what this argument is supposed to mean.

verdverm6• 5 years ago

It's understood, but not desirable. Proof of Authority is preferable. Double spend is somewhat separate from proof of trust one you change the consensus algo and make it a permissioned system.

Animats2• 5 years ago

What's so striking about all this is the sheer scale. There have been bubbles before, but not trillion dollar ones based on nothing.

It's not just Bitcoin and friends. Rivian, which is just starting out as an electric light truck manufacturer, has a market cap of US$98 billion. First vehicles will ship no sooner than January 2022. This is more market cap than Ford Motor, the #1 seller of light trucks for the last 44 years and with a good electric truck in their lineup.

This can't end well.

cyphertruck2• 5 years ago

Bitcoin isn’t in a bubble on any time scale longer than 4 years. Bubbles don’t re-inflate.

1970-01-012• 5 years ago

Rivan began truck delivery months ago. Lordstown has a suitcase full of cash and a direct flight to Maldives coming up.

Animats2• 5 years ago

"The first R1T rolled off the assembly line in Normal, Illinois on September 14, which means that over about 48 days, the company was producing the R1T at an average rate of nearly 3.8/day (including weekends). ... Nearly all of these vehicles were delivered to Rivian employees."[1]

That's not production. That's debugging the assembly line.

[1] https://insideevs.com/news/544860/rivian-r1t-production-deli...

cyphertruck2• 5 years ago

The irony is that this article is correct for “crypto” but not Bitcoin. Every “crypto” could be better done with a database.

But Bitcoin allows journalists like Wikileaks to be paid without it being censored.

You can call that “crime”, but your definition of crime doesn’t comport with natural law.

And censorship resistant money breaks the stranglehold of theft via inflation from the central banks.

It eliminates the primary cause if generational poverty.

I know this site is inhabited by government worshipping authoritarians, but bitcoin will fix that too, eventually.

praveen9920• 5 years ago

I agree with the author but in the world of startup.. people come to your product/solution only if there is some issue with existing system. With crypto coins, a need is established.

Even though I agree that current crypto coins have no clear value, there is some aspect of it which people want but was probably not done right or sometimes illegal

Imagine being in 90s and everyone doing some silly websites and saying it is future. Then came the giants which actually solved the problem for the masses

timdaub6• 5 years ago

Smart contracts are, in database terminology, stored procedures that run one of the various incarnations of distributed databases these technologies are built on.

This is a classic misrepresentation of the properties of a smart contract. It's nothing like a procedure and the environment that its executed is different.

A database procedure can be deployed, run and deleted by anyone being a database admin. Anyone else cannot even see the procedures. A procedure can be edited mid-lifecycle too. E.g. we cannot see DB procedures of FB, neither can we interact with them.

A database has mutable state. And every data base makes trust assumptions about the nodes and their operators. You wouldn't invite a malicious actor to run a node in your regular DB cluster.

Anyone can host a blockchain node but not all state can be arbitrarily edited. That may require "work" as in "Proof of Work".

A smart contract can be published by anyone, be run by anyone and it cannot be updated. And it's internal state can be read after any transaction. DB procedures have no internal state that's persisted. They are functional and pure. They update the DB records.

Smart contracts and DB procedures are very different.

dominiek• 5 years ago

"Any application that could be done on a blockchain could be better done on a centralized database. Except crime."

What if the actual crime is committed by those that control our money...

Saifedean Ammous' book "The Bitcoin Standard" gives an excellent history of hard money and shows that any new form of hard money will inevitably replace the lesser form (e.g. from the silver standard to the gold standard).

Crypto is composed of interesting projects and scams. Gambling and speculations are symptoms of a wider problem of debased currency and a lack of hard money.

Bitcoin fixes this...

Talking about Bitcoin in the same vain as Crypto shows a profound lack of understanding of history both past and recent when looking at Bitcoin.

While people trade their little Pokemon NFTs Bitcoin will be doing what Bitcoin has been doing from the beginning: Staying exactly 21 million bitcoin - the scarcest and most accessible form of hard money the world has ever seen. It's a black hole sucking in monetary inflation.

1 Bitcoin = 1 Bitcoin.

easrng• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

Actually, you can have private digital currency without a blockchain that would be perfectly usable for crime. You'd need a server coordinating a scheme like that of https://www.chaum.com/publications/Chaum-blind-signatures.PD..., preferably accessed through Tor for additional privacy.

EVa5I7bHFq9mnYK• 5 years ago

That's a lot of smart words, but I just paid $7 in bitcoin to top up my Egyptian sim card (wi fi in the hotels is not existent over there, so you must use mobile internet), using bitrefill and lightning. It took a few seconds to complete, I paid zero fees, I didnt have to divulge any information about myself nor to the vendor, nor to any bank or goverment. No registration, no validation, nothing. Vendor did not have to worry about my transaction being fraudulent or that it might be charged back for any reason.

As to the volatility, I topped up my payment wallet with $100 some time ago, used it to pay for many things, and now it shows a balance equivalent of $800. I welcome such volatility.

To me, this clearly shows the superiority of this form of money over previous forms.

smitty1e2• 5 years ago

I’m not alone in believing in the fundamental technical uselessness of blockchains.

Hmmm.

Codd delivered "A Relational Model of Data for Large Shared Data Banks" in 1970, and it took something like a decade (waves hands) for RDBMS systems to appear. Packet-switched networks, anyone?

So it seems perhaps hasty to write off the blockchain entirely, though currently the idea seems to need a saner catalyst than these various coins to bring it to fruition.

btbuildem• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

The opening quote in the article captures it all for me, except the last part. The implied definition of crime is so narrow.

From what I know of the financial markets in the US, mortgages and other loans as well as more esoteric financial instruments -- it's all moving in the direction of Ponzi schemes and get-rich-quick scams. I'd go as far as saying that it is all in fact a big organized crime circuit, if you're just a little flexible in the definition of crime (mostly in the part where crime usually has consequences, but the really big crooks have found a reliable way to "socialize" the consequences of them getting theirs).

In that light, having a public, transparent ledger of all the "important" transactions at the top levels could help reduce the amount of routine white-collar crime that goes on. Perhaps it is not explicitly criminal in nature - or it is, but the offenders have far too many resources to be held accountable -- but all the same it's harmful to society at large. An idealist can dream of a system where these actors can be scrutinized, and named-and-shamed into some kind of socially responsible behaviour.

worik16• 5 years ago

I loved this article. I am almost in complete agreement.

Reading the comments here is very worrying. So little understanding of simple economic ideas, like what a Ponzi scheme is.

Truly amazed that people think that Bitcoin is comparable to gold. I am not a fan of gold as an investment, they have that in common. But nothing else.

It is a tragedy that so much energy is used, in times like these, for something so useless.

128 TWh in a year. https://www.sciencealert.com/bitcoin-could-soon-consume-0-6-...

sershe• 5 years ago

Any application that could be done on a blockchain could be better done on a centralized database. Except crime.

"Crime" is a word with bad connotations, but what it actually means is "whatever your government doesn't allow you to do". Being able to do something that a government doesn't want you to do isn't prima facie wrong or immoral in most of the world. Even under more benign governments like the US one, there are plenty of normal activities that it doesn't allow for various bad reasons (war on drugs is a good example). Technically, bypassing the restrictions on drugs, avoiding capital controls or straight up confiscation of deposits, opting out of local currency devaluation, etc. can be "crime". However, it is actually good that crypto makes that possible.

Is crypto a good tool for that, long term, from a technological standpoint? I am not sure. But the author is clearly sneaking in connotations here.

mvkel• 5 years ago

I think this fundamentally ignores what’s guaranteed to happen in the future: corporate ownership of… everything.

The only thing we own these days is our identity. That said, our digital identities are largely owned by user data companies like VISA, Google, et al.

If applications can run on the blockchain, and users have the ability to immediately and irrevocably “nuke” the personal information stored on the block chain, that massively improves on the centralized database model.

mclightning2• 5 years ago

I'm very much deep in crypto, "have skin in the game" big time. But are you being honest there?

A majority of coins are owned by corporations. Some coins already have governance through staked amount of coins. ETH2.0 and PoS will centralize the power to the majority holders of ETHs.

When that happens, corporate/"whale" investors will decide the future implementations. Either through governance voting, or just by basically clogging the execution & blockchain through a strike.

The Handwavy Technobabble Nothingburger of Crypto

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