The gaslit asset class

https://blog.dshr.org/2025/09/the-gaslit-asset-class.html

by zdw • 10 months ago

163 137 10 months ago

blog.dshr.org

bix6• 10 months ago

Well hot damn!

Terr_2• 10 months ago

The fascinating thing about cryptocurrency technology is the number of ways people have developed and how much they are willing to pay to avoid actually using it. What other transformative technology has had people desperate not to use it?

Regarding this juxtaposition between between advocacy that others buy-into the system versus, er, tactical-avoidance by advocates, I'll recycle a comment from earlier today:

[Some proponents say] "That's fixed with private blockchain", which is the equivalent of "That's fixed with Segways that have a second set of wheels and the self-balancing is disabled."
There's a bunch of people busy reinventing decades-old old tech/accounting, either because they never bothered to learn what was actually new about "blockchain", or because they can't bear to admit that the new stuff wasn't really good/necessary.
[...O]utside of wild-west cryptocurrency, [unrestricted node membership] usually isn't necessary, nor even desirable when you consider the rest of the cycle-burning baggage and complexity that comes with it.

__________

They are all either false or misleading. In most cases Nakamoto's own writings show he knew this. His acolytes were gaslighting.

Quibble: Nah, that would be classical lying. "Gaslighting" is more specific and involves trying to make someone doubt your own sanity, memory, or senses.

Ozzie_osman2• 10 months ago

I think there are a large group of techies who hold similar opinions and never really bought into the hype, but still sit and watch with amazement (and maybe envy) at how something that they believe is fundamentally flawed has passed the test of time and recovered through many boom-bust cycles.

loeg• 10 months ago

What boom-bust cycles have there been since 2009?

maxbond• 10 months ago

I assume you're asking because there has only been one major crash of the financial markets since 2008, but there have been numerous cycles local to cryptoassets (eg the NFT/web3 driven cycle several years ago).

So, the answer is more or less "all of them," from dollar parity day to the latest all time highs.

silisili• 10 months ago

That's me. If there's one thing I've learned about it, it's that we'll never get rich quick as over logical people.

Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief). Wrong every time.

It doesn't pay to be the 'smartest guy in the room', as a figure of speech. It pays to be able to figure out how the everyman will act, no matter how much it pains you. And maybe those people who do are the real 'smartest people in the room.'

Terr_2• 10 months ago

Survivorship bias is significant though, it's hard to notice—or even find and enumerate—all the people who may have lost money or given up earlier with a similar business/product.

https://xkcd.com/1827/

Ozzie_osman2• 10 months ago

I think there's a difference between Bitcoin and Dropbox/Twitter. Even if you were skeptical about the latter products at first, with the benefit of hindsight, it's easy to make a retroactive argument for why they made sense (better usability, better network effects, etc).

But with Bitcoin, even with the benefit of hindsight, I still don't get it.

fhd2• 10 months ago

Some people are smart in the sense that they are very logical. Others are great predictors of how people will behave, I would call those smart, too. I'm not in that group, but feels wrong to dismiss it as "not smart". Just different smart.

earnesti8• 10 months ago

It doesn't pay to be the 'smartest guy in the room'

But it is important that you keep thinking that you are the smartest man in the room.

procaryote2• 10 months ago

Yes, although while being smart about bitcoin hasn't allowed me to predict its price at all, it has helped me not waste time on "what if we did this on the block chain?"

One of them is in the class of "if enough people believe it, it's true", the other one is actually subject to logic.

e1g2• 10 months ago

The cynic always sounds smart and remains poor.

tarsinge• 10 months ago

It’s because in investment it’s not about being right. Thats why I invested in it. Also gold is the same, makes no sense on paper, still works. Second effect is it made me lean left economically realizing how flawed are liberal economics basic assumptions about rational actors and efficient markets.

johncolanduoni• 10 months ago

This depends on what people mean when they say “Bitcoin is dumb”. Cryptocurrency as a speculative asset, regardless of whether it’s driven by the flocking of the everyman, is clearly capable of producing personal wealth the same way every other highly volatile speculative asset can. But usually people hawking cryptocurrency are talking about other applications than that, and those are almost always unrealized or just straight up scams.

jasode• 10 months ago

, it's that we'll never get rich quick as over logical people. Of course Dropbox is dumb when rsync exists.

It's neither over-logical nor "smartest guy in the room" to equate Dropbox with rysnc. Instead, it's a category error.

Consider that rsync syntax is basically : rsync <src> <dst>

Before that command is run, that "<dst>" has to exist somewhere that's reachable by all client devices that want to see the same files. That means creating that "dst" target such as arranging a $5/month VPS at Hetzner, or a self-hosted NAS at home with Tailscale/CloudflareTunnels VPN, etc.

Dropbox takes care of the "<dst>". rsync does not. That makes a profound difference in usability for non-techies.

(One could use rsync only as a peer-to-peer sync between client computers with no "server" but that doesn't work well for a 1-to-many file sharing setup to facilitate a "Single Source Of Truth".)

derangedHorse3• 10 months ago

Or perhaps there are important properties about these things that you're missing. Something that’s causing you to conflate similar use cases as alternatives to these projects. Maybe the perception of being the ‘smartest guy in the room’ is really just hubris.

sealeck• 10 months ago

Of course Dropbox is dumb when rsync exists. Of course og Twitter was dumb when group sms existed. Of course Bitcoin is dumb because...(waves hands in all encompassing disbelief).

Twitter/Dropbox offer more convenience to people: Bitcoin offers _less_. That's why people are using Bitcoin for two things: crime and speculation. People aren't buying houses with Bitcoin, they don't use it as a store of value (because it has extreme deflation), and they aren't doing their books using BTC as the currency.

What features/improvements does Bitcoin offer over the financial system? So far, the differences to me seem to be

- It's easy (or at least possible) to get a bank transaction reversed by going to court.

- If you forget your password, your bank can reset it and you don't lose all your money.

- When you transfer money using your bank, it arrives immediately in the recipient's account. When you transfer money using Bitcoin, it takes hours. The bank checks that the name matches the bank account number beforehand.

- If you get hacked, and the hacker tries to steal all your money, your bank's fraud detection system will kick in and stop this.

- Banks are regulated, and the currency is stable. This means that you can quote a price in USD, and do your accounting in USD, whereas very few people do their accounting in BTC.

- People have faith in fiat currencies because they have state backing, which means that the central bank will intervene to maintain price stability.

AnimalMuppet• 10 months ago

"The market can stay irrational longer than you can stay solvent." True. But if you're invested in the market staying irrational, it can crush you when it abruptly becomes rational.

We may not get rich, but we may miss out on becoming poor, too.

tim3332• 10 months ago

Bitcoin is kind of brilliant in a way - the first secure decentralised currency. The white paper is a good read. Twitter and Dropbox were much more obvious things.

midmagico3• 10 months ago

lol ArtForz was an engineer who single-handedly designed from scratch low-run book printing machines, built his house with CHP that he designed and created himself, created his own pick-n-place machines from parts he had laying around, reversed a hidden opcode in the AMD GPUs of the time, designed at the gate-level his own FPGA, manually soldered his own sASIC, and printed his own MOSIS chips. He was the smartest person in the room. By far. Many of the very early non-get-rich-quick people that didn't think anything would happen for decades but were interested in Bitcoin, were in fact the applied-science smartest people in the room. The people generally who thought it was digital tulips even a few years later were also people who thought they were the smartest people in the room, but were actually nowhere close.

Others who were very early (source: I was there and interacted with them) were extremely wealthy investment bankers with a track history of being able to make money, some kinds of cryptographers (Hal, Adam, etc) and others who were ultra-competent, often inventors of new technique in their own right.

It's a well-studied but unfortunately not particularly well-known result that the people most interested in Bitcoin are at the two ends of the expertise spectrum—highly highly financially competent, and financially incompetent people.

You will never hear from most of the highly-competent people because they also recognize that being noisy about owning Bitcoin draws a giant target on their backs. E.g. try and find ArtForz now.

I would offer that the late and very great James Randi's often-repeated comments on ultra high-skilled people being some of the easiest to trick are probably illustrative, and my personal opinion at the moment is that many of these people have been tricked long ago into thinking that Bitcoin is something bad.

otterley2• 10 months ago

It’s not because crypto is useful for the average person. It’s because demand for a place to safely store illicit assets is practically inexhaustible. Had I the foresight to realize that criminals would turn to it as an alternative to traditional forms of hoarding and money laundering, I would have invested in it ages ago.

earnesti8• 10 months ago

Isn't the property that it keeps getting up pretty useful for the average person.

procaryote2• 10 months ago

I saw that potential as obvious from day one. I just thought governments would care. Usually when someone sets up a money laundry ring, someone tries to stop it.

My best idea, that probably gives governments too much credit, is that it's pretty useful to have a transparent record of illicit money flows, and that you can be OK with a bit of crime to get it.

spaceman_20204• 10 months ago

Baffling that people make blanket statements like these without any real world experience of living in high inflation, poor countries. All the contractors I’ve hired from Philippines or Nigeria or Vietnam want to get paid in USD stablecoins because their currencies depreciate 5-15% against the dollar every year and stablecoins help them protect their capital

Same for friends living in high inflation LatAm countries - crypto stablecoins are a way to escape rampant inflation

potato3732842• 10 months ago

You fundamentally misunderstand society, the state and law.

Most bitcoin users aren't storing illicit assets. They're hedging against the state doing something absurd.

m463• 10 months ago

I could never wrap my mind around the formation of the united states, over 200 years ago, based on people agreeing. There was basically no technology back then. Their "software" was the constitution.

AndrewKemendo• 10 months ago

The Continental Congress was famously held in secret. A small number of wealthy aristocrats waged war on their home country without the consent of the people they were governing.

I don’t remember the powhatan or Lenape (Virginia-MD-PA tribes that were exterminated in order to build the core of the US trade and political networks) being consulted on any of this.

https://en.m.wikipedia.org/wiki/Powhatan

tomgp• 10 months ago

I think the reason is that Bitcoin et al were sold as having practical uses but their ‘success’ has been as a vehicle for speculation. Though the two things are linked (hype for the former drives adoption for the latter) and it’s possible to both hold that crypto currencies are of no practical use and a great investment opportunity. (FWIW, with a long enough time span I believe neither of these is true)

[edited to correct a couple of typos]

tanh• 10 months ago

I could always see how useful it is for criminal enterprise. That doesn't mean I want in. I wish I could avoid it altogether. Alas even stocks in my ETF holdings are proxies for some cryptocurrencies.

fxtentacle• 10 months ago

It didn't take long before it became obvious that Bitcoin would revolutionize money laundering. I think this is more like the righteous vs. evil scale in D&D. Some people are OK with profiting off crime while others aren't. And techies are more likely to be on the righteous side, while bankers, traders, or CEOs are more likely to be on the psychopathic side. And if you look at how many times HSBC has been in the news for working closely with mafia, I'm not surprised that they're selling crypto ETFs now.

buckle8017• 10 months ago

For such a well written and cited article you sadly seem to make a mistake all to common with Bitcoin.

You assume Satoshi understood what he created.

The very basis for Bitcoins security is that the real users of the system, the people who have the monetary power to not value it at anything are running nodes.

If those people don't run nodes the rules of the system are just suggestions.

Satoshi never had the chance to understand this before leaving since it's not an obvious property of the system.

wmf2• 10 months ago

This is an underappreciated point. Many people try to understand Bitcoin through Satoshi's writings but the street finds its own uses for things. The way Bitcoin is operated and used today isn't how Satoshi imagined. (And there's no evidence that building Satoshi's "original vision" would be successful either.)

danielscrubs• 10 months ago

Why attack someone like Satoshi who can’t/won’t defend himself on based only on your own hunches?

jaza• 10 months ago

I reckon Satoshi understood quite well what he created. But what he quite possibly didn't understand as well, is how human behaviour would play out with his creation. He clearly believed that at least 51% of the node-grunt-power would be controlled by people who have good intentions - or at least by people in who's interest it is - to maintain the rules of the system. That has held up so far, but there's no guarantee it will always hold up.

failuser• 10 months ago

Crypto facilitates bypassing financial regulations, drug trade, evading taxes, extorting ransoms, breaking sanctions and so on. I’m not at all surprised it’s popular. I’m surprised that even relatively sane US admin did not crush it.

divbzero• 10 months ago

China, on the other hand, did.

[2017] https://www.cnbc.com/2017/09/11/bitcoin-price-falls-on-repor... "Bitcoin price falls again on reports that China is shutting down local exchanges"

[2021] https://www.cnbc.com/2021/06/22/china-crypto-crackdown-wipes... "China’s renewed crypto crackdown wipes $400 billion off the market as bitcoin slides"

dist-epoch• 10 months ago

You realize the irony of looking at those titles, and then at the present day price of bitcoin, which is 25x, 10x the price at the time of those articles.

toenail6• 10 months ago

Money is used in crime, nothing surprising there, and the most popular money for crime is the USD.

BoppreH6• 10 months ago

Well, USD has many other (legal) uses. I have yet to see a legal use for Bitcoin that was not better served by cash or traditional banking.

sneak5• 10 months ago

This is a common retort used by crypto proponents (of which I am one). It overlooks, however, that is it much, much, much easier to do large-scale financial crime using cryptocurrencies than it is to do so with USD due to the intense and robust controls applied to USD for precisely that purpose.

One need only look at the rapid rise of cryptocurrencies in criminal enterprises over the last 10 years or so to see the truth in that.

tim3332• 10 months ago

It's hard to crush. The whole design is made that way so if you shut it down in one country it continues in other ones.

Also it funnels money to the people running it which enables them to lobby etc politicians.

yieldcrv2• 10 months ago

This is the level of discussion and nuance about cryptocurrency that I wish was more common on hackernews

The discussion about the $460 billion bounty to take “lost” bitcoin in pre-quantum proof addresses and moved to post-quantum proof ones is worthy of many threads

the quantum-scare in crypto is very unnuanced - even crypto proponents handwaive it away - when the reality explains the original confidence in this system: it adapts. Post quantum addresses will be fine

And speaking of fine, the system is “good enough”. The decentralization is “good enough“, the development platform is “good enough”, the aggregate processing power of the execution environment doesn’t need to be more powerful than a $50 raspberry pi device as it’s “good enough” - you can use those nodes as microcontrollers in the cloud and there isn’t a similar offering and pricing strategy in non-distributed ledger cloud systems

chhxdjsj2• 10 months ago

When quantum is near just get everyone to move their btc to quantum secure addresses and then orphan all the other btcs.

igor47• 10 months ago

Addressed in TFA

cyphertruck• 10 months ago

I stopped when he flubbed the first point. No, it’s not correct users have to just hope big miners will mine their transactions.

For two reasons:

1. They pay them. Do you trust “big grocery” will provide you food, or did you start a farm in your yard?

2. If that trust were ever broken, millions of bitcoiners who can easily afford to lose $10 a month can mine them. Despite there being no such censorship happening, these uneconomic miners are already a rapidly growing group. Bitcoiners are acutely aware of the state of the mempool.

Youden• 10 months ago

Your first point is addressed directly by the article.

Your second point essentially requires a decentralized charity to exceed the size of an attacker, which isn't a realistic form of security.

marcus_holmes• 10 months ago

Maybe read the rest of the article (where those points are addressed) before commenting.

And if I thought "big grocery" could make more money by not providing me food, I would definitely start growing my own food. It's got nothing to do with trust.

pants2• 10 months ago

The author simultaneously claims that:

1. Crypto is a battleground where anything that can be exploited will be

2. Bitcoin is highly vulnerable to 51% attacks

Something's not right here. For all the theoretical speculation about a 51% attack on Bitcoin, it's never happened, so maybe the system is working as designed.

Bitcoin is relatively unchanged since 2009 by design, the author hardly mentions more modern consensus protocols like Ethereum's Proof of Stake + Slashing + LMD GHOST. Even in the most optimal scenarios the cost to attack Ethereum is astronomical.

auggierose• 10 months ago

I believe in a 1M qubit quantum computer when I see it.

cwmoore• 10 months ago

Money means different things to different people. There are values that are always apparent and others. “We have inspired PageRank” is not money, it’s position. What values shall the next generation appreciate in us?

seanieb• 10 months ago

Some of his points overlap with Signal founder Moxie’s observations:

“I don’t think it’s on a trajectory to deliver us from centralized platforms, I don’t think it will fundamentally change our relationship to technology, and I think the privacy story is already below par for the internet (which is a pretty low bar!), but I also understand why nerds like me are excited to build for it.”

https://moxie.org/2022/01/07/web3-first-impressions.html

jstanley3• 10 months ago

Unlike most people discussing them, I am not "talking my book".

Is another way of saying "I am not putting my money where my mouth is".

0xAFFFF• 10 months ago

Don't make me tap the "Markets can stay irrational longer than you can stay solvent" sign.

Ekaros• 10 months ago

Also with betting against crypto I always question who is the counterparty, where will the bet happen and if I win will I actually get paid?

jstanley3• 10 months ago

Everyone always thinks they're right and the market is irrational. But taking the outside view, at least some of the people who think the market is irrational are actually just wrong and the market is right. And those are the people who will observe the market staying apparently-irrational the longest!

Yeah, markets can stay irrational longer than you can stay solvent. But also you can stay wrong longer than you can stay solvent. And it's much easier to be personally wrong about something than for the market in aggregate to be wrong about something. So you have to expect that, most of the time, if you disagree with the market, you are in fact wrong.

evadne2• 10 months ago

I remember engaging in extensive discussions with folks and at the end we just agreed that the purpose of this is number goes up.

Sammi• 10 months ago

Maybe not for all who buy bitcoin, but certainly for a large majority.

evadne2• 10 months ago

Current levels working for all who have established a position before July 2025. Of course, it can go to 0 tomorrow. lol

jstanley3• 10 months ago

Bitcoin's ten-minute block time is a problem for real-world buying and selling

In practice, the risk of suffering a double spend if you accept transactions with zero confirmations is less than the risk of chargebacks if you accept credit cards.

athrowaway3z• 10 months ago

So i'm nodding along with most of this, but I don't understand how they can say something as strange and obviously nonsensical as this:

The incentive for it to happen suddenly is that, even if Nakamoto's fix were in place, someone with access to the first sufficiently powerful quantum computer could transfer 20% of all Bitcoin, currently worth $460B, to post-quantum wallets they controlled. This would be a 230x return on the investment in PsiQuantum.

Thats some really bad accounting on the incentives and ROI available. You can't just start selling and expect the price to be stable.

But it does bring up a secondary question I've never seen any numbers on; How much money could you possibly make if you knew for certain the value of bitcoin magically went to 1% in a panic sell?

Are there any institutions open to selling a billion dollar put option?

earnesti8• 10 months ago

Also it is very likely that the advent of Quantum computing would be gradual. There exists bounty addresses, with ascending difficulty to crack. We would see the progress in steps, not suddenly. These quantum tinfoil scenarios just don't make sense.

nairboon• 10 months ago

Sure, someone on CME will gladly sell you these options. That futures market has open bets with notional value of more than 10 billion usd. How much money you can make? Depends on how much capital you're willing to bet and the used leverage.

https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bi...

yieldcrv2• 10 months ago

These fiat-default takes are uninspired

Simply having possession of the bitcoin is valuable. You can borrow against, for other cryptos assets and for fiat. You can invest with it to someone else that also won’t sell it, either at all or all at once, you can obtain goods and services from people that wont sell it, and you can also sell it. Treasury companies are buying billions of BTC per week, for now.

nullc• 10 months ago

Cynthia Dwork and Moni Naor

IIRC Dwork and Naor's work had a trapdoor (which the server used to cheaply validate the challenges) and would be unsuitable for any kind of decentralized public system. It's not "proof of work" in the same sense, or arguably proof of work at all to anyone but the server and parties that trust them.

futurecat• 10 months ago

I'm sorry but this post is highly biased and serves as gaslighting in its own way, just for a different crowd. I don't know if it's deliberate or not, but it's very telling that it's on HN frontpage.

There's no mention of:

- The lightning network (bitcoin-native layer 2 enabling near-instant transaction speed)

- Role of mining in grid stabilisation, methane reduction, etc.

- How mining hardware is actually used by miners when cost of energy is nearly free.

- Bitcoin's difficulty adjustment algorithm

- Protocols like Cashu (Chaumian Cash based on Bitcoin)

And one last thing. Mixing in a big bag "crypto" and "bitcoin" is in itself just a very bad take. sigh.

As a side note, I highly recommend Lyn Alden's book Broken Money.

sneak5• 10 months ago

The “light” in “to gaslight” is a noun. Hence, the past participle is “gaslighted”.

philippz• 10 months ago

Uff, reducing crypto as an asset class down to Bitcoin is "so 2005". Honestly, what's even the point here when doing so?

Stable-Coins are the first crypto product with global product-market-fit and real economic impact. That's just to start with.

Please take a look at Ethereum and adjacent tech (L2s, L3s).

midmagico3• 10 months ago

pfft, real neutral pov there

akk0• 10 months ago

This is an interesting list of claims but it's hard to evaluate it as much more than that. I'm aware of several of these arguments and some of them are strong, others have merit but also have standard counter arguments that aren't mentioned here. A bunch of claims either sound implausible to my ear or I don't quite understand; there's a lot of links to research that is then distilled down to a single paragraph where it's hard to understand what exactly the claim is, whether it actually matches what the source says, and if course whether the source itself is strong. Then there's some claims that are just patently absurd like RSA-breaking quantum computers in 2027 .

There's some good stuff in there but it's just a kind of a gish galloping polemic, it raises some interesting questions but it doesn't do much to sway my opinion on the macro level.

midmagico3• 10 months ago

Most of the article is technically ill-informed; unfortunately, much of the logic, while sound if it were based on factual reality, fails in that sense.

The gaslighting in this case is therefore inverted.

The gaslit asset class

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