Everyone's got 2c on bitcoin but here's mine: I don't consider the price of crypto when looking to see progress / success.
Could you explain to somebody why Bitcoin is successful without mentioning that the price goes up, by talking only about the technology, product, and adoption? What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?
AFAICT the main changes in Bitcoin in the past 5 years have been some incremental evolution of the technology that I'm not aware of changing the fundamental usage of the product in any way (SegWit, LN, and most recently Taproot).
A note on blockchain proliferation: The author considers it a bad sign that there's an explosion in new blockchains. While I also consider it a bad sign for Bitcoin, I think it's a good thing for the ecosystem. My hope is that some day we'll have ubiquitous inter-chain protocols so, rather than obsessively hyping the coin/chain we're invested in, we can move all our digital assets and contracts to whatever blockchain offers the best technology, the best performance, and the lowest fees. This will allow for increased competition and evolution in the blockchain space. You can see the beginnings of this movement in some places, but it has a long way to go.
> What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?
More liquidity allows people to get their money of their home currency and evade capital controls. In places like Argentina you're forced to use and hold a currency that's depreciating 50% a year. You get one exchange rate, while foreigners get another. And to top it off you're not allowed to hold USD or another stable currency.
Sure it would be great if they got rid of capital controls but that's not the reality and people in these countries have to live with it.
This was telling from the article:
>> Citizens moving money out of authoritarian regimes. This is, by definition, illegal, but is it a net benefit to society? I don’t know. Maybe sometimes.
I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls. To be so flippant about basic rights that people in developed countries have access to is really off-putting.
> In places like Argentina you're forced to use and hold a currency that's depreciating 50% a year.
Can we please stop banging on with this trope that BTC is somehow the magic savior of poor people in oppressive regimes? This has been beaten to death already and is just bs. Please try to look out of your western high-earner bubble and see that the majority of poor people in countries like Argentina, Afganistan, Zimbabwe, Venezuela, Cuba, etc. that suffer from that rampant inflation have not enough money and assets to buy into the bitcoin ecosystem and make it work on a daily basis.
Again, in those countries, only the corrupt rich benefit form this new digital money laundering, tax evasion feature of BTC, as the average Joe there can't afford the $26(??) transaction fee every step of the way when that's the cost of their family groceries for a month.
Everyone in those countries with failed currencies use stable fiat like USD or EUR to fend off inflation, not BTC. BTC hasn't democratized wealth, but concentrated in the hands who already owned lots of fiat/assets or those who have access to free energy for their mining enterprises. Poor people in poor countries have not benefited form BTC.
I'm not saying that there aren't poor people in Argentina who put all they had in BTC when it was low and sold high and got out of poverty, but that's more akin to playing the lottery than an actual sane financial strategy for staying solvent.
>I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls
But do YOU live in an authoritarian regime? Or are you blowing smoke based on how you imagine life is in those countries from your cushy western perspective and stuff you read on reddit? Because I spent my childhood in a broke totalitarian regime.
As the CTO of a local exchange in Iran, I can confirm that many average people here are using cryptocurrencies for many reasons including countering inflation. We even have farmers and other low-tech workers using our platform. Buying USD is not that easy here and many people simply use an exchange to buy and save crypto, without needing to do any on-chain transaction at all. Many use crypto when local stock market is not doing good for having profit on their normal savings. Even a non-trivial percent of our users identify themselves as full-time traders. Additionally because of US sanctions many are using crypto to transfer funds to their relatives over the borders, buy games/VPS/VPN/etc, receive remote salaries, or even accept donations for completing GitHub issues.
The local or the US government may oppose some of these actions and consider it illegal, but many normal people just use crypto to have a better life regardless, using their hard-earned money, for normal savings or completely ethical personal financial purposes. Those who want to launder money or evade taxes already had access to more efficient ways and presumably are still using them.
> Buying USD is not that easy here and many people simply use an exchange to buy and save crypto, without needing to do any on-chain transaction at all.
So people are using IRR to buy “crypto” on an Iranian exchange, without any on-chain transaction? Does the said exchange even have real crypto backing these accounts? If so, how did they buy it, since there's probably no-one out of Iran that would offer bitcoin or anything against rial.
On a side note, because the majority of today's use of crypto is intermediated by exchanges (which are banks, really) I'd really love to know how “leveraged”[1] they are: that is, how much of the crypto there customers have on their bank account they actually own on-chain. It could still be 1/1 at this point, but it would be surprising given they have no regulatory requirements and it's such an easy way to make money.
[1]: yes, I know, this isn't the proper term, but I just can't recall it right now.
The parent mentioned high transaction fees, that for some people may equal their whole savings. For these people, the best option is just to trust the exchange. But people with even moderate sums can and do transfer their cryptos to their own wallets. We support multiple networks and withdraw methods and transfer fees can be as low as less than a dollar. In fact our daily deposit and withdraw rates are usually comparable.
Is the crypto real and backed? As far as our exchange (the biggest in the local market) is concerned, totally yes. Aside from matching local request and demand and local mining, there are big providers that can provide USDT/USD inside or outside Iran. Then you can exchange them on many international exchanges ignoring all limitations. As I said above, there are many traditional ways of bypassing laws/sanctions and big players actively use them. The cryptocurrencies and exchanges are just creating platforms for ordinary people to have access to it.
There are inevitably “banks” and large holders/miners/etc, but the best thing about crypto is that anyone can be their own bank and trust no other person, or even mine their own money. Just as you can setup your own blog as well as using big platforms.
The regulation is in its early stages, but even here exchanges use KYC to prevent really bad actions like laundering stolen money. The trust is also more reputation based than regulation based. If an exchange is operating for a long time with known founders, and was able to satisfy all withdraw requests even in low markets when everybody was getting their money out, people tend to trust it. Our users usually do not even tolerate a minute of downtime. But of course good regulation (if there is such a thing and governments are agile enough to provide it) can help to prevent frauds that may happen in any market, including crypto. But probably making everyone more knowledgeable, with a light supporting regulation, is a better approach to preventing fraud.
> As I said above, there are many traditional ways of bypassing laws/sanctions and big players actively use them. The cryptocurrencies and exchanges are just creating platforms for ordinary people to have access to it.
I love how casually you're bragging about “delivering money laundering and corruption to the masses”. I sincerely hope you end up in jail some day.
It is just normal consumers doing things that are already accepted, even if not explicitly declared. For taking any substantial amount of money out of a bank anywhere in the world, there are tight controls and nobody can sell oil or deliver large stolen money trough crypto. But how it is different that a person can directly buy an Xbox game with crypto instead of buying it from a reseller? The reseller already did the same thing - somehow move USD to another country, buy the game and sell it inside the country. I'm saying that the crypto is just removing some proxies and traditional processes and is not providing any new way of doing bad things that were not possible before crypto.
It's like saying that Uber is causing global warming. If you really care about global warming, just regulate using cars and force EV. If for whatever reason no one cares about regulating cars and everybody already uses them, disallowing an electronic method of renting cars does not fix any real problems.
If you think anyone cares about these use cases, why a company like Apple does not simply block Iranian network providers on iPhones to prevent any illegal selling of iPhones here? There are a many many people in Iran that are using iPhones and other products that are not supposed to be used here, all of which are imported using the same methods that I said exists and are being used. Does allowing use of such products "money laundering and corruption" and you are hoping for Apple managers to end up in jail? The services I said are being used are all of the the same kind, normal services used by normal people. That's not even considering the debate that does a country like USA has the right to define what is a crime in another country or not.
There's a pretty big difference between “not actively policing your market to avoid money laundering” and “creating a business dedicated to money laundering”. We can argue that the first is irresponsible (because most of the times, the company is aware of what's happening) but the second one is in another league.
And I don't really know why you bring the USA here, this isn't harming them in any ways (Otherwise, you can be sure that iPhones would be bricked there for instance), this is harming Iran.
> Can we please stop banging on with this trope that BTC is somehow the magic savior of poor people in oppressive regimes?
I never said it would be a magic savior. I said its a good option for people that aren't legally allowed to hold a currency outside of their own country's depreciating currency.
> Please try to look out of your western high-earner bubble and see that the majority of poor people in countries like Argentina, Afganistan, Zimbabwe, Venezuela, Cuba, etc. that suffer from that rampant inflation have not enough money and assets to buy into the bitcoin ecosystem and make it work on a daily basis.
No one is forcing them to use crypto. I would like it to remain an option, even if they have to buy locally. You're the one that's in a high-earner bubble thinking they can just go down the street and open up a US denominated free checking account.
> Again, in those countries, only the corrupt rich benefit form this new digital money laundering, tax evasion feature of BTC, as the average Joe there can't afford the $26(??) transaction fee every step of the way when that's the cost of their family groceries for a month.
There are cheaper ways to acquire crypto and there are also stable coins. But it doesn't sound like you're interested in that. If it really costs $26 then obviously that might be too expensive, or maybe not considering sending money through Western Union is often times more expensive.
> Everyone in those countries with failed currencies use stable fiat like USD or EUR to fend off inflation, not BTC.
In Zimbabwe and Argentina and many other countries with capital controls, it's illegal to hold USD or other foreign currencies.
> But do YOU live in an authoritarian regime? Or are you blowing smoke based on how you imagine life is in those countries from your cushy western perspective and stuff you read on reddit? Because I spent my childhood in a broke totalitarian regime.
No I don't. But I'm not the one that wants to restrict what people in poor countries can or can't do with their money. That's you.
>But I'm not the one that wants to restrict what people in poor countries can or can't do with their money. That's you.
Sorry, but if you're gonna make false accusations about me and put words in my mouth, i will end the conversation here and never reply to you again. Good day sir.
I don't know why the false assumption that Bitcoin fees are expensive keep propagating. Just last December $166 million was transferred for $1.25. In general I've never had to pay more than $5 for a transaction fee. Also, I don't know if living in a totalitarian regime a long time ago makes you all that much more an expert than OP.
> I don't know where the author is from but I am almost certain he doesn't live in an authoritarian regime with capital controls. To be so flippant about basic rights that people in developed countries have access to is really off-putting.
Argentina isn't an authoritarian regime, and from what I learned when my wife lived there 9 years ago, one of the biggest challenge faced by the country actually comes from the wealthy people turning all pesos they could into USD (which drives the peso down, leading to bigger inflation because it raises import costs a lot). Capital control was actually set to avoid this issue (with pretty much no success) and if you really cared about Argentina, you should wish for a more effective way to counteract money evaporation instead of something that makes it easier.
> What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?
WOW, all these walls of text replying.
Simply put, Bitcoin's strengths:
1) resilience
2) that jack shit has changed, and it's still A-OK at storing funds.
It is a slow-moving dinosaur of a blockchain, and that's how you should want your permanent store of value.
"Slow" (still pretty fast compared to ACH!) protocol updates and careful, conservative governance = safety of your funds.
What a terrible chart. It has no Y-axis labeling and one of the trendlines they've drawn has the number of bitcoin users exceeding world population in a little over 5 years.
It's interesting, the original article is one giant Appeal to Consequences fallacy. The arguments are structured like "If Bitcoin succeeds, X will happen, and X is bad, therefore Bitcoin will fail" or alternatively "Bitcoin undoes policy Y, policy Y was a good thing, therefore Bitcoin is bad and will fail." And then the epilogue here finally acknowledges that yup, all the bad stuff did happen, and yet Bitcoin still succeeded, and the future will probably involve more bad stuff but that's the way it goes.
I feel like one marker of maturity is understanding that not everything true is going to be good, and not everything that we want is something we're going to get. So many timely debates take the form of an Appeal to Consequences fallacy. "Hyperinflation would be bad for everyone, therefore the government will not allow hyperinflation to happen" - ignoring that the government may not have the mechanisms to stop it once it begins. "If it's too late to do anything about global warming, we're all fucked anyway, so let's proceed on the assumption that it's not too late" - ignoring that "we're all fucked anyway" may mean many different things and some of them might be significantly more pleasant than others. "America is a great country, so it can't possibly collapse", ignoring that many once-great countries have collapsed before.
I found my predictions got significantly more accurate, though significantly less comforting, when I realized that good doesn't always win out in the end.
There's a missing step in both directions: what is the policy response going to be?
Bitcoin maximalists assume they can take over without firing a shot, seemingly ignoring what happened to both the online poker world and Liberty Reserve. Whereas the likely outcomes are "registered bitcoin" (you're obliged to tie all your transactions to KYC identities) or "offshore bitcoin" (you're obliged to firewall against US customers).
I think the backdrop that's allowing cryptocurrency to flourish is rising state failure, globally, even in nations that we previously considered relatively stable & developed. People have a gut sense that the state can't protect them from the challenges that the next decade will bring, whether climate change, mass migrations, terrorism & extremism, inflation, a demographic bulge of young adults. They're looking for solutions that they personally can do in case the state either dissolves or becomes a hostile entity.
I think it's very likely that governments will outlaw cryptocurrency. But I also think it's likely that an increasingly larger portion of the global population is going to exist outside the law and outside the state. The government will say "Cryptocurrency is against the law", and a large fraction of people will say (quietly, unless they're stupid) "We don't care, because the alternatives you provide us are not working." Cryptocurrency is invaluable in that context, in providing a financial layer that does not require the state's power to enforce contracts.
And what exactly are you going to do with your illegal currency then? Apart from paying your drug dealer, I don't really see the use case.
It's already hard enough to launder cash, and that is the official currency! In addition money laundering regulations get tougher every day, so I'm afraid as an individual you'll just be able to send money to your friends, and potentially use it in holidays abroad (careful not to take any picture or let anybody know, more than one money laundering got caught by displaying vacations way above their declared income).
You use it to buy food, fix your house, pay off your protection racket that keeps the mob and/or police from killing you, get some car parts, pay that guy who loves cars to figure out why your transmission is busted, get antibiotics from the family that thought to loot the pharmacy, and of course convert into cash to pay the electric/Internet/phone companies so you can keep using Bitcoin, assuming they continue to exist (not a guarantee, and IMHO the weakest point in the "Bitcoin as a hedge against state failure" thesis). Plenty of people in failed states do this already.
I think most people in the developed world take for granted how much we get from a stable currency, rule of law, and public institutions that at least make an attempt to serve the public. All 3 of these are under threat right now.
Your assumption is that you can go to the grocery store, put your credit card into the self-checkout machine, and buy anything with money you earned several months ago. What happens when that money is worth less than half what it was last month? And grocers are like "Sorry, I don't take dollars, because they'll be worthless by the time I get my next delivery."
People in conditions like these survive by black markets. They pick something that can't be forged by a central bank - cigarettes, liquor, gold, seashells, whatever - and trade for goods with that. Cryptocurrency has the advantage of being worldwide (you can still get chips from Taiwan and electronic components from China), but the disadvantage of requiring electricity and the Internet to operate. Whether this is a winning combination depends on how deep the crisis is.
Don't share your predictions in the real world, then. Normal people want to hear good news, even if they are false. Or bad news they find outrageous or catastrophic and that they feel empowered to fight.
«it’s now obvious that use of bitcoin (and related blockchains) for payments is almost entirely scams and illegal stuff»
It is neither obvious, nor is there any data that suggests that is the case for Bitcoin. I suspect people who hold this opinion form it passively while reading the occasional flashy news headlines "Drug lord used Bitcoin!" and don't actually do any research. After all, news reporters write about what drives readership, and "Grocery merchant used Bitcoin" just doesn't quite get the same engagement.
There are very few research papers that conclude a large percentage of Bitcoin's transaction is tied to illegal activity, for example [1] claims 46%. However they are fatally flawed: they fail to consider the amplifying effect of mixers/tumblers that, by design, create thousands of automated mixing transactions per original transaction. So 1 illegal transaction will look like 1000 transactions in their analysis... facepalm
If only demanding evidence of crimes would magically materialize said evidence. It is hidden by design, that's why it's used for illegal stuff on the first place, and why it wasn't banned yet (who needs to hide money more than politicians?).
It's pretty obvious by the lack of legitimate activity. Nobody's buying pizzas for bitcoins. It's all about speculation and hiding your money from taxes.
The Goverment is no longer promoting Chivo. The platform is allegedly cold now. People who originally installed it for the $30 sign up bonus (which is hefty) retired.
Your link is from September.
I am not going into the problems with the platform as I am not physically there. But this iteration of the project didn't take off. The government still invests in Bitcoin, which is another issue.
Interesting, I hadn't heard Chivo was no longer active. I can't seem to find any reference to it being cold, though like you say it's difficult to get perspective not being boots on the ground. The most recent article I can find is this one from last week that seems to indicate it's still active, though it could be out of date.
Chivo is active. What I wanted to say is the Goverment had cooled down the promotion of the platform. Advertising in private and public spaces, that is. My opinion is Nayib Bukele will keep chivo as a business partner.
This article from a week ago states that the goverment is paying a cashback of a $0.30 per gallon of gasoline if you pay with Chivo.
escaping incompetence and corruption of politicians lobbied by banking elite, saving for retirement, funding opposition in oppressive regimes, buying things.
You've created a straw man. Author said use of bitcoins for "payments" while you've broadened that to all "transactions" on the blockchain. These are not the same thing.
I broadly agree with the author on Bitcoin, but I do not agree on what was said about the gold standard being bad.
On August 15, 1971, Nixon removed the gold standard from the US dollar. Using unilateral government power, he managed to stop the system from completely imploding from shock.
But...then what were the long-term effects? One of my favorite websites (except for language) is "What the ** Happened in 1971?" [1] It's a series of charts showing how until 1971, economic growth for everyone was about the same, including the poorest of society. After 1971, only the richest were seeing gains.
So what happened? I'll tell you what happened: our currency was changed from the gold standard to a free-floating currency. The rich were able to invest in other things, like land and capital, but the rest of us had our savings wiped out. We also did not continue see the income gains that we had been getting up to that point.
I'm not saying you're wrong. The way new money is distributed (via banks) definitely favors the rich, as does inflation assuming there is not sufficient upward pressure on wages for them to keep up. But I also always have to point out that a lot of things happened in the early 1970s:
- We opened a lot of avenues for labor outsourcing and starting importing more finished goods.
- Factory and office automation started ramping up as the information revolution really began.
- The 1970s saw the beginning of the trend toward "neoliberal" style economics with lower taxes on the rich and less investment in social and infrastructure programs.
- The Kennedy assassination, many other somewhat suspicious assassinations, the Vietnam war, etc. all started a process of erosion of public trust in US institutions.
- Women joined the work force in droves. I completely support womens' right to do this, but I also have to point out the completely amoral mathematical supply and demand implications for the cost of labor. More minorities joining the workforce also counts. You could say that prior to this era racism and sexism created a white male labor cartel and that this cartel was broken.
- Unions really started to get broken in the 1970s and have never really come back.
I could keep going...
IMHO most large scale social and economic movements have more than one cause. Back to inflation though, it's possible that inflationary economics became more harmful to the middle class when combined with the things above as many of the factors I listed made it hard for wages to keep up with inflation.
> - The 1970s saw the beginning of the trend toward "neoliberal" style economics with lower taxes on the rich and less investment in social and infrastructure programs.
Federal, state and local expenditures and tax receipts as a percentage of GDP has increased since 1970s [0]
Public infrastructure spending is roughly flat as percentage of GDP [1]
However, all of those things are things that happen over time (except assasination, and Kennedy's assassination happened 8 years before), which does not explain the obvious inflection point in those graphs.
I honestly think that some of those things may have been caused by the removal of the gold standard, especially neoliberal economics. (Obviously, things like minorities and women's rights probably not so much; those things were already happening.)
So yes, you are right that those things also changed, but what caused what?
Thing is in a closed system that is steady in other ways, wages should keep up with inflation.
It would be interesting to graph inflation adjusted wages per capita ignoring employment rates to test whether increased women or minority participation in the workforce explains the lag of wages behind inflation.
Once again I have to point out that supply and demand economics are as amoral and apolitical as physics. Don't read any opinion commentary into that.
There is talk of labor shortages now and employers are being forced to increase wages. If workforce equality is a major explanation then maybe the change in employment demographics has played itself out and now wages will start keeping up a little better. Maybe. Or maybe more jobs will get replaced by robots and industry in other countries.
Any remaining gap is probably attributable to outsourcing.
What I do wonder is whether the decoupling of the dollar from gold and consequent monetary inflation masked the effects of all the other things I mentioned enough that we could impoverish the middle class without people rioting in the streets. If we'd stayed on gold people would have seen their paychecks decline in both nominal and real terms.
Further, adherence to the gold standard also tends to lend itself to austerity which leads to economic suffering (e.g., deflation) which has often people to more extreme politics:
I want to offer an, hopefully intuitive enough, alternative to this line of reasoning. To me the aspects that make cryptocoins behave a bit like a gold standards is what makes them scary and dangerous:
The fact that blockchains are used by criminals is definitive proof that it improves upon traditional financial infrastructure also in legitimate use cases where trust is an issue. I.e., blockchains are an indisputable success from a technological point of view.
The fact that criminals use tools, such as bolt cutters, cars and computers, doesn't mean that the tools are evil. Criminals are evil! Punish criminals for engaging in criminal activities, don't punish morally upstanding citizens for enjoying the liberty afforded them by virtue of their humanity.
There, two simple points that 99% of bitcoin "critiques" fail to address.
Trust isn't the reason that criminals use blockchains. They would happily transfer money the same way normal businesses do. They use blockchain cause they are locked out of the normal banking infrastructure.
For the same reason normal people don't use blockchain to transfer money. They are able to use the banking system or Venmo or whatever. Using a blockchain is more complicated and usually more expensive than the alternatives.
What enables the exclusions of actors from the traditional banking system if not a different trust model?
Instead of having a 'trusted' 3rd party mediate your transactions, you use a blockchain. Difference being that the trust is now distributed over a large set of actors that are directly financially invested in maintaining the integrity of your transaction.
We can talk about cost and convenience if you want, but they were never at the core of blockchain/BTCs value proposition as far as I am concerned. In well-functioning societies anyways.
PoS is no greener than PoW, they are equally expensive. PoS is expensive in political plane (just like current financial system with all the corruption and wars) while Bitcoin is expensive purely in terms of energy. I know which one i prefer.
Why should an average user care that founders are premining "scammers"? An average user won't be a miner and an average user doesn't have an investment in any platform.
Someone saying x-crypto is a premining scam is somebody who invests in another platform and is advertising.
The fees of bitcoin are paid in the damage to the environment done by mining. It is vastly more expensive than traditional banking. The only difference is that it's not paid by the user directly, but by the whole of humanity.
bitcoin doesn't damage environment by mining, that's just a dumb thing people like to repeat without spending a second to think about it.
first - damage is done by producers of energy, not consumers
second - yes, consumers create the demand for energy, which drives producers to do harm, but harm is still producer's responsibility
third - if we want to reduce environmental harm, it is much more sensible to regulate producers in how they produce rather than regulating consumers in what they consume for
fourth - even if you somehow want to blame consumers - bitcoin mining actually drives development of green energy, increasing capacity, making green producers more profitable, allowing more development and r&d in that segment of energy production industry, so even by that ridiculous standard bitcoin mining is the last energy-consuming industry you want to be going after
I guess I'll just leave a firehose blowing water out my window because it's not me who's literally sourcing tap water, it's the utilities, and if they do that by overusing and destroying some watershed it's not my fault since I'm not literally the one doing it. It's too bad my plan is not nearly as profitable as mining bitcoin though...
"We’ve seen forked chains, theft, mysteriously reversed transactions, 51% attacks."
Citations? Forks are not actually a bug. Theft because of "cryptographic weakness" has not happened so far, afaik? Neither have reversed transactions, and I am not aware of successful 51% attacks on Bitcoin?
I'm sorry but I don't think that author has a good understanding of Bitcoin.
He has a point about government attacks. We don't really know yet what will happen if governments simply try to stomp out crypto. For sure market prices would take a hit at first, as they did when China tried to curb crypto.
> He has a point about government attacks. We don't really know yet what will happen if governments simply try to stomp out crypto. For sure market prices would take a hit at first, as they did when China tried to curb crypto.
We've just seen what happens when China banned it as you mention. The price took a dip and then recovered.
It game theory. Classic Prisoners Dilemma. Everyone else just gets a higher incentive to use it when some part of the world is not allowed, because everyone else gets a higher advantage.
Especially Americans will jump all over it if the communist ban it. That just completely legitimizes it for anti communist Americans.
The best thing that came out of Bitcoin isn't Bitcoin itself, it's that it's the progenitor and catalyst to more useful and interesting things like DeFi, smart contracts, distributed governance, and all sorts of ideas and future tech.
Simply saying that Bitcoin is garbage and should fail is a bit like looking back at the tree of life at some goopy half fish, half land creature, and saying "look at this crappy thing, I hope it fails".
You could apply very similar analysis to DeFi, smart contracts, etc. In practice they appear to be second-order gambling systems for people who find L1 gambling not exciting enough.
Example of how I understand it with gold: L1 is gold itself. L2 would be currencies with gold backing. L3 would be bank / credit card services based on that currency.
Bitcoin: L1 is Bitcoin itself. L2 are certain technologies, like the Lightning Network, that allow for bundling of transactions. L3 would be service providers who use L1 and L2 Bitcoin technologies in the background.
Really? This feels overstated. The core software has been remarkably (some might say unreasonably and implausibly) solid. The software is supposed to be a pile of amateur C++! It would be so easy for something like a trivial buffer overflow bug to break block validation and unravel the whole system. But it hasn’t happened after ten years and a multi-billion-dollar bug bounty available. Why is it so good?
Because of said $$$ bug bounty. There have been countless mitigations since launch. The biggest one for me is they nerfed (locked down) Bitcoin script for security reasons, which reduced it's utility for anything but transferring BTC.
Granted, it's inability to scale would have made that true anyway, but the resulting inability to have smart contracts on Bitcoin might be one reason arguments for scaling it with bigger blocks have failed to win: if all it does is move a coin, why bother changing the block size etc when you have Lightning etc.
> The current financial system is slow, and tedious, and old, and in many ways actually broken or flawed. But one thing we know is that it's resilient. One single mathematical error will not send the whole thing into a tailspin. With bitcoin, it will.
9 months later, this article was released, titled "The mathematical equation that caused the banks to crash".
> That’s because I forgot one essential reason bitcoin has survived:
> Because people really, really, really want it to.
My impression is that Bitcoin (and crypto) is now a religion. It's tied to a lot of people's identities. That's to say, a group of people think of themselves as crypto people and are proud of it, just as someone might be a Christian and proud of it or a Golden State Warriors fan and proud of it.
While I've personally used crypto and found it useful, it doesn't really matter what the environmental impacts are or how useful it is to a large swath of those interested in crypto. As long as there's a plausible argument for why crypto is good, it's enough for the believers to continue believing.
Not only that, crypto is and will continue to be cool and rich. As long as people like Tom Brady and Fortune 500 companies are talking about buying and selling crypto, it's a religion that will continue growing.
By acknowledging this, I realized that I should move past dismissing the religion, but rather think about how I should engage with it. Imagine I've never watched American football but a lot of people I know are really into it. I then need to think:
Is it a cool community that I should join? Is it something that's not for me but that I should try to understand? Or is it something that's so bad that I should try to stigmatize it? I think the right response for me is closest to the second option, but I'm not sure yet.
[edited to remove some earlier, more divisive comments that I didn't intend to make]
“It’s a religion/identity” is true of just about everything these days (sports, political movements, subreddits, whatever). It’s not specific to crypto.
It’s a symptom of the lack of meaningful identities for people to adopt, and the social media push toward outlier-ism (nobody follows a boring father of 2 with a reliable job and a stable marriage) - so they choose trivial things like crypto or wokeness or Q to identify with and be extreme about.
It's striking that although there's a lack of meaningful identities to adopt, the number of shallow identities to choose from is mushrooming. Pursuits that used to be "interests" or "hobbies" (gaming, fandoms, sexual preferences) are converting into identities. What's concerning is that people will aggressively defend identities and turn them into causes, not something we need more of right now.
I saw some lark call it the toaster fu*er problem once and it’s stuck with me.
40 years ago if you fetishised having it off with a toaster and told your mates they made fun of you and/or you got help.
Today you tel your mates; they make fun of you, you double down, find the toaster fu*er community online, feel vindicated in your newfound sense of meaning, purpose and belonging and get about defiling kitchen implements
You’d be surprised how many boring/conventional influencers there are out there with huge followings. People who literally are just doing up a house or something incredibly benign.
Having everyone get their news, information & entertainment from Facebook/YouTube/Twitter/Instagram plays a huge part in this.
Algorithms that serve you the "most engaging" related content pushes a lot of people to extremes.
Oh you want to eat a little less meat do you? How about you FAST for 18 hours a day and go mega-VEGAN? Oh you want to read an article about Politics? How about you now watch this very well produced documentary on how the government is run by aliens.
Politics wasn't fundamental to most people in identity sense for most of humanity's history, for the simple reason that most of them didn't have any political power to speak of, even notionally. Which, to be fair, is still true - but we've got better at pretending otherwise.
It's striking to me how all my friends in the USA talk about politics nonstop, but now that I moved to Japan practically nobody under the age of 40 seems to care.
I don't really think this everyone's goal anymore actually,
It is shaping up to look more like 'purchase some now, such that it takes you a slight bit further in the future'.
People like paying each other with Paypal.
Unless they don't, and they prefer Zelle.
Unless they don't, and they prefer Venmo (which I think is crypto based now).
Unless they don't, and they prefer Monero.
Its possible my perspective on this is too moderate, since I'm not a crypto-basher, but also not a huge crypto fan.
However, I really don't get the vile hatred for crypto on this site. Some of the crypto currencies are quite good, with the support of privacy, smart contacts, app integrations, etc.
For as many people here that enjoy the backup of simple static webpages, sharing of data, etc, I would think a project encouraging data sharing on e.g. ipfs, should be celebrated here.
Instead, if anyone here gets a quick whiff of the word 'crypto' they're quick to dismiss it without ant consideration.
It seems to me that people who don't like crypto are equally as guilty of assigning it to their identity in a religious way.
>It seems to me that people who don't like crypto are equally as guilty of assigning it to their identity in a religious way
And where did I do that? I've pointed out that the majority of BTC strength lies in the critical mass of people speculating on it increasing in value and attracting more people in when it does, further inflating the bubble. That's why everyone I know online and IRL bought in, the FOMO when they saw the crazy returns others made (by cashing out into fiat of course so they can actually spend their gains).
>People like paying each other with Paypal. Unless they don't, and they prefer Zelle. Unless they don't, and they prefer Venmo (which I think is crypto based now). Unless they don't, and they prefer Monero.
Please, Paypal and crypto payments are not the same. With Paypal you still pay and receive fiat at both ends of the transaction.
Back to my main point, people keep tooting that BTC is a payment method but I have seen no evidence of mass adoption for that uscase in most of the west and the number of users who actually use BTC for (legitimate) payments is minuscule, due to the high transaction fees and low adoption of it as a payment method, compared to the mass of big and small HODLers that's just using it for speculative gains a.k.a. gambling, gains which are turned back into fiat in order to be spent into the economy, further defeating the point that BTC is a viable currency.
The taxman does not, nor the car dealers, nor real estate agents in my area take BTC payments, only EUR. When that will change then I'll grant you that BTC is more than a FOMO driven speculative pyramid scheme.
It's mostly just the unwillingness to have a moderate view towards these currencies. Everyone on HN seems to have blind hatred steering the discussion, rather than admitting that it may fail, or may become the main transaction currency in the future, or (more likely) somewhere between - such as becoming the major way in which large banks and institutions transfer currency between countries.
It's strange to me that people are using the argument of what behavior of crypto see right now will be how crypto will continue to be used in the far future. Unfortunately it got misconstrued in recent years to be an 'asset' rather than currency, but it's still possible for it to return to being seen as more as currency.
It could remain the same or change - but I don't see why everyone is so hatefully polarized over it.
And where exactly did I show blind hatred or unwillingness towards a moderate view?
I gave you my arguments why BTC is now just a Ponzi scheme and not a currency or a good legal payment system, while you have not provided any kind arguments to support BTC as a payment system or as a currency and instead just complain that people have a blind hatred and what not.
So I'm all open for a moderated discussion but you need to bring some arguments to the table not just complaints on the participants.
This is literally how fiat currency works. Sure a government can pass a law saying so and so is the official currency but as you see in many minor countries they still use USD or Euros. Without buy in from the population fiat currency can also be left ignored.
The value of USD is also a pyramid scheme and entirely depends on demand from everyone to keep it's value. The federal reserve is only one small actor creating demand.
The value of USD is underpinned via demand manufactured through taxes. Crypto has no equivalent of taxes so it is almost entirely reliant upon perception. This is partly why HODLers are so aggressive in defending the perception. It's possible to literally "talk" their wealth into worthlessness.
There are countries that use USD but with the exception of ecuador (where you pay taxes in USD) i cant think of one that uses it exclusively.
>US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international.
This is nonsensical. More USD is traded internationally than bitcoin.
The value of USD for somebody living in Paraguay stems from a demand for US goods and services A) supplied by people who pay US taxes or B) supplied by client states of the US (e.g. saudi oil) who kind of also pay USD taxes in a roundabout way
I think you're getting a little off topic here. Whatever demand exists for USD there's a ton of sources in the world to supply same said USD that isn't the united states because as we all know it's a world reserve currency... This helps the USA because it makes it possible to print a ton of money and the inflation gets absorbed by all world wide holders of USD instead of just Americans. This keeps inflation way down while they print more money. But even so $1 is worth less and less everyday. Bitcoin has no such problem. It's deflationary. As long as there's a floor to it's demand it will continue to go up in value. Nothing in the past 9 years has disproved this concept.
If you think demand is beside the point and inflation is everything then you'd probably consider exchanging every dollar you have for a deflationary shitcoin.
It is until it isn't. The base demand for USD comes from the federal reserve. Bitcoin has a similar base for it's legit uses (like international currency transfer) so both have a demand floor. After that it's all dependent on use and further down market demand.
I think when we all are dead future generations will see crypto as a basic value store like gold. No one will call it a pyramid scheme either cause it would have been around since before they were born.
Yes, and some currencies do lose value because the government and economies backing them have lost trust.
The demand for USD comes from people wanting to do business with one of the biggest economies in the world. The demand for Bitcoin comes from people wanting to make money by hoarding Bitcoins.
It could be different, but right now it is not and I'm not sure if Bitcoin (or any other cryptocoin) would survive a transition to become a currency or something else less like a pyramid scheme.
You're kinda dismissing it without respecting that it's no different from gold as far as people wanting to hoard it. People also do use Bitcoin when convenient to move money. I personally used it to pay someone in Brazil for some mechanical keyboard services when PayPal failed to transfer the money. Totally legal and organic demand exists.
Have you compared the gold price with the Bitcoin price?
I'm not saying it Bitcoin could not be like gold, I'm saying right now it is not and everyone in it doesn't want it to be. And I'm not convinced it ever will be.
I'm thinking in the long long term of hundreds of years. Seems to me when we start exploring space moving around heavy chunks of metal won't be so useful anymore and we'll need to use a Blockchain to verify value transfer.
While I agree we will probably want something different from the current status-quo when light-lag gets big enough to matter for normal daily financial interaction, one potential solution could be to go back to local banks holding money locally, just as things were here on Earth before ATMs and cheap telephony.
We haven't been using heavy chunks of metal as currency for a while without a need for blockchains. I see mostly disadvantages compared to government backed currencies.
To someone who doesn't live in the US, the value of USD mostly depends on trust in the US government and economy.
To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper.
It is true that if any of those three things don't happen, you have far more serious problems than 'what currency you use'.
>To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper.
Or in other words: trust in the US government and economy.
The difference is that the local monopoly on violence forces demand for their fiat on the people and organizations within their sphere of influence, explicitly and implicitly.
It remains to be seen if an entirely voluntary money can be a major player in the modern world.
Then again, raw fiat is a very new experiment as well. It's only been about 50 years since the US broke the pretense of the dollar being constrained by gold reserves. So from that context, bitcoin's 13 years doesn't actually seem that radically young, especially if compared to gold's 5000 years.
If people (specifically, the police and soldiers) stopped believing in the local monopoly on violence, it wouldn't exist either. Historically, this is a thing that happens pretty often, every few decades.
Gold in coinage is only about 2700 years old, btw, not 5000, and that was really electrum. Gold, silver, or electrum by weight may go back significantly further.
"Long before" and "commonly" is a matter of perspective. It was first struck as coins about 2700 years ago, and was definitely used as money in a few countries at least 300 years earlier, and possibly as much as 3000 years earlier. There is no evidence to suggest that it was in wide use as money until about 2200 years ago, only in a few places like the Mediterranean. Then again, maybe there wouldn't be, since not many places had writing.
Well, by definition a stable country is one without a collapse every few decades!
It happens somewhere quite often, and the number of countries with 100-year uninterrupted continuity of government is shorter than you'd expect - basically the unoccupied Allies, Switzerland, and a few microstates.
I meant that it happens in a given country on average every few decades. I took a somewhat slapdash sample last year and the median time of last violent collapse of government was 01945, 76 years ago. On average it happens in a few countries every year.
Raw fiat is NOT a new experiment, the Yuan dynasty in China printed paper money in the 13th century, not backed by any precious metal or commodity. They printed too much and had inflation problems, so that's not a new problem either.
The difference is that the government will (implicitly) point a gun at you and demand a tax payment from you next April, and they'll want that payment in fiat. Everyone knows that everyone else will be coerced into coming up with some U.S. dollars in a few months, so they have a lot more to rely on than everyone else's mere belief in money.
Amen to that. Incidentally this is not just a crypto tax avoidance play. It's an asset-rich tax avoidance play. Do you think Bezos sells stock to buy the latest mega-yacht? Of course not. He'd realise a substantial capital gain. Instead he borrows against his stock. No capital gain = no CGT.
I really wish people would think systematically about these issues before jumping on their soapbox, as this strategy does not eliminate tax payment, it merely defers it, with some interest cost.
Consider the following scenario:
Say the interest rate for a wealthy individual like Bezos is 1% per period.
Case A: Bezos sells $100 of stock. He pays 20% and consumes $80. NPV of tax liability is $20.
Case B: Bezos borrow borrows $80 to spend in a period and then at the end of the period sells $101 of stock to pay back the loan and (and pay taxes on it). Thus his tax liability at the end of the period is .20*101, which in present value terms = .20*100 = $20. Exactly the same amount of taxes he would have paid if he didn't borrow.
Case C: Bezos sells only $80 of stock and then borrows $16 to pay his taxes, ending with a debt of $16.16 at the end of the period, and he will need to sell $20.2 in stock to extinguish his total liability ($16.16 due the bank and also the $4.04 in taxes on the sale), which in present value terms is the same payment as before, namely $20.
The real reason people like Bezos borrow to pay their taxes is because the interest rate charged to them by the bank is less the growth rate of their assets. Therefore they are acting like a bank, borrowing at one rate and investing at another rate, making money on the spread. Thus keeping the stock is worth more to Bezos than borrowing to pay the tax, which is effectively what is happening.
At least, this is what they believe. Of course this type of balance sheet expansion comes with risk - risk that they bear that if the stock price falls, they will end up paying much more than if they hadn't levered up and borrowed to pay their taxes. But that's a risk they are willing to take.
So you don't need to pull your hair out worrying that Bezos is not paying taxes. He is effectively borrowing to pay taxes so that he ends up with a bigger payment down the road, which in present value terms is the same tax liability as if he didn't borrow. The treasury will receive not only all the tax money as if Bezos never borrowed, but all the tax money with interest, namely whatever interest Bezos needs to pay. However Bezos is betting that the growth rate of his assets is even higher. So now you understand why everyone is borrowing to pay taxes -- because interests are so low. So thank the Fed that this type of arbitrage is possible. It's not tax arbitrage, it's interest rate arbitrage.
So I should rest assured that the rich people are all wrong, and fully plan on eventually paying more taxes? And I’m just supposed to believe that? They are purposely doing all of this to intentionally pay more taxes? And they’re just too dumb to realize it? You don’t think they haven’t thought this through? First, there’s the death loophole in capital gains taxes. Two, assets are reliably outpacing interest rates and inflation, so even if it’s simply deferred taxation, that’s a de facto reduction (and yes that’s a problem, ask Piketty). Three, I’d imagine the billionaire class recognizes the trend of their increased power and influence, and could even just be betting on re-writing the rules before their bill comes due, fueled by the outsized influence bought by their lifetime of not paying taxes. So excuse me if I’m not OK with an upper echelon of society simply excusing themselves from taxation via mechanisms that are not available to regular wage earners.
You should rest assured that it's not a good idea to invent grievances to justify personal hate.
It is just not true that because there is a carried interest loophole, for example, that you can just make up arbitrary other tax loopholes that don't exist and blame "the rich" for abusing them, and then when confronted with being wrong on the facts, cite the carried interest loophole as a justification. "Piketty" isn't some magic word you can use to waive away reality.
You forgot to mention that if Bezos holds shares until he dies, the people who inherit them will not pay capital gains tax on them even if they do cash out. And the treasury will not get anything in that scenario.
I didn't mention it because it's not true. I am amazed you think collateralized loans are just forgiven when someone dies. Remember that these are personal loans to Bezos. If they were loans to some business entity Bezos created, then whatever payment he received from that entity would be taxable income.
The debts will need to be paid to the banks as part of the settlement process of Bezos' personal assets, which will require asset sales, and these sales will incur a tax liability and all of the above calculations will take effect.
And don’t you think that the bankers and heirs wouldn’t simply agree to have the heirs pay the loans back after they inherit the assets? Why wouldn’t they? I’d even assume it’s written into the loan documents or maybe even through the individuals will or something. And why wouldn’t an heir agree to that? By paying the loan after inheriting the assets the heirs will get to keep the capital gains. “Hey Bezos Jr., do you want to inherit 20% more money, or 20% less? Because all we have to do is sign this stack of papers in a different order to avoid all capital gains.” Or even simpler still is just to pay the loans back with the assets directly. Or any other number of maneuvers to make sure the bankers are happy and simply call the debt settled. There’s myriad ways of doing this, and I’m absolutely 100% sure that the billionaires and their ‘family offices’ of likely dozens or hundreds of highly skilled accountants and attorneys haven’t figured out some way out of this.
> And don’t you think that the bankers and heirs wouldn’t simply agree to have the heirs pay the loans back after they inherit the assets?
OK, at this point you are just speculating wildly, right? You are inventing tax loopholes that don't exist, and when this is pointed out, more loopholes are invented which also don't exist. Point is, that's not how consumer lending, tax law, or inheritance law works. Those loans will be settled requiring asset sales at his death. If banks forgive a loan, that debt forgiveness is counted as income and is taxable.
Actually it is likely they will be wound down before his death as he will want to reduce his personal asset holdings and put them in a trust, because the inheritance taxes on all of his wealth are much stricter than any income taxes. But reducing his asset holdings will require de-leveraging because loans against equity require quite a bit of collateral.
> You are inventing tax loopholes that don't exist
Are you aware of "step-up in basis" [1] that is widely considered a loophole around CGT for inherited assets? Any gains on assets up to the point they are inherited will not be subject to CGT.
So now we are in the weeds about inheritance tax, but the idea is that you pay 40% on your inheritance which clears your tax obligations for that inheritance and resets all the cost basis calculations, and then after that you pay gains when you sell from the time you inherited.
That is not a tax loophole.
E.g. if someone buys stock for $10, then the share price grows to $100 and they die, so that a family member receives $100 of stock, and then the share price goes up to $110 and the inheritor sells, then in the current system, the inheritor pays:
$40 on receipt of shares at $100 (cost basis for him is zero)
$4 on sale of shares at $110 (cost basis is now 100)
for $44 in taxes paid on that stock.
RSUs also work in the same way -- you pay taxes the moment you get them, and then if you keep them, when you sell your cost basis is the price of the shares when you were given them. That is important to know if you like to hold onto your RSU shares for a while -- know that your cost basis is not zero, but whatever the price of the shares were when you paid taxes for receiving them as income.
In your opinion. However, some people clearly believe it _is_ a tax loophole, presumably including those you're discussing with upthread.
One of the talking points against inheritance tax is that it taxes the same money twice. If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever. Taxes are then levied a second time on what's left when I die.
People above are pointing out that, in contrast, extremely wealthy people manage to avoid the income/CGT part by borrowing against their assets tax-free and repaying the loans once they die and after the assets can be stepped up. So yes, inheritance tax may still be paid, but a great deal of their day-to-day income while alive is untaxed. Inheritance tax should be _in addition to_ income/CGT rather than instead of it, and part of the perceived injustice is that the ultra-wealthy get to dodge this in ways "ordinary" people can't.
Based on that I personally would call it a loophole.
> In your opinion. However, some people clearly believe it _is_ a tax loophole
Only people who are not familiar with basic accounting or tax economics can believe this.
> One of the talking points against inheritance tax is that it taxes the same money twice. If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever.
OK, you are mixing two different things here. One is the "double taxation"(1) on assets in the inheritance tax. First, don't worry, only a handful of families pay this tax. But ignoring that, the double taxation applies to income not spent. It is irrelevant to this discussion, in which Bezos borrows to spend. If he didn't borrow and sold assets to spend, then those sold assets still wouldn't be taxed as an inheritance tax. So that double taxation unfairness complaint is again just a confusion about what is happening and has nothing to do with whether borrowing to spend is somehow tax avoidance.
Now as to the second point: "If I'm a middle earner I pay taxes on my income, and I pay CGT when I dispose of assets to pay for my car or retirement or whatever."
No, you only pay taxes on the gains. Think back to what we were discussing before -- you get $100 of stock, then it goes up by $10 and you sell. So you have two taxable events in which income is recognized - the income of getting $100 and then the income of getting $10. When you sell for $110, your cost basis is $100, not 0, because you already paid taxes on the $100. Thus there is no double taxation for you or for Bezos(2).
No one is treated differently here. It is the exact same re-upping you were complaining Bezos being given -- that re-setting is available to everyone else for any other kind of asset they have for any reason.
So here, too, this is just complaining about things that aren't actually happening in order to get a justification for complaints about "injustice". It's a lot of very angry people applying who/whom logic rather than getting the details right about how much is paid.
Now, if you want to talk about real tax loopholes -- for example, carried interest, mortgage interest deduction, differences in tax rates on long term versus short term gains, charitable deductions - yes, by all means let's get rid of these loopholes. Bezos pays too little taxes, not because he borrows, but because the long term cap gains rate is so low. Let's not treat LTCG differently from wage income. But trying to infer the money borrowed should be taxed at the amount borrowed is just insane. Borrowed money is not income. Bezos is not doing this to evade paying taxes, he is doing it to take advantage of spreads.
(1) It's not really double taxation, because what is taxed is the income received by the inheritor, who never paid any taxes on it before.
> But ignoring that, the double taxation applies to income not spent. It is irrelevant to this discussion, in which Bezos borrows to spend.
It's not irrelevant if Bezos spends his borrowed money on real estate and generally vacuuming up other assets that are likely to appreciate in value faster than his loans. It's not like he consumes all of it (or even most? I don't know, but I doubt it. How on Earth do you consume a billion dollars?).
> Thus there is no double taxation for you or for Bezos(2).
As I already explained there is for me if I don't consume all of my taxed gains before I die, or if I use it to purchase assets that outlive me.
> Bezos is not doing this to evade paying taxes, he is doing it to take advantage of spreads.
He's clearly doing it for both reasons. At least to avoid, not evade. I accept that he's legally not required to pay tax in this situation, but the whole point is I'm saying that should probably change!
> So here, too, this is just complaining about things that aren't actually happening in order to get a justification for complaints about "injustice". It's a lot of very angry people applying who/whom logic rather than getting the details right about how much is paid.
Dismissing this as "just complaining" is really missing the wider point. That is that "buy, borrow, die" is a well documented strategy that the ultra-wealthy use to avoid paying tax and that is widely considered a tax loophole (even by those familiar with basic accounting and tax economics). Whether it's a loophole or not isn't even really the point, rather that we should change things such that people who "buy, borrow, die" actually pay something like CGT.
>The thing is, who freaking cares. He can literally go to his grave without paying taxes. That shouldn't happen.
So yes, you can borrow to pay taxes. And you can borrow to defer taxes. But that is limited by how many assets you have.
Households across the country do something similar when they borrow to buy a house -- they do not pay taxes on the mortgage loan as if it was income. And, unlike Bezos, the mortgage interest paid by households is often tax deductible.
But Bezos' loan does not deprive the government of taxes, because the rate on government borrowing is always going to be lower than the rate charged to Bezos. So if Bezos defers by 10 years, with the debts accruing at some rate r, then the government makes up for that by deficit spending with its debt accruing at a lower rate. Thus when these are settled, the government will make a profit.
> Why are you even defending him? Your position is morally untenable.
I guess the first mistake here is to try to view public policy from a "moral" perspective first and "not caring" about the details of what is actually happening.
The second mistake is automatically decide who is good or evil based on some atavistic criteria and deciding the details don't matter if you are sufficiently outraged.
Because at that point you've already lost. I suggest it's better to actually care and run the math before deciding whether something is good or bad for the Treasury. And questions about what is good or bad for the Treasury should be the ones you ask when determining tax policy, not whether you are really angry at a public figure or not.
Bezos' motivation is not to pay fewer taxes across his lifetime, because he doesn't. It's that the interest rate he is charged is less than the rate of return on his stock. This has absolutely nothing to do with tax avoidance but exploiting spreads.
I find amusing that the same people (from my perspective) will argue that Roth savings vehicles are terrible because the government gets its $20 now and then all this growth happens untaxed and the government never gets its cut of that 40 years from now. “Uh, you did, back on the first day, remember?”
Example? I'm a UK taxpayer and as far as I know you can still do basically that. You can also avoid inheritance tax is you buy a farm to borrow against rather than crypto. See J Clarkson for example.
>He bought it mainly because you don’t pay death duties on land. “That’s the critical thing. So rather than just have money in the bank, and get a statement with numbers written on it that gives no one any pleasure at all, you could derive a great deal of pleasure and pass it on to your children.”
The loans thing you linked to is a bit of a different thing I think - "People who use these schemes have their salary paid in loans, instead of being paid in the usual way."
Just borrowing against assets that have gone up is different and pretty normal.
It doesn't matter whether or not you believe fiat is valuable or not. I know that tomorrow, I can buy a Big Mac for $4, and McDonald's knows that the person who makes it will go to work for $10/hour. There are way too many transactions that take place for people to "believe" that fiat is worthless. The same cannot be said about cryptocurrency.
But imagine that a secondary ecosystem emerges because of these crazy cryptocoiners, who start using crypto for everything (just out of principle) (see https://99bitcoins.com/bitcoin/who-accepts/ for viability).
They also insist on getting paid in crypto (not every country puts capital gains on crypto).
This basically means we could have a small parallel ecosystem.
Imagine this thing growing to a few % of all transactions.
Now the question comes to people holding fiat: are you sure your fractional reserve money will keep its value? Only a small percentage of fearful people could cause serious issues for that fiat system.
So I agree that you are right for now. But I wouldn't rule out the possibility of it taking a shift in the future.
Yes, inflation is a thing. The numbers aren't important to my argument. My point is that the value of fiat is baked into virtually every transaction. As such, even if you don't believe in fiat, so long as you want to participate in the economy, you'll still use it all the same.
This is most likely one of the most unintelligent statements I have ever heard. Value is subjective, period. End of story. The US dollar literally only has value if people have confidence in it. Because we are still bartering and trading, the US dollar is simply a standardization of value. Again, value will always differ from person to person. In fact, I think commodity based tokens would be interesting. Cryptocurrency, as it is, has no value to me. The dollar bill is a standard that will certainly change. Hopefully we can have a utility/commodity based currency in the future. We used to have that when the Dollar was actually backed by bars of gold. LOL
There's an interesting contrast: the technical security of crypto relies on not trusting and not believing anyone or anything but the value relies on social belief.
You say, "the technical security of crypto relies on not trusting and not believing anyone or anything," but I don't think that's quite right. I think it's more accurate to say that the purpose of the technical security of crypto is to permit you to not trust anyone (or, in some sense, "anything").
However, by "anyone", we mean "any single person", in the same way that science or money permits you to not trust anyone. For example, fake ivermectin covid studies are eventually found to be fake, so in that sense we "don't trust anyone" to not fake their studies. But if everybody publishing ivermectin studies is actually in a grand conspiracy to promote ivermectin, this fails; at least some honest people have to run studies with ivermectin to find out that it doesn't cure covid. In fact, probably even a majority. This is still a great improvement over the medieval system where the Pope decided whose opinions could be published on whether the Earth moved or not.
Similarly, the great thing about money is that it gives you autonomy; if you have money, it doesn't matter that much that the Soup Nazi banned you from his restaurant, because you can just go buy soup elsewhere. You won't starve, the way a child abandoned by their parents often will.
But it isn’t. Fiat currency is tied to a _countries_. What tanks are going to line up to save an attack on crypto? What standing militaries defend crypto? Exactly.
The government, you know, that thing that has a million other uses, will always want control over the currency.
If the crypto point of view is that no one should control currency, first of all, that's super naive and secondly, that puts it on a collision course with governments.
I do not understand why one would fetch stacks of paper from the bank if one believes toilet paper is the more valuable type of paper you should hoard and maybe also trade with.
Seriously, why would the end of fiat cause a bank run? I would expect it would cause a switch back to trading physical goods directly, or the emergence of another currency-like thing or good (like cigarettes might have been in the past).
When bank runs were common it was normal for a bank to go out of business while nothing really happened to devalue the currency so you'd essentially be racing other customers to withdraw first. The Fed's guarantee to cover accounts in the event of a bank failing stopped bank runs entirely.
Because fiat is created in 2 ways: central bank and bank. Cash in hand means it's central bank money, numbers on your bank account are the multiplied variant. Both are part of the fiat system.
> My impression is that Bitcoin (and crypto) is now a religion.
Whilst this looks valid on the face of it, the best explanation I've seen is that crypto-currencies, DAOs, NFTs, what-have-you are counter-intuitive to most people, even the ones hodling it, because most of these decentralized products are just not the same thing and shouldn't be all lumped up in one giant straw-man. For one, I am really bullish about payment networks like Facebook's Diem, Celo.org, Coinbase/Circle's USDC, and Stellar. These absolutely should disrupt international payments.
There's a lack of coherent understanding but just as apenwarr pointed out, eventually something good will come of it, and then everyone that is/was on the blockchain train would claim, "I told you so".
At this point, there are so many smart people working on it, that I don't see it failing in my lifetime. The key, I guess, is to pay attention to whoever is out there toiling away to make the ecosystem better and listen to their whats, whys, and hows.
Isn't 'solving' international payments messing with the US govt? If you bypass the swift system then they can no longer track international transactions and more importantly enforce sanctions.
I'm just generally opposed to a system being pushed by a single country. Don't care if that's the US, China, Russia or Nepal.
It's not because I don't like the US, I just wish that we all would get to say how that system is supposed to work, instead of the US thinking it knows what's best for "us". Similar to how it's for whatever reason okay that the US has it's military bases littered all over the world.
I've got nothing against y'all as people, but your government and military for sure grind my gears.
I'm a Brit so an outsider on that issue. I would imagine the only legal issue with international bitcoin transactions are related to tax. Unless of course the transfer is part of some other illegal activity, such as money laundering or drug trafficking.
This, plus the lack of simple explanations of the various parts of the ecosystem(s), is one of my main gripes (the environmental costs being the other). Hopefully it will change in the near future, but if it takes 1000 words (and potentially as many moon/rocket emoji) to explain the what/why/how of NFTs/cryptocurrencies, that doesn't seem like a sign of success to me.
Some sibling comments argue that the USA is a religion in the same sense, which is a nice thought experiment and a fair comparison.
However, I think it's incumbent on us compare bitcoin as a religion to the prevailing mode of social organization (or religion, as it were) where money is concerned:
The Rule of Law
and it's missionary arm
International Trade Relations
Except for this, whatever one realizes from bitcoin holdings (read: exchange ledger holdings for legal tender) is just numbers on paper.
I just don't see how bitcoin can fulfill any of it's purported roles (asset, currency, value-store) outside the rule of law, and yet flouting the established legal ways of settling transactions, asserting ownership and saving for the future were all part of the elevator pitch.
This begs the question: What effect will bitcoin have on the rule of law? I fear that, on net, it may serve to undermine our legal, liberal traditions by antagonizing proponents to the regular economy and pursuant democratic processes for improving its shortcomings.
More directly, the unregulated nature of the bitcoin economy leaves affected societies knee-capped in managing externalities and second order effects right where the incentives are the most perverse (on the ledger), forcing heavy-handed and perhaps illiberal responses from regulators. Success on it's own terms will spell bitcoins demise so long as belief in the rule of law remains stronger than in crypto-utopia (I will take that bet).
I think it is also kind of a collectors' item. Like owning a piece of a rare set of baseball cards or cars.
There are definitely religious zealots out there but in terms of passive ownership -- it could be viewed as a scarce collectors item with theoretically infinite appreciation right?
For example, if a rare painting could not be effected by environmental degradation. Would it not appreciate forever until people stopped caring about paintings or suddenly rare paintings could be atomized into existence by a replicator?
I think it would be more accurate to compare it a monument or artifact, specifically because of the amount of real world energy that has gone into creating it.
It's currently a half terabyte immutable linked list filled with a rich history of transactions and hidden messages/graffiti that can't be copied or changed without an commitment of energy and computation resources equal to the sum of what's gone into it for these 11 years.
That's something that starts to rival the Great Pyramids (pun intended).
Crypto is destroying the environment? Bollocks. The electricity of the worlds ATM,s bank branches, trading floors, etc dwarfs the electricity cost of bitcoin. And for a system that rewards those close to the money printers and fucks over the little man.
Everything has a cost. But is the cost worth paying is the question.
> The electricity of the worlds ATM,s bank branches, trading floors, etc dwarfs the electricity cost of bitcoin.
Even if Bitcoin actually became a valid means of transaction and bank branches, ATMs, etc became obsolete, it doesn’t replace the need for trading floors as an interface between finance and equities/commodities, so that’s a weird comparison.
But even so, I wouldn’t be so confident that the banking sector uses more, or will for long given the current investment spree into mining. Here’s one plant that will use nearly 4x the energy of downtown Dallas:
Mind you, the more the price of Bitcoin goes up, the more energy miners burn on mining, so if Bitcoin actually grew to the size of the fiat economy we’d be talking about substantially more energy use.
> Mind you, the more the price of Bitcoin goes up, the more energy miners burn on mining, so if Bitcoin actually grew to the size of the fiat economy we’d be talking about substantially more energy use.
You are not taking into account the diminishing block reward. More and more miners are chasing a dwindling supply of coin and will eventually only earn transaction fees and no block reward. This will put a natural dampener on more miners coming in (all other things being equal) and it will plateau.
Right, the energy use goes up with the value and (separately) down over time. They’re separate variables, but it’s fair to point out that they're not independent variables (the price is more likely to vary over a longer time horizon), which is I think the point you’re making?
This is a very surface-level understanding of the concept of the economy. We could all use river rocks instead of dollars and fundamentally the economy would be unchanged. We could all (try) to use Bitcoin tomorrow and the economy would be unchanged. It's about using a medium of exchange which works best for all parties, which today is the US Dollar.
Bitcoin is just additional, unnecessary carbon and e-waste on top of the existing economy. It's fatal flaw is that it's deflationary, which in a world of rational thinkers would have doomed it from the start, but instead it seems to have attracted those yearning for a system free of "money printers".
Inflation can make things bad for an economy. Deflation utterly destroys economies.
It attacted those who don't trust the people in charge of "money printers". Which, given the overall low level of trust in the government in many countries today, US included, is hardly surprising.
(Even more so in the third world, where quite a few people have personally lived through periods when government printed money like crazy, and saw first hand how it starts and how it ends.)
I hate it to break it to you, having lived in a country with hyperinflation, but crypto is not the answer to that.
Hyperinflation is just a symptom of other broken things in those places, and the real solution is to work on that brokeness.
You don't paper over lack of trust with a system that sort of works around lack of trust, you increase trust. Otherwise you'll be screwed in a million other ways that have nothing to do with money.
I have lived in a country which suffered rampant inflation as well (not quite to the degree where it'd be called hyperinflation, but rapid enough that it was a serious consideration in day-to-day life).
It's all well and good to talk about fixing brokenness, but it's not always politically viable. Furthermore, even when it is, people still have to go around living in the meantime. "It'll be solved eventually when everything is made perfect" is not a reasonable approach, and people are well aware of that. A very popular saying where I'm from goes, "the strictness of the law is mitigated by not having to follow it".
Let's do a fucking carbon tax and actually solve the problem, rather than just scapegoating an easy target and wasting political capital on attacking something many people value that doesn't directly or necessarily contribute any more to the problem than anything else.
A carbon tax in the US just moves the miners somewhere else without a carbon tax. That carbon still ends up warming the same planet, thus not solving the problem in any meaningful way.
I agree. Any anti carbon solution needs to be global.
That's a a tricky problem since some countries, maybe Russia and Canada, could theoretically come to the conclusion that climate change will actually be a net benefit for them by way of opening up access to resources in their lands. And other countries might come to the conclusion that the benefits of burning lots of carbon fuels to develop and modernize their nations outweigh the risks of climate change.
Our ability to actually reverse the trend of atmospheric carbon seems grim to me.
The environmental impact is tiny compared to that of the banking industry.
Of course, we can always strive to reduce emissions in every facet of our lives. However, this argument applied to Cryptocurrencies didn't hold any water at all, once we make the proper comparisons.
The banking industry does a ton of things: holds salaries for billions of people, performs payments for billions of people, holds bank guarantees for millions of people, offers loans to millions of people, offers savings accounts (not amazing these days, but they're there). They also do the same for millions of businesses, with even more complex products.
Do you think that all of that can be waved away? What do you think will replace it with crypto? Nothing? Where will I get a loan? Heaven? The Moon?
The daily trading volume of nyse was similar to that of btc even back in 2017.
Banks are throwing enormous amounts in now.
But if your little quip was meant to ask how the mere mortals are using it in the streets, I think it depends on the country.
It may take some years before developed nations have old ladies paying each other for wine night with some crypto.
Although, it seems that companies like Venmo may be crypto in the backend, with a usd mask for the user. So, perhaps more than you think.
I'm conflicted between telling you how clueless you are (and getting downvoted for being a dick) and walking away shaking my head because I don't feel like wasting my energy explaining shit to clueless people. "it seems [...] Venmo may be crypto"? Wow, yeah, you look like you know what you're talking about. /s
I guess I'm doing both. Good luck with your expert knowledge of economics!
The United States itself is also a kind of religion.
We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).
We have our sacred texts (Constitution, Declaration, etc) and our genesis story (War for Independence).
We have our temples (capitals, court houses).
We have our core beliefs (representative democracy is good, all men are created equal, the peaceful transition of power).
Citizens of this country worship at the alter of Americanism, and many of us work hard to make the religion successful and dominant throughout the world. Like other religions, we've even engaged in genocides and wars to spread our beliefs and convert or destroy the unbelievers.
The United States succeeds only because a critical mass of us choose to believe in this religion and really want it to succeed.
'The United States succeeds only because a critical mass of us choose to believe in this religion and really want it to succeed.'
Systems ought not require faith in order to be successful. An actor can believe in the good of a system without worshipping it; the kind of 'religion of America' you describe is the framework culpable for many of the worst atrocities the US has committed: Iraq, Vietnam, even Jim Crow or slavery can by tied to a reverence for some fundamental eidolon of 'Americanism'. Separating church and state is meaningless if you turn the state into a church: our systems should be meaningful without the crutch of the founding fathers, the constitution (as a historical object), or the piety of our public infrastructure.
There may be an element of the United States social project which resembles religion, an element that is likely very similar to crypto worship. However, this is not a defense of crypto's legitimacy, but a scathing critique of America's ontological basis.
Bitcoin "the system" doesn't require faith to work. It works by pure cryptographic rigor that is provably infeasible to cheat, along with an adaptive ruleset that responds to changes in external conditions to keep running as designed. It just works, and I don't need any faith to know that. I just need a solid understanding of math and computer science.
Bitcoin "the price" is fundamentally different from the system, and really just serves to operate as a signal for how much collective human attention and trust it is gathering. It's incredibly volatile because it's still so young and finding it's place.
I also don't think the religious element of bitcoin is likely to be a long term thing, but a kind of bootstrapping mechanism to both draw attention, and nurture a core foundation of devotees who are committed to working diligently to integrate "the system" more and more into the real world.
The price and the system are really inseparable from each other. If bitcoin was worth $0, there would be no computers running it and so it wouldn't exist as a system. So the system does require faith to work.
> We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).
Relevant: had they not removed it, this sculpture of George Washington would have greeted visitors to the US Capitol rotunda, handing them the hilt of a sword and pointing directly upward: https://en.wikipedia.org/wiki/George_Washington_(Greenough)
> We have our gods (founding fathers, dead presidents) and demigods (American folk heros, war heros).
> We have our sacred texts (Constitution, Declaration, etc) and our genesis story (War for Independence).
> We have our temples (capitals, court houses).
> We have our core beliefs (representative democracy is good, all men are created equal).
I'd be willing to bet a month's worth of my income that a majority of the population doesn't view it this way. The only people I know who view things this way are very far to the right (and this group is not the majority on the far right by any means).
The only part I'd be willing to bet is shared by more than 50% of the population is that all men are created equal (in theory at least; there are plenty of people with disabilities who would disagree that they are viewed as equals in practice; you needn't think too far beyond who would be sacrificed on a deserted island first and without much conflict).
The different political alignments are really just different sects of the nationalism/religion. Liberals simply idealize a different subset of the core tenants, and maybe are more tempered in their zealotry. But they are nationalist to their core nonetheless.
Having said that, there certainly are other groups that don't prescribe to Americanism, and are loyal to other 'religions' be it globalism or some other political ideology that's incompatible with American ideals.
I would even argue that Bitcoin is itself a flavor of globalism, albeit one that the establishment global elite aren't cool with, because they missed the boat on being early adopters and their power would be radically diminished if it wins.
If you artificially constrain yourself to an overton window that excludes e.g Bernie Sanders, sure. That's a false equivalence that's being pushed by one ideological cluster though, similar to the horse shoe theory or the idea that the center is reasonable. There are a lot of people who have problems with the idea of nations themselves. And there are people for whom politics is not part of their identity, but simply a part of negotiationing existence with the world. Again, specific clusters of the political landscape use and fulfill the patterns of religions much more than others (demonizing the other, dehumanising the other, creating a mythology of the ingroup that doesn't tie to material reality) and it's in their interest to push the idea that everyone does that, that the other side is equally religious in their politics and therefore it's not a case of one group wanting special treatment in a system that's meant to be equitable, it's everyone gunning for special treatment with some winners, some losers, politics as war between equally valid but inherently unchangeable ideologies that justifies the actions one takes.
I personally disagree with that politics as war perspective, as well as with the false equivalence
It actually reminds me a bit of consumer credit. It’s bad in every conceivable way for society, but good luck explaining that to people who can now buy things they can’t afford because of it.
You can’t fight a hurricane, so I have a card I use for travel points. When in Rome, or this trash fire world we live in…
Consumer credit is good for society in some areas. Used properly, it allows someone to smooth their lifetime consumption and production.
When you’re first starting out, you have a vast well of future production capacity but also vast current, unmet needs.
Expecting people to “just save up” for things that they need is not optimal, especially if that thing they need to save up for is part of what they need to get/keep their first job.
I'm not really seeing the parallels. People having strongly held beliefs that they advocate for does not make something a 'religion'. This seems more like an ad-hominem non-argument.
the belief in and worship of a superhuman controlling power, especially a personal God or gods.
Scratch the last bit, since it's a tautology. How many people in the crypto space proclaim that "decentralisation" or "smart contracts" or "hard" (i.e. deflationary) currency will fix everything and make bitcoin the new world currency and grant its loyal hodlers everlasting wealth? What percentage of them actually had a concrete idea on how that will happen?
We've had schisms (BTC), there's a mythological originator (Satoshi) and a possible historical counterpart (Hal Finney if I remember the name correctly?) as well as anointed saints and "first disciples". There's even new prophets (ethereum founder) proclaiming the last interpretation wasn't wrong but incomplete.
I've got to say, I see it rhyme. While I wouldn't say that everyone in the space treats crypto like a religion (probably), I'd wager for decent amount of people that description is a useful model
To be honest, I'm seeing parallels in the opposite direction.
There's a reason we don't have anti-golfers, or threads over and over again rehashing how dumb it is to have 18 holes, or about the number of senseless injuries sustained while golfing, or how it's too expensive to golf. It's because people who aren't interested in golf don't feel a need to prove to others how bad it is, or to force golfers into justifying how good it is.
People who don't golf just kind of focus on other things. But Bitcoin and cryptocurrency seem to be different.
> My impression is that Bitcoin (and crypto) is now a religion.
I don't agree with this characterization, but let's assume for a second that you're correct.
You need to look at the fact that every religion I'm aware of exists and thrives because it fulfills a human need.
You are therefore implying that Bitcoin does fulfill a human need, hence the current demand for it.
The fact that some people, much like with religion, will take it to extremes and/or gobble it up without questioning it and/or not believe a word of it yet use it to manipulate others to their own advantage does not seem to have any incidence on the fact that large swath of the planet's population are still religious.
everything on earth has a religion around it. Doesnt tesla or apple have religiously devoted investors? You only hear the loudest voices, not the millions of people who keep their coins somewhere and go about their lives.
Hn hates crypto so much the top comment just has to compare Tom Brady to Tom cruise and u get all the upvotes. So much salt from a sad community. Can we just ban crypto discussions from hn so the circus can finally close?
Keep in mind that HN is also oriented towards VCs and finance people who see cryptocurrency as a rival.
Some evidence for this is that the environmental argument is easily dispatched with: Cryptocurrency is on the demand side and the climate change problem is on the supply side. We need to switch from fossil fuels to non-fossil fuels, which we need to do independent of whether or not cryptocurrency exists, and then people mining cryptocurrency powered by solar panels is not a real problem. Pass a carbon tax.
There are also cryptocurrencies that use proof of space (e.g. Chia) or proof of stake, which don't have the same energy footprint even on the demand side.
But people who say this are regularly downvoted here by people who presumably dislike cryptocurrency for other reasons and see the alleged environmental impact as a strong lever for getting undecided people against it.
Why would I be mad? If my neighbour happens to win the lottery, I'm not going around being annoyed that I didn't play. Playing on bitcoin was stupid then and is even more stupid now. That it made some people very rich hasn't changed that fact.
You didn't miss out on anything by not playing the lottery. It's not like you would have also won if you just bought a ticket yourself.
It may be stupid and bad but the only reason we have strong feelings against it is because we missed out. You can convince yourself all you want but deep within we both know it's true.
First of all, I'm not the person you replied to but I want to answer:
I'm mad because there are people who lost their money, trusting that many "techies" know better than them, so they invested as well.
I had some bitcoins before it became a thing, I donated all of them to charity the moment I started suspecting it became (or always has been) a pyramid scheme (when it was like 10K each, yeah I'm a bit slow sometimes). I did once believe that it could be a gold replacement, but it wasn't becoming that too. Zero regrets.
"Oh I couldn't get into a scheme early enough which made many rich", may be what some feel, but there are also some who feel otherwise. If you are a bit smarter and/or technologically more savvy than the average person, there are many borderline legal ways to scam people. The faceless-victim aspect of bitcoin doesn't make it not a scam for me.
Also, I'm not judging you, I'm defending a position I believe in, which is important to me because there's not many things I actually believe.
It’s great for you that you think you know more about my inner states than I do myself. Just because you feel you missed out doesn’t mean that everyone else do. It just doesn’t bother me that some people are becoming rich while I’m just plodding along in my comfortable upper middle class life. The only reason I’m pissed at Bitcoin is because they are spewing out greenhouse gases for almost no use.
I've thought about this a lot because my less technical friends are often surprised when I tell them I am not "super into" BTC.
I wonder if it is because I am used to dealing with the fragility of digital systems (not to unfairly discount their strengths either) -- so then paper money almost feels like a relief to hold in my hand and just slap on the counter and smell that fresh legal tender.
It is easiest to trick people by saying "other people love this!". Engineers believe in crypto currency, so HODL! Or, the kids today view NFT's as hockey cards, they gonna soar like crazy! You might not see the value in this, but others do and that will make you rich!
Basically it is a way to make people turn off their sanity checker "Oh yeah, I don't see the value, I guess I just don't understand, but I still want in on this opportunity!".
oh if we are on that kind of position then crypto is ok for anybody.. anyone can try to create value from nothing and make people believe... actually they did already ... someone created facebook make people believe that it worths billions... but if someone claims that this is a revolutionary monetary system then I'd become suspicious..
> someone created facebook make people believe that it worths billions
Facebook make billions on ads, you don't have to make people believe when you are making wads of cash. And even when Facebook was new the business model was proven to be valuable by Myspace and the many other similar sites making lots of money on ads.
So your post here just strengthens my argument, the fact that you don't see the difference between the two just proves that you have turned off your own sanity checker.
Edit: What we are seeing now is similar to the investment craze in IT before the dotcom bubble. No sanity there, people just invested without thinking. I'll believe in crypto when people starts to think before investing in it.
I think you didn't get the point .. making crypto the default banking system is paradigm shift and efficient paradigmal application. I gave the facebook example because the economic approach which offers that supply and demand is right tools to decide whats good for humanity is simply not accurate.
It’s also tied inextricably to Austro-libertarianism and I think that’s no accident. My wild conspiracy theory is that the founders of blockchain are cashed up libertarians who created it to promote libertarian economics (which overwhelmingly benefit the cashed up among us)
Yeah, one side effect of Bitcoin is that it created 1000x more believers in crackpot Austrian economics. This may end up legitimizing some bad economics.
Austrian economics aren't crackpot, they're just outdated. Their view of the world was the correct when human labor was the most valued thing in the world.
Austrian views on inflation have been proved several times over.
Austrian views on the value of labor are a disaster. They're entirely unable to imagine our current labor market where a substantial amount of the work is done by machines. Human Action was written in 1949. Imagine how different the world must have been back then. My iPhone can recognize the contents of pictures such that I can search them-- in 1949 that would have required an office building some storage cabinets, logistics, and a personal secretary or two. Now nobody,
How do you define "praxeology"? My recollection from reading Human Action is it was only defined as "The study of human action."-- which could be scientific or might not be.
As used by the Austrian school, at least, it explicitly rejects empiricism, and uses deduction instead (from premises that are essentially taken for granted).
The scientific method is not an exclusive means to seek truth. Science has only one job-- to make testable predictions. It does not inform us about anything else.
You're essentially arguing "Falsus in uno, falsus in omnibus" because of an inherently illogical belief that only science can arrive at truth.
Rejecting empiricism means rejecting the very notion that one can make testable predictions, though. If that is rejected, what is the point of economics, even?
Austrian economics is essentially a deductive theology; the purpose is to work out the more detailed/complex implications of the basic axioms (both descriptive and, more importantly, prescriptive) that it assumes.
> when human labor was the most valued thing in the world
Try hiring sofware developers with skills that aren't entirely copy-pastable from Stackoverflow and getting them motivated enough to not cash out after six months, and then tell me it isn't.
I'm not talking about that of course. Smart people will always be in demand.
I'm talking about ditches that need be dug. Floors that needs to be swept. Notes that need to be taken. Automation has eaten low end jobs since the industrial age began.
I keep hearing from the futurists that massive job losses from automation are right around the corner. Yet any unskilled profession has no workers. If the automation was coming, wouldn’t we be in massive structural unemployment rather than massive unmet labor needs?
The true morons are the Marxists and their labor theory of value, as well ask MMT idiots. Crack pots are everywhere.
The homology of God and Mammon is long known.
They are both, at least for a lot of people, transcendend and abstract forces dictating human life.
Over which they have no influence.
While there is a legitimate argument to be made in favor of either restructuring or banning American football, it's clear that the moral culpability relating to these systems aren't comparable. A fundamentally very small population is vulnerable to the TBI risk of American football, and the vast majority of that population willfully decides to engage in that risk with knowledge of it. However, the environmental and economic (supply chain) externalities of Cryptocurrency are imposed upon those who don't opt into the system, and also operate entire orders of magnitude higher in scope.
I sold my BTC from 2011 in the (what felt "big" at the time) run-up end of 2017, before it crashed in 2018.
Me at the time: "nailed it. knew this was hype and surfed it beautifully. looking forward to never thinking about crypto again."
Me now: "blew it. didn't even realize what 'mainstream' could mean."
What this taught me is that hype can come in waves, and the next one might be bigger and the timing unknown.
This article is great because it outlines all the different reasons why the hype of crypto has kept growing. It has so much controversy, is pretty generic, and nobody can really make sense of it. So it just keeps getting bigger because it is driving everyone nuts until they either:
A) get it out of their system and move on because honestly, dollars work
B) get rich off it and stop caring because they're rich now (probably converted a good amount to USD ;)
C) don't get rich off it but could have / wished they had and spend time hating it until something distracts them towards a healthier life
D) use it for practical purposes (aka crime) and then eventually get caught and have to wait out a sentence until they can get back in
In my opinion, it is the very fact that it has defied so many predictions (while confirming others) that both explains its persistence, and leads to the author wanting to encore his prior post in the context of the _current_ wave of crypto hype.
> Me now: "blew it. didn't even realize what 'mainstream' could mean."
Exponentials are a helluva drug. Even here on HN people don't feel exponents, power laws, and related growth in their bones. Whether it's Moore's law or experience cost curves or smartphone adoption... It's entirely possible for something to double or more in a year.
The other day I noticed Tesla's forecast for manufacturing cars in 2021, I think. At a quick estimate, they're going to make more cars this year than they've made total in their entire history up to somewhere around 2020. Think about that: all the Teslas you've seen driving around already, well, next year, there's going to be twice as many, and then the year after that...? No wonder the Tesla stock price has shot up so much the past few years, as it becomes clear "they're gonna make it", and competitors like Ford are crashing their own electric truck programs or like Toyota are now out doing outrageous things like propagandizing about how awesome gasoline engines are & how actually the future is hydrogen.
Unfortunately doubling your production capacity doesn't equal doubling your sales. Tesla can only do that for so many years before they're like GM or Ford: selling a commodity item, competing with others selling similar items, with decreasing margins, and shareholders demanding dividends and employees forming unions.
Bitcoin’s goal was a censorship resistant form of P2P electronic cash. (Don’t get hung up on those terms- they are terms of art.)
It has completely succeeded in that. In a decade it has never been successfully censored, it remains viable P2P cash and in fact has scaled in capability dramatically.
Now you can trustlessly transfer $1k from one phone to another in milliseconds across the globe at effectively no cost.
That is the best cash ever.
And no government or corporation can censor it like they did to Wikileaks.
A side effect of its security approach is the coin limit which has created scarcity and a virtuous cycle whereby early adopters gain relative wealth that helps fund continuing development.
Bitcoin has completely succeeded on its own terms, far beyond its intended scope.
It is now in the early stages of remaking the world in its own image.
I know that likely few of you can see that, but it is already a national currency, and soon the trickle of adoption will become a flood as bitcoin incentivizes a speculative attack on the dollar and every other fiat currency.
In the process it will destroy the funding mechanism that has kept the world at war for a century, and massively increased poverty.
War is over. If you want it. Maas theft of poor peoples savings via inflation is over.
With Bitcoin.
PS: Blockchain/NFTs/Ethereum and every other shitcoin are scams. Beware.
Inflation on their savings is really the least of most poor people‘s problems.
Exactly what‘s funding wars is also funding social welfare and public goods and services. But It‘s cool that you and everyone else in this will be super rich when the time comes so what do you care.
P2P cash that cost me up to $50 to use for a single transaction isn't exactly a success. It might be great for collecting some ransom money, but is completely useless for buying some donuts. Whatever bitcoin is, a replacement for cash or its digital equivalent it is certainly not.
Bitcoin never had $50 transaction fees, I don't know what you're talking about. The fee right now is ~$1. For small purchases you can use Lightning Network and the transaction fee would be fraction of a cent.
IDK I'm paying less than $100/year for Revolut and can unlimited instant mid-market-rate all-I-can-use foreign exchange that has next to no chance of me just losing it all by fat fingering an address, bundled with global travel insurance and a boatload of other perks. And within the USA and other countries, instant no-fee transfers are also common nowadays (Venmo/Cash App in the US, PayPay/Line Pay in Japan, etc). I actually thought about moving money with crypto, but between it being way more complex, involving confusing calculations to make sure I'm not making a bad financial decision and a minefield of regulatory and taxation issues (I already screwed it up once and now probably owe the Japanese government thousands of dollars in taxes this year) I feel like the best cash ever is just... bank accounts.
> In the process it will destroy the funding mechanism that has kept the world at war for a century, and massively increased poverty.
This is delusional: if WW2 was fought on any one currency, that was oil. It has nothing to do with fiat currency. Nor does, say, Syria.
We'll know the censorship resistance is working when Iran routinely sells oil for bitcoin.
> Mass theft of poor peoples savings via inflation is over.
Bitcoin has yet to achieve price stability against real goods, because the price of bitcoin versus the real dollar goes up and down by tens of percent on a monthly basis.
> Bitcoin has yet to achieve price stability against real goods, because the price of bitcoin versus the real dollar goes up and down by tens of percent on a monthly basis.
True, but Bitcoin still has a fixed supply. If adoption continues (and it might not), it does provide protection against an inflated dollar.
> If you want price stability, use Tether.
But price stability does not protect you from inflation, which was the point here.
This is a poor argument that I see a lot. Do you really think everyone stops buying stuff when money slowly gains value? (If so, I'd say it would be a great way to address the climate crisis.)
So, I'm just a guy, been a software engineer most of my life, from age 7 or so when dad first showed me how to punch some commands in DOS. Probably like many of you here. So, when you read what I am about to write, please don't attack me, please read it with an inquisitive, truth seeking perspective. I come in peace, if even you don't like what I am about to say.
When I first got into tech, the technology amazed me, not the problems it solved. The tech was enough, it was not a means to an end, it just was. As I got older, and started owning projects, managing teams, etc, I realized that technology should be in service of something, not just a thing to exist in and of itself.
So, how does that relate to this? One question I have constantly asked, and never gotten an answer to - What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve? What problem does it solve that no other distributed system does as well, if not better? I've yet to see the answer.
inb4 payments: Payments has been the closest answer, but then you realize that payments infra is bogged down by regulation, not by technology, and that any technology that goes to replace existing tech will get regulated down into the same place.
I worked in the public sector for decades and we did so many proof of concepts on block chains, exactly because successful consultants and university researchers (the sort of people we trust) tried to sell us various ideas.
It never stuck in my country, I think it did for a while in Sweden for their land ownership systems, but never here. It never stuck because it’s just a terribly inefficient database.
There is a use case for decentralised landownership, maybe not in a low corrupt country like Sweden, but I’m sure you can think of places where total transparency in land ownership and the transfer of land ownership would matter.
The problem blockchain doesn’t solve is that even with perfect transparency, your claim of ownership means nothing to the people with guns. Which means it doesn’t actually help you in countries that aren’t big like Sweden.
The same is true for all its use cases, including money. Because even money relies more on the established system more than any crypto fan will ever care to admit to themselves.
What problem does blockchain solve there? Land is expensive and not exchanged often, it wouldn't be a problem to require every operation to be submitted to a government agency, right?
I think that comes back to “the people with guns don’t have to care what the blockchain says” - and places without a widely trusted entity are likely to have the people with the guns.
That was sort of my point. I’m not English so maybe it got a little lost in my wording, but decentralised trust doesn’t work, exactly because you need a centralised force to back its integrity up, and if you have that, what use is the decentralisation?
Maybe if it wasn’t hopelessly energy inefficient you could utilise it to cut back on your bureaucratic processes and make your organisation leaner. That’s just not going to happen in politically lead organisations, at least not here, where it would be political suicide to replace workers with a technology that can easily be painted as destroying the climate. Even the most fanatical liberal (this is our right-wing mind you) would realise how poor of a political platform that would be in the current political climate.
What, exactly, is the enforcement mechanism of NFT? Do they come with a military or police force to do violence against those who disagree with your Internet Claim Check?
Easy: it's censorship-resistant. You send a transaction and no middleman, no financial organization, no one can prevent you from sending it. You can transact with anyone, anywhere, 24/7/365, however much you want, $100 or $100 million. No other system does this.
On the other hand, with legacy systems, Paypal can freeze your account, Zelle limits your sends to $2500/month, a credit card company can deny your transaction, a bank chooses to not process your international wires on "weekends and holidays", etc. Limits everywhere.
1) You're right, and perhaps its a position of privilege to say this, but this does not seem to be a real problem worth solving? I've transacted a lot of money, both ingress and egress, buying a modest home, a car or two, paying off student loans, etc. No one has ever tried to censor me.
2) Beyond censorship, one needs safety. It may not be censored, but its certainly traceable, so how useful is the lack of censorship without anonymity?
3) If we take it that it solves this (both 1 and 2), then moving on to the other part of the question, how does it solve it better than any other distributed infrastructure? You could build a censorship resistant payment system without the insanely excessive hoarding of base wealth (like the gold mining analogy in the payment article), and without the insane environmental impact.
4) Let's say it solves 1, and 2, but we can't do better and I am wrong in 3. Is this problem worth the massive environmental cost to solve?
No offense, but that's a very egocentric view. You may be (probably) a middle/upper-class westerner who has never encountered censorship, but I assure you there are billions (literally) of people on the planet for whom censorship is an issue.
So another spin on what you're saying is that middle/upper-class westerners have no use for blockchain, which certainly is in line with my experience that the only people who really need to rely on cryptocurrencies are ransomware people.
Yeah. And anyone unlucky enough to live in a place where the govt fucked the local fiat currency with hyperinflation. Zimbabwe, Turkey, Lebanon, Argentina, Venezuela, etc.
The problem still remains of how do you get crypto if all you have is near-worthless paper. Who would trade it to you? How much crypto is actually "produced" internally? International traders wouldn't want your shitty fiat.
Wouldn't it make more sense to use fiat from elsewhere like EUR or USD? There's probably already a decent stream of it into the country (from exporters and remote workers) so exchange could be done internally, lessening the above problem. Its value is far more stable than any crypto, it can actually be used in foreign trade without lossy conversions, it's just as easy to use, you can get bank accounts, etc.
> International traders wouldn't want your shitty fiat.
I'm sure there are local traders savvy enough to get a +30% premium in local cash which they then immediately exchange for more durable assets.
So international traders wouldn't but national ones that know the country, they would.
If I could sell my crypto for +30% and then immediately use that money to buy gift cards at a store (just brainstorming here) and could put those online and redeem them and cash out with a 10% slippage, allowing me to keep +20%. Why wouldn't I do it?
I don't know such a method since I'm Western-European. But if I'd be from Venezuela, then I'd know to what extent a plan like this is feasible among: friends, family and perhaps even certain strangers.
These places have wealth, in the form of foreign currencies like the USD, real property, businesses, commodities, etc. Their national currencies rapidly depreciates though, so it can only be used for short-term liqudity purposes.
>>Wouldn't it make more sense to use fiat from elsewhere like EUR or USD?
That's a good question. The only use-case I can see where cryptocurrencies are a better fit is when digital/international payments need to be made. Crypto allows that without any formal approval, from the state, for a USD/EUR supporting payments/e-wallet/banking firm to operate in that country.
It could (in combination with Lightning) function as alternative to card payments in places where banking systems aren't functional.
Also international waters.
Also digital goods.
However it won't be soon. It's financial infrastructure - just different from the ordinary. And that takes decades to build. Cards were accepted at only few establishments at first too.
So is the view that PayPal/Zille will block their transactions.
> billions of people for whom censorship is an issue
I would love to read a source on that. PayPal/Venmo isn’t the de facto exchange in the world and many newly industrialised countries have robust p2p payment systems like mPesa/UPI.
1) This indifferent attitude is what enables censorship to occur in the first place.
2) Not all currencies have the privacy implications of Bitcoin.
3) Not all currencies have the inherent environmental cost that 'proof of work' currencies like Bitcoin do. Is preventing the hoarding of wealth really a goal here?
Regarding censorship, that will continue. Anti money laundering laws for example tend to popular support. If crypto wins out it will have to have a mechanism for blocking or canceling some transactions due to people with guns deciding that.
You could build a censorship resistant payment system without the insanely excessive hoarding of base wealth
A key tenet of crypto is that you cannot, in fact, do that. To make the system secure it needs to make the people running it rich or they wouldn't bother. This is debated, of course, but so far blockchains that don't have "number go up" have been stillborn.
>it needs to make the people running it rich or they wouldn't bother. This is debated
I don't think this is even debatable anymore. We were promised decentralization and transaction costs at a fraction of traditional payments. Instead we have astronomical transaction/gas fees and effective centralization around a different cast of characters.
Of course there are positives. For instance, if you are sending large sums, it can be cost-effective. But, this is far from the world of micropayments and fractional penny transaction costs, and that money is going somewhere.
Seems pretty clear that we've just dislocated some percentage of the financial incumbents to create new ones. And, even the old incumbents are buying back in. Reminds me of the early promise of the Internet itself giving way to corporate overlords and capital.
I'm not anti-crypto, but it is kind of silly to keep pretending it's close to or even on track to realizing its early promise.
> Seems pretty clear that we've just dislocated some percentage of the financial incumbents to create new ones. And, even the old incumbents are buying back in. Reminds me of the early promise of the Internet itself giving way to corporate overlords and capital.
And yet again a bunch of tech-enthusiasts are forced to face that fact that their breakthrough technology does not infact lead to the techno-utopia they imagined, and instead is heavily directed by human factors, and leveraged/exploited by the same types of systems and entities that had the most power/influence prior to it.
Can't wait till we start again on this cycle with widely deployed machine learning systems in about 15 years. The same exact arguments of "it's just a technology." "It doesn't matter how it will be used in society." "By nature it's more [democratic/egalatarian/...]" "It will help to remove people problems by being tech".
Which will yet again change to: "Wait what?" "Not like that." "It's not supposed to be used like that". "It's been corrupted and taken over by X. Who could've foreseen this??"
If you're designing tech without designing how it will interact with society, you're just designing foot-guns. Hopefully at somepoint as an industry we'll get past this stage from teenage "look what I can do isn't this cool" to resonsible adult "Yes I have the freedome/ability to do this, and here's how I'll do it responsibly."
Are you saying Nano is based on Ethereum? Because it's not. Or if you mean the environmental impact claims are based on Ethereum... that's sort of true (Bitcoin is still the biggest offender here, but Ethereum currently also has a significant impact).
However, Ethereum is moving to proof-of-stake, so this won't be relevant once that transition is complete.
1. That shadow force is regulated by the legal system.
2. If the centralized legal system is needed, then what's the point? The immutable crypto ledger say GO, the people with guns say NO. Which one's right?
Bitcoin is perhaps a rounding number today (my guess is that it is more than that due to Chinese miners not reporting energy usage correctly but could very easily be wrong), but what it solves is even less of a rounding number.
Said in a different way to do all financial transactions on the blockchain would use a lot more energy then it currently does.
This appears to be a semantic deflection. Are you arguing that less than 0.1% of the world's energy consumption equates to a "massive environmental impact"?
The reason why the argument that it is only using 0.1% of the worlds energy consumption so it doesn't matter is a stupid argument is because it can be used about absolutely everything. This particular coal plant only emits a 0.01% of all greenhouse gas emissions, so it doesn't matter. That is true about that coal plant too, and that one. So just leave them all because no single coal plant matters in the whole.
140TWh out of 170000TWh is about 0.8%. relative impact is bigger than 0.08%. Coal is 36% of the power mix. Under the assumption that most bitcoin mining happens connected to the grid (seems reasonable) and that these grids contain coal powerplants (also reasonable with the exception of Iceland), that 0.08% translates to 0.22% of global coal based emissions. On a global scale, being responsible for 1/500th is a lot (for me at least)
the numbers are more relatable when looking at absolute impact. Assuming a average coal power plant of 600MW (you can find bigger, but this is a representative plant near me[1]). That’s 5TWh/yr per plant. Bitcoin then represents 28 of such coal powerplants running at 100% capacity 24/7. That - to me - seems like a massive amount of CO2 for a niche application.
And if I read your source correctly, that’s just bitcoin
Actually, it's the opposite as far as censorship resistance goes. Because all transactions are public, any bitcoin can be traced and tainted. Taints can be enforced easily because the process of detecting tainted coins can be cheaply automated by all involved. Mixers are of little consequence, just like money laundering schemes aren't a magical loophole around laws regulating transactions and tracking asset ownership.
Paper fiat is much better in this regard as bills are much more difficult to trace and taint. The infrastructure isn't in place to comprehensively enforce serial tracking. More importantly, there are usually laws that guarantee the fungibility of bills, which means it's usually very difficult as a legal matter to force a current, honest holder of a circulating bill to relinquish it. Such laws exist precisely because of the difficulty of cheaply tracking the provenance of bills.
A large country like the U.S. could easily mandate verification by its citizens and businesses of all bitcoin transactions against a central registry. Then in a blink of an eye it could begin flagging bitcoins the way car VINs can be flagged.
Sure, you can send it to people not subject to the mandate or otherwise willing to risk accepting it, but the value of that bitcoin is now diminished as compared to the rest of them because the market will be smaller. Transparency means they're not perfectly fungible, yet perfect fungibility is what you need for censorship resistance. To avoid the cost of receiving coins from illegal activity there'll be various escrow and insurance schemes which will make bitcoin transactions even less efficient than they currently are.
The flip-side, however, is that for law abiding people without privacy concerns, bitcoin might prove an excellent asset store. Nobody could steal it from you, at least not without fooling the legal system and/or central authorities, which [ideally] would require alot of non-anonymous, conspicuous activity. Which is why NFTs are enticing. Relatedly, NFTs make no sense without a centralized, easily queryable database linking legal ownership of an asset to the NFT. But, ironically, it would be the central database, not the NFT itself, that truly establishes ownership. Similar to how land title registries, not occupation of a piece of real estate or chain of title, establish rightful ownership in jurisdictions with such registries.
The infrastructure isn't in place to comprehensively enforce serial tracking.
It is in China, since 2013.[1] ATMs which do "cash recycling", giving out bills they took in earlier, have the hardware for it, because they have to do a detailed scan of incoming bills for counterfeits and wear anyway.
The basic question is whether you can force forfeiture of an innocent receiver of a tainted bill. You can always legally do this, but it diminishes the utility of the medium--the very purpose of currency, afterall, is to provide an efficient substitute for barter, and the greater the fungibility the greater the efficiency. Is the benefit in suppressing criminal activity worth the cost imposed on economic activity? The more potential innocent, protected receivers, the greater potential for effective money laundering, the less effectively you can suppress illegal activity.
The cost is a function of determining provenance at the point of a transaction, and the benefit a function of degree of ubiquity. This cost is most minimal when all transactions already occur electronically, online, and in real-time, as with Bitcoin. Similarly, it's precisely such a system where you can impose the burden most ubiquitously--literally every individual and every transaction subject to your legal authority without very much technical effort. So it's with something like Bitcoin where you're most likely to see heavy reliance on tracing and tainting because shifting the burden onto innocent receivers imposes the least cost to them individually and to the transaction system generally. By contrast, paper fiat is the place you're least likely to see this strictly employed, so long as it remains a substantial medium for exchange. (Rather, the tracing is most useful for catching criminals, not passively diminishing their ability to utilize the transactional system itself.)
AFAIU, not only does China have systems in place to more ubiquitously trace bills at certain points in the system, they're also actively encouraging (i.e. forcing) a shift to electronic payment platforms. The details of precisely what they're doing, when, and how I don't know much about. But the basic principles and concepts are clear, making the trajectory of what they need to accomplish easy to predict.
Especially in jurisdictions with long established, legally mandated fungibility guarantees regarding paper fiat, many Bitcoin advocates are unwittingly ushering in the future they claim to fear most.
The basic question is whether you can force forfeiture of an innocent receiver of a tainted bill. You can always legally do this
Depends on the jurisdiction. US, probably. France, probably not.
This cost is most minimal when all transactions already occur electronically
Tracking bills through ATMs is picking up as ATMs add "recycling", where received bills can later be dispensed to another customer. That requires much better scanning of bills. Serial number recording is a by-product of counterfeit detection and bill-damage detection. So the hardware and software come standard.
There are ways to anonymize Bitcoin transcations, but I don't know how reliable they are. But there are other coins that attempt to be anonymous by default. I don't think it is a fundamentally unsolvable aspect.
> Mixers are of little consequence, just like money laundering schemes aren't a magical loophole around laws regulating transactions and tracking asset ownership.
The key is understanding that governments don’t just say “oh, it involves computers, guess we have to give up”. Once something grows to the point where it’s worth caring about, blockchains are easily censored as we’ve seen in e.g. China. It’s not just that they’re a complex high-volume network stream which is easily blocked but, more importantly, that most of what people want to do happens in the real world where those governments control things.
If businesses are required to report their customers, a blockchain doesn’t help you because the auditors are going put them out of business if they don’t comply.
If you are linked to a mixer or anonymous coin network, congratulations, you’re now at risk of being charged as an accomplice for the worst crime committed using that system – better hope you can prove and they care that you weren’t knowingly helping them! (Are you sure that service isn’t run by the police so you can pay them to make a confession?)
All of this is fully retroactive, too: you might think you’ve evaded attention but that changes when someone you transacted with turns over their transaction history. How many of the people you’ve transacted with are you willing to go to jail for rather than testify against them? If the government published a list of tainted addresses involved in illegal activity, it’s going to be quite expensive to ignore it since whoever does do is taking on both the risk of prosecution and a reduced pool of potential buyers.
All of those things cut into legitimate usage: most people have alternatives so if a blockchain isn’t cheaper people aren’t going to touch it if it involves legal risks.
Nobody expects governments to simply give up. But for a country to have to go full China to be able to prevent the use of Bitcoin is still quite an effort. And even if that happens, you can memoize your master key and try to escape into another country. Much easier than if you have to transport several pounds of gold.
So it isn't perfect yet, but still a lot better than any other approach.
The argument "but it is against the law" (like money laundering) isn't really a good argument against an attempt to hedge against unfair governmental interventions.
You can, in practice, by forcing exchanges like Coinbase, Binance, Kraken, etc, to refuse tainted coins. Their value in the market would instantly go down.
If you don't control miners you have to do something even harder:
You would need to control or force 100% of exchanges, 100% of merchants, in fact 100% of all participants in the Bitcoin network to reject tainted coins. See how this can't work?
The tainted coins remain usable everywhere and anywhere that doesn't track tainted coins. The owner of such coins only has to find a SINGLE such party to be able to launder the coins.
And then what? The poor shmuck who wasn't aware they received tainted coins, eg. an online store in Oceania, would get scolded by The Tainted Coins Authority who would maybe decide, after investigation, he was a victim, and would "untaint" the coins.
Multiply these incidents by a thousand per day. Unworkable.
Who funds all this effort?
And who actually would be "The Tainted Coins Authority"? It sounds just like a centralized thing that pretty much all Bitcoin exchanges & participants are against.
You're confusing the technical aspects of Bitcoin--concensus on which entity possesses a Bitcoin--with someone's ability to derive value from that possession.
If the government passes a law that says nobody is allowed to transfer a US $100 note with serial 123-456-789, then if it catches you transferring the note, it can penalize you. It doesn't need to void the transfer that changed possession as technically defined by the system. It needn't care about what happens to that particular note, it only cares about your behavior. And through controlling your behavior (as all laws do, good and bad), it can ultimately effect how the system is used, even the parts not directly under its control or authority.
For a variety of reasons it's very cost prohibitive to enforce such a system for paper fiat. But most of those costs disappear in a transactional system that is inherently electronic, online, and real-time. There are still costs--like needing to maintain and make available a blacklist, and compliance costs for both users and legal authority--but they're still unfathomably cheaper than requiring and enforcing verification when passing a bill to a clerk at a grocery store.
FWIW, forgery of paper currency also imposes costs. The street value of a US $100 bill is actually worth slightly less than 5 x $20 bills. But the cost is very small because enforcement is difficult. A bank may refuse deposit of a forged note, but a store can almost as easily pass it on directly to another payee as when it received it. The more places you can easily utilize and enforce verification, then the more difficult it is to pass on forged bills, diminishing the value of forging bills in the first place. And this happens even if forged bills can be and are still exchanged among some subset of people. Unsurprisingly, this ease of verification is precisely what makes Bitcoin so seemingly useful. You can't forge Bitcoin because provenance is easy (i.e. relatively cheap) to track and enforce. But fundamentally that ease of identification cuts both ways--easy to detect forgery, but even easier to match a Bitcoin against a blacklist registry. And if its cheap for you to make the match, then there's less inherent cost to burdening someone with a legal mandate to make that verification. (And it's even easier to verify compliance because the government could regularly taint a Bitcoin, test passing it on, and track it as it goes through the system. Everybody who accepts it is busted, at least up to the last entity that didn't verify the legal identity of a payee, but you can impose even costlier fines in that case, which we actually do today--ever apply for a mortgage recently?)
That seems to be the consensus of what people say, but I think that all of those things are false or atleast assuming functional parts that aren't actually guaranteed.
No anonymity, means sure you are free to transfer, but the gov is free to track you down, and if you live in an anti crypto gov, that means entering or exiting the crypto universe is very difficult.
You say $100 or $100 million, but this is a large failure of Bitcoin. You are tying it's value to fiat. That compounds on my previous point, if all governments crack down on crypto, would it actually have any value? If tomorrow, all exchanges were shut down, the truth is, Bitcoin would be dead.
Lastly, the largest flaw of Bitcoin is it's failures to scale. That means that in the golden crypto universe that every follower dreams of, every text, transaction, breath, thought, all exists on the blockchain, Bitcoin inevitably collapses. You have the problem of both the blockchain size has grown to such a size that the barrier to entry for nodes becomes too large, as well as the failure for Bitcoin to handle any rate of transactions/seconds to handle the real world.
Other currencies have addressed the issues of anonymity and environmental impact, and the block size can be scaled dynamically. If the block size increases too much, there is an argument for sharding/pruning- this is an open question, and probably not the one which will crypto-currencies.
> in the golden crypto universe that every follower dreams of, every text, transaction, breath, thought, all exists on the blockchain
Bitcoin is necessarily, explicitly inefficient, by virtue of being an immutable append-only log. A first-year CS student with a week of Data Structures and Algorithms classes could tell you that.
And it's not even being widely used as a payment system yet - at that point the transaction volume would explode, and the computational and storage inefficiency would become even more salient issues than they are now.
The authoritarian tech/finance cartel will gladly close your PayPal account without recourse to claim the balance, close your bank account, prevent you from getting access to payment processors, delist your products, kick you off of web hosting, ban your social media accounts, and otherwise shut you out of 99% of what people use the internet for, just for crossing one of them.
I never hold more than leftovers-worth of Bitcoin, so I'm not tied up in its success financially, but it has been a great way to support people who have been oppressed governments and corporations, many of whom who have never even been accused of a crime.
>> The authoritarian tech/finance cartel will gladly close your PayPal account without recourse to claim the balance, close your bank account, prevent you from getting access to payment processors, delist your products, kick you off of web hosting, ban your social media accounts, and otherwise shut you out of 99% of what people use the internet for,
Wouldn't this effectively make it impossible to exchange bitcoin for currency rendering it utterly useless?
> Easy: it's censorship-resistant. You send a transaction and no middleman, no financial organization, no one can prevent you from sending it. You can transact with anyone, anywhere, 24/7/365, however much you want, $100 or $100 million.
This is not completely true. There are middleman and in bitcoin world they are called miners. They are the ones that need to add your transaction to a block and who you need to pay so that they do that. Control the miners and you can censor all you want.
Doesn't the common method of obtaining Bitcoin force the same system on you.
If you are buying from coinbase like most Americans you are forced to provide identity to buy, sell or receive over various levels. Same on the other exchanges. Exchanges do freeze accounts.
How does a regular person who doesn't mine get around these same controls?
How does Bitcoin solve the "can't trust the other party" problem? If you send bitcoin to someone to buy some fine pharmaceuticals and they just don't send the product, what recourse do you have?
I believe this is why ethereum was so popular, as it introduced the idea of "Smart contracts". So the transaction is dependent on something occurring in the real world.
Obviously there have been a ton of developments since then with newer crypto currencies, including increased privacy, anonymity, linking to applications, etc.
For instance, I think Chainlink rewards people for hosting datasets (like ML datasets, or waybackmachine) on ipfs, and also inherits the smart contracts from ETH.
Additionally, I think Monero has made developments in smart contracts as well, and the price seems to be more steady, since people actually seem to be utilizing it more for buying things in the real world, like computer services and such.
Smart contracts can only depend on something happening in the real world if it's accurately reported by an oracle - ie. a trusted third party / middleman.
I’m genuinely curious, how would that solve the problem? The real world event - say, delivery a purchased good - would still have to be flagged by both parties as “delivered” before the smart contract can execute. If you only allow the receiver to flag, then the problem inverts! Now the receiver can just deny the item was delivered.
Middlemen are useful, as annoying as they may be. I’d love to be proven wrong here.
> Easy: it's censorship-resistant. You send a transaction and no middleman, no financial organization, no one can prevent you from sending it.
Devil's advocate here: How is a state not going to see that as a bug not a feature? Do you think that governments will let the loophole stand and grow? Won't there inevitably be a choice eventually: get regulation and oversight like any other mass payment method, or be banned outright, and driven to the margins of society?
Are you running a bitcoin node that successfully mines blocks?
If you were adding a hypothetical transaction that would heavily injure a majority of miners (think shifting a huge number of the Satoshi owned coins to the US Gov) do you think they would still happily process it?
This entirely depends on your point of view. What you call a problem, I call a feature. I do not want the monetary system I'm apart of supporting Organised Crime, Terrorism, etc. Things like Sanctions, Unexplained Wealth Orders, Proceeds of Crime, suspicious transactions etc.. Are there to protect me.
At best, I would say Bitcoin is resistant to unjust-censorship.
However the only real instance I'm aware of that I would call unjust is Visa refusing to accept WikiLeaks donations.
As I say, it depends on your point of view. There are proponents and critics of Civil Forfeiture but as an Englishman I do not have the Cultural/Societal understanding of America to form my own view on the subject that doesn't directly affect me.
And the feature of many monetary systems is they are "property" i.e physical currency, and so must yield to US legal doctrines about physical property.
It's not relevant that this is US-specific, because this is an example, which must be based somewhere.
I don't think it does. Rights to search & seize physical goods isn't the same to search a digital device and force a transaction. At the very least, you can with-hold passwords i.e. refuse to participate, in a way you can't prevent police from searching your vehicle.
people are just hopes that things will be good... do you really know who built the bitcoin? is there any person you can point ? no? then do you really think that people are smart, decisive enough to keep this kind of systems up in spite of their loss of monry or etc.
do you really think that there ls no trust issue with the bitcoin? let say "some" guy "one" day finds a way to steal your wallet ... can you find a way to make it safe as it is with the current banking system? think about even if your credit card used by scammers you still have some kind of safety... banking systems are not there to be perfect but here to secure people's ( who are not thst smart ) money safe...
lastly censorship rsistant is my ear! it is clear that you have never lived in an opressed country..
> One question I have constantly asked, and never gotten an answer to - What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve?
i just can’t tell if these comments are in good faith or not anymore. every thread on HN that even brushes up against crypto has about a million comments explaining what problems these things solve. you can disagree with the solutions, you can find it hard to relate to the problems being solved, but don’t play the “i’ve never gotten an answer to <x>“ game here, because you absolutely have.
> every thread on HN that even brushes up against crypto has about a million comments explaining what problems these things solve.
More accurately, they have plenty of people with a financial stake saying that the technology can solve a particular problem. It’s exceedingly rare that they can discuss the problem at a level of detail demonstrating real understanding of the problem, the systems currently being used, or, especially, non-hypothetical ways to deal with the limitations of the proposed system.
I would say this, as someone who was deep into Bitcoin until 2012 or so, got out but still use it ocasionally as payment method.
For me, coming from a country ravaged by corrupt politicians, that controlled the Central Bank, and destroyed the country with years of hyperinflation, among other tools of destruction, the biggest problem Bitcoin seems to solve is Economic Dependency on Public Policy
What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve?
Blockchains solve an unusual problem of how to get trust between untrustworthy parties. The underlying problem is "how do you make a secure distributed ledger that all parties can agree on". Using the previous entries to sign new entries is a good solution.
The problem is that Bitcoin has nothing to do with that problem.
> Blockchains solve an unusual problem of how to get trust between untrustworthy parties.
People keep repeating this, but this isn't true. It doesn't solve this problem for the general case, it only solve this under very special circumstances and it has yet to be proven that these circumstances allows blockchain to be useful for anything but as a currency. This is what the crypto proponents doesn't understand, they think like you do here that you can just slap blockchain on stuff and now it is trustworthy.
The interesting thing is that it is people believing that blockchain makes something trustworthy that is its real value. If you can slap blockchain on a scam to make people believe it is trustworthy, now that is worth many billions of dollars! That is the true value of blockchain. And it wont be valuable as anything other than as a scam as long as people can't tell the difference between a blockchain scam and a real blockchain business, and since it seems basically nobody who is pro-crypto can do this I don't see a bright future for it.
People keep repeating this, but this isn't true. It doesn't solve this problem for the general case
Why not? A signed distributed ledger isn't a complicated thing, so it's hard to see how a blockchain would fail in.
Cryptocurrencies are an application of blockchain as a technology. They may or may not need to use one. That doesn't have any impact on the use of blockchain in other areas, like supply chain validation for example.
> A signed distributed ledger isn't a complicated thing, so it's hard to see how a blockchain would fail in.
Right, but a signed distributed ledger doesn't inherently provide any trust, so that is where your thinking fails.
> Cryptocurrencies are an application of blockchain as a technology. They may or may not need to use one. That doesn't have any impact on the use of blockchain in other areas, like supply chain validation for example.
Certificate authorities for signing things like products or documents already exists for many things, blockchain isn't a new solution to that.
Right, but a signed distributed ledger doesn't inherently provide any trust, so that is where your thinking fails.
A blockchain does provide trust insofar as it's cryptographically impossible to tamper with the previous ledger entries. Obviously that trust only extends as far as trusting the crypto software, the ledger software and that people's entries in to the ledger are authentic at the time of entry, but that's the same as any ledger whether it's signed or not. The advantage of a blockchain is that a third party (eg someone joining the ledger at a later date) can verify the previous transactions and continue the chain with a good level of trust that the previous entries are true.
So, a signed distributed ledger like a blockchain does provide a level of trust that the ledger data hasn't been modified. As that's what a ledger is for (trust in the individual parties or transactions is done outside of the ledger) it does work.
Certificate authorities for signing things like products or documents already exists for many things, blockchain isn't a new solution to that.
A blockchain isn't a new solution. They've been around for decades. It's a different solution to something like a signing authority though. Using a signing authority requires everyone to trust a third party. That can be difficult. A blockchain doesn't require that.
Arguing that there's an alternative to a blockchain is not an indication that blockchain won't work. It's possible, and usually good, to have more than one solution to a problem.
> The advantage of a blockchain is that a third party (eg someone joining the ledger at a later date) can verify the previous transactions and continue the chain with a good level of trust that the previous entries are true.
You don't need blockchain for this. I've worked in this space (the non blockchain part of online trust), tamper proof logs is already a service provided by central Certificate Authorities. All you need to do is to continuously sign a log and the CA can keep the chain of signatures, and thus provide proof that you didn't tamper with the log. That way the CA can both validate the identity of the signer and validate that the signer didn't tamper, meaning it is a better service than blockchains.
There is great value in software signatures. But that value is already captured and used everywhere, in SSL, software signing, document signing etc, blockchains doesn't add any value at all to that space as far as I've seen.
> Using a signing authority requires everyone to trust a third party. That can be difficult.
Finding a third party both trust more than they trust each other is trivial in almost every transaction. When you buy from Amazon you trust your bank more than you trust Amazon, and Amazon trusts your bank more than they trust you. Your bank is the third party. Can you name any significant usecases where there isn't a third party both participants would trust more than they trust each other?
already a service provided by central Certificate Authorities
Yes, and that's great if everyone agrees to trust the CA. Now try to solve the problem if they don't. I guarantee that your solution will look a lot like a blockchain.
In the case of certificate transparency, the CAs know that the browsers will nuke their business if they’re caught cheating and the design of the system makes tampering evident so they’d primarily only be able to cheat by issuing a certificate without logging it.
I think that’s an important point because it touches on the challenges of a blockchain: if trust can be based entirely on the information in the chain, it can work. If security depends on outside oracles, legal enforcement, or other trust relationships anyway, you don’t need the expense of a blockchain relative to something like a distributed signature system. This is why the supply chain stuff never goes anywhere unless it pivots because the hardest part is trusting your auditors, and the expense / fragility of an always-on networked system isn’t worth it when it can’t solve that problem.
Yeah, this can be done with a normal sql database too. Saving a representation of a linked list is not hard at all. Blockchains are not that special and can be made with less than 50 lines of code (that's with the ability to "mine" a block with x difficulty, but on the CPU). Add some persistence (flat file, sql, etc) and you end up with less than 200 lines of code. Then you can use that to build your ledger/currency system. What makes crypto currency systems interesting to me is the networked consensus and distributed parts. But blockchain itself is dead simple. It doesn't solve any problems for banks because they already have solutions to ensure data integrity and to survive audits.
A bank could theoretically rewrite your account balance with terminal command. Now this example is contrived because banks are under strong government regulations, but what about similar deals you make with your peers? When there are an infinite type of deals you can come up with and no regulation could ever keep up with every single deal that you would ever want to make, how do you trust that the other party will keep their word?
Blockchains solve a human problem, not a technical one.
I'm not sure what you mean by "they don't." But you don't need guns for compliance.
If can make it so that people will lose money if they don't follow the deal, then no you don't need guns. People will comply because it's good for themselves. That's how compliance is enforced under a capitalist system and it's the main reason we live in a modern, golden age of cooperation rather than a medieval age of conflict.
Moving away from an inflationary currency that the government is able to keep printing more of and devaluing everyone's hard work, to something closer to the gold standard.
Of course, things are very volatile now, but hopefully in the future the price of the major crypto currencies stabilizes.
I have some news for you: Gold has been both deflationary and inflationary over historical time... because its supply varies based on how much miners can dig out of the ground. That quantity may or may not relate whatsoever to the amount of value the economy created over the same time period. Instead of being at the mercy of a central bank you're at the mercy of the mining industry and how many gold deposits have been found.
When the Spanish brought their stolen Gold back from the Americas it more or less ruined their economy by flooding it with cheap money (tons of Gold chasing too few things of value). A similar crash in Silver happened when the Comstock Lode was found.
If you imagine that a precious metal standard would make the economy more stable you are absolutely wrong and history proves that. Gold is only preferable when the monetary authority has lost so much credibility they can't control the value of the currency anymore. Pegging one's currency to the US dollar is a modern equivalent of that idea. Of course now your entire economy is at the mercy of (US Dollar/Gold/Silver).
If things go really well and you produce 25% more widgets... well congrats, prices across the economy must fall because there is a fixed amount of gold available to circulate or be stored. Of course that's not really possible so the distortions happen in lots of other ways and people inevitably turn to privately issued paper or bartering just to make life possible.
Bitcoin has many of the same problems (inability to adjust money supply to economic activity) but it is slightly better than gold: we know it is deflationary (the supply of new coins decreases over time) so in theory all BT loans can have negative interest rates to account for that (deflation "cancelling out" part of the negative rate).
> Moving away from an inflationary currency that the government is able to keep printing more of and devaluing everyone's hard work, to something closer to the gold standard.
That is Bitcoin creating a problem, not solving one.
Inflation does not "devalue everyone's hard work", deflation does, by pumping up the value of debt relative to labor, i.e. making the rich richer and the poor poorer.
> hopefully in the future the price of the major crypto currencies stabilizes.
Given that their price is 100% based on speculation: not bloody likely.
The rich does not hoard fiat, they own assets which go up in price as the money supply increases.
Meanwhile the poor has its savings eroded, their paychecks have less and less buying power and they are forced to negotiate to get a raise to simply stop becoming poorer.
If you have substantial savings, you are not poor. "The poor" generally is in debt. As are states. And that debt in turn forms part of the assets held by the rich.
The rich are also in debt, because the debt is cheap, especially if you're already rich. So inflation benefits the rich not only by increasing the value of their assets but also by wiping out their debt.
Government flooding the market with cheap money has so far gone mostly to inflating asset prices. Who owns the assets? The rich. Who does not? The poor.
> by pumping up the value of debt relative to labor, i.e. making the rich richer and the poor poorer.
In other words, interest based debt is bad because it is exploitative. Something we've known for a long time now. Interest based lending is prohibited in Islam for that reason (as well as in Judaism and Christianity).
> Crypto solves problems very few people have. The enthusiasm relies on uneducated naivete.
About half of the world's population lives in an authoritarian regime. Having a savings account that is not tied to your ID, is not seizable by the State and that can be easily transferred if you have to flee the country is important.
You don't actually own cryto currencies either. You own the key, equivalent to the document you mentioned.
If something happened to the blockchain, your key would be worthless. Much like a bank that got robbed.
Storing crypto currencies is also very expensive, at least for all popular ones. Proof of Work requires to chrun out hashes to secure the network from external threats and in the car of Bitcoin it costs billions each year. Compared to the relatively low number of users it's very expensive and resource intensive.
this is just false. the document is just assignment of rights while they key is literal asset. trying to equate the two means you either don't understand or you have some agenda.
Why don't you explain why it isn't like this? Instead you accuse me of having an agenda, that is a very weak argument in a discussion.
The fact is, you cannot touch crypto currency or take it home, you can just tell somebody else to move it to another vault. You cannot do it yourself unless you are lucky enough to mine the block with the transaction in it, which is futile unless you have a mining farm.
It's closer to a document than a physical key to a safe deposit box at a bank.
absolutely false and misses the entire point - with document you own nothing but the document. whatever that document says can become false in an instant. whatever gold you are promised by that document might not even be where it purports to be.
with bitcoin key you own the bitcoin and you always know (can trivially verify) that your bitcoin is there.
You don't own the Bitcoin. You own a private key. If somebody else got the private key, they could drain the funds. That far from owning something. There is a saying in the CC world: not your keys, not your coins.
What you are talking about in regards to documents are scams. There have also been a plethora of scams in the crypto currency world. Making the distinction there is quite strange.
> What you are talking about in regards to documents are scams
yes, thanks, that's exactly what current financial and banking system is - a gigantic scam. all you own is bunch of documents pinky-promising that your assets are there, except they are not.
and yes, if your private key is stolen - your asset is stolen, that's how real ownership of a digital asset works.
strange is you trying to equate ownership of IOUs, that make you entirely dependent on some third party, in terms of accessing your assets, and ownership of a private key, which is the only way anybody can ever access your assets.
nice try. my only agenda is to clear up the confusion in your mind about cryptocurrency ownership.
> you rather want to destroy the current bankingsystem
who said anything about destruction? i know full well that i will need to suffer through the scam of fractional reserve banking until i die. bitcoin is just a partial escape hatch.
> I just wanted to have a discussion about the meta model of crypto currencies
if you did, you wouldn't begin with logical fallacies and prejudice.
notice how you don't even respond anymore about ownership aspect, yet this was your central argument - that crypto is no different from gold in that aspect.
i'll just wait for you to actually address that central point - that will indeed signify if you want to have a discussion.
The key is literally the bitcoin. So if you own the key, you own the bitcoin. Duh! And if you lose your key, you lose your bitcoin. That's what it means to own something.
And if you lose your gold bar or coin, you also lose your gold.
No, you are absolutely wrong. Owning something is way beyond having access to it. If I leave my bike unlocked and somebody took it, it would still be stealing.
So crypto currencies don't work without a working legal system to back it up? Why the hassle with ever increasing transaction logs, and decentralization with all its drawbacks then?
what are you talking about? the concept of ownership exists outside of any legal system. legal system is there to have a recourse if your ownership rights were infringed upon, regardless of whether it was gold or bitcoin or sheep.
They work with and without a legal system, and you can still steal them. When I know you stole my bitcoins, I won't go through the legal system either ;D
Gold doesn't give you near instant finality and requires either transporting heavy gold for large txns or transact in IOUs which is like transacting in cash, since a centralized party handling your gold is to be trusted with the issued currency.
A decentralized, global currency that makes sending/receiving money cheap & easy anywhere in the globe. I do think payments will come in time as well with Visa & Square both heavily invested in the space.
It doesn't need to be optimal or better than any of the other solutions. Because the above is enough.
Something like that takes time. Like you said it's not just about the technology (which itself has evolved a lot). It's about momentum, knowledge and trust.
We now have the crypto.com stadium in LA (ex Staples Center). It's gaining momentum with the public, corporations, and financial institutions. The decentralized nature has made it so far resilient to bans & attacks.
It's fine if crypto gets heavily regulated. In fact in my opinion that would only build trust in it. The space does not need to be the wild west.
But people take more time to change than technology.
There are other blockchains without those issues. I'm not naming names but if you care to research the space at all you'll find many, with various strengths and tradeoffs.
It's a Ponzi scheme, but it's a Ponzi scheme that is legal for now, worldwide, can be participated in from the comfort of your own home or mobile phone, and should be good for the next 120 years or so. It's had a lot of help from inflation, state failure, low interest rates and resulting high asset prices, and shortages of fundamental goods like housing and health care that lead people to believe that they'll never have them without getting rich. But fundamentally people invest in Bitcoin because they want to redirect other people's wealth into their wallets, and believe that they'll be the ones receiving wealth rather than losing it.
It's a cynical take, but fundamentally "other people are rich and I'm not" has been a prime driver of human behavior for millennia.
I don't think there's been any purely financial Ponzi scheme that lasted more than 50. And definitely not on this scale. At some point you run out of suckers :-)
I'm curious when this crash will happen and we see the hype go away and see some valid blockchain uses.
Bitcoin needs even more fresh meat than the average "purely financial" scheme because there's an unavoidable amount of value leaving the scheme every day just to pay for electricity to keep the whole show rolling.
Bitcoin yes, but the cryptocurrency market as a whole is moving towards proof of stake cryptocurrencies which don't have this specific issue. In 4-10 years I don't think Bitcoin will still be the most valuable cryptocurrency by market cap.
I think the problem is that the current nature of Bitcoin and its community is so silly, and so far from what it was intended to be, that it blinds people to its real potential. It is a good implementation of digital cash which could solve the problems that digital cash intends to solve, if it sorts out a few of its issues (computational inefficiency, latency, storage ineffiency).
TLDR: Bitcoin is a clever and nearly-adequate solution to the problem it meant to solve, which is being drastically misused, and yet that doesn't reflect on Bitcoin itself (any more than tulip mania reflected on the merits of tulips).
It’s sort of a genie in a bottle proof of concept. It becomes whatever its desiderants wish for, about half the time, maybe. I think if you really want to understand why it has become so powerful, then you have to change the question of “how does this solve a problem people have and therefore empower people?”, to “but how does it apparently empower its worshippers without solving a problem at all?”
I am basically not talking about the merits of its technical design; I am talking about the impact of having a software that a nontrivial minority of society view as a money pump whose only input resource constraint is lines of code + cheap hash compute.
In a way you can reframe it like this: when you learn lisp, you realize, code is just data. Bitcoin had some people conclude, code could also be money. Then the ethereum fans have another epiphany: money can be computation etc and so on w the others.
I think it’s less so fidelity to being the optimal remedy for the present’s ailments, and more being wedded to the inpouring of dedication of a few talented coders being caught up in a style of financialized mass sociotechnological engagement that was not really possible to witness until fairly recently w the modern internet
I like this framing. I think there's a rebellious undertone to some of the aforementioned "worshippers" -- and at least as many are definitely there for the money-pump effect.
The double spend problem. That enabled decentralised trust and interchange of value. You could tank the value of bitcoin or ethereum by imposing tough regulations to it but it will still be around regardless of what you do as long as we're here. The implications for what that means for banks and governments of today is huge.
In the meantime though what people actually use it for today:
- To get richer because the price is going up
- To get richer because it's an unregulated market so you can be a market maker today or dive into all the other trading variants programable money enables that don't have any counter-part in traditional finance.
- To get richer starting a small project with no experience and getting overfunded.
- To transact because you're part of the 1.7 billion unbanked
- To keep your wealth because you're part of the masses that don't agree with your governments restrictions on your money (china comes to mind but you could expand it to westerners too that don't agree)
- (less than 5% probably?) build stuff, experiment, learn, try to come up with the financial system of tomorrow.
Mid 2000s, I was interested in using rolling hash logging for tamper evident audit logs. For use cases in healthcare (medical records) and election integrity (did someone change the tally).
One logical extension (expansion of scope) would be sharing these audit logs, mostly intra-organizations. aka blockchains.
Once potential extension is to do accounting and finance on top of blockchains, potentially supplanting IRL trust relations with digital trust. Meaning doing biz with people you don't know. Voila! Cryptocurrency!
--
IMHO, the central conceit (deceit) of cryptocurrency is that it's a decentralized system that replaces IRL trust relations. That'd be really cool if true. But it's not.
And I'm not sure any wholly digital (financial) system can ever be decentralized, trustful, or both. Theoretically or practically.
>"I realized that technology should be in service of something, not just a thing to exist in and of itself."
While for me technology is just a tool to help me make what I want I do realize one can just practice / enjoy it as an art form. Nothing is wrong with it.
Payments may very well be held back by regulation. But because crypto currencies are essentially permissionless protocols, they can kind of just…ignore all of that, which makes them useful but also of dubious legality. And it definitely results in adverse selection because then of course people who want to avoid the regular banking/payment system will use the next best thing available.
Still, it’s utility, even if it’s grey market (of course it can be used for black market stuff, but it’s a protocol agnostic of that). For me I have purchased legal stuff with crypto that regular payment processors had essentially banned, so crypto was actually a better option than alternatives like e-check.
I suppose the classic answer to the problem it solves is the Byzantine general's problem, or in other words the combination of incentives and rules to allow records to be made on a distributed system that isn't actively managed by anyone.
Debts and units of account are arguably a foundational part of civilization. In David Graeber's 'Debt the first 5000 years' he argues that debit and credit appeared before money and barter. Regardless of which came first writing seems to have emerged out of a need to keep a ledger - so and so owes 5 loaves of bread and is owed 2 clay pots.[1]
The downside to such a system is that it either requires a central authority to manage the contracts, and have some sort of stick it can hit you with, or it can physically be changed. With a clay tablet contract for example I could destroy the tablet, or it could be held by the third Mesopotamian government and enforced by them to throw me in debtors prison or something if I refused to pay. This necessitates a central authority with something like "legitimate state monopoly over the means of violence" in a best case scenario to keep bad actors from violating their agreements. In a less than best case scenario, such a monopoly allows for exploitation of it's power.
A decentralized ledger allows for agreements to be made without the risk of the agreement being broken by the other person or the central authority. Precious metals fulfilled the same role previously, as an ounce of silver is an ounce of silver, regardless of what may happen in the future.
Frankly I have no idea if anything will come of it in favor of existing systems. Perhaps on the whole the existing system is more effect. But personally it's pretty exciting from a historical/economic perspective.
At this point I kinda feel it’s a pointless to try to explain anyone on the values of crypto-currencies (and Bitcoin in particular).
In many online discussions I’ve brought up the values that I see in Bitcoin and then the discussion partner says most of these values are (in their view) not valid.
So I guess people have just dramatically different views on the values of cryptocurrencies that cannot be reconciled.
In the end it doesn’t really matter. I keep investing in Bitcoin and other people don’t. Live and let live. I don’t really see a need to try to convince other people to buy cryptos.
I think it facilitates the construction of non-hierarchical organizations where the participants don't have to know each other. In other words, it seems feasible to build companies that have low politics, low backstabbing and minimal profit siphoning.
Of course, it will probably take some sophisticated code and some time.
> What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve?
I'll bite.
Currently, digital goods are relatively useless, which disincentivizes their creation and usage. NFTs change this, by making digital goods far more useful, which will encourage the creation of innovative digital goods we've never seen before, and add useful new functionality to apps/websites/games.
What's a digital good? It's basically any data stored in a database: tweets, forum posts, upvotes, badges, items in video games, etc. These goods aren't very useful for numerous reasons. For example, they're typically leased rather than owned. If Twitter were to close its doors tomorrow, you would quickly find out that "your" tweets are really their tweets, and they can delete them from their database if they want to. Also, digital goods aren't portable. There's no real way for you to take your HN points with you to another website. Instead, that website would have to ping HN's API (if it even has one) with your credentials to ask how many points you have.
Imagine if the real world worked this way. If you went to buy alcohol from a restaurant or a store, you wouldn't actually own a driver's license that you could carry around with you. Instead, each establishment you patronize would have to call up the DMV and ask them to check their database to see if they have your license on file and if you're above the legal age to drink. This would obviously be a shitty way for goods to behave. But that's how they work online.
By making use of the blockchain, NFTs are a decentralized way to track ownership of digital goods. In essence, your crypto wallet(s) can serve as a "digital backpack" for you to store digital goods (NFTs) that you've acquired from apps, games, websites, or other people. That means real ownership -- none of your goods disappear just because the entity that gave them to you disappeared, nor can anyone tell you what you can and can't do with your goods. It also means portability. Today when you show up to a new app/website, they have no idea who you are. In the future, you'll show up with your digital backpacks in tow, and you can reveal their contents to the service you're using, and they can see what you have and react accordingly. That's what portability means, and it's obviously quite useful.
For example:
- Let's say Reddit granted you an NFT badge for being a moderator. When you sign up for Hacker News, you could share your digital backpack, and HN could look inside and see the moderator badge NFT you got from Reddit, and decide you're worth trusting more than the average Joe. Maybe HN would give you downvote privileges without making you earn the points first? Who knows. But one could imagine lots of trust-based use cases like this. What if colleges gave students NFT-representations of their degrees?
- I believe Lyft employees get $400 in free rides every month. Imagine if that was handled via an NFT: new employees get an NFT, and Lyft gives anyone who owns that NFT the free rides. Most would just keep it. But some employees might choose to sell, trade, or give it away. After all, it's their NFT that they own, not just some row in Lyft's database. You could apply this to other perks and awards as well. Suddenly, perks are granular and portable.
- What if games give you NFT representations of the items you earn? Then other games can see that you earned those items, and if their developers choose to, they can represent the items in their games, too. Perhaps if I get an NFT showing that I'm a grandmaster in StarCraft 2, some other game can skip me ahead in the ladder so I don't have to grind my way up. Or if I earn a magical sword in World of WarCraft, another game might give me their version of that sword just because they know I'll think it's cool.
- Every time I sign up for a new social network, forum, or dating site, I have to reenter my biographical information from scratch. This is tedious. What if I could just write down my bio and keep it in one of my backpacks as an NFT? Now every time I sign up for a website, I can show them my backpack, and they can autofill my bio.
- etc. If this technology becomes ubiquitous, it's difficult to imagine what types of digital goods will be created 5 or 10 years from now, just like nobody imagined Airbnb or Uber back in 1993 when the web was new.
What this essentially does is transform the internet into a metaverse. Instead of a bunch of silo'd apps that store all their data in silo'd databases, we as individuals own and control our own data, that we take with us from place to place. Instead of apps having to make NxM API calls to interact, there's one global API (the blockchain) that every app can write to and read from. Suddenly, everything on the internet is interoperable.
> What problem does it solve that no other distributed system does as well, if not better? I've yet to see the answer.
This doesn't matter that much. Is HTML the best technology imaginable to build web apps front ends? Certainly not. But it's the one that won, so that's what we have.
Similarly, blockchains are winning handily. For various reasons, they're gaining mass adoption. It's quite likely that the internet of the future will be built on top of blockchains. In fact it's already happening.
I'm not an expert on the technology, but I've seen this same argument from friends of mine who are into a blockchain they claim will allow people to carry their Universities degrees / Academic qualifications with them. Similar to your "wallet" idea I guess.
So, by dint of being tokens, accreditation, land deeds, car papers, game items etc etc etc must all be able to be transferred right? Which means they can also be stolen or attributed to the wrong people right? So, if you get hacked and your car registration token gets stolen, or if someone steals your degree and starts walking around pretending to be a doctor using your token, what do you do? In fact, what happens if the University accidentally gives your degree to someone with the same surname as you, and you get a Diploma in Basket Weaving instead of your medical degree and they refuse to give it back? Because these things will happen endlessly.
Well, as always, you'll go to the DMV or the cops or the Uni and they'll.....what exactly? The answer, necessarily, will be to check their master records to see who should have what, and then change it. Which totally obliviates the purpose of the decentralised blockchain.
You can see this in action with that dope who had his cartoon ape NFT stolen. What did he do? Immediately appealed to the closest thing to a centralised authority there is, Twitter and the ape community, and begged them not to buy "his" NFTs. Then contacted the exchanges and begged them not to sell. Then contacted the cops. Then, in a move with a jaw-dropping lack of self awareness said it "didn't matter" that the NFT had been stolen, because he "still owned those apes". So in the space of about ten minutes, he firebombed every core tenet of NFTs, and that was over a cartoon ape in the first moments of NFTs even being a "thing".
What's your solution for the guy who gets his house token stolen?
I think a house token is an interesting idea, once you accept the inevitability of having to interface with the real world.
If you had one and it got stolen, you'd file a court case with your state or local authority. They would then add a record saying that the ownership is disputed. If you won the case, they'd add a new record saying that the house still belongs to you. It turns it from "I'm screwed" to "Ugh, a legal hassle", the exact same as if your paper deed got stolen.
You'll probably say "but why bother then?" The main reason is standardization. I have no idea how to check housing records for other states, let alone other countries. Some shitty broken website created by a lowest bidder contractor? Request a copy by mail that probably costs money because someone has to physically print out a copy themselves? Instead, everybody everywhere can use the same software stack instead of reinventing the wheel N times. Checking the current state of things becomes trivial.
It's also trivial to do private house sales then. One transaction signed by both parties, and you're done.
That's not a solution. Most places have computerised land records, and maybe they aren't so great, but that is an argument for a new modern database, not a worse one (blockchain).
I don't fully understand your logic. Are you saying that theft will prevent the adoption of this technology?
People get shit stolen in the real world, and in the current implementation of the internet all the time. What happens when your Google account gets fished and someone steals tens of millions of dollars from your company? Do we shut down the internet and call it a day? No, not really. It has no effect on adoption.
The fact is that when you invent the ship, you invent the shipwreck. So it goes with all new technologies, and so it always has. Have we ever simply said, "Welp, there are costs to go along with the benefits of this new tech. Let's just give up here!" Not to my recollection. We simply make the ships more crash-resistant.
The problems with new tech are almost always obvious early on, but the solutions require creativity and frequently result in hugely successful businesses.
Consider early criticisms[0] of the internet from 1995:
> "Every voice can be heard cheaply and instantly. The result? Every voice is heard. The cacophany more closely resembles citizens band radio, complete with handles, harrasment, and anonymous threats. When most everyone shouts, few listen." True enough. There's a cacophony. So what? The internet survives. Algorithms rank posts and tweets and surface the best insights.
> "How about electronic publishing? Try reading a book on disc. At best, it's an unpleasant chore: the myopic glow of a clunky computer replaces the friendly pages of a book. And you can't tote that laptop to the beach." True enough. So what? We got Kindles, and smart phones, and higher-res screens, and people bring laptops to cafes instead of beaches.
> "…the Internet is one big ocean of unedited data, without any pretense of completeness. Lacking editors, reviewers or critics, the Internet has become a wasteland of unfiltered data. You don't know what to ignore and what's worth reading. Logged onto the World Wide Web, I hunt for the date of the Battle of Trafalgar. Hundreds of files show up, and it takes 15 minutes to unravel them…" True enough. So what? A few years later this problem was largely solved by Google, which is now worth a trillion dollars.
> "…who'd prefer cybersex to the real thing?"* Hundreds of millions of people are addicted to porn. Not saying it's a great result, but the fact remains that problems don't stop adoption.
And do you remember how much credit card fraud there was in 90s e-commerce, when security was trash and almost nobody was used to regularly checking their digital bank statements, so it would take weeks or months for people to even notice? Hell, there's still a lot of fraud today. E-commerce still reigns supreme.
Sure, people will get their NFT good stolen. It will happen frequently. It already has happened many times. This will not hurt NFT adoption. It will simply spur innovation in security and defense, which it already has if you actually look into early solutions (e.g. custodians, insurance).
At best, you're simply pointing out problems that people will innovate to solve.
This is really dumb sorry. Just one great big "waddabout" going on and on about problems OTHER tech has, and not addressing my question at all. I'll ask again.
The University sends your medical degree to someone with the same surname as you by mistake and you get their basket weaving degree. They refuse to return it.
What do you do? You go to the university, and they check their CENTRALISED MASTER RECORD, notice the mistake, and fix it.
So. #1: Why do you need blockchain at all? #2: How can you have your blockchain system WITHOUT also having a centralised database somewhere?
The answer, as always with blockchain, is "So I can sell you a token." Always.
In your example, who cares if the university has a centralized master record of the degrees they choose to recognize? If they choose to tell everyone on earth that the degree they gave me was baloney or false or was revoked, that's their prerogative. If they choose to record coin
NFTs and the blockchain aren't meant to prevent that.
What NFTs guarantee is that the degree the school gave me is still mine. Without NFTs, they could not only revoke my degree, but also delete it from their database and leave me with no proof I graduated from there whatsoever, since I never really owned the degree as property. But with NFTs, no matter what they change or delete in their centralized database, my degree still exists as my property in my decentralized NFT wallet, and the school can't delete or take that back. Which is how property should work! In the real world, if my alma mater were to revoke my degree, they'd update their databases, but they wouldn't also come to my house, find my paper degree, and rip it up.
Now this is obviously a contrived example, because the entire point of a degree is to say, "Look! <AuthorityX> thinks highly of me!" So of course if the authority changes their mind about that, then your degree is worthless whether you still own it or not.
In a less contrived example, there might be property you own that's valuable regardless of the original owner's opinion of you or any records they keep in their database. For example, if you get a magical sword in World of WarCraft in NFT form, you now own that, and you can use it in other games that choose to recognize and represent that NFT. Even if you get in a fight with Blizzard's CEO, and he orders his minions to delete your account from their servers, you'll still have the NFT, and other games will still respect it.
Whereas in a world without NFTs, the only way for other games to even know you had the sword would be to query Blizzard's servers, so you would be fucked in this scenario, because Blizzard would delete all records, because they owned the records, not you.
That's your example? A sword in a video game? Honestly though, I guess it makes sense, because NFTs are arse for anything that has actual real life meaning. Even you, yourself, realised that halfway through your post. Yeah, no shit your degree is worthless if the university says it's worthless.
So, on to video games. You think it would work that way huh? Your sword would still be worth something if Blizzard revoked it because you "own" it? You are making the mistake of thinking that whatever game you want to use the sword in wouldn't check with Blizzard to find out if you are a douchebag who has been banned or not, before they allowed you to use the sword for something in their game. They'd check, see that Blizzard has no record of it on their database, then decide that you'd either been banned or had stolen it, then block you.
1. The NFT degree actually could still be useful for proving that you were accepted to the college and that you graduated. Not every entity cares if the college subsequently revoked your degree, and not every entity will check.
2. Other "real world" use cases abound, especially with intangibles. Degrees, certifications, licenses, tickets, contracts and invoices, perks, discounts, coupons, identifications, you name it. And these are just physical goods becoming NFTs, to say nothing of digital goods. Turning any good into an NFT adds it to a blockchain, which (a) enables ownership, (b) makes it part of a publicly accessible API that unlocks infinite creativity, (c) plugs it into a booming and a liquid market where owners can buy, sell, and trade their goods, and (d) guarantees its existence and accessibility for the long term.
3. I completely disagree with you that most games would check to see if Blizzard has marked you as a douchebag. Why would GameX care if a player broke some arbitrary rule that Blizzard has? They wouldn't.
4. The person who wrote that post barely even understands what an NFT is, and gets a whole bunch wrong. For example, they write that the concept of ownership of NFTs is "unenforceable," as if the blockchain needs some sort of enforcement. I'm not sure you want to get your predictions from somebody who doesn't understand the technology. There are plenty of smarter game developers working on NFT companies and writing much more intelligent posts.
1: It doesn't prove it. The only thing it proves is that you have the NFT. The only way to prove you have the degree is to contact the central authority, thereby invalidating the need for the blockchain entirely.
2: All your examples can be done easily without blockchain. Perks, discounts, coupons, tickets etc. We already do all of this just fine.
3: "They wouldn't". Lol. Why not? It takes them zero effort, it would be an automated system, and guess what, it totally destroys your whole assertation. Doesn't it? GameX would check with Blizzard for reason that Blizzard would also check with GameX.
4: Ownership with NFTs is entirely unenforceable. Contrary to your point, you are the one who actually doesn't understand NFTs, nor the real world it seems. You seem to want to turn everything into a bearer bond, when in fact nothing in real life will ever work that way.
ID's? Ok, you have some ID token that "proves" you are 21. Does that mean you are 21? No, the only thing it proves is that you have the token. In any consequential case, the entity wanting to verify your age would have to check back with a central authority to determine if it's valid or not, thereby invalidating the need for the blockchain.
Tickets? You somehow think any ticketing agency on earth will hard over all control to what happens to the tickets they have sold?
Coupons? You've seen all the legalese and prohibitions written on coupons I take it. There are more rules about what you can and can't do with a 10% Off Pizza Hut token than many contracts. Yet you think they'll start putting them on the blockchain?
You live in fantasy-land mate. No game company is going to devote a whole bunch of effort and programming time into allowing someone with assets from a competitor to use them in their game.
1. You misunderstand how NFTs work. They are proof, because anything on the blockchain can be easily traced back to the original distributor, which in this case would be the university. Thats why it's called a blockCHAIN -- you can easily follow the chain of blocks. What do you think the school is going to do if you contact them? Check their database. The blockchain is no different. It's a public database, which obviates the need to call the school to ask them to check their non-public database.
2. None of these things have digital ownership enabled, none are part of a global publicly accessible API that others can connect to, none are part of a market where they can be bought/sold/traded. So all would be better with NFTs.
3. You haven't given a single reason why GameX would care to ban PlayerA just because Blizzard banned them. We see the opposite online all the time: people getting kicked off of one social network while be allowed to operate on others.
4. All of your examples here once again misunderstand how NFTs and the blockchain work, just like with #1 above. With IDs, the central authority that granted you the "21 years old" NFT would be listed as its origin on the blockchain, which obviates the need to check with them.
Anyway, at this point discussion is futile. You don't understand the technical details of how the blockchain works, and the rest of your points are just negative predictions of the future in the vein of, "This is how things work today, therefore this is how things must always work." It's very similar to people in the 90s claiming that no serious company would ever put anything on the internet.
Not sure why your comment reply to mine got flagged, but I can't respond to it, so will respond here.
1. You can get around this trivially, by simply either (1) looking at transactions originating from the node that distributes degrees, or (2) looking at the degree directly from a person's wallet. You don't need to use the blockchain for searching. It's not going to replace databases. You can have databases, too. But an NFT degree originating from a school's degree-distributing node is just as good as proof and doesn't require some additional step of contacting the school to find out if it's legit.
2. You've still said zero about the utility of a market where these things can be bought/sold/traded, or the API being publicly accessible, etc.
3. No company was putting their assets on the internet before the adoption of the web started compelling them to.
4. See #3. I'm trying to see your point here, but so far it amounts to, "People are doing X today, so they will always do X," which ignores the fact that technology takes a while to adopt. NFTs are new, and their utility is based on network effects, which means they'll become more useful with more adoption. Of course Apple isn't jumping in to use them right now. That says nothing about the future. That'd be like going back to 2011 and saying, "Nobody is using Zoom yet when they could be." Okay sure, but what does that say about the future? Little to nothing.
Again, of course it's possible that this won't catch on. Likely even. But the reasons you're listing don't seem like deterrents.
No, you are correct. You could do it the way you claim. Build in workarounds, try and get everyone to use less efficient tech, try and fix problems of errors and fraud, but I don't think it ever will happen. It's not going to replace a database? So why do we need it?
Centralized control will always be faster and more efficient and less fragile. Errors can be fixed, fraud can be blocked. Fans of blockchain would be a lot less certain that the tech had value if they were unable to shill a token.
Why isn't Apple jumping in to use them? They could set up their own blockchain right? Well, because the central issuing authority doesn't want to lose control of them. Why aren't ticket resales on the blockchain? Because the central issuing authority doesn't want to lose control of them. And that's what you will run into, every time.
All the things you claim that will be able to be done with the blockchain can already be done. So yeah, I guess we'll wait and see.
I think these use-cases are a pipe dream. Platforms tend to build walled gardens instead of opening up. There is no reason to believe that NFTs will solve what could be solved by open data protocols long ago. A platform will only implement features if they are profitable. That is why CSGO lootboxes work as a closed system. If CSGO lootbox was an nft and it was recognized by let's say Overwatch game that would mean a some sort of business partnership between two games would have to be established. There is no other reason why Overwatch would implement and maintain features that would promote competitor games. RSS was also a nice idea, but it was not well aligned with individual private company interests and that is why it failed to be globally adopted.
When it comes to innovation, it's a mistake to assume big incumbents must lead the way. It's called disruptive innovation for a reason -- because incumbents who refuse to change often get disrupted. We've seen this time and time again.
That doesn't mean incumbents are powerless. They can resist top-down changes. But they often have trouble resisting technological innovation that spreads bottom-up.
The blockchain is a decentralized protocol that's spreading from the bottom up due to popularity with consumers, similar to the web. Did newspaper companies want to be on the web in the 1990s and early 2000s? No. But they were forced to by new web-based competitors that readers found more convenient. The same pathway is quite possible here. There are already lots of games and apps being funded that support NFTs. Assuming they're any good and consumers like them, what are incumbents to do? Continue making inferior products? They won't win like that in the long run.
And FWIW, Meta already announced it'll be supporting NFTs, and Jack Dorsey from Twitter has been musing about doing the same.
> There is no reason to believe that NFTs will solve what could be solved by open data protocols long ago.
HN has a history of prioritizing technological specifications over real-world adoption and human psychology. The fact of the matter is that NFTs and the blockchain are seeing adoption, whereas the other protocols you're alluding to are not.
> In essence, your crypto wallet(s) can serve as a "digital backpack" for you to store digital goods (NFTs) that you've acquired from apps, games, websites, or other people.
I got vaccinated this summer, there is this virus going around, maybe you heard.
The vaccinator gave me a signed digital token (a QR code) which I can carry around (in paper form or digital) to prove that I am vaccinated. No blockchains involved. Why do you use cases need a blockchain at all?
Afair one lunatic bidder for building that signing thing talked about involving 5 (five) blockchains for that thing. Everybody laughed at them.
Riffing with some Web 2.0 perspective on your use cases:
> Let's say Reddit granted you an NFT badge for being a moderator. When you sign up for Hacker News, you could share your digital backpack, and HN could look inside …
Or, you could give HN your reddit username and HN could query the Reddit API if you’re a moderator and by doing the API requests could find out if that privilege is still current and if those subreddit’s stats match HNs criteria for “trust”. Time and trust seem rather relevant to me. Would you want reddit “moderators” like u/violentacrez in perpetuity have privileges on HN and other forums?
> Every time I sign up for a new social network, forum, or dating site, I have to reenter my biographical information from scratch.
You could be identified by the URL of your home page and the new service simply could fetch machine readable information from there. The Indie Web over two decades did multiple stuff in that regard, from OpenID, over OAuth to rel=me and web-sign-in:
In a way individual homepages/profiles and a standardised API solve the N×M problem of APIs and could solve as a digital strongbox for your use cases of common information and other acquired signed trinkets. I don’t really see the need for a distributed ledger which needs computing power just to keep running. In your answer you concentrate on access to tokens but IMHO didn’t really answer the blockchain part.
Your example is one of a physical good. Of course you don't need an NFT to display a card physically. But what if you want to display it digitally? Your best option at this case is to take a photo, upload it to the web, then the consuming websites can hire people to scrutinize a bunch of grainy vaccination card photos from their users. Meh.
On the blockchain, you'd have an NFT representation of your card, and its origin (i.e. which authority gave it to you) could be easily programmatically tracked.
Obviously, vaccination cards aren't the best example, because COVID-19 is a real-world virus, not a computer virus, so it's doubtful that digital applications will care much about your vaccination card. But you get the idea, hopefully.
> Or, you could give HN your reddit username and HN could query the Reddit API if you’re a moderator…
This is the N × M problem.
> …and by doing the API requests could find out if that privilege is still current and if those subreddit’s stats match HNs criteria for “trust”. Time and trust seem rather relevant to me. Would you want reddit “moderators” like u/violentacrez in perpetuity have privileges on HN and other forums?
We solve this in the real world by putting expiration dates on licenses and badges. Is that perfect? No. But the benefit of portable certifications dwarfs the costs of the occasional expired or revoked cert.
In addition, NFTs are just code. You could easily include a URL with each NFT, which would point to some endpoint that responds with "revoked" or "expired" or "active". Best of both worlds.
> In a way individual homepages/profiles and a standardised API solve the N×M problem of APIs and could solve as a digital strongbox for your use cases of common information and other acquired signed trinkets.
Sure, that could work. But that standardized API does not exist, or if it does, it's clearly not being adopted, so it's a moot point. Where is the Indie Web in terms of adoption?
IMO HNers often focus too much on the merits of a particular technology, and not enough on the adoption. Often it's the case that worse technologies win, because they enjoy network effects that allow them to grow quickly and then maintain their lead. Again, look at HTML, CSS, and JavaScript -- hardly the best tools to build the web on, but that's what we've got, regardless of the fact that other tools "could" solve the problem better.
You're also neglecting the fact that blockchains are decentralized, but the web is not. The web is based on renting. Renting hosting from some other company, renting space in some company's database, etc. It's fine for today of course, we all do this and it works well.
But the blockchain and NFTs are about improving digital property, and one major improvement is moving from rental to ownership, as I pointed out in my original comment. No company can delete your "backpack" of NFTs, or shut you down because you're a sex worker and they think that's immoral, or tell you who you can and can't sell your items to. Sure, the authorities can try to track you down and punish you after the fact, but that's how things work in the real world, and getting the digital world to that point is the goal here.
For various reasons, this is catching on with NFTs in a big way that it didn't and won't with the Indie Web and other efforts. Adoption matters.
> Sure, that could work. But that standardized API does not exist, or if it does, it's clearly not being adopted, so it's a moot point. Where is the Indie Web in terms of adoption?
The same argument could simply made forward: the idealistic hopes of Web 1.0 and Web 2.0 of an distributed, interoperable web did not materialise because walled gardens arose which then embraced and extended™ and then sabotaged the open web. Somehow I think Zuckerberg will not build his metaverse on a digital wallet which enables his users to possible leave his walled garden.
Au contraire, Meta already announced that they'll be supporting NFTs, and so has Twitter.
Meta wants to build a metaverse, a goal which has no chance of success if they try to wall it off and prevent portability of data and information. If they see the metaverse and decentralized portable goods as an inevitability in the evolution of the web, then their best bet is to play along and find new ways to capture value instead of hoping the old ways will work.
I'd compare it to the NYTimes reinventing itself 10 years ago. I'm sure they would've preferred the old world of print media dominance, but the writing was on the wall, and they made bold steps to go fully digital, hire a tech team, and lead the way on paid media subscriptions instead of continuing to rely on print ads and physical distribution.
Also, in most earlier versions of the web, I'd say embrace and extend failed. Incumbents were either disrupted or they adapted. The biggest internet giants today are examples of new disruptors who supplanted incumbents, or the incumbents who adapted. Assuming web3 is a Thing, the same should happen. Some incumbents will die, some incumbents will adapt, and some new players will supplant incumbents. Looks like Meta and Microsoft are attempting to adapt very quickly.
QR codes aren't digital, they're physical. The purpose of a QR code is for physical entities (scanners, cell phone cameras) to be able to read digital information. Compare to an NFT, whose purpose is for digital entities (apps/websites/games) to read digital information.
The goal here is to make your online data portable, so you can take it with you as if you're wearing a backpack. What that looks like in practice is, when you show up to an app/website/game, to tell them the address of your backpack + proof you own it. A QR code could not accomplish this.
How's that any different? I can print out a QR code with the NFT info as well and make it "physical". The vaccination certificate is a digital code along with your details to "proof that you own it". The DB is even distributed among EU member states so the code points to the "backpack" (database) of the state where you got your shot
I guess I don't understand your point. Are you trying to say that QR codes are a replacement for NFTs? Because I can list dozens of things that NFTs can do that QR either can't do, or would be much clunkier to do.
"Your example is one of a physical good. Of course you don't need an NFT to display a card physically. But what if you want to display it digitally? Your best option at this case is to take a photo, upload it to the web, then the consuming websites can hire people to scrutinize a bunch of grainy vaccination card photos from their users. Meh.
On the blockchain, you'd have an NFT representation of your card, and its origin (i.e. which authority gave it to you) could be easily programmatically tracked."
I'm saying we already have all of that and more without having to complicate it with an NFT that doesn't add anything.
The QR code does not get you everything an NFT gets you and more. It gets you significantly less.
NFTs are stored on blockchains, which are distributed databases, which anyone can read from. Those serve as public APIs, basically. That means anyone can incorporate NFTs into their apps in whatever creative and innovative ways they want to. And since these blockchains are digital, NFTs can easily be accessed, browsed, filtered, and searched. Again, not so with QR codes.
For example, let's say there's a sporting event and the league grants complementary NFTs to fans who buy a ticket. And let's say this particular event goes down in history as being a legendary game. Everyone will now have blockchain-based proof that they were a ticket holder, in NFT form. In fact, anybody can look and see who all the ticket holders were and take action based on that. For example, the league could throw a celebratory 10th anniversary party only original ticket holders are able to attend, or send a memento to everyone who attended, or those tickets could become collectors' items that holders display or sell.
This isn't going to happen with real-world tickets or QR codes, unless every organization that issues them feels like building their own database of people it distributes QR codes to, and making it a publicly-accessible via API. Even then, that would still be worse, because developers would have to find the proprietary API for every distributor of QE codes and then learn how to connect to it. One API > n APIs.
And even then, those databases would lack functionality, because the holders of the tickets wouldn't have control over the data. If the original maintainers disappear and the database is deleted, everyone loses their data. And they can't exactly sell or transfer their data, since they don't own the database row it lives in, unlike with the blockchain.
I appreciate your comment. It's one of the better pro-NFT comments I've read. That said, I don't think your examples stand up to scrutiny.
- NFTs between communities. Your second example illustrates why this is a bad idea. Is the new user that trusted reddit moderator or are they are a spammer, disinfo troll, or bad actor who just bought the NFT off of a trusted reddit mod? And how trusted is the general class of reddit mods anyway? Some of them are probably trustworthy, others are probably less trustworthy by dint of the subreddits they moderate. Still others could just create subreddits to moderate them to get the token to troll your forum.
In your example you'd need to hope that reddit subclasses all of their NFTs in a way that fits your use case and then you'd have to have special cases for all the subclasses. Okay, you moderated a 1k+ sub community that wasn't on the restricted list for more than a year...
It's also possible to do this now and I don't see this kind of thing except in rare circumstances. For example, when you are registering with our forum, if you wanted to claim special privileges, we could give you a GUID and ask you to message us with that GUID in the next 5 minutes on platform X. Then, we use the Platform X API to confirm you have exactly the attributes we want and confer those privileges on you. Nobody is really doing this now (to my knowledge) so it makes me question how useful this would be in our glorious NFT future.
- Lyft NFTs for benefits. Here similar objections apply. It's possible to make such perks transferable without a blockchain. That seems like a pretty simple feature to implement. Presumably, Lyft does not do this because first, they expect less than one hundred percent utilization of the benefit so it won't cost them quite as much as 400 X number of employees, but more importantly because they want their employees to use their service. The NFT would work against them because it would encourage employees to sell the perk which Lyft doesn't want them to do.
If you think about the problem of abuse, e.g. a Lyft driver buys the free rides NFT and does 400 dollars worth of rides with himself every month to get driver bonuses and extra cash, then Lyft would probably want to be able to disable those NFTs to stop people using the program when Lyft would prefer they not. And Lyft would have this capability! You notice that NFT X is being used in an abusive pattern, so you add X to a blocklist and now the app doesn't respect its free rides anymore. Uh oh, it looks like we had the appearance of decentralization, but actually full control over the valuable part of this rested in Lyft's hands the whole time. How is this ultimately any different from Lyft implementing the feature themselves - which they don't seem to want to do?
- Items that transfer between games. Again, this is possible now and doesn't happen. In order for your NFT sword to come from game1 and get imported to game2 we need g1 to mint NFTs. In modern day g1 could just expose an API that would let us query game object ownership and we could accomplish the same thing.
Maybe NFTs make this a bit easier or standardize it, but the fact that this is possible now and doesn't happen makes me think it's unlikely to happen in the NFT future either. My guess is that it's not worth the headache to add cross-game balance issues and the hard part of adding more content is not checking ownership but creating the assets and determining how that content should behave in your game.
Furthermore, what if g1 gets hacked or someone duplicates items or g1 becomes pay to play and users buy the powerful sword in a way that upsets g2 players? Either g2 accepts the damage to their game and continues to respect the NFTs, or g2 just makes an update and stops respecting the problematic NFTs. In this case, same as with the Lyft example, we see that things aren't really decentralized, it's the g2 servers deciding the reality of game2. Just, for a while they decided to respect the output of g1 servers.
- etc. I agree that it's impossible to know what these things will be used for in the future. To me it doesn't seem like they add any new capability and are basically just used as a Ponzi Scheme.
I think the biggest potential use for NFTs would be the transfer of games/movies/books between services and users, e.g. buy a movie on Amazon Prime and than watch it inside Netflix or sell your used digital movies to somebody else.
The reason I could see this working is because being allowed to sell your used goods, even digital ones, is already the law in many countries. But so far it has just been utterly impractical. NFTs provide the framework in which this could work. It would also be a good way to break up monopolies, as it would make switching between services much easier and companies would have to compete on the actual services they offer, instead of just relying on the lock-in to keep the competition away.
Now getting companies to join in on NFT-based license management ain't going to be easy. But due to there already being laws that regulate the sale of used copies, there might be a way to force them to.
Epic Games is currently having a lot of lawsuits around App stores and is talking about having an universal app store that works across different platforms. Maybe something will grow out of that.
What does an NFT add over a PKI signature? The rights holders aren’t going to allow their materials to be published without restriction and they’re not going to accept claims from anyone they don’t trust, not to mention many people won’t want their media purchase history being published.
A useful example of what this would likely look like is Movies Anywhere. That was created by the big studios to limit the tech companies’ control, and it limits transfers to the stores they trust.
I think a key question for NFT licensing would be how it would get the power to force something different, especially when that costs more.
NFT behave like physical goods, they can't be duplicated, but they can be transferred. A plain PKI signature does not and if you surround it by additional bookkeeping that you can, you are just reinventing your own NFT.
Furthermore you have to consider the long game here, what happens if the company you bought the good from goes under? Stops running the service, etc.? With NFTs that is in theory a complete non-issue, you can just go to your next library, show them your NFT and they give you a copy of the movie. NFTs basically allow you to ignore copyright, as the NFT proves that no "copy" in the traditional sense took place, as you already owned the content. So you no longer are required to get your movie from the rights holder, you can get it from anybody that has a copy. If you own the NFT you are allowed to get a copy of the movie. And the NFT can be found on a used market if the company no longer sells it themselves.
As for companies not joining in, that's not for them to decide. You are already allowed by law to sell your goods. That's existing law. It's just difficult to enforce when there is no system in place that allows selling used digital good. NFTs could provide the foundation for such a system.
> NFTs basically allow you to ignore copyright, as the NFT proves that no "copy" in the traditional sense took place, as you already owned the content. So you no longer are required to get your movie from the rights holder, you can get it from anybody that has a copy.
I think this is the core misunderstanding which makes NFTs appear useful. NFTs in fact do not allow you to ignore copyright and NFTs do not show ownership unless there's a separate contract conveying legal rights to the current NFT holder. That's why the entire scenario outlined doesn't work: if Amazon goes out of business, I can show Apple my receipts (PKI signed or not) but whether Apple will grant me the ability to get a copy comes down to the legal terms under which I licensed a copy from Amazon and what Apple has negotiated with the actual owner.
If those parties want to allow me to do this — as, for example, they did with Movies Anywhere — they don't need a blockchain because the key legal requirement is Amazon originally saying they sold me a license.
If the owner doesn't want to add a transfer clause which wasn't already there, or allows Apple to charge me a transfer fee, an NFT again does nothing to change the situation because legally I do not have any right to the content: what I bought was permission to use Amazon's service to display it.
There's absolutely no reason to have NFTs involved there, or even for there to be a "there". You're accepting a false premise of artificial scarcity that is being pushed by dinosaurs. Humankind needs to just accept that information costs nothing to copy now.
Copyright isn't going away anyway soon and with the way things are going, we are going towards a future where Disney basically owns everything. I don't find that very desirable.
NFTs provide a way out of this, as the rights holder is no longer the one who completely controls the content. Once they sold a copy, it can circulate in the used market, completely outside their control. This also makes it much easier for new players to enter the market, as they do not need to Disney's permission to resell used copies.
Thanks, and I appreciate your thoughtful response!
- With the Reddit example, you're pointing out how NFTs and digital property shines in comparison to physical property. Specifically, you can trace the history of any NFT or token on the blockchain. HN could choose to only trust NFT holders who are one hop away from the origin, i.e. NFTs that were directly granted by Reddit. HN would thus be ignoring any moderator NFT that's been transferred or sold.
As for whether or not Reddit mods are trustworthy, that's a moot point, as it's just a contrived example. There are infinite possibilities, and it's doubtful that I'm going to think of a the best use cases, just as it was doubtful that an internet pundit in 1993 was going to think up the best websites. But a better example might be, let's say FAANG companies grant NFTs to senior engineers. Perhaps StackOverflow might want to show that status as a badge next to user accounts.
Yes, it's possible to do this now, but there is little incentive to, because these digital goods suck for the most part. Because digital goods aren't portable, they require the development of N × M propriety API calls for anyone apps or services to use them. Or in your case, HN mods would have to create a Reddit account and monitor it for messages. Total pain in the ass. We do see APIs used often regardless, despite the pain. It's hard not to imagine that use cases and creativity increase as a result of the tech getting easier.
- If Lyft wanted to allow employees to trade or sell perks, they'd have to create a marketplace for this, build features to support all of it, all for users to register accounts, etc. It'd be a lot of work. And it likely wouldn't do well, because it'd be a small silo'd market. So it's not worth the effort.
If Lyft instead distributed perks as NFTs, that's it. That's all they'd have to do. The blockchain would take care of the rest, as NFTs are automatically portable and sellable and tradable to anyone on the internet, without Lyft needing to lift a finger build some proprietary market connected to its databases.
Just because Lyft retains control of who does and doesn't get the perk doesn't affect much re:decentralization. The point of decentralization is to allow us to own our digital property that we control rather than that companies control, not to force companies and apps to lose all power in every other respect. Lyft can't delete your NFT or stop you from selling/trading it, and that's it. That's the goal. The rest is fine. It's the same in the real world: if I buy a ticket to a sporting event, it doesn't mean the stadium can't deny me entry or throw me out if I get drunk.
- Yes, games don't tend to share digital goods today, for the same reason websites don't: There's little consumer demand, because digital goods aren't useful, because they require N × M API requests to achieve portability + because there's no true consumer ownership.
And again, it doesn't matter if g1 or g2 want to make their own rules and changes. That's perfectly fine, and doesn't make digital property useless. It happens with real-world property, too. I had a Google Glass early on, and at first everyone loved it, but after a few weeks bars and restaurants banned me from coming in with them on. No big deal.
What you're pointing out are indeed problems, but they aren't problems that are going to stop proliferation and adoption of this new technology. It's similar to when the web was new, and pundits criticized it for being a hodgepodge of mediocre information that was difficult to sort through. Okay sure, that was true and it was a problem. But it didn't stop the web from spreading. It just resulted in the birth of Google, a $2T company that solve this problem. And social networks, which let you sort information by the people who you know/follow based on your personal connections or their popularity.
- You could argue that the most popular current use case (speculating on art and collectibles) are a Ponzi scheme I suppose. But the other use cases I proposed seem quite useful despite the minor problems pointed out, and it's hard not to imagine there will be many creative use cases in the future. Again, who could've predicted Airbnb or Uber or TikTok in 1995?
"Crypto" is a general set of fundamental primitives for decentralized infrastructure.
(1) A decentralized, "trustless" ledger. There are a ton of use cases here -- akin to databases, but without having to trust a central authority to not go in and just tweak the rows. Good examples: Land registries, stock ownership (current status quo with entities such as DTCC are "interesting" in the loopholes), etc. Bitcoin made this datastructure popular, but it has become (effectively) a Digital Gold; I do not think it will "win" the day due to some key limitations around Proof of Work.
(2) Futures contracts on compute power. Ethereum is a good example. Each "smart contract" lives on the blockchain and is akin to a perpetual AWS Lamda-style program. You can spend ETH to publish or execute programs. By owning ETH, you have a futures contract on said computation.
(3) Futures contract on file storage. The most prominent examples are IPFS/Filecoin & AR Weave. People earn tokens by storing files & spend tokens to have someone host files. Owning tokens gives you the ability to store files in the future.
(4) Decentralized governance (DAOs). These are new ways for people to organize and control the direction of projects. It makes things like voting trivial & verifiable. See recent US elections for examples of how this is beneficial.
(5) Decentralized Finance (DeFi): Combining the above, you can do amazing things in finance without relying on centralized institutions. For example: DEXs (decentralized exchanges) are marvelous -- you can convert between virtually any pair of crypto currencies automatically without restriction.
(6) You can build incentivization structures to enable microtransactions. A good example is Helium -- a LoRa wireless network (900MHz, super-low datarate IoT) ecosystem that covers vast areas. You earn Helium by providing area coverage & transferring data. You spend Helium by using bandwidth. All of it is done without a big central authority (e.g. legacy telcos). Currently in the process of supporting cellular & wifi.
Using these primitives, you can build a host of valuable applications. E.g. rideshare is really just a giant decentralized auction on moving things from A->B -- doesn't matter if it's Uber, Lyft, taxis, autonomous cars, or random people with a vehicle -- you could implement the auction via smart contracts and have "perfect" balance of supply, demand & pricing.
I would liken the state of crypto today to the internet in 1995-1998 -- bubble & all. My suggestion: Try not to judge the www by your experiences with usenet. The "toys" of today could very well become the most valuable institutions on the planet in 20 years. And above all, remember that in the scope of humanity, money is not that old -- and fiat less the gold standard even less so: https://www.youtube.com/watch?v=-nZkP2b-4vo
> When I first got into tech, the technology amazed me, not the problems it solved. The tech was enough, it was not a means to an end, it just was. As I got older, and started owning projects, managing teams, etc, I realized that technology should be in service of something, not just a thing to exist in and of itself.
This reminds me when somebody on an old project said: "well, Git is almost the same as our Subversion..."
But, in the end, why not be amazed by the technology?
Why can we gamble but not crypto trade? It's not logical.
Let's take smokers. They are burning their cash plus getting themselves sick, getting others to breathe their smoke and loading our universal healthcare through their individual addictions. What problem does smoking solve?
For the individual? Depends. The percentage of individuals with ADD smoking is 10x higher than in neurotypicals (whatever that may be). Dopamine deficiency may be one "problem" people self medicating with nicotine might try to "fix" (treating symptoms).
> "So, how does that relate to this? One question I have constantly asked, and never gotten an answer to - What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve? What problem does it solve that no other distributed system does as well, if not better? I've yet to see the answer."
> What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve?
My opinion - the most significant problem bitcoin (and, historically, gold) solves is it is a store of value that is difficult (arguably, technically impossible) to inflate - there will only be 21M bitcoin, ever.
We all trust the fiat USD as a store of value bc we have trust that the US treasury and central bank will not start to fund government operations by "printing" more money.[1] However, that is effectively what is happening.[2] This is a really hard pill for people to swallow bc it fundamentally changes our worldview - "the US government is the most trustworthy, I have saved all my money in USD, how could they do that to me?" That emotional response will look like anger, hate, denial, etc.
So, what the fed and the treasury are doing is very bad for everyone. Hopefully, the majority of Americans will come to that conclusion before it is forced upon them. How does bitcoin solve this? Bitcoin does the same thing gold did (except a lot better in a couple ways [3]). When I dig up a gold nugget, I worked to create it, which is another way of saying I spent some energy and that energy is represented in that nugget I hold in my hand.[4] Bitcoin is the nugget in electronic form. Digging those nuggets is hard bc they are rare, so I don't worry about more people competing with me with more nuggets.[5] Now the dollar has a competitor. I hope that bitcoin keeps the stewards of the USD honest, bc people can trade their dollars for bitcoin - that is the problem is solves.
[1] I am not a fan of the word "printing" when describing the mechanics of what's going on today. It's an over-simplification, but analogous enough for people who do not have the intellectual inclination to go into the specifics. Most people get bored very fast when I try to talk about economics.
[3] It weighs as much as the thing that holds the private keys, takes up almost no space, is divisible, can use it for a payment very quickly, very divisible, bitcoins supply is known, etc.
[4] If you take away anything from this post, please let it be this - energy is the master resource.
If your entire life savings are in USD, you're doing it wrong. USD (any real currency, really) is to be spent. It has no returns. It is not a productive asset. The only reason to hold USD is to have liquidity. It is not a good thing for your non-productive medium of exchange to be one of the better stores of value, as it discourages investment into actually productive things. We shouldn't want a society that takes all their value and buries it in the backyard, we should want a society that is encouraged to invest in each other, trade, and grow.
21M bitcoin, and 21M Bitcoin Cash, and however many ether, and doge, and shiba, and Floki, etc... Will all of these retain their current valuation? If not, why should any of them?
This is like asking "what problem do computers solve?"
I recommend you have a look at the ecosystem where literally thousands of problems are being solved in new ways, and more every day than it's possible to keep up with.
You aren't missing anything. Crypto doesn't solve an existing problem. It was created by arrogant software engineers who thought they know monetary policy better than people who devote their entire lives to the study.
It's survived because it happened to make a great natural ponzi scheme, which then made some people rich, and made some people financially invested in pumping the price higher, who now spend all their time telling you how useful it is in an attempt to get you to buy into the "Crypto" universe but really just want your fiat.
It's a libertarian currency. Don't be surprised that it's a greater-fool nightmare - that's exactly the point. There's a reason that the True Believers get the majority of the coins for no mining costs and the rest beg for fractions of a coin. It's pure FOMO and reflected in their unofficial motto: "Have fun staying poor".
All of the people replying to you trying to convince you that crypto makes sense have a personal financial interest in getting you onboard. They have a larger interest in shooting down dissent and mocking non-believers, because if people stop believing the whole house of cards comes down.
I stand to gain nothing if you believe me or don't believe me, so take it however you wish.
For me, crypto enables experimenting with new kinds of corporate structures. That's what I work on. I think we have a decent shot at replacing the current model—basically psychopathic projections of sick humans minds—with something that won't destroy Earth.
It's very hard to do that without programmable money.
Perhaps the downvotes were harsh (I was not one of them, can't downvote :), but the question was "what problem does bitcoin solve?". I'm having a hard time seeing any problem in the parent's comment. Instead of identifying a problem, poster is encouraging us to go on an adventure.
For me, I'm tired of really discussing it. I stated a powerful usecase before, but it seems a lot of HNers don't really want a use case, they just want something to bash on.
So if you want use cases, you can look it up on the net. And if you want something to bash on, you won't get it from me.
I get it, it can def be discouraging. For me, I really _want_ to know what the great problems of the day are that bitcoin/blockchain can solve (or assist in solving). I imagine many others are too. So far, from my cursory reading, I haven't seen anything that makes it click, especially when weighing off against energy costs to our planet.
And for use cases, the second hand car industry is ready for disruption. You could say all blockchain use cases can be also handled by a central database. But this has failed miserably in the car industry. There are plenty of companies trying to log metadata, and as a result none of them have the complete picture. Even data aggregator companies are not able to properly bundle it.
Blockchain could offer a very good trustless solution, where you could log a cars history, and a second hand buyer could consult it.
Therefore, big names are entering this space, and I'm confident we will see blockchain solutions in that market soon.
I think you are right the crypto can solve some problems, perhaps even useful and interesting problems. But I don’t think it currently solves useful problems dot average people.
I know that was not your claim, but it could be read as such and many people think that way of crypto.
Thanks, that's a good answer. I am not 100% sold that any of these are "problems", but I could at least see why you think they are and pursue "solutions".
The computer made a huge improvement. Have you ever written and edited a significant document with pencil and paper?
The bigger point is that it's very easy to point to huge improvements computers have made or to new things computers enable (e.g. collaborative document editing with many authors around the globe and version control). It's much harder to point to things that crypto improves or enables - except for illicit activities.
I think the bigger point is that when computers were first introduced, there was a lot of similar pushback to what we see today. The answer is that they don't _directly_ solve a pressing problem, but are a canvas for others to come and use as a new paradigm to solve problems using its technology. Blockchain by itself is a canvas, and anyone can come and create applications on top of it that could solve real problems. Computers and the web are similar in this regard.
> Have you ever written and edited a significant document with pencil and paper?
I'm from 1979, so yes. Now that you mention it, before writing a huge document, you had to think up front what you were going to write and how to write it.
So now that I think about it, the computer is actually a step backwards in some way.
Ecosystem is the key word here. Crypto currency enables an economic ecosystem to expand where as without crypto this ecosystem and all the network effects and innovation of said ecosystem would not exist.
Computers are Turing Machines - a paradigm of openness to implement processes. How you can compare them to the specific topic is as mysterious as attempting to put life and tree leaves on the same plane.
I'm in Vietnam, all banking process here requires a human that u need to talk to in case of 99% use case.
Your account to login is blocked ? Call someone. Why should there be username/password checking in first place ? It's solved by Bitcoin right ?
You want to withdraw some money which is larger than the threshold from ATM, you repeat above my process.
And of course many more.
Call to someone in a hopeless hope that they'll call you back. Luckily there's someone who's ready to help your issue, then u repeat above process.
Why does Hacker News so studiously dismiss the innovations that other projects such as Monero, Nano, Ethereum or the so-called 'Proof of Stake' chains have made in favor of trashing Bitcoin, as if Bitcoin were all there is to cryptocurrencies? Most of Bitcoin's (technological) problems have already been solved.
> If you like bitcoin, you must think the gold standard was a good idea.
Yes, it was.
> Because people really, really, really want it to.
Exactly. People are sick of government induced inflation, and the government devaluing people's hard work at a whim to pay for their debts they go into through incompetence. Since the government won't go back to the gold standard, the people are taking things into their hands.
Inflation is a safety net. Inflation prevents populations from fearfully (or speculatively) hoarding money. When a population collectively decides to hoard money, demand for goods and services tanks, jobs are cut in response, and so on in a vicious cycle until the entire economy grinds to a halt. Such a situation is extremely difficult to recover from without government monetary policy to stimulate demand.
this is only valid for growth-above-all capitalist outlook. nothing is wrong with "hoarding" money, in non-biased language it's also called saving for retirement, yet your capitalist overlords created a view of reality where nothing good ever happens if their investments don't grow steadily. but for that to happen - money has to lose value steadily.
don't be a slave to your capitalist overlords. you can save yourself by just rejecting their view, way easier than what slaves of the past had to do.
The problem is that today's economy is also based on debt (a very bad idea), many if not most people cannot simply save to buy assets like the old days because, due to inflation and interest, prices keep going up. Some of us refuse to engage in interest based finance as it is against our religion (and for good reason).
There are over 200 countries out there. One of them could always adopt the gold standard if it's such a great idea. Maybe there's a reason zero have done so in recent decades?
I liked his point near the end of the article comparing blockchains to XML - overcomplicated and oversold and added to too many things due to marketing and consultant hype.
The obvious next question he didn't ask is, what is the JSON of blockchain? The one that's more flexible and efficient and ends up actually becoming ubiquitous?
Maybe it hasn't appeared yet? Maybe it shouldn't? I don't know, but the comparison is just waiting for that followup.
> Here's a metaphor. Blockchains today are like… XML in the early 2000s. A long-burning overcomplicated trash fire that a bunch of large, cash-rich, unscrupulous, consultant-filled mega-organizations foisted on us for years and years, that we all now pretend we weren’t dumb enough to fall for. Remember SOAP? Remember when we tried to make HTML4 into XHTML? Ew, no.
To answer your question, here are some suggestions for what might be the JSON of blockchain:
* Git - Cryptographic hashing, Merkle trees, and distributed architecture (pre-GitHub) to record a history of events.
* Databases (SQL, NoSQL, NewSQL) - Have been running the entire fincancial system for several decades.
* Credit cards - ubiquitous electronica payments "Credit card was the most used payment method in the United States in 2020, with 38 percent of point of sale payments being made by credit card." - statista.com
The most defensible / widespread use-case of getting money out of an oppressive regime strikes hollow to me as a lefty. Most people in an oppressive regime don't have the problem of moving large amounts of money around. And it only helps you with "temporarily store it somewhere with a wildly deviating value", how does that help when you need to get it BACK into your hands and actually spend it?
The real exploitation for 99% of the population isn't someone currency-manipulating your fortunes, it's being a de facto wage slave because we live in a system that decides at birth that you're a slave and 1% of people aren't. Crypto doesn't help you with that, ironically it makes it worse because it helps the kleptocracy move their money. That's who has a use for anonymous money, and they're normally robbing the locals. See: the Panama Papers, Russia
I've been thinking, how does one get free of the wage slavery situation, where I'm at?
Where I'm at I can't own land, only lease it from the govt for a specific purpose. A guy I know ended up paying back-fines for not actually making use of some chunk he leased. The real estate development investment sector is full of horror stories, some from people I know personally. Last year and this, many small businesses did not survive "stay home" messaging, but owe full year's worth of insurance and forward taxes non the less.
How do you accumulate wealth, exactly? Everything you could own depreciates faster and faster with time. There's no way to keep your money. You can make some money by speculating on the uneven depreciation rates of things.
Bitcoin (not other crypto) is specifically a thing one can own for 10 years, and get rid of at some point in the future presumably not having half or two-thirds of it's value gone by then. And I don't own any.
I'm the one-man shop who's business got owned by the govt messaging and now owes them.
> I've been thinking, how does one get free of the wage slavery situation, where I'm at?
Class solidarity and non-violent action. Look at history of 20th century, before neoliberalism took hold.
> How do you accumulate wealth, exactly?
Impossible to do en masse with private capital, since it is by and large ability to command other people. You can increase public goods, this is the wealth that (the society owning it) can increase and benefit from.
People will have to re-learn the lesson not to be so selfish.
I do not disagree on your points, but do on the basis of premise.
I do not believe we're any longer in a situation where people can achieve a critical mass of solidarity (even on the lower bound) leading to action. It seems to me that time has passed, and what public goods or you could say rights we have are on their way out.
It follows that an adaptation, a shift in personal thinking is required. I would have agreed with you in December 2019, but not after the summer of 2020.
Alternatively, everyone can gradually reject their manipulated fiat and embrace an alternative economic paradigm that eventually denies the government the ability to inflate away the value of their savings.
> The real exploitation for 99% of the population isn't someone currency-manipulating your fortunes, it's being a de facto wage slave because we live in a system that decides at birth that you're a slave and 1% of people aren't.
Coincidentally, the 1% are always people who have ties with the State and who have access to cheap credit. Bitcoin solves this.
> Crypto doesn't help you with that, ironically it makes it worse because it helps the kleptocracy move their money. That's who has a use for anonymous money, and they're normally robbing the locals. See: the Panama Papers, Russia
So you see Panama Papers and you infer that that the kleptocracy has any problems with storing their billions in bank accounts? The little guy needs Bitcoin, the kleptocracy does not.
I'm surprised at how much the comments are defending Bitcoin. Maybe the author is being a bit harsh to defend his past article, but I agree with him overall. I have exactly 1 use for Bitcoin. Putting dollars into it, and hoping I get more dollars out. That's it. I'm never going to use it for anything besides that. Why would I? I'm not buying drugs, or fleeing authoritarian regimes.
I think many Westerners assume that government-enacted regulations on currency are broadly a good thing, and thus don't see this as a valid use case. They might even be correct wrt their own country - but this is often not the case elsewhere.
That's a political problem that needs to be solved via political means. Trying to amend this by, essentially, making illegal transactions does not seem like a good use case to me.
Working around oppressive laws is politics. If by "political" means you mean elections etc, this completely ignores the fact that some countries don't have any, and in many they're basically just for show.
And if you're advocating for violent overthrow of the governments that do those kinds of things, that in and of itself is illegal (and much more so) than any skirting of financial regulations; not to mention that most people sensibly aren't willing to stick their neck out unless things get really bad.
The main use case in El Salvador is having instant payments better than credit cards without needing a bank account (which few non-corporate merchants can get)
But the main use worldwide is remittances without paying %30 fees.
> The main use case in El Salvador is having instant payments
What's the average time for a bitcoin transaction these days?
Ten minutes, ok.
So those people in El Salvador actually aren't transacting in BitCoin, they're doing transactions by having a number change in a centralized database somewhere that someone owns, and then claims that all transactions are backed by bitcoin, whatever that means.
And the difference between that, and having your bank update their centralized database as a result of a transaction going through the VISA network is... what, exactly?
The difference is VISA doesn't get a dime from you. Also if you use something like SWIFT and want to transfer money on the weekend you are stuck till Monday. It's also not unusual that oversea transfers take days to complete. Volatility for Bitcoin over 10 minutes is negligible.
So it's a) faster for most people, b) you don't pay big corporations for the transfer itself, c) it works 24/7, d) doesn't track "well" as of now. Those reasons are enough for some people to prefer it over traditional remittance.
> El Salvador actually aren't transacting in BitCoin, they're doing transactions by having a number change in a centralized database somewhere that someone owns
Wrong, people in El Salvador are using Lightning Network.
We live in mostly great times in the first world countries. Peace, and compared to previous times, almost no one is starving and almost everyone has a roof or could get one.
It's always easy to take things for granted, but the real power of Bitcoin shows when things go sidewards. One could say that governments printing a lot of money is already the beginning. Bitcoin (as well as other stuff such as Gold or even global competition) are acting as a certain counterweight against control by other people.
Maybe without these counterweights, we would already be in a much worse situation right now.
> It's always easy to take things for granted, but the real power of Bitcoin shows when things go sidewards.
Yes because the one thing that works best when things go sideways is a giant network of electricity wasting computers you access over the internet. Definitely nothing taken for granted here.
> Maybe without these counterweights, we would already be in a much worse situation right now.
I have plans for a real SHTF scenario. Things to eat, things to barter, things to defend myself with. I really don't think in time of instability I'll be thinking "damn, wish I had some bitcoin right now."
Bitcoin is not for these times directly, but for after.
With gold, historically governments have tried to get a hold of it with draconic punishments if they found someone tried to hide it.
With gold you are more in danger and you can't easily move it. Bitcoin is better, but certainly not optimal. Still, if you were to flee from your country, you might not be able to take gold or money with you, but for bitcoin it's much easier. So someone in government will think twice before putting heavy restrictions if they can easily be circumvented.
No, he means asset price speculation. The inflation argument that is so often brought up seems ridiculous to me. Inflation ensures sufficient demand. Modern economy will collapse if the global rate goes negative.
Gold is also one of 118 boxes on the periodic table. It pre-existed humans and has been something people valued for millennia.
Bitcoin is an imaginary thing someone made up ten years ago that we all just collectively decided to value. Or at least, some of us did, in the hopes that the rest of us would come aboard and they’d be rich.
The cool thing about a bubble is we can all be rich on paper, for a bit. If you cashed out and bought stuff, though, good for you for finishing on top.
Of course it can fail! It's all about chances and risks, no?
For me, there is only a small chance that cryptocurrency will truly break through. But when it does, it will be HUGE.
So a small chance X total game changer = a lot of potential return.
If you invest 1% of your portfolio, you can only lose 1%. However, there was (and still is) a small chance it goes x100, which means a total 100% return on your portfolio. So now you have 200 instead of 100.
I was proven right, and so it's easy for me to say I took the right decision. But when it would have gone to 0, it would have still been a smart move to invest 1%.
For me, the stupid people are the ones who are sure about the outcome. While at this point, nobody knows. You can only see the potential or not.
Realizing gains in a shockingly volatile speculative investment just seems like common sense. Particularly so if you can take out your original investment and be "playing with house money" so to speak.
The fervent defenders are either trying to convince others, or mostly themselves, that crypto will be king. Why? Well, they've put their money in it, and if they weren't convinced before they should be convinced after that. And since it's a pyramid scheme, they, consciously or not, are trying to convince others to join in that scheme so their own investment grow.
Secondly, no one likes to admit they've been foolish, and so far the value of BTC has not made fools of anyone. Well except if some people borrowed to buy at 20K and it stayed around at 2-3K for a long time. And those burned "losers" mostly stay quiet, out of embarassment.
XML is still relevant, useful, and better than YAML for most of YAML's use cases.
The rest of his arguments, meh, whatever. I'm guessing in another 10 years he'll write another post exactly like this. XML and BTC will still both have a place in the world.
YAML is better than XML for some things (human-readable config files), worse than XML for others (everything else?). But XML is always bad (though always bearable, barely).
Surely you didn't mean to imply that there are no other options?
I really like that story at the beginning. Unfortunately, the author uses it to construct a false analogy to Bitcoin.
The same article could have been written about the Internet of 1999. And it would have been wrong for a lot of the same reasons.
Here's what the author is missing: the reason that Bitcoin exists.
It's not about the gold bugs, although they get the talking head appearances. Should inflation indeed prove "transitory," the Bitcoin exchange rate is getting taken to the woodshed. I suspect this will be the outcome because gold has performed so abysmally. Gold traders know for a fact that inflation is transitory, and they're putting their money on the outcome.
Rather, Bitcoin is about censorship resistant money. That means that Bitcoin makes it hard for others to implement exclusionary rules that target specific individuals or groups.
Contrast this with the government-controlled currencies, especially the US dollar. They have been weaponized and weaponized again. Against individuals for domestic law enforcement. Against other countries because the consequence of wars between big countries is so horrifying. All over the world, the call rings out to use money as a proxy for violence.
Bitcoin and its censorship-resistant properties stand in the way of this Juggernaut.
The author doesn't mention this once. And this is what the author misses. When the goldbugs fade into the rear-view mirror and the world wakes up to the possibility that printing money can cause deflation, what will be left of Bitcoin's value proposition is censorship resistance. And in this regard, there will be no other alternative.
People hate XML. Mostly because its association with SOAP. It's also not a great data format. Why would you want a data format that is hard for both computers and humans to read?
Weird JSON with schemas. To me, that sounds like a pretty good trade. I know there's a bunch of json-schema things, but none of them have the weight of a primary-source officially blessed schema system.
I read quite a bit about what the author wrote at google and worked with people that had worked with him. I only heard good things and he seems very smart.
He wrote some articles that I remember was obviously wrong, and maybe this is one of them. That was usually when it was outside of his domain knowledge. Of course I could only recognize it when it was an area where I had a lot more local knowledge. I think very smart people sometimes overestimate how well they understand things they have not thought much about and underestimate domain knowledge.
I think the same as him about crypto, but I also think I don’t know the domain very well and could very easily be wrong.
Failure in the context of a crypto-currency is when it fails to act as a trustless form of p2p money for those who use it + does not increase in adoption by users. Neither of those things are true.
Not who you're replying to (I'm a little higher in the thread) but I will take a stab at it.
The goalposts get moved a lot. Not by anyone in particular. The term "trustless" was not really in use until around the time of the ethereum launch. The goal of bitcoin was always only a digital cash system that has no central record keeper. It is currently a functioning, although inefficient, implementation of that concept.
To a broader point though, I say it often, you don't get to decide how the tools you build get used. Trying to do so is an exercise in frustration. Even if bitcoin were to never be used as intended, for it to be a success, it only needs to be used for something.
The main thing bitcoin (the network and codebase) did IMO is spur innovation into user generated currencies (and financial assets). Bitcoin itself is not that great, but some specific cryptocurrencies are wonderful. There are some emergent properties of these types of networks (they fork instead of evolve is pertinent to my point) that were not anticipated before they were live, and bitcoin can be viewed as a sort of prototype network that helped show us how to build and manage these things. For that, it is also a success, although I wouldn't dream of using bitcoin specifically to pay my bills, as it exists today. There are plenty of other currencies though that I would use to pay my bills, for various reasons.
I really see bitcoin as a step to something quite a bit more ambitious: Algorithmic governance.
It seems like this article only concerns bitcoins, which would appear a bit narrow.
Crypto currencies are a large area. And in my opinion, we should not call it crypto currencies as much as crypto economies. when these are not merely niche markets, they will constitute full economies, with the result of constituting governance.
Eventually we are done adding the tech words like algorithmic or crypto, and we merely call it economy or governance.
All this is still quite far out, but probably closer than we relize.
There are a lot of comments on here about crypto only being useful for criminal activity.
The UN estimates that $1.6 TRILLION is laundered each year. The entire market cap of BTC is around $1.1 trillion.
If crypto wasn't around, fraud and scams would still exist. The fact is that significantly more crime involves fist currency than crypto. Cash is far harder to track than crypto, so using crypto in crime is actually more dangerous because of the ability of exchanges to track transactions and blacklist accounts.
You're presenting statistics in a biased way which fits your narrative.
It's very common to hear "most of the illegal transactions are still in dollar". But that's a biased way to see it.
If USD represents $100T of transactions amongst which $1T of transactions are for illegal activities, this means only 1% of the transactions are illegal.
On the other side, if crypto represents $1T of transactions amongst which $500M are illegal, this means 50% of transactions are illegal.
In absolute, in this example, most illegal transactions are in USD, but crypto is much much more likely to be used for illegal transactions, therefore showing that it has little/less use for legal transactions.
I enjoy this quote from the 2011 piece. If only someone had forced me to buy bitcoin then. Not exactly a USD- or CAD-style "screwing."
I don't own any bitcoins. I don't particularly want to. If one day I have to own some for some reason, I will buy them at the market rate and get screwed, just as I do today with U.S. and Canadian dollars.
I always marvel at how fellow technologists and engineers on HN don't grok the significance of Bitcoin, while people from all walks of life on crypto Twitter truly understand Bitcoin's impact. This post and the comments section is proof.
The thing with decentralised cryptocurrency is it's money on the internet independent of government control. It's not going to disappear any more than photos on the internet or videos on the internet. Maybe you don't like videos or crypto currencies and and avoid or try to ban them but it only takes two people who do like them two exchange data over the internet for the things to continue.
Maybe Bitcoin will go a bit like XML and become dated and replaced by a better format but something like blockchain based currency will go on.
The key is the independence of control. I could set up internet money without using crypto techniques but I would be shut down for operating such a scheme. Is there a way to have no operator without using blockchain? In theory, but with such a setup you might as well use a blockchain because that is the exact problem it solves.
However, if government wanted to it could stomp out crypto. As decentralized as it is it's still groups of people doing things, and very visibly. For as much as the crypto community is anti-government they've been treated very nicely by most governments.
Most people didn’t predict Bitcoin and blockchain would succeed. Being someone who said it would fail doesn’t make you special, interesting, or unique because that is the standard line that 99%+ who heard about Bitcoin thought. Yet it’s here and successful, and at a minimum it’s going to help people in countries with corrupt central banks like Lebanon to get some modicum of stability.
I wonder if any other system will ever be as good as SPL USDC for international remittances. As soon as people in any country can wire money to any other country without making any phone calls or paying more than a penny, let me know.
To be clear, I operate a business, and we accept payments and pay bills this way. We would like to pay more of our bills this way!
There's a news cycle to the blockchain that everyone wants to be a part of to appear smart whether they know anything about a topic or not. Notice how the majority of critics never talk about any deep use-cases for the technology and instead choose to make up that it's only ever used by criminals. This is because they don't actually know anything about the technology. It's just more status signalling for clicks mixed together with a bunch of regurgitated arguments made a million times before. Enjoy the traffic bump op before fading back into obscurity. Meanwhile, the countless people in the know who actually matter are going to keep building on this "failing" technology.
Some interesting comparisons in there. There sure is a lot of cult-like behavior coming out of the cryptosphere, I wonder if/when that aspect will stop. The underlying tech has great potential, the scammy gambling cult part--not so much.
When someone knows so little but has so many opinions and try to pass them off to others as truth it's hard to know where to start. A few points are valid or at least worth discussing but overall it's an uneducated rant.
There are some silver linings to the crypto explosion - imagine if the trillions of dollars went into the normal economy instead. OK some of it is probably illegal so it wouldn't but the rest would inflate stock prices and worse: nobody normal would be able to buy a house anywhere (and everyone suffers from that - some areas here are now to expensive for elementary school teachers, so they move away so schools don't have enough teachers).
> It's been ten years, and it all went pretty badly, so let me make a new prediction.
Say what you want, being entirely wrong doesn't deter him from trying again.
But then again, with nothing at stake but your already ruined reputation, that's an easy thing to do.
His case would be a lot stronger if it was backed by something more tangible, like - oh, I don't know - a visible to all Bitcoin short bet on - oh, what could possibly let you implement that - a public blockchain.
If I could go back 20 years and write a sci-fi story about crypto eating the financial world during a global pandemic. Wow, what a great story that would have been.
Economy of turn on computer and get a bread/tesla/... for doing it. That what bitcoin is to me. People who 'produce' bitcoins get a VERY cheap meal for useless work. Almost like thiefs.
The truth is that there is no free meals in real life and at the end someone will have to pay the price. And the wet dream of all wisely involved in BTC is that you'll pay that price.
Why doesn't it mention the main reason people use Bitcoin: drugs?!
Hydra, Russian drug marketplace, is the single most popular destination of Bitcoin across the whole network. And there's a whole generation of drug users who've never saw any other way of buying drugs at all.
It's weird, the post and comments here are like intentionally blind to the whole thing.
I love the moniker that crypto is just an ever growing bug bounty :)
Maybe it will work when GAI is writing perfect code…
ie Bitcoin is 100 years too early, we don’t have perfect code or computers efficient enough to do proof of work without destroying the environment, we aren’t on 100% renewables, etc
> we don’t have perfect code or computers efficient enough to do proof of work
Correct me if I'm wrong, but isn't the point of proof of work precisely that it takes resources to perform this work? I.e. it's not a bug, it's a feature.
It's a feature from the viewpoint of ensuring that the chain works at intended. It's a bug from the viewpoint of climate change. Or perhaps a better way of putting it: the fact that proof of work burns a lot of electricity is not a feature, the protocol does not directly rely on electricity being used; that part is a misfeature, aka bug.
Cryptocurrency is an incredibly powerful technology, in that it enables distributed consensus via a self-contained economic system. The challenge is separating the hype from the real value, as the space is deluged by speculators.
So Bitcoin is like XML or SOAP and therefore what we need is the crypto equivalent of JSON and REST for the whole endeavor to really reach its potential?
a more perfect counterpost could not be made to "crypto.com arena". fucking amazing. avery's always just spot on but this one counts for a lot.
grady booch had a good thread in the possible value of blockchains today, contrasting against what they do get used for (but holding the punches). i feel like some basic certificate transparency logs probably fulfill of these objectives. or the former linux foundation sponsored project publictimestamp.org, in many cases, for attestation. https://twitter.com/Grady_Booch/status/1461122915286487042
i do hope some good decentralized identity can emerge. but right now it seems to cost $500 to register a ENS domain and another bundle to update it. figuring out what data the world ought all keep is a question, a real one, and one the invisible hand of the market seems basically useless at helping us prioritize & sort. what we're doing is pointless in extreme.
Ultimately it comes down to ideology as so many things, for some the lack of centralised control a cryptocurrency (should) bring is a desirable, mainly to libertarian-minded people, others focus on the downsides.
Got to give points for OP to remain consistent, knowing of crypto in 2011 (but obviously not being knowledgeable) and not speculating takes some character.
What a crock. By his definitions succeeding is when everything goes perfectly right, 100% to plan, forever, according to every third party observer.
By his definition all of FAANG (or whatever) are total failures. You could poke minor semantic holes in their accomplishments!
CNBC lists bitcoin price next to the S&P. It's up infinity percent. There are regulated financial products. If asked at the time he would have unequivocally said those things would not have happened because bitcoin was going to fail because he was dead wrong.
It would have been much braver and more respectable to just say "yeah, I really was wrong on that one"
>CNBC lists bitcoin price next to the S&P. It's up infinity percent. There are regulated financial products. If asked at the time he would have unequivocally said those things would not have happened because bitcoin was going to fail because he was dead wrong.
there is a difference between "succeeding somewhat in the original goal" and "succeeding in a way different from the original goal all together". the former seems to closer to start ups that made it big - they had a product that became successful even if the endproduct isn't 100% as the original product
with bitcoin, wasn't (isn't?) the original goal to create an alternative to mainstream financial system? just based off the example you listed, among other things, it seems like Bitcoin has completely 100% has failed in that regard since it's just become another feature of the mainsteam financial system
sure bitcoin and crypto are still here, but they're just another asset class at this point. sure it's not "failure" - it certainly is successful by a different set of metrics from the original, but I'm sure this isn't what Satoshi had in mind
Who’s to say what “the original goal” was? Satoshi wasn’t that vocal and explicit about their vision in many ways.
As for the early community, there may be as many narratives as there were bitcoiners.
And even if satoshi would have posted a more explicit manifesto, who’s to say that they are the authority to dictate the goals of a project they abandoned almost a decade ago and that others have picked up?
Saying “nobody buys their coffee settled and priced in bitcoin; that was the whole point and should have happened in <10 years” is simply a straw man.
Hell, several of the “failures” points the author brings up are considered features by some.
The existence of permissionless and liquid cryptocurrency markets have political and economic implications. That you do not agree with them does not make it a failure; you just have a different perspective.
All that aside, I think it’s too early still to call Bitcoin’s success or failure.
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."
That’s been the case for years. One self-hostable payment
solution is btcpayserver (also supports lightning).
(PayPal recently rolled out allowing users to use crypto assets including btc for any PayPal payments but arguably that is not “real adoption” in context of payments, as merchants still get paid in fiat with PayPal’s partner Paxos acting as intermediaries)
But Bitcoin hasn’t succeeded. It doesn’t allow you to do anything useful except (1) buy drugs on the internet, and (2) move money out of authoritarian countries, both of which he acknowledges in the article.
The fact that a lot of people care about blockchains and are willing to make speculative bets on them doesn’t mean that the idea is actually useful for much.
The FAANGs at least have made some real products, some of which some people find useful.
But Google hasn't succeeded! It was supposed to do something useful but all it does is mine data for ads. They were supposed to not be evil but they are evil.
But Facebook hasn't succeeded. It was supposed to do something useful but all it does is mine data for ads. They were supposed to connect everyone but all they did was corrupt our political system.
But Apple hasn't succeeded. It was supposed to do something useful but all it does is pump out a new Iphone color every year and remove a port. They were supposed to revolutionize computing but all the did was figure out how to sell shiny junk made by poor people in developing markets to middle class people in developing markets.
See how easy it is to play that game?
Somehow I'm guessing most people who like bitcoin in 2011 aren't reeling from the failure of bitcoin.
Your analogies miss the mark because in addition to the negative things you’ve pointed out, Google Search, for example, _is_ useful.
Comparing the usefulness of Bitcoin to Google Search or the smartphone is asinine.
> Somehow I'm guessing most people who like bitcoin in 2011 aren't reeling from the failure of bitcoin.
Of course not — they’re all extremely wealthy. That’s irrelevant to the discussion; I’m sure the author of this piece understands that Bitcoin has increased in value, but that’s not at all what the piece is about.
What is useful about Bitcoin? I genuinely don’t understand what use people see in it. Do you have a use? It seems to me the main use is “get rich on vetting it will go up” because I haven’t been able to find any other articulation of why i might ever want to use it.
Can you not imagine a future where the value of the USD is continually inflated by the FED to benefit particular segment of society, and wanting an out? What if there was this currency that no government could inflate away for political reasons, that you could really rely on to be free of short-term economic thinking?
Have you never eaten with a friend and had to pay them with Venmo?
You could also do it with paypal, or even hugs.
Or Monero. It's a bit more stable since people use it as a currency more often.
You have options, which pretty much depend on what that person wants to receive.
It's not that big of a deal guys, stop the hate. It's a bit childish really
>> It was supposed to do something useful but all it does is mine data for ads.
Gmail, docs, sheets, slides, drawings, calendar and geez just 1000 other things disagree with you. Yeah I know the ad network is paying for that stuff: that's the bargain that people who use their ecosystem of software products have made, just as people on Apple's ecosystem accept their tradeoffs. It just seems extremely cynical to suggest Google has done, or is doing, nothing useful. If there was no utility flowing the other way in return for the eyeballs and profile data I don't think they'd have a business.
I don't think Google has succeeded, for the same reasons you state ironically. "Making money/having power" isn't "success", it's "making money/having power". I don't find it at all ridiculous to say that Google and Facebook are failures, I (as the author) contest the synonymity of success and money. It's actually telling of how shit our society is that you (and most people) say "success" and mean "money", and find attempts to separate them laughable.
And yet a VAST majority of people would label all of those companies successes and would also label bitcoin a success (comparatively from where it was 11 years ago)
You can buy tons of stuff with Bitcoin (not just drugs). You can transfer it around the world basically for free (transaction fees amount to the equivalent of pennies no matter how much you send). It's immutable. Basically it does the things it's supposed to do. It's gained widespread adoption, a whole economy, thousands of businesses.
doesn't that describe a lot of cryptocurrencies? or are you suggesting the people in these regimes use cryptocurrencies as an intermediary to transfer their local currency into more stable foreign currency?
This reasoning is really strange and reeks of bitterness. Do you have anything backing up your claim BTC is used for mostly illegal activities? Please provide some very clear citations for that claim.
There are very few things you can buy more easily using Bitcoin. And average fees to send money right now with Bitcoin are 2-3%. Which is not great, considering the current financial system offers lots of much cheaper options for sending money.
So because Bitcoin hasn't overtaken fiat currency as the de facto international standard means it's a failure? All of the critics in this thread sure have some narrow goalposts, don't they?
To move money out of an authoritarian country, you have to know someone who wants to move money in. The only reason it works at all is because the total amount of Bitcoin doing this is comparatively very small compared to local corruption and mining which can support this use case.
To make this transaction someone else in your local authoritarian country has to have Bitcoin, and be willing to exchange it for local currency. It's no huge surprise a lot of mining power ended up in China, because of course this is a transaction you do not want to do in China: you want to originate Bitcoin and then get some Americans to pay you nice clean USDs into bank accounts outside of China.
Which of course works because electricity consumption in China is relatively unsuspect (or was: naturally China has cracked down on this and is having ongoing power shortages to boot).
Which of course creates a weird compromise: if Bitcoin is good at getting money out of authoritarian countries, then either you're outsourcing to someone who can move currency around locally, or you are outsourcing an increasing fraction of the Bitcoin mining compute, and thus control of the network.
Filechain might be worth a look, distributed storage to allow people to rent out unused storage capacity in exchange for coins and based in IPFS which isn't blockchain but is neat.
Or Internet Computer, which is more or less a blockchain equivalent of the internet allowing you to for example host a website on it versus say AWS or GoDaddy, which has some potentially very positive benefits for data security and users being able to manage their own data as practical benefits.
What data? We are talking about projects and those projects are useless.
> but you do have to admit that some of the projects would do some good for the world when they catch on.
The will not catch on because they are useless for real world use. The most cost efficient way to do processing or data storage is within someones datacenter.
> I would love to have an easy system to distribute ML models and databases for projects without having to pay AWS fees for example.
I would love a free meal as well. It does not make sense for me to expect free lunches though.
It's not a "free lunch".
I would advise you to look into projects like these, as it appears you have a lack of expertise in this field. That knowledge gap isn't filled by dismissing projects with a religious like attitude
There's an entire blockchain-based industry being built in the gaming space as we speak, to allow player to trade NFT's (unique items in games).
There are many more.
> other than illegal money transfers
To address your point more directly: depending on the regime you live under, illegal money transfers are a life-saving device, so just that use case makes Bitcoin worth it.
It's true that if your measuring stick is toilet paper, the current price of Bitcoin doesn't tell you much.
> b) has been up till now
Past performance is no guarantee of future ... etc
Sure, that's what every traditional investment prospectus says in the first paragraph. They usually then proceed to explain how well they've been doing and why you should therefore invest.
There is something called Baye's rule. Ignore it at your own (opportunity cost) risk.
Thankfully people that can’t admit when they’re wrong despite almost absurd evidence of their wrongness just don’t matter that much in economic bets.
The people constantly predicting Tesla failure and shorting the stock lost all of their money. This guy won’t matter.
You’d think people would learn to change their mind and update when massive economic incentives exist to do so, but often they don’t. Confirmation bias is a powerful thing.
Michael Burry was dead on the money that a crash was imminent in 2008, but he was still in serious danger of going bankrupt before it happened and his short would pay out.[1]
"The market can remain irrational longer then you can remain solvent" is a saying for a reason.
You are not addressing the point: having enough capital to support a completely valid short position against an irrational market is staggeringly hard to do, to the point the most reliable short in history was still in danger of wiping out the person who was right about it and ended up making a huge amount of money from it.
You’re right of course and Michael Burry made a great trade recognizing the CDO issue and bad incentives around reselling mortgages leading to banks giving mortgages to people that couldn’t afford them and not taking the risk directly.
It was also time bounded (he knew when the rates would change and they’d start to fail).
That said, people often use the “market can remain irrational longer than you can remain solvent” line as an excuse - basically to say they’re right about an “impending crash” on an infinite timeline. If you can’t predict it within a bounded timeframe than your prediction is useless and ultimately equivalent to predicting nothing.
In the case of the OP he was clearly wrong, and instead of updating is spinning it as he was kinda right anyway. I think that’s dumb.
Which might be relevant if it was 20 years later, but it's not. Tesla's stock run-up preceded a number of unprecedented events that are all notably not associated with it's actual fiscal success. So it's incredibly vapid to a year later saying "see! It's not going to crash!"
I mean sure...put your money where your mouth is on that one, but I'm not buying TSLA at $1096 per share.
The original comment was nothing about Burry. Burry is relevant because he did sucessfully make money off the GFC by spotting the issue. Barely: he was facing stockholder revolt over the fees involved in maintaining the position, even though it resolved.
Which is the point: the market can (generally) remain irrational longer then you can remain solvent. Even when you're right.
The most amazing thing about bitcoin is that it turns every disadvantage to an advantage.
For example, the bias you are talking about means that the open minded and more virtuous people will adopt bitcoin earlier, and those who profit from the existing exploitive system much later.
This produces a massive wealth transfer from evil to good.
A minimum threshold of dogmatic people does not a good idea make. Crypto’s value basis versus its fervor is a mirror image of any bubble we’ve ever seen. The smart ones will figure out how the bubble pops. My guess is power outages.
how do you call people that can't admit they were wrong in face of clear evidence and must write pages of re-defining what it meant to be right in the first place?
Oh boy did OP make a big mistake: "Also, it’s now obvious that use of bitcoin (and related blockchains) for payments is almost entirely scams and illegal stuff."
When I say this, I typically get a landslide of people claiming they send infinite monies to their impoverished family members in ____ foreign country because the USA limits / regulates / taxes transfers over US$10k. Do you see the implication? This means they are sending more than US$10k in BTC. Think about that for a split second.
How dumb does this person feel sending $10,000 in BTC to a family member a few years ago, as now it it is worth hundreds of thousands, if not millions, which means their family members are crazy rich and they are not. Assuming their target family even has the infrastructure to convert BTC to their local currency of said impoverished nation.
But what do I know.
OP also missed a heavy part of the analogy to XML: people didn't gamble with their life savings by using XML.
Maybe this is too obvious to mention, but people send money to their impoverished family because the family needs that money now, not in a decade. Of course your family didn't "hodl" and become rich.
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Could you explain to somebody why Bitcoin is successful without mentioning that the price goes up, by talking only about the technology, product, and adoption? What if that person was unimpressed by Bitcoin 5 years ago, could you explain what changed in the last 5 years (again, not mentioning change in price) to change their opinion of bitcoin?
AFAICT the main changes in Bitcoin in the past 5 years have been some incremental evolution of the technology that I'm not aware of changing the fundamental usage of the product in any way (SegWit, LN, and most recently Taproot).
A note on blockchain proliferation: The author considers it a bad sign that there's an explosion in new blockchains. While I also consider it a bad sign for Bitcoin, I think it's a good thing for the ecosystem. My hope is that some day we'll have ubiquitous inter-chain protocols so, rather than obsessively hyping the coin/chain we're invested in, we can move all our digital assets and contracts to whatever blockchain offers the best technology, the best performance, and the lowest fees. This will allow for increased competition and evolution in the blockchain space. You can see the beginnings of this movement in some places, but it has a long way to go.