I hate this headline. Which experts? How many experts? Do most experts agree or disagree (is this an actual representative sampling)? Do many experts just not have an opinion? Do the experts have enough experience in this kind of situation to make a recommendation? How do you know if they are actually experts? Why should we listen to the experts even if they are? Who do these experts work for? Do these experts have conflicts of interest? Have these experts been wrong previously? If so, by how much?
I could give a rip about generic experts and a few quotes.
Couldn’t agree more (about these types of headlines). It’s easy to find a random expert that believes anything you need them to. Many things are controversial
Anti MLM and ponzi law was passed when large numbers of people lost money in these schemes, and they got so out of control that they became politically destabalising.
I think western govs will enact legislation that basically puts an end to the whole crypto industry when there's large loss. And the legislation will, I think be very simple and fair, it will say: crypto must work as its claimed.
As soon as you're legally required for your product to do what you say it will, in crypto, there goes the whole industry.
I think you're correct about the legislation to an extent, but you're being facetious about that destroying the crypto industry.
Face it, even in the sea of scams, there are a wealth of crypto projects that have delivered and do exactly as they say. It's an industry that is here to stay. There will be large shakeouts every few years, but that's relatively normal in a burgeoning new industry.
This isnt my view. I dont think any crypto project delivers -- and this is an extremely strong claim requiring only a single counter-example. I'd love to hear the counter-example.
I dont think a distributed immutable ledger whose state changes one when everyone recomputes it is a good technology for almost anything. Think of this from a devops/data-eng perspective... what, in your infrastructure, do you want to work that way?
In practice, we are always able to assume a non-trivial amount of trust which would eliminate almost all of that excessive computation. OR, if not, coordinate in such a way that we can acquire non-trivial amounts (eg., first exchanging keys).
This technology is an engineering revolution in the minute "data-engineering cyptographic problem space". That might be a business somewhere. I dont think it has almost anything to do with any marketable proposition.
I cannot think of any single business case thus far offered where removing the blockchain doesnt produce a better product.
A single counter-example is Uniswap. I can swap one currency or token into any other currency or token, in seconds, with a very modest fee of 30 basis points. And I can do this anytime, 24/7. Fiat-denominated, bitcoin, altcoin, whatever. I don't have to pick up the phone and talk to anyone, don't have to worry about my money being locked up for days while it gets cleared by the ACH process.
Another example is Aave, or Compound. I can take fiat-denominated crypto or bitcoin/ethereum/etc and Lend it in return for a modest interest rate. I can also borrow up to 80% of my collateral in fiat-denominated or other cryptocurrency and leverage that in a trading market. Again, I don't have to talk to anyone or get permission to do so. And I can borrow/lend indefinitely, and withdraw whenever I'd like.
It's alright if this is not valuable to you or your clients. But to say this is not a valuable and novel application is demonstrably false, as > $50 Billion in value is currently held in these applications.
It seems you don't realize that ETH products like USDC are redeemed 1:1 with their fiat counterpart USD through regulated banks. Again, your view is demonstrably wrong, as products "inside" the system have value outside the system.
Unfortunately your view seems to be the majority in HN. Quite disappointing from a supposedly forward thinking community. I'll be hearing the lazy beanie babies or tulips comparison for the next decade.
SBF, the billionaire owner of that company says he plans to donate $100 mil - $1 bil in the next election because it's the most efficient use of money possible:
Another way to look at lobbying is that it helps grow/sustain our economy and the successful companies at the government level. i.e. "if you made it this far (and have the money to show), you've proven to us [the government] that we can depend on you to bolster our economy". It's a self perpetuating economic positive feedback loop.
That view can be used to justify any type of corruption. You're paying a mayor to give you a permit? Proof you're a pillar of the local community. Paying the police not to investigate your sex trafficking? An important part of the local labor market.
There is basically no danger in this. Federal Reserve master accounts and simply accounts at the Federal Reserve Bank(s)- and transactions between FRB member banks are subject to the same SAR, KYC(C) OFAC, and BSA regulations. Truly, integrated banks would be safer not riskier due to the amount of oversight.
I'm honestly a little surprised that cryptospace is even still a thing at this point. No practical uses. Grift. Scams. This is the banking schemes of the 1800s played out with modern machines and cryptography. I genuinely feel sorry for all those people that got rich quick from BitCoin and now are going to have to go back to being, "not rich." Worse yet a critical mass of people still desperately holding on could bolster the price long enough to stall a complete failing of cryptocurrency markets outright.
Who know magic computers monopoly money without government oversight would backfire on everyone? I guess sometimes your velociraptors turn on you.
Believing that the technology is worthless is just as naive as believing the space should have $2T in capital.
There are tons of interesting things you can do with cryptocurrency and blockchains. Most are financial products, but some are just easier ways to develop software. None of this justifies the insane valuations of most coins, but I have built products that would not have been possible in the pre-ethereum world.
For example, who wouldn't want a system that forces banks to track customer balances in a secure, private, and auditable data structure? This is completely possible with cryptography that was researched as a byproduct of cryptocurrency development. It would be a marginal improvement on the existing banking system, but it would provide real, practical use and would improve confidence in the banking system.
I increasingly see this sales pitch as similar to a pyramid scheme schilling vitamin supplements.
Yes, vitamins "have some benefits", but no one wants them. If they cured cancer, sure. But they dont.
Likewise, sure, an international distributed ledger that can compute about as much as a school calculator "has some benefits", but it doesnt cure anything. Least of all "international finance".
Crypto-holders (ie., people in the pyramid scheme) want the debate to be about the technology... so you can't quite see the structure of whats going on.
ie., that there's no demand for the product. No one wants your 100MW blockchain calculator
You're confused about the difference between "something having value" and "something being revolutionary and universally transformative".
People buy vitamins, that is a fact. From walgreens or CVS. I do not buy vitamins, but some people do. I know that most people buying vitamins do not benefit from them. Does it follow that vitamins "have no value"? No, they just have less value than the currently market would suggest.
I'm referring to the marketing of MLM companies around supplements which do heavily imply (or claim) that they have often dramatic and curative benefits.
Customers dont believe this, they dont want supplements from MLMs. But dupes believe it enough that, at least, they buy a warehouse full and start shilling; or otherwise, think that enough other people can be duped.
Now, since there's no actual demand, these dupes are forced to sell to other dupes just the prospect of further selling, not the actual product for its own use. Since there's no actual market, this whole thing collapses ("when the dupes run out") and 95% of people lose money with warehouses full of product they cant sell.
This is, in my view, where crypto is heading. I believe within the year there'll be a lot of impoverished people with wallets full of useless coins: though, of course, we're already there in many cases.
I think this is patently obvious to the 1% of crypto holders who own and run the crypto market. It's a scam.
This has already happened 3 times, and it will keep happening. The dynamic is more complicated than what you're describing.
Crypto isn't a big MLM. Crypto is a family of technologies that make it possible to easily build MLMs.
The analogous thing in traditional MLM is the internet or mail. The difference is that the internet is much more valuable as a technology than crypto. That doesn't mean crypto has 0 value though, it's just that the internet is one of the most valuable things humans have created.
I buy vitamins. It’s because of a vitamin deficiency identified by my yearly doctor visit. When I am good about taking them, my numbers come back good. When I am not, she reports a deficiency again.
I don’t guarantee my life would be worse if I continued my vitamin D deficiency, but my doctor suggested I fix it and CVS sells me the fix. Certainly not a useless product until the scientists tell me my doctor is a quack.
> There are tons of interesting things you can do with cryptocurrency and blockchains.
Interesting? Sure. Useful, economically viable and slowing real problems? After tons of companies spending many billions of dollars in RD, we still have none.
> For example, who wouldn't want a system that forces banks to track customer balances in a secure, private, and auditable data structure?
No one, expect for cryptobros. Tracking balances and solving discrepancies is long solved problem. And it’s not a technical problem. I don’t need super wasteful DB to do that, I need law, procedures and customer service.
The hard part isn't tracking balances. It's reporting, auditing, and security/privacy.
We need laws and procedures, but the barrier to getting operationally intensive things shipped becomes lower with better technology and particularly with standardization. One of the key benefits, if not the main benefit, of blockchain systems is that it forced all the players to agree to a highly detailed and easily testable specification (otherwise their nodes fork). That is an enabling design pattern for inter-bank communication.
I believe the main reason it hasn't materialized is just what you say though. It's not that valuable. But it's clearly not worthless.
> the barrier to getting operationally intensive things shipped becomes lower with better technology and particularly with standardization
100% agree.
> One of the key benefits, if not the main benefit, of blockchain systems is that it forced all the players to agree to a highly detailed and easily testable specification (otherwise their nodes fork)
There’s a lot of, way cheaper and convenient ways of enforcing it.
I disagree, there are not cheaper or more convenient ways. There is overwhelming evidence that building highly standardized financial infrastructure is much cheaper and easier with blockchains than doing it without blockchains.
You can argue that the result of that is mostly scams, because building scams is easy. But clearly crypto made building financial infrastructure cheaper and more convenient. There was absolutely nothing in the world like Uniswap for example, and we were not on a trajectory for something like that to ever be built in traditional finance. If you don't believe that, then I encourage you to look closer at Uniswap. Try to think about it from a purely technical perspective, without the understandable bias earned from its usage for scams, pump and dumps, etc.
Another good analogy is nuclear weapons. Purely as a weapons technology, they made warfare cheaper and easier. The end result of the existence of nuclear weapons may be the opposite (countries spending more to keep up with MAD). But as a technology, they clearly enable specific things that weren't possible before (blowing up cities). Crypto is like that.
Laws are big and complex for 2 reasons:
1. Corruption
2. Most importantly, because real world is complex
Blockchain doesn’t make world simpler. And “cheaper” is just laughable, as whole idea of blockchain and its security is about being as expensive as possible.
>For example, who wouldn't want a system that forces banks to track customer balances in a secure, private, and auditable data structure?
Crypto doesn't force banks to do that.
Also, if it was a real problem, there would be legislation for it since RSA became a thing.
And if it was, having a 3rd-party timestamping server and regular cryptographic signatures would be enough to solve it. No bank in their right mind would burn terawatts of power to prevent an error that has a 0.00001% chance of happening and costs virtually nothing to fix.
Technology from the cryptocurrency world can be used to force banks to do that.
RSA alone isn't enough. How do you use RSA to build this? You can do auditable sums (prove that private balances sum to a public total), but I can't think of a way to do things like proving that a particular debit happened.
> costs virtually nothing to fix.
There is very high system-wide cost to the status quo. Part of the reason that bank errors are so inexpensive to fix is because transfers take 2-5 days.
>I can't think of a way to do things like proving that a particular debit happened.
Prove to whom? Banks have multiple layers of redundancy (including internal logs, paper/PDF statements, etc). So in case of any software error or a single-employee malice, it will be just fine.
>Part of the reason that bank errors are so inexpensive to fix is because transfers take 2-5 days.
That's a feature, not a bug. It gives you time to stop a transaction initiated by someone who stole your identity. With blockchain, you lose keys - you lose coins.
It doesn't have to be that way though. There's nothing inherent about the timescale of 2-5 days that prevents the same level of security and reversibility with shorter transactions. The problem is the lack of coherence, lack of information, and lack of fast technology. It's easy to build a reversible version of BTC with programmable timeouts for reversal, and the timeouts can then be tuned based on transaction size, risk tolerance of the sender, and willingness of a third party to underwrite the transaction risk.
Credit cards basically do this. Part of the reason they are able to is because they gather more data and rely on more sophisticated technology than the banking system. With blockchains, you have another small tool to improve the situation.
> cryptography that was researched as a byproduct of cryptocurrency development
Oh please. What cryptographic advances were made possible by cryptocurrency? Name one. Merkle trees and hash chains aren't exactly rocket science and they predate cryptocurrency by decades.
Not going to defend cryptocurrencies, but there's been huge explosion in formal methods research funded by the money chasing smart contracts and the like.
VDFs, zk-STARK/SNARK, Verkle trees, coinjoin, taproot, ...
There are hundreds and some are already used outside of cryptocurrencies. In 20 years many of them will be. As a person with a background in distributed systems
I'm particularly excited about VDFs and compact cryptographic datastructures because they made developing secure distributed systems much easier.
I built an ICO platform that allowed companies to raise funds and I did not escrow the money or get approval from any financial institution. We operated outside the US. It would have been impossible to do anything remotely similar in terms of UX without crypto. Best alternative would have cost $XX millions to set up and would require users to wire money to an escrow entity. Nobody would have used that. We built ours with 2 engineers and very little capital in less than a month.
So, you’ve built a platform to help scam people (that’s what ICO were) in a way that doesn’t involve financial institutions (that give people at least some protection).
Yeah, that’s what current uses of blockchain are all about.
Regardless of where you stand on the value of financial products, undeniably the technology was enabling. I'm not a luddite, so I put a nonzero value on all new enabling technology even if in practice the technology is currently not used productively.
But this is sort of like saying Moderna has it easy because they punted the hard part of deploying an mRNA vaccine to global shipping and distribution chains that they did not build.
Is that an actual problem that needs solving? How often do real banks make errors in customer account balances? That's never happened to me or anyone I know.
One time, in 1995, Glendale Federal made an error for $-3200 on my account. Confused me with a similar named customer in Turlock. Took two weeks to settle out and another two weeks to reverse the overdraft fees. $3200 was a lot of money for me at the time.
Edit: error rate of 1 per 20 years seems very good to me.
20k is near the floor of what it cost to mine crypto at scale, I think that's why it's a support point. Large miners have capital reserves to hold the Bitcoin if they can't sell it profitably. I'm guessing 2 years runway for well managed large operations. Which means one more 1/2ing in 2024, a price spike, and then it's final collapse 6-12 month later.
> Large miners have capital reserves to hold the Bitcoin if they can't sell it profitably. I'm guessing 2 years runway for well managed large operations.
“Well managed” is the key sentence here. A number of larger miners became addicted to using cheap capital to fuel massive hashrate growth, and it’s coming back to bite them. Riot Blockchain had about one quarter of cash left as of their last filing; they’ve been selling off digital currency holdings into a falling market.
The real scam are central banks. Bitcoin is an attempt to make them obsolete. But if I were a central bank desperately clinging to power and with the ability to create and destroy money with the press of the button I would make bitcoin seem as unstable as possible. The price is the only thing they can manipulate at this point. The fundamentals are solid.
If Bitcoin's price is subject to manipulation like this, then the fundamentals are definitely not solid. If you want to replace central banks with something that isn't under control of governments, I'd think that a central feature of that thing would have to be that it can't be manipulated by governments. Seems like Bitcoin fails that test, if what you are saying is true.
Exactly, either you're a threat to governments and thus need to treat them as adversarial, or you're not. Crypto is in no way safe from state actors, unless those state actors are profiting from it.
The government collects taxes denominated in USD which is enforced with violence. This is why USD is in demand. As soon as this (in case of income tax even unconstitutional) collection mechanism by force fails the dollar becomes worthless over night.
You really need to look into the history of currency of you truly believe any of this.
Currency is worth something because other people are willing to trade it for something useful at a stable exchange rate. Now, having a central bank that controls the currency, and a government that enforces that control, can help protect the stability that gives that currency value in times of economic instability, but that's only occasional interference.
We know this because, in the past when states were weaker and less able to do this, huge swaths of people ignored their state currency, more or less, and used other states' currencies, ones that were more trustworthy (counterfeiting used to be a serious concern) and stable.
Even today there are countries where people are in practice using the US dollar as their currency, ignoring local official currencies, simply because the dollar is recognizable and its price is extremely stable compared to their official legal tender. How does this square with your theory that the dollar would lose all value overnight if the US government stopped requiring it?
It’s funny how unflinchingly the narrative shifted from “bitcoin is an inflation hedge outside of government control” to “the government is manipulating the price of bitcoin through inflation”
A partial list of narrative shifts after each use case/benefit proved to be infeasible:
- Digital cash (volatility, transaction rate, gas fees, etc). Only potential counter argument here is Lightning which essentially compromises on many of the original design goals of Bitcoin and comes with its own set of issues[1] PLUS still has the pesky volatility problem
- Store of value (Volatility)
- Inflation hedge (Volatility, essentially tracks other markets)
- Outside government control (Law enforcement and tax authorities routinely seize, tax, and disrupt cryptocurrencies). There is the “fleeing a dictator” scenario but that’s a very limited use case that in no way supports the current market value.
- Banking the unbanked, remittances (See El Salvador [2]). Money quote from the article:
“There is no experiment where a currency was introduced with such strong incentives and still failed,” Fernando Álvarez, an economist at the University of Chicago
I feel like registering “whatarewecallingbitcointoday.com” or some such to track these.
Those are all made up narratives by random media outlets.
From the beginning there was only one true narrative: "Abolish central banks". Because they are at the core designed to enslave humanity. That is why Bitcoin is created. It was always an attempt to solve a political problem with technology. Not more not less. Will it succeed? I hope so.
I have yet to receive a point by point rebuttal with any kind of real data or sourcing. It always ends up in deflection or something along the lines of a conspiracy theory (any debate of which is infamously unproductive).
I would like for blockchain technology to find its rightful place as a unique solution to a real problem with actual user adoption and meaningful real world impact but after 13 years, substantial investment, and several pivots/rebrands/etc it hasn't been successful at anything (relative to the total potential user base/"addressable market" of 5 billion internet users).
I like to look at it as if Bitcoin (and to a larger extent blockchain) were a single technology startup. Let's call it "Blockchain Inc". If it weren't for the religious fervor of true believers, speculators, "hodlers" doing anything and everything to pump it, etc no investor or group of investors in their right mind would keep pouring untold billions of dollars into Blockchain Inc after its pivoted over half a dozen times, still has essentially no real world use case, and no meaningful user adoption (when compared to other 13 years old startups, platforms, technologies, etc with or without equivalent investment).
It's a failed tech startup being propped up by speculation and its own engine of propaganda and constructed media narrative.
And it completely ignores the bubble that the crypto world created through things like NFTs, whose only value to their owners is the promise that they'll be worth more tomorrow. It's just the digital incarnation of Beanie Babies.
The "everything bubble" which also affected crpyto was created by central banks with the various QE programs and the relentless money printing. Don't blame crypto for creating a bubble.
You can absolutely blame crypto for creating the NFT bubble.
The banks flooded the economy with cash but they didn't tell everyone to start buying NFTs. All of these exchanges, stablecoins and crypto-derivative products were built solely on the self-propagating hype that needed the cheap cash flowing into the system. The banks didn't tell anyone to go buy crypto, the crypto companies did, which effectively tied the performance of the crypto market to the stock market because the average consumer saw crypto as a more enticing speculative investment, not a currency.
If the crypto community was as focused on the fundamentals as you argue, there would be a lot more conversations around not allowing these billion-dollar exchanges creating derivative products with unsustainable rates to capture the market. But they did and the crypto world is where it is today because of it.
The Fed may have cut the trees down, but the crypto community threw them in a pile, doused them in gas and set the whole thing on fire and it wound up burning out of control. How do you blame the Fed for the fire?
Let's just say that I trust the ECB, The Bank of England, The Swiss National Bank or even The Fed a hell of a lot more than all those slick talking shysters shilling crypto.
Bitcoin will never make "fiat" currency obsolete. It's ridiculously volatile, its transactions are irreversible (and therefore a magnet for fraud), it's inconvenient to use, and it doesn't scale. It's also brutally unforgiving in the sense that losing access to your wallet means losing all your money. These things might appeal to a few hardcore anarcho-capitalists or day-traders, but no rational person would choose Bitcoin over the existing banking system.
The volatility is generated by the central banks. They were printing money like there is no tomorrow since 2008. Now they are destroying it again with interest rate hikes and balance sheet reduction.
Bit of title gore here, I was thinking of the security experts that must run the alarm systems at the Fed (what with their precious metal holdings and all) and wondering why access to those experts would be blocked and why crypto companies would need alarms experts anyway…
