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The abstractions and tech which cryptocurrency works on is fragile in most of the same ways as the layers that came before it (credit cards/banks/etc). Try to

by foxhop 9y ago

The abstractions and tech which cryptocurrency works on is fragile in most of the same ways as the layers that came before it (credit cards/banks/etc). Try to look at all this holistically. How many people and resources do we dedicate on this planet to keep track of money, economy, mine the coins, cash the checks, swipe the cards, keep the lines working? All of these abstractions make trade faster and more liquid but honestly it really feels like dimished returns in the grand scheme of things. So many people make money by keeping track of money. So much resources. I can't even fathom it. Bankers, store clerks, amazon servers, politicians, Dunbar, Stock markets, its crazy. How much do we allocate to this cause, the cause of keeping track of "who owns what"? This is not rhetorical, If I had to guess, I would guess that 70% of our resources and jobs are dedicated to this nonsense. Just think we are mining coal out of the real ground just to mine these "valuable" ones and zeros. What the actual fuck? It all just seems like a waste. Use my empty clock cycles to mine and keep track of everyone's virtual coins? I was behind folding proteins and SETI, and all the other distributed computing ideas. It felt meaningful, like I could help change the world and help raise up the human condition... Thanks to this post, I just learned what "Tethers" are, and I have to say, I'm so fucking disappointed with this part of the industry. One of the early promises of cryptocurrency was to "sick it to the man and governments". Now its powered largely by greed and consuming our most important resources in breakneck speeds. I wish you all luck this this "investment", hopefully the planet will survive this next abstraction of "money".

pjc50 9y ago
> I would guess that 70% of our resources and jobs are dedicated to this nonsense I think that's a wild overstatement, even if you're including every kind of management and public service job in the world.
20after4 9y ago
And then there is the whole "root of all evil" thing.
hvk 9y ago
Without making a comment on the crypto/tether aspect, I just want to express that it seems to me that the "cause of keeping track of 'who owns what'", as you put it, is precisely the singular technological achievement which has enabled the "human condition" to evolve to its current state. Money is literally the decentralized, asynchronous, dynamic, and continuous computation that has evolved to process the combinatorial coordination of signals/information on resources between 7+ billion unfathomably complex and independent agents. To me, the staggering thing wouldn't be that "70% of our resources and jobs are dedicated to this nonsense", but rather that the technology known as money is so incredibly efficient that it leaves 30% surplus (in this example) for society to further grow.
- shobith 9y ago
  > Money is literally the decentralized, asynchronous, dynamic, and continuous computation that has evolved to process the combinatorial coordination of signals/information on resources between 7+ billion unfathomably complex and independent agents. I liked that thought, however, I don't agree with the sentence that followed it. We can do way better than that, if we're designing the "next gen" currency, it better give us way more productivity.
- Nursie 9y ago
  Really? You really think that having only 30% of output go into actual, productive endeavour would be a good thing? It just screams of a completely broken system to me, and inefficiency. I could understand if your attitude was that, well, it seems it had to be this way, it's the best we can do. But to actually celebrate a ~2:1 ratio of fund-shuffling busywork over production seems crazy. Don't get me wrong, I work in the sector right now, I'm happy to get paid for it, and I can see a use for what I'm doing (exposing data for use in new services) but really not so much when it comes to using distributed supercomputers and thousands of coders to try to predict tiny market movements. And really not "burning energy as fast as possible to (adversarially) compute transactions on a shared ledger".
  - jackstraw14 9y ago
    Just what exactly is your definition of an "actual, productive endeavour"? Is it really that ridiculous that we dedicate a lot of resources to keeping track of who owns what? We're a mostly capitalist society, right? In a system where private ownership reigns supreme, you absolutely need to keep track of who owns what or we'd have even greater wealth inequality than we have now. Personally, I'd like to see some kind of anarcho-syndicalist structure but let's be honest our greatx10 grandchildren will probably still be capitalists. This article is a little over-the-top in some spots, but the main point is correct. Cryptocurrency is an innovation in accounting: https://hackernoon.com/why-everyone-missed-the-most-important-invention-in-the-last-500-years-c90b0151c169 https://hackernoon.com/why-everyone-missed-the-most-importan... Cryptocurrencies are trying to make trustless transactions a reality so we don't need a human workforce to keep it all mostly accurate. Don't get too disappointed yet, this stuff is just getting started.
shobith 9y ago
I understand your sentiment. However, I think about it slightly differently -- crypto currencies (and their likes) are just an attempt to replace man-power with computer-power. We need someone to enforce the rules without human intervention, hence, freeing up more people to do stuff that doesn't involve managing the abstraction of money. edit: When we imagine "mining" in this realm, it'd help to think in terms of mining abstract resources like cost for verification of a transaction, rather than tangible resources like coal.
- foxhop 9y ago
  Most of the other layers of abstractions and tech are still present. We literally are mining coal to burn it in powerplants to energize servers and GPUS to waste clock cycles to find "coins". The world is the realm and how we use its people and resources matters, especially when its to just create more entropy faster then natural systems.
  - shobith 9y ago
    > We literally are mining coal to burn it in powerplants to energize servers and GPUS to waste clock cycles to find "coins". I'm curious to know what the carbon footprint of a human is, that way we can compare it to the GPUs doing an equivalent amount of work (which I think will be tricky to determine in the first place). > The world is the realm and how we use its people and resources matters, especially when its to just create more entropy faster then natural systems if anything, we're pushing entropy away, we're tending towards order not away.
    - foxhop 9y ago
      Natural systems self renew. Mining coal to mine bitcoin isn't anywhere close. And the legacy systems from barter to bitcoin are all still around.
      - shobith 9y ago
        I agree, we should stop generating electricity using fossil fuels. That said, I don't think it's right to just short the connection between "coal" and "bitcoin", we aren't mining coal to get bitcoins, it just so happens that majority of the electricity generated is through coal and mining uses electricity, so does our conversation on the internet. > And the legacy systems from barter to bitcoin are all still around. I'm not sure I get your point here. At some point, money of any form will be exchanged for goods or services.
cup-of-tea 9y ago
Countries like the UK are dominated by the business of deciding "who owns what". Of course the people running the system are "earning" a whole lot of money for themselves. But money is a strange thing. Almost everyone you speak to doesn't understand it. People think the money itself---the bank notes and numbers in an app---are "worth" something. The system itself does have value because it enables asynchronous trade, which seems to be a good thing. But when you tell people that the numbers in their bank account were just created from thin air by some bank who lent someone money at one time, their eyes glaze over. When you look around it is obvious that there really are people who are "good with money", and people who are not. Who knows if the poor understanding is intrinsic or has been nurtured by the finance sector. But if we accept that money is a good thing and that some people are bad with it, then that does mean the finance sector has some value. Bitcoin has long been about greed, unfortunately. In the beginning it seemed like a majority were in it because they saw the value of trustless electronic cash. A system much like gold but completely electronic and completely accurate. But it hasn't been about that for a while. Today you can't even move BTC around due to high transaction fees. I can't believe that the current market cap reprents the value in the current system.
whiskers08xmt 9y ago
Proof of work was the first, crude consensus algorithm for crypto-currencies. A lot of more eco-friendly consensus algorithms have been proposed. Ethereum, the second largest crypto-currency in the world, is currently moving towards a Proof-of-stake consensus algorithm, instead of the old proof-of-work one. Don't forget that decentralized currency is a rather new technology, and is constantly seeing progress being made on all fronts. You can even mine Grid coins doing SETI and Protein folding work!
- VMG 9y ago
  > Ethereum [...] is currently moving * has been moving for years with no end in sight
infinity0 9y ago
I disagree with the approach to just say "this all sucks". It sucks in particular ways, but I do agree with the other comment that this system has gotten humanity this far, so there are certain benefits to it. I hope in the future we'll have better systems than money to be able to allocate resources. So we need to understand why part of it sucks, why part of it is great, and develop better alternatives that are also great but suck less. For example, it is important to keep track of who owes what to whom, otherwise people can't trust each other to make promises on a large scale with strangers. It's less good that people can gain a lot of profit simply by manipulating numbers and moving financial instruments around. Part of this stems from all value judgements being collapsed down into a single number which of course can never be self-consistent [1], part of it stems from informational differences between actors and other real-world deviations away from what a "perfectly-liquid" market should look like. If financial activity was truly a "market optimisation" mechanism, we ought to be able to replace the entire thing with a neutral algorithm and get rid of bankers and personal profits here completely. [1] you cannot totally-order a 2-vector (and in general a n-vector) so that the ordering obeys the neighbourhood principle
parasubvert 9y ago
The global financial sector is about 13-19% of the global economy, and 20-30% of the global services sector: https://www.investopedia.com/ask/answers/030515/what-percentage-global-economy-comprised-financial-services-sector.asp https://www.investopedia.com/ask/answers/030515/what-percent... Which is higher than it should be, but thankfully not 70%... The above probably includes the accounting industry but not all employee accountants/cashiers embedded in all companies, but even if it did, it would move the needle only a bit (maybe 10% of employees?)
nadam 9y ago
Proof of work is not the only scheme to ensure consensus. There are multiple projects based on some kind of proof of stake. One of the most promising such projects is EOS in my opinion. I suggest you not to gain knowledge about cryptocurrencies on HN. Yes, cryptocurrency forums may be an echo chamber, but HN seems to be the other way around. Lot of HN-ers are extremely cynical about cryptocurrencies, so you will mostly hear the bad news here. Reality is not as black and white as most commenters here suggest.
- wyldfire 9y ago
  New coins using proof-of-stake should look to Peercoin for guidance. It's the oldest PoS coin, had no premine/developer fee. (note that it does use PoW for distribution). > Lot of HN-ers are extremely cynical about cryptocurrencies I think cryptocoins are great but we can all see folks dumping their money into assets that they have no hope of understanding, guided by FOMO. As a whole it seems like there's not enough cynicism.
wyldfire 9y ago
> One of the early promises of cryptocurrency was to "sick it to the man and governments". Now its powered largely by greed and consuming our most important resources in breakneck speeds. There is a really critical distinction between truly trustless currencies like bitcoin and "managed" [centralized, trusted] assets like the ones Ethereum offers. Interesting that once you start to grant some amount of trust there are options that don't leverage proof-of-work at all, so the waste is not necessarily a concern. Proof-of-work is "only" necessary if you want trustless coin w/egalitarian distribution. Some folks would argue that it's not necessary to be truly trustless (perhaps bootstrapping a new bitcoin node could suffer a DoS from a sybil false-chain attack, at which point you would trust someone authoritative's copy of the blockchain). No matter how you slice it, you should be very, very suspicious of any new cryptocurrency and super extremely suspicious of any new "crypto-asset".

by foxhop 9y ago

pjc50 9y ago

> I would guess that 70% of our resources and jobs are dedicated to this nonsense I think that's a wild overstatement, even if you're including every kind of management and public service job in the world.

20after4 9y ago

And then there is the whole "root of all evil" thing.

hvk 9y ago

Without making a comment on the crypto/tether aspect, I just want to express that it seems to me that the "cause of keeping track of 'who owns what'", as you put it, is precisely the singular technological achievement which has enabled the "human condition" to evolve to its current state. Money is literally the decentralized, asynchronous, dynamic, and continuous computation that has evolved to process the combinatorial coordination of signals/information on resources between 7+ billion unfathomably complex and independent agents. To me, the staggering thing wouldn't be that "70% of our resources and jobs are dedicated to this nonsense", but rather that the technology known as money is so incredibly efficient that it leaves 30% surplus (in this example) for society to further grow.

shobith 9y ago
> Money is literally the decentralized, asynchronous, dynamic, and continuous computation that has evolved to process the combinatorial coordination of signals/information on resources between 7+ billion unfathomably complex and independent agents. I liked that thought, however, I don't agree with the sentence that followed it. We can do way better than that, if we're designing the "next gen" currency, it better give us way more productivity.
Nursie 9y ago
Really? You really think that having only 30% of output go into actual, productive endeavour would be a good thing? It just screams of a completely broken system to me, and inefficiency. I could understand if your attitude was that, well, it seems it had to be this way, it's the best we can do. But to actually celebrate a ~2:1 ratio of fund-shuffling busywork over production seems crazy. Don't get me wrong, I work in the sector right now, I'm happy to get paid for it, and I can see a use for what I'm doing (exposing data for use in new services) but really not so much when it comes to using distributed supercomputers and thousands of coders to try to predict tiny market movements. And really not "burning energy as fast as possible to (adversarially) compute transactions on a shared ledger".
- jackstraw14 9y ago
  Just what exactly is your definition of an "actual, productive endeavour"? Is it really that ridiculous that we dedicate a lot of resources to keeping track of who owns what? We're a mostly capitalist society, right? In a system where private ownership reigns supreme, you absolutely need to keep track of who owns what or we'd have even greater wealth inequality than we have now. Personally, I'd like to see some kind of anarcho-syndicalist structure but let's be honest our greatx10 grandchildren will probably still be capitalists. This article is a little over-the-top in some spots, but the main point is correct. Cryptocurrency is an innovation in accounting: https://hackernoon.com/why-everyone-missed-the-most-important-invention-in-the-last-500-years-c90b0151c169 https://hackernoon.com/why-everyone-missed-the-most-importan... Cryptocurrencies are trying to make trustless transactions a reality so we don't need a human workforce to keep it all mostly accurate. Don't get too disappointed yet, this stuff is just getting started.

shobith 9y ago

I understand your sentiment. However, I think about it slightly differently -- crypto currencies (and their likes) are just an attempt to replace man-power with computer-power. We need someone to enforce the rules without human intervention, hence, freeing up more people to do stuff that doesn't involve managing the abstraction of money. edit: When we imagine "mining" in this realm, it'd help to think in terms of mining abstract resources like cost for verification of a transaction, rather than tangible resources like coal.

foxhop 9y ago
Most of the other layers of abstractions and tech are still present. We literally are mining coal to burn it in powerplants to energize servers and GPUS to waste clock cycles to find "coins". The world is the realm and how we use its people and resources matters, especially when its to just create more entropy faster then natural systems.
- shobith 9y ago
  > We literally are mining coal to burn it in powerplants to energize servers and GPUS to waste clock cycles to find "coins". I'm curious to know what the carbon footprint of a human is, that way we can compare it to the GPUs doing an equivalent amount of work (which I think will be tricky to determine in the first place). > The world is the realm and how we use its people and resources matters, especially when its to just create more entropy faster then natural systems if anything, we're pushing entropy away, we're tending towards order not away.
  - foxhop 9y ago
    Natural systems self renew. Mining coal to mine bitcoin isn't anywhere close. And the legacy systems from barter to bitcoin are all still around.
    - shobith 9y ago
      I agree, we should stop generating electricity using fossil fuels. That said, I don't think it's right to just short the connection between "coal" and "bitcoin", we aren't mining coal to get bitcoins, it just so happens that majority of the electricity generated is through coal and mining uses electricity, so does our conversation on the internet. > And the legacy systems from barter to bitcoin are all still around. I'm not sure I get your point here. At some point, money of any form will be exchanged for goods or services.

cup-of-tea 9y ago

Countries like the UK are dominated by the business of deciding "who owns what". Of course the people running the system are "earning" a whole lot of money for themselves. But money is a strange thing. Almost everyone you speak to doesn't understand it. People think the money itself---the bank notes and numbers in an app---are "worth" something. The system itself does have value because it enables asynchronous trade, which seems to be a good thing. But when you tell people that the numbers in their bank account were just created from thin air by some bank who lent someone money at one time, their eyes glaze over. When you look around it is obvious that there really are people who are "good with money", and people who are not. Who knows if the poor understanding is intrinsic or has been nurtured by the finance sector. But if we accept that money is a good thing and that some people are bad with it, then that does mean the finance sector has some value. Bitcoin has long been about greed, unfortunately. In the beginning it seemed like a majority were in it because they saw the value of trustless electronic cash. A system much like gold but completely electronic and completely accurate. But it hasn't been about that for a while. Today you can't even move BTC around due to high transaction fees. I can't believe that the current market cap reprents the value in the current system.

whiskers08xmt 9y ago

Proof of work was the first, crude consensus algorithm for crypto-currencies. A lot of more eco-friendly consensus algorithms have been proposed. Ethereum, the second largest crypto-currency in the world, is currently moving towards a Proof-of-stake consensus algorithm, instead of the old proof-of-work one. Don't forget that decentralized currency is a rather new technology, and is constantly seeing progress being made on all fronts. You can even mine Grid coins doing SETI and Protein folding work!

VMG 9y ago
> Ethereum [...] is currently moving * has been moving for years with no end in sight

infinity0 9y ago

I disagree with the approach to just say "this all sucks". It sucks in particular ways, but I do agree with the other comment that this system has gotten humanity this far, so there are certain benefits to it. I hope in the future we'll have better systems than money to be able to allocate resources. So we need to understand why part of it sucks, why part of it is great, and develop better alternatives that are also great but suck less. For example, it is important to keep track of who owes what to whom, otherwise people can't trust each other to make promises on a large scale with strangers. It's less good that people can gain a lot of profit simply by manipulating numbers and moving financial instruments around. Part of this stems from all value judgements being collapsed down into a single number which of course can never be self-consistent [1], part of it stems from informational differences between actors and other real-world deviations away from what a "perfectly-liquid" market should look like. If financial activity was truly a "market optimisation" mechanism, we ought to be able to replace the entire thing with a neutral algorithm and get rid of bankers and personal profits here completely. [1] you cannot totally-order a 2-vector (and in general a n-vector) so that the ordering obeys the neighbourhood principle

parasubvert 9y ago

The global financial sector is about 13-19% of the global economy, and 20-30% of the global services sector: https://www.investopedia.com/ask/answers/030515/what-percentage-global-economy-comprised-financial-services-sector.asp https://www.investopedia.com/ask/answers/030515/what-percent... Which is higher than it should be, but thankfully not 70%... The above probably includes the accounting industry but not all employee accountants/cashiers embedded in all companies, but even if it did, it would move the needle only a bit (maybe 10% of employees?)

nadam 9y ago

Proof of work is not the only scheme to ensure consensus. There are multiple projects based on some kind of proof of stake. One of the most promising such projects is EOS in my opinion. I suggest you not to gain knowledge about cryptocurrencies on HN. Yes, cryptocurrency forums may be an echo chamber, but HN seems to be the other way around. Lot of HN-ers are extremely cynical about cryptocurrencies, so you will mostly hear the bad news here. Reality is not as black and white as most commenters here suggest.

wyldfire 9y ago
New coins using proof-of-stake should look to Peercoin for guidance. It's the oldest PoS coin, had no premine/developer fee. (note that it does use PoW for distribution). > Lot of HN-ers are extremely cynical about cryptocurrencies I think cryptocoins are great but we can all see folks dumping their money into assets that they have no hope of understanding, guided by FOMO. As a whole it seems like there's not enough cynicism.

wyldfire 9y ago

> One of the early promises of cryptocurrency was to "sick it to the man and governments". Now its powered largely by greed and consuming our most important resources in breakneck speeds. There is a really critical distinction between truly trustless currencies like bitcoin and "managed" [centralized, trusted] assets like the ones Ethereum offers. Interesting that once you start to grant some amount of trust there are options that don't leverage proof-of-work at all, so the waste is not necessarily a concern. Proof-of-work is "only" necessary if you want trustless coin w/egalitarian distribution. Some folks would argue that it's not necessary to be truly trustless (perhaps bootstrapping a new bitcoin node could suffer a DoS from a sybil false-chain attack, at which point you would trust someone authoritative's copy of the blockchain). No matter how you slice it, you should be very, very suspicious of any new cryptocurrency and super extremely suspicious of any new "crypto-asset".