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Here's the best possible view of crypto: When the internet first got going, everything worked with protocols. Protocols are open, decentralized, interopable. T

Here's the best possible view of crypto: When the internet first got going, everything worked with protocols. Protocols are open, decentralized, interopable. Think email. Anyone can send an email as long as they follow the protocol. Then people figured out that you can't make any money from protocols. Instead we got platforms: closed, centralized, and most importantly monetizable. Think facebook. Cryptocurrencies are a way to combine open protocols with making money. Instead of building a cloud-storage business, you build a cloud-storage protocol and make money on the coin that is used within that protocol. ICOs are how you fund development of these protocols. Now, in reality, a huge number of coins are borderline useless or outright scams, and the current valuations are absurd. But long-term I think it's a very valuable technology.

dvdhnt 9y ago
I really like your description - it's easy to understand and is brutally honest.
ljoshua 9y ago
For those of us still trying to wrap our heads around the value you described here (btw I do like the level of simplification you've introduced), can you explain how the coin would effectively be used in the cloud-storage protocol you suggested? I'm just not connecting the dots yet.
- tashoecraft 9y ago
  https://sia.tech/ https://sia.tech/
- monadmancer 9y ago
  Protocol operators running "full nodes" are paid in tokens for performing the service outlined in the protocol. The protocols are ultimately developer tools for user facing apps. Most of the user facing apps aren't mature enough to be notable, just like the internet wasn't all that exciting in the early 90s.
  - krrrh 9y ago
    > just like the internet wasn't all that exciting in the early 90s. Anyone who believes this probably wasn’t alive then. Everything we take for granted is built on open and free (as in beer) protocols. The people who created and supported TCP/IP, HTTP, XMPP, etc. figured out ways to have successful careers without a micropayment scheme for basic participation.
    - monadmancer 9y ago
      That is true. And then we ended up with Facebook, Amazon and Google et al to handle the rest. I'll take micropayment schemes over centralized megacorps. At least for now. And personally, I remember a simultaneous mix of excitement and disappointment from the internet of the 90s.
- throwawaycrypto 9y ago
  The coin is how transactions are processed on the protocol and value exchanged. In the cloud storage example given, if I want to hire some storage I would need to have some storageCoin to pay for the storage. Because I'm not hiring the storage from a single centralised place I can't just pay the storage provider in dollars because there isn't one place to pay it. Instead the protocol can distribute the coins to the relevant hosts in the right proportions dynamically and instantly. This wouldn't be possible with something like Visa or invoicing. The second advantage is this allows you to pay exactly for what you use and for how long you use it by effectively streaming coin in exchange for storage. So I can pay for exactly how long I actually used the storage rather than paying in advance for a storage limit or certain amount of storage that then remains empty most of the time. I probably mangled that explanation but maybe it helps.
- bobcostas55 9y ago
  In bitcoin, miners receive coins in proportion to their computational power. A cloud storage protocol might work by paying out coins to miners in proportion to the storage they provide. Storage users get storage by paying coins to the "miners".
monadmancer 9y ago
Exactly. A huge amount of excitement about moving away from closed monolithic platforms to distributed protocol operators paid in tokens. For example, the little guy might be able to make a small income from IPFS/Filecoin that would otherwise be strictly the domain of AWS and other giants.
- Gh0stRAT 9y ago
  I imagine the little guy is going to have a hard time beibg price-competitive with companies that can buy HDDs by the truckload.
xchaotic 9y ago
but why would you pay for the protocol and bother with switching, if you have a good-enough solution with free protocols and paying for services with ad money.
dogma1138 9y ago
Except that no what Bitcoin tried to be it wants to be a currency or a value store it doesn’t rely on the internet nor does it need an open internet bitcoin would work just as well for 99.9999% of its users including the mining syndicates if it would run on a completely closed network.
ebbv 9y ago
Maybe I'm dumb but I don't follow. If I invent a new messenger protocol, how does a cryptocurrency enable me to make money on that protocol better than any other method? Just because I make an ICO for my new protocol? Seems like a bit of wand waving going on in your description there.
- bobcostas55 9y ago
  You certainly have a point: it doesn't make sense for all kinds of protocols. I would say that coins are a good fit for contexts that involve decentralized service provision of some sort. Also in situations that could benefit from a decentralized database (blockchain), though those are surprisingly rare. There actually already exists a coin connected to messaging protocols, Kin. I don't see much practical use for it however.
  - meheleventyone 9y ago
    This feels like it’s going to provide a horrible amount of friction as a user. It’s basically adding multiple use specific currencies to everyday life. I predominately work across pounds, dollars, euros and Icelandic krona the latter for day to day and the rest for occasional transactions. If I have to add to that multiple service tokens just to access storage or chat or services x, y and z it adds a whole lot of trading and market following overhead. Particularly given the volatility we’ve seen in crypto currencies, especially amongst those with niche uses. Further following Bitcoin it seems like the decentralisation aspects are theoretical rather than practical as those able to provide a service such as mining seem to do better at scale and end up centralising anyway.
- s73ver_ 9y ago
  You can issue the ICO first, and then when the money pours in, disappear and you don't have to bother with that pesky "work" part.
- nirv 9y ago
  > If I invent a new messenger protocol, how does a cryptocurrency enable me to make money on that protocol better than any other method? This is my limited understanding: 1) You want to allow users to send and businesses to receive (micro-)payments within your messenger/protocol. 2) You want to allow users donate/vote/gift/award other users/groups/posts with their tokens within your messenger. 3) You want to allow users create custom (chat-)bots which could apply some scripted logic to send/receive tokens; etc. Inventing a new distributed messenger/protocol with cryptocurrency, you essentially create (and own) a new platform with services operating on "virtual money". Rules of money (tokens) distribution in theory must be guaranteed by your protocol implementation (usually presented via whitepaper). If potential future users like your idea (whitepaper), they may invest into your new shiny platform via ICO (with other cryptocurrencies) to get some of your initial (limited) tokens. They want to get them while they cost less than they potentially will cost later, if your platform becomes popular. It's assumed that in the case of an open distributed blockchain platform, amount and belonging of tokens won't be able to be painted by you, but guaranteed by algorithms and public network. We've seen how it works on totally scam projects. And apparently, we'll have a chance to witness how this works out in case of the already popular platform[1]. [1] https://techcrunch.com/2018/01/15/inside-telegrams-ambitious-1-2b-ico-to-create-the-next-ethereum/ https://techcrunch.com/2018/01/15/inside-telegrams-ambitious...
harryh 9y ago
Instead of building a cloud-storage business, you build a cloud-storage protocol and make money on the coin But this makes zero sense! What purpose does the coin serve here? Imagine coins had somehow gotten tied in with email protocols. The person who came up with the protocol somehow gets to magically siphon off money every time someone sends an email? Why? How?
- 16th_hop 9y ago
  Because a protocol with a finite number of coins has an inherent value to it, by virtue of the fact that other people are there and you can only use it if you have a token. Imagine I have a club, and it costs $5 to enter. You can always just create your own club for $2, but it's not a given that people will come. This is how a completely open-source protocol can monetize. The same is true with Bitcoin or Ethereum. You can fork it and make your own, but the majority of the people want to use one of the original protocols, and you can only use the protocol if you pay with the proper protocol token (either BTC or ETH).
  - harryh 9y ago
    Because a protocol with a finite number of coins has an inherent value to it. But not value that can be captured by the creator of the protocol. Let's go back to cloud storage. Sellers of storage sell 1GB-Month for 1 token (or whatever). Buyers of storage eventually run out of tokens because they've given them all to sellers. So they have to purchase the tokens back from sellers for dollars. How much will sellers charge? The cost of storage (plus whatever profit they can get away with). At that point buyers of storage are paying exactly what they'd pay for storage if the token system didn't exist. It's just this goofy middle layer of scrip. There's no magical extra money that the protocol creator can siphon off. Step back and look at the big picture. The only way for a protocol creator to make money is for either sellers of storage to charge less than they otherwise would or for buyers of storage to pay more. Why would either of those two groups ever want to do that?
    - DiNovi 9y ago
      ...uhh, or people could rent storage and get paid a token fee, thus generating revenue
creeble 9y ago
If the protocol is open, why do you need to use a certain coin to use it? Isn't that just the definition of another type of 'closed'?
- aussie1233 9y ago
  Its not closed, since the data and code is out for anyone to use typically, you could even fork and create your own. What is different is the incentive to provide storage and compute for others. Over simplified, you lend your storage and compute (that's called mining) and get paid in crypto tokens in return.
- hmm_really 9y ago
  Because mostly its all about the coin, there are no users, only speculators... ahhh but build it and they will come mentality rules here!
coliveira 9y ago
> build a cloud-storage protocol and make money on the coin that is used within that protocol In that case it is not an open protocol (at least not in spirit). It is better to go with platforms.
- aussie1233 9y ago
  Why is it better? What Ethereum for instance did is genius. It distributes storage and compute across the world to those willing to share their resources and you get paid by doing so. It's a way to drive decentralization, because there is an incentive for mining. Is it perfect? Not quite yet for various reasons (performance, privacy), but its an interesting new paradigm.
WorldMaker 9y ago
The missing symmetry in your own analogy is that Cryptocurrencies themselves are protocols with their own inherent (if not requisite) platform problems. In theory, protocols like the blockchain are open, decentralized, interoperable. Yet in current practice a cryptocurrency only works with platform lock in: if you don't lock people into your platform it isn't monetizable. Market forces push toward closed (artificial scarcity, rising costs for new players to enter the market versus entrenched players/miners/etc) and centralized (central wallets/brokers/exchanges on the one side, complex miner unions as complex political boundaries form on the other side). I'm not sure cryptocurrencies can save the internet from platform problems when they themselves are platforms.
ken 9y ago
> Think email. Anyone can send an email as long as they follow the protocol. Email is not centralized under a single authority, but I disagree that it's so decentralized that "anyone" can do it. The openness worked so well in the short-term that spammers and scammers started using it, so all the major email providers started running serious spam filtering. As an individual, I can't realistically set up a mail server to send email to anyone, like I could in 1995, since Gmail will reject it. SMTP is a pretty simple protocol but now I have to use major third-party services for both sending and receiving internet email. In the case of email, that's fine, because there was never a centralized alternative. In the case of currency, what's the point? Isn't it just going to circle back around to (mostly) centralization again, and so what was the point?
- vog 9y ago
  > As an individual, I can't realistically set up a mail server to send email to anyone, like I could in 1995, since Gmail will reject it. I'm an individual who runs his own mailserver and all emails are accepted by Gmail. Sure, today a mailserver must be absolutely properly configured. Not just to play with Gmail, but with all other players as well. The HELO string, DNS settings and especially reverse DNS settings must be correct. Don't run it in a non-dynamic IP range. And for IPv6, better have correct SPF/whatever records. This is initial effort, for sure, but absolutely doable for an idividual who plays with their own server/VM anyway. Pro tip: It is more fun if you share the infrastructure with friends. And there are properly configured projects with ready-to-use VM images and good tutorials out there. In some sense it is even easier than HTTPS, because for SMTP+TLS and IMAP+TLS a self-signed certificate is sufficient, you don't need Let's Encrypt certificates, let alone pay dubious CAs for certs if you are commercially active.
- ZWoz 9y ago
  I am too individual running my own mail server and gmail don't reject my mails. I don't even have SPF or DKIM on my domains. I think most common mistake is making mail server out of cheap VPS. Don't do that. Your IP reputation depends your digital neighborhood. Blocks happen even /16 level, entire VPS provider networks are on special lists in some mailservice providers. Additionally, those IP-s are reused, so there is nice chance to get some hit-and-run spammer IP and that is lots of work do clean that up.
grysledman 9y ago
This explains your point about protocols vs. platforms pretty well I think: https://key2.bluematrix.com/docs/pdf/34dda769-d83d-4504-beed-372b9569e6b4.pdf https://key2.bluematrix.com/docs/pdf/34dda769-d83d-4504-beed...
loceng 9y ago
The main goal I had heard is that the incentivized structure of most crypto-assets will lead to everyone collaborating together - the alternate being the state/government mandating collaboration. The solution is the later, if blockchain and an immutable ledger is the real value and goal, and the problem with the first is the same incentive structure leads to a lot of bad behaviour and unreasonably transfers wealth (or could say distributes or could say steals from uneducated people) weighted towards the earlier adopters; it mimics a decentralized and global Ponzi and Pyramid scheme, the decentralized and global part are what has made it reach the point it has and has allowed marketers and schemers from around the world to collaborate - the truth if ignoring the whitewashing done by spouting all of the supposed benefits.

dvdhnt 9y ago

I really like your description - it's easy to understand and is brutally honest.

ljoshua 9y ago

For those of us still trying to wrap our heads around the value you described here (btw I do like the level of simplification you've introduced), can you explain how the coin would effectively be used in the cloud-storage protocol you suggested? I'm just not connecting the dots yet.

tashoecraft 9y ago
https://sia.tech/ https://sia.tech/
monadmancer 9y ago
Protocol operators running "full nodes" are paid in tokens for performing the service outlined in the protocol. The protocols are ultimately developer tools for user facing apps. Most of the user facing apps aren't mature enough to be notable, just like the internet wasn't all that exciting in the early 90s.
- krrrh 9y ago
  > just like the internet wasn't all that exciting in the early 90s. Anyone who believes this probably wasn’t alive then. Everything we take for granted is built on open and free (as in beer) protocols. The people who created and supported TCP/IP, HTTP, XMPP, etc. figured out ways to have successful careers without a micropayment scheme for basic participation.
  - monadmancer 9y ago
    That is true. And then we ended up with Facebook, Amazon and Google et al to handle the rest. I'll take micropayment schemes over centralized megacorps. At least for now. And personally, I remember a simultaneous mix of excitement and disappointment from the internet of the 90s.
throwawaycrypto 9y ago
The coin is how transactions are processed on the protocol and value exchanged. In the cloud storage example given, if I want to hire some storage I would need to have some storageCoin to pay for the storage. Because I'm not hiring the storage from a single centralised place I can't just pay the storage provider in dollars because there isn't one place to pay it. Instead the protocol can distribute the coins to the relevant hosts in the right proportions dynamically and instantly. This wouldn't be possible with something like Visa or invoicing. The second advantage is this allows you to pay exactly for what you use and for how long you use it by effectively streaming coin in exchange for storage. So I can pay for exactly how long I actually used the storage rather than paying in advance for a storage limit or certain amount of storage that then remains empty most of the time. I probably mangled that explanation but maybe it helps.
bobcostas55 9y ago
In bitcoin, miners receive coins in proportion to their computational power. A cloud storage protocol might work by paying out coins to miners in proportion to the storage they provide. Storage users get storage by paying coins to the "miners".

monadmancer 9y ago

Exactly. A huge amount of excitement about moving away from closed monolithic platforms to distributed protocol operators paid in tokens. For example, the little guy might be able to make a small income from IPFS/Filecoin that would otherwise be strictly the domain of AWS and other giants.

Gh0stRAT 9y ago
I imagine the little guy is going to have a hard time beibg price-competitive with companies that can buy HDDs by the truckload.

xchaotic 9y ago

but why would you pay for the protocol and bother with switching, if you have a good-enough solution with free protocols and paying for services with ad money.

dogma1138 9y ago

Except that no what Bitcoin tried to be it wants to be a currency or a value store it doesn’t rely on the internet nor does it need an open internet bitcoin would work just as well for 99.9999% of its users including the mining syndicates if it would run on a completely closed network.

ebbv 9y ago

Maybe I'm dumb but I don't follow. If I invent a new messenger protocol, how does a cryptocurrency enable me to make money on that protocol better than any other method? Just because I make an ICO for my new protocol? Seems like a bit of wand waving going on in your description there.

bobcostas55 9y ago
You certainly have a point: it doesn't make sense for all kinds of protocols. I would say that coins are a good fit for contexts that involve decentralized service provision of some sort. Also in situations that could benefit from a decentralized database (blockchain), though those are surprisingly rare. There actually already exists a coin connected to messaging protocols, Kin. I don't see much practical use for it however.
- meheleventyone 9y ago
  This feels like it’s going to provide a horrible amount of friction as a user. It’s basically adding multiple use specific currencies to everyday life. I predominately work across pounds, dollars, euros and Icelandic krona the latter for day to day and the rest for occasional transactions. If I have to add to that multiple service tokens just to access storage or chat or services x, y and z it adds a whole lot of trading and market following overhead. Particularly given the volatility we’ve seen in crypto currencies, especially amongst those with niche uses. Further following Bitcoin it seems like the decentralisation aspects are theoretical rather than practical as those able to provide a service such as mining seem to do better at scale and end up centralising anyway.
s73ver_ 9y ago
You can issue the ICO first, and then when the money pours in, disappear and you don't have to bother with that pesky "work" part.
nirv 9y ago
> If I invent a new messenger protocol, how does a cryptocurrency enable me to make money on that protocol better than any other method? This is my limited understanding: 1) You want to allow users to send and businesses to receive (micro-)payments within your messenger/protocol. 2) You want to allow users donate/vote/gift/award other users/groups/posts with their tokens within your messenger. 3) You want to allow users create custom (chat-)bots which could apply some scripted logic to send/receive tokens; etc. Inventing a new distributed messenger/protocol with cryptocurrency, you essentially create (and own) a new platform with services operating on "virtual money". Rules of money (tokens) distribution in theory must be guaranteed by your protocol implementation (usually presented via whitepaper). If potential future users like your idea (whitepaper), they may invest into your new shiny platform via ICO (with other cryptocurrencies) to get some of your initial (limited) tokens. They want to get them while they cost less than they potentially will cost later, if your platform becomes popular. It's assumed that in the case of an open distributed blockchain platform, amount and belonging of tokens won't be able to be painted by you, but guaranteed by algorithms and public network. We've seen how it works on totally scam projects. And apparently, we'll have a chance to witness how this works out in case of the already popular platform[1]. [1] https://techcrunch.com/2018/01/15/inside-telegrams-ambitious-1-2b-ico-to-create-the-next-ethereum/ https://techcrunch.com/2018/01/15/inside-telegrams-ambitious...

harryh 9y ago

Instead of building a cloud-storage business, you build a cloud-storage protocol and make money on the coin But this makes zero sense! What purpose does the coin serve here? Imagine coins had somehow gotten tied in with email protocols. The person who came up with the protocol somehow gets to magically siphon off money every time someone sends an email? Why? How?

16th_hop 9y ago
Because a protocol with a finite number of coins has an inherent value to it, by virtue of the fact that other people are there and you can only use it if you have a token. Imagine I have a club, and it costs $5 to enter. You can always just create your own club for $2, but it's not a given that people will come. This is how a completely open-source protocol can monetize. The same is true with Bitcoin or Ethereum. You can fork it and make your own, but the majority of the people want to use one of the original protocols, and you can only use the protocol if you pay with the proper protocol token (either BTC or ETH).
- harryh 9y ago
  Because a protocol with a finite number of coins has an inherent value to it. But not value that can be captured by the creator of the protocol. Let's go back to cloud storage. Sellers of storage sell 1GB-Month for 1 token (or whatever). Buyers of storage eventually run out of tokens because they've given them all to sellers. So they have to purchase the tokens back from sellers for dollars. How much will sellers charge? The cost of storage (plus whatever profit they can get away with). At that point buyers of storage are paying exactly what they'd pay for storage if the token system didn't exist. It's just this goofy middle layer of scrip. There's no magical extra money that the protocol creator can siphon off. Step back and look at the big picture. The only way for a protocol creator to make money is for either sellers of storage to charge less than they otherwise would or for buyers of storage to pay more. Why would either of those two groups ever want to do that?
  - DiNovi 9y ago
    ...uhh, or people could rent storage and get paid a token fee, thus generating revenue

creeble 9y ago

If the protocol is open, why do you need to use a certain coin to use it? Isn't that just the definition of another type of 'closed'?

aussie1233 9y ago
Its not closed, since the data and code is out for anyone to use typically, you could even fork and create your own. What is different is the incentive to provide storage and compute for others. Over simplified, you lend your storage and compute (that's called mining) and get paid in crypto tokens in return.
hmm_really 9y ago
Because mostly its all about the coin, there are no users, only speculators... ahhh but build it and they will come mentality rules here!

coliveira 9y ago

> build a cloud-storage protocol and make money on the coin that is used within that protocol In that case it is not an open protocol (at least not in spirit). It is better to go with platforms.

aussie1233 9y ago
Why is it better? What Ethereum for instance did is genius. It distributes storage and compute across the world to those willing to share their resources and you get paid by doing so. It's a way to drive decentralization, because there is an incentive for mining. Is it perfect? Not quite yet for various reasons (performance, privacy), but its an interesting new paradigm.

WorldMaker 9y ago

The missing symmetry in your own analogy is that Cryptocurrencies themselves are protocols with their own inherent (if not requisite) platform problems. In theory, protocols like the blockchain are open, decentralized, interoperable. Yet in current practice a cryptocurrency only works with platform lock in: if you don't lock people into your platform it isn't monetizable. Market forces push toward closed (artificial scarcity, rising costs for new players to enter the market versus entrenched players/miners/etc) and centralized (central wallets/brokers/exchanges on the one side, complex miner unions as complex political boundaries form on the other side). I'm not sure cryptocurrencies can save the internet from platform problems when they themselves are platforms.

ken 9y ago

> Think email. Anyone can send an email as long as they follow the protocol. Email is not centralized under a single authority, but I disagree that it's so decentralized that "anyone" can do it. The openness worked so well in the short-term that spammers and scammers started using it, so all the major email providers started running serious spam filtering. As an individual, I can't realistically set up a mail server to send email to anyone, like I could in 1995, since Gmail will reject it. SMTP is a pretty simple protocol but now I have to use major third-party services for both sending and receiving internet email. In the case of email, that's fine, because there was never a centralized alternative. In the case of currency, what's the point? Isn't it just going to circle back around to (mostly) centralization again, and so what was the point?

vog 9y ago
> As an individual, I can't realistically set up a mail server to send email to anyone, like I could in 1995, since Gmail will reject it. I'm an individual who runs his own mailserver and all emails are accepted by Gmail. Sure, today a mailserver must be absolutely properly configured. Not just to play with Gmail, but with all other players as well. The HELO string, DNS settings and especially reverse DNS settings must be correct. Don't run it in a non-dynamic IP range. And for IPv6, better have correct SPF/whatever records. This is initial effort, for sure, but absolutely doable for an idividual who plays with their own server/VM anyway. Pro tip: It is more fun if you share the infrastructure with friends. And there are properly configured projects with ready-to-use VM images and good tutorials out there. In some sense it is even easier than HTTPS, because for SMTP+TLS and IMAP+TLS a self-signed certificate is sufficient, you don't need Let's Encrypt certificates, let alone pay dubious CAs for certs if you are commercially active.
ZWoz 9y ago
I am too individual running my own mail server and gmail don't reject my mails. I don't even have SPF or DKIM on my domains. I think most common mistake is making mail server out of cheap VPS. Don't do that. Your IP reputation depends your digital neighborhood. Blocks happen even /16 level, entire VPS provider networks are on special lists in some mailservice providers. Additionally, those IP-s are reused, so there is nice chance to get some hit-and-run spammer IP and that is lots of work do clean that up.

grysledman 9y ago

This explains your point about protocols vs. platforms pretty well I think: https://key2.bluematrix.com/docs/pdf/34dda769-d83d-4504-beed-372b9569e6b4.pdf https://key2.bluematrix.com/docs/pdf/34dda769-d83d-4504-beed...

loceng 9y ago

The main goal I had heard is that the incentivized structure of most crypto-assets will lead to everyone collaborating together - the alternate being the state/government mandating collaboration. The solution is the later, if blockchain and an immutable ledger is the real value and goal, and the problem with the first is the same incentive structure leads to a lot of bad behaviour and unreasonably transfers wealth (or could say distributes or could say steals from uneducated people) weighted towards the earlier adopters; it mimics a decentralized and global Ponzi and Pyramid scheme, the decentralized and global part are what has made it reach the point it has and has allowed marketers and schemers from around the world to collaborate - the truth if ignoring the whitewashing done by spouting all of the supposed benefits.