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I don't understand this. I don't understand any of it. I don't understand cryptocurrencies. I don't understand what problems they really solve. > "Ethereum

I don't understand this. I don't understand any of it. I don't understand cryptocurrencies. I don't understand what problems they really solve. > "Ethereum is open access to digital money and data-friendly services for everyone – no matter your background or location. It's a community-built technology behind the cryptocurrency ether (ETH) and thousands of applications you can use today." I can do all these things already. > Ethereum is a technology that lets you send cryptocurrency to anyone for a small fee. It also powers applications that everyone can use and no one can take down. I don't have this need ever, to be frank. Who really does, looking at the larger population? > It's the world's programmable blockchain. I don't understand what this means. What does this do for real-life applications? What problem / which problems are being solved here?

RikNieu 6y ago
I feel that no one is using crypto currency for it's original intended purpose, and in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions. Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. But alas.
- dylkil 6y ago
  >Everyone just seems to want to use it like gold, to store wealth or speculate with. Except ethereum has a decentralized composable financial ecosystem gaining traction as we speak with over $15b locked up. [1]https://blog.coinbase.com/a-beginners-guide-to-decentralized-finance-defi-574c68ff43c4?gi=137fd23cc28f https://blog.coinbase.com/a-beginners-guide-to-decentralized... [2]https://defipulse.com/ https://defipulse.com/
- twox2 6y ago
  Well, it's very useful for LARGE and semi-clandestine cross-border transactions, but yes it's not a liquid currency. It's more of a separate economy. It's just programmable money so it's really the beginnings of a new financial system that is a bit divorced from our current one. It's not panacea for the world financial problems, but it's cool and fun.
- busterarm 6y ago
  > in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions. Hawala has succeeded in performing that role for centuries.
  - ichbinwiederda 6y ago
    Yes but Hawala it is the anti-thesis of crypto. Crypto is born out of the dream of cyberpunks to have a trustless society.
    - louwrentius 6y ago
      That's funny, Bruce Schneier has written something on that topic. https://www.schneier.com/essays/archives/2019/02/theres_no_good_reaso.html https://www.schneier.com/essays/archives/2019/02/theres_no_g...
    - zadler 6y ago
      Cypherpunks* https://en.m.wikipedia.org/wiki/Cypherpunk https://en.m.wikipedia.org/wiki/Cypherpunk
    - busterarm 6y ago
      That's why it's no surprise that crypto has mostly sucked at a role that Hawala has been filling just fine.
- RamshackleJ 6y ago
  Iran is using btc to settle international trade transactions[1]. Using a gold backed coupon for settling trade has been talked about for a really long time by a bunch of people. If you're confused why people are speculating about crypto they might know something you don't. The rewiring of the global economy off of the USD _is_ coming, the USD introduces counter-party risk (albiet small for most people) and if btc can avoid that its an improvement. 1 https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:~:text=0-,Iran%20Adopts%20Bitcoin%20for%20International%20Trade%20Amid%20Heavy%20Sanctions%2C%20Falling,imposed%20by%20the%20U.S.%20government https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:....
- worldsayshi 6y ago
  > Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. Isn't this to be expected when there's no way to balance the currency value by adjusting the supply dynamically?
- dmihal 6y ago
  I get paid in stablecoins on Ethereum. Then, I deposit them in lending protocols like Aave to earn ~6% interest. Would you say that I'm using them for their original intended purpose?
  - RikNieu 6y ago
    A lot more so than most! Is this your regular and main form of income?
xiphias2 6y ago
Ethereum is very different from Bitcoin, so this comment is offtopic, and it's tackling a different problem space, but if you are really interested, I'm reading the Bitcoin Standard book, and I can recommend it if you really want to understand what problem Bitcoin solves. There's no simple answer, only learning about the history of money and monetary theory from a non-Keynsian view. https://www.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861 https://www.amazon.com/Bitcoin-Standard-Decentralized-Altern...
- louwrentius 6y ago
  I'm not looking for links to books. I'm looking for an explanation in plain English that shows why any of this matters.
  - mikro2nd 6y ago
    The world needs a form of money that is not under the control of any one sovereign power or group of sovereigns. Understanding this may necessitate reading some books, but in short, sovereigns have historically proven to be untrustworthy, so a trust-free form of money is a powerful notion.
    - louwrentius 6y ago
      > The world needs a form of money that is not under the control of any one sovereign power or group of sovereigns. Why? Why can't you explain this in simple, easy terms?
      - zdkl 6y ago
        Simple is going to be a caricature: Diversification of risk.
        louwrentius 6y ago
        Have you bought a loaf of bread with Ethereum or Bitcoin? And internet is shut down btw...
speeder 6y ago
As for Ethereum itself: It is basically a distributed computing platform designed to handle money, idea is you make a program that handles money, and it runs in a decentralized manner, this way noone can interfere with it, for example you could make a program that tells the users the password to login on a dissident newspaper if they donate something, since it is decentralized the government would have a harder time taking it down. (that is just a simple example, people doing all sorts of stuff with this)
- louwrentius 6y ago
  I read a lot of difficult words that I can't relate to. What does this mean for the average citizen in America or Europe? Also, I read this: > Ethereum clients use a listener (TCP) port and a discovery (UDP) port, both on 30303 by default. > If you need to run JSON-RPC, you'll also need TCP port 8545. Note that JSON-RPC port should not be opened to the outside world, because from there you can do admin operations. Sounds like quite easy to block by any government. Or just cut off internet access at all.
  - speeder 6y ago
    "Just cut off internet" indeed would work... but it would work for a lot of things. But saying that is same saying that a normal bank is useless because the government can just "just cut off the power" and thus the bank servers would be down. And indeed in some siege situations, that would be possible, but Ethereum never promised to be siege-proof. As for what it means to the average citizen in America or Europe? Well, one of the popular uses of Ethereum is gambling, that in some places is legal, in some others is not. Another use is create business that can't operate in some jurisdictions for whatever reason (for example because sanctions, or just plain old outdated laws that were forgotten).
    - louwrentius 6y ago
      > Well, one of the popular uses of Ethereum is gambling, You are really selling this to me...
  - 6y ago
csolorio 6y ago
I first used it to pay a contractor in Argentina, since then I stick with the store of value hypothesis. It’s like gold but easier to hold and trade without having the government devalue it by printing more dollars. Or put another way, why does a dollar have value?
- louwrentius 6y ago
  We already have solutions for paying people in other countries. Why would I use this one? I read a lot of difficult words I don't understand. It doesn't explain anything to me.
  - NotUsingLinux 6y ago
    Today’s (normal)money system is complex and still many of it is not transparent to the public. Ethereum is trying to build something with more transparency but also tries to create a space in which people can experiment with funding. ( see quadratic voting experiments)
  - csolorio 6y ago
    Argentina at the time had an official rate that was 4 to 1 the black market rate. If I used the official methods I'd be paying the contractor 25% of what I promised. In the US, this is not a large issue, but there are many countries where the gov't can manipulate their currency and exchange rates.
  - vbezhenar 6y ago
    There are lots of hoops I would need to jump around if someone would send be US dollars. Those would be frozen in my bank account, I would need to get an official papers (contract or something like this), translate it to the local language, notarize it and prove that those moneys are not from laundering stuff. And even then I might be denied to get those money if those papers were unconvincing. With Bitcoin it just works with 0 issues. Also I don't need to pay taxes which is good thing as I don't like this government and don't want to fund it.
pmachinery 6y ago
> I don't understand cryptocurrencies. People buy cryptocurrencies and hope the price rises and they can dump it back into the USD it has always been valued in, before everyone else does the same. Since spamming forums to inflate the price doesn't work as it did a decade ago, in order to prevent them crashing to the floor, all kinds of nonsense white elephant use-cases have to be imagined/invented. We all understand cryptocurrencies. (You're just not supposed to admit it out loud.)
- jesusthatsgreat 6y ago
  Same could be said about the stock market. Lots of companies aren't in profit and would die without the ability to dump shares and without speculators (and indeed the government itself - the ultimate speculator) propping it all up. Many of them die anyway, sometimes right after raising fresh capital from suckers who believed in their vision. We've been here before in tech with the dotcom bubble. Lots of noise, nonsense and white elephants. Most projects will crash and burn, some will go on to change our daily lives.
PycptN2MH 6y ago
It is deceptive to say 'I don't understand' when what you mean is 'I disagree.' Your central argument is: 'You offer a service to everyone. I already have that service. Therefore you are not creating value'
- louwrentius 6y ago
  I don't even understand if they even provide a real service. But - for the sake of argument - if they do, I don't see the unique selling points.
  - prussian 6y ago
    Honestly, the selling point is it is a demonstration of global consensus. whether that is useful as a service is debatable I suppose.
  - anonymousab 6y ago
    Crypto is easy to transfer and keep and has more lasting value in countries that are facing hyperinflation, often moreso than USD. This particularly applies to Venezuela, which is exerting extra pressures and taxes in foreign currencies.
    - louwrentius 6y ago
      So it's basically irrelevant for the USA and Europe. Then why is it such a hot topic on Hacker News? I have some ideas, but they are not kind.
      - dmihal 6y ago
        Forget about the developing world. I'm an American living in Europe. My money is in the US banking system and in crypto. There's no easy way for me to "Venmo" money to my friends here, I'd have to use an international bank transfer which would take over a week and cost high fees. But with my friends in crypto: I can just transfer them Dai. It takes about 15 seconds and costs less than a dollar (and will get cheaper with things like Eth2)
sweetheart 6y ago
https://lmgtfy.app/?q=what+is+the+point+of+ethereum https://lmgtfy.app/?q=what+is+the+point+of+ethereum
rakoo 6y ago
I'm not specially a believer in cryptocurrencies, but it's probably the best way to implement micropayments, which will solve the biggest problem we have on the internet: monetization of content and of effort (think open source), which today is mostly sustained by ads.
lkbm 6y ago
> What problem / which problems are being solved here? I think mostly it's for people don't want the government/Federal Reserve fiddling with the value of their money. Personally, I think monetary policy is an incredibly valuable and important tool, but I recognize that trusting the powers that be to wield it properly is a bit naïve of me.
bjarneh 6y ago
> What problem / which problems are being solved here? I guess all crypto-currency is an attempt at digital cash. I.e. the ability to send "money" between people who do not trust each other digitally; with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc. Why people want to solve this problem through a scheme of chained hash-values and mining (which I guess is just padding the data you compute hash-values from until it hits a certain number of 0's at the end), is still unclear for me.
- louwrentius 6y ago
  > I.e. the ability to send "money" between people who do not trust each other digitally; How does a cryptocurrency actually solve the lack of trust? From the few things I do understand, I think it doesn't at all. I think this article by Bruce Schneier is interesting: https://www.schneier.com/essays/archives/2019/02/theres_no_good_reaso.html https://www.schneier.com/essays/archives/2019/02/theres_no_g... > with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc. I don't have a need for that kind of secrecy. I understand the Silk Roads of the world would like it though. But that doesn't sell cryptocurrencies to me. If you need to hide stuff from the government, there are bigger problems that cryptocurrencies can't solve, as I can tell.
  - bjarneh 6y ago
    > How does a cryptocurrency actually solve the lack of trust? I said it was an attempt, I'm not sure it solves it.. > If you need to hide stuff from the government All governments are not good. The US government for instance "froze" (basically took) all the money WikiLeaks had, and made it impossible to send them money through traditional banking systems. So crypto-currencies have already been important in funding an organization that uncovered war-crimes; which is a good thing. Not all secrecy/privacy is criminal behavior, sometimes it is actual journalism. I guess we have seen so little journalism in the last few years we barely remember what it looks like.
- 101008 6y ago
  > the ability to send "money" between people who do not trust each other digitally How is this solved with crypto? I bought a few things with crypto that they were never delivered, so I got scammed. Yes, crypto helps the part receiving money, not the part sending money. This is not a solution, it's just moving the problem to the other side.
hated 6y ago
The problem is payment processors deciding who you can and cannot give money to. Crypto currencies solve this problem by not requiring traditional payment processors to make an exchange of value between parties.
- prussian 6y ago
  Thus, a new problem is born. Governments regulate what securities people can buy or exchanges simply deny you services. then you're back to your former problem. Most people participating are doing so with fiat on-ramps.
s_dev 6y ago
>What problem / which problems are being solved here? Lets say I want to transfer some assets to a guy without anyone knowing from any internet connection. There is a demand for this global service. Crypto-currency faciliates this. You buy crypto with your normal currency. Transfer. Switch back to normal currency. Yes you've endured some volatility in price but the whole operation was done in an hour or so. So legit business will set up as "Bitcoin Banks" allowing people to trade in and out of them. It's truly "digital cash".
- prussian 6y ago
  so basically, we're inefficiently reinventing payment processing with the added tax burden of buying/selling securities?
  - apexalpha 6y ago
    Well for what's it worth I've only ever needed it once. I was moving out of China and wanted to take my money with me. It was really hard to get this done, there are tons of capital restrictions and the banks literally wouldn't help me out. So I put all my money in the BTC blockchain in China and pulled it out in the EU. The other option was to get it in cash and physically bring it over the border, which I considered riskier.
  - s_dev 6y ago
    >reinventing No reinventing -- this tech doesn't require a middleman. Unprecedented.
- dmihal 6y ago
  > Yes you've endured some volatility in price Not if you use stablecoins like Dai :)
seibelj 6y ago
Ethereum is a platform for decentralized computing. It's like a web server that is always on, never goes down, and you only pay for exactly what services you use (and no more). It is also uncensorable and perfectly immutable - which as a consequence is very useful for money. So one of the high-value services Ethereum supports is moving money and applications around money. This "money" is sometimes referred to as "tokens", which are like digital equity, bonds, currency, but are very hard to put in a single bucket and kind of operate like all of them at once. One interesting aspect is they are bearer instruments, meaning no one can seize them from you. It's an alternative financial system that anyone can hack on and no one can prevent you from using. Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. But there is a sizable community of programmers around the world that value a completely open, transparent, hackable, and protocol-oriented financial system. Its network effects have allowed it to be greater than the sum of its parts, and novel financial applications continue to be constructed on it.
- 1996 6y ago
  > Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. Neither do I. I believe it's sour grapes: they missed up on crypto following the advice of people/websites they trusted (given the negative outlook on HN since 2009), and it's becoming harder and harder to justify their past mistakes. So it turns into cognitive dissonance. Said differently, just like how it's hard for someone to understand something when them making a living depends on NOT understanding it, they must keep not understanding to justify their past mistakes. Eventually, I think it will turn into a Ballmer-esque throwing chairs, and calling it a cancer, before coming to terms with reality.
jules-jules 6y ago
You might want to start here, focusing on the transformation of ethereum's ecosystem [0] >ETH 2.0 is finally here and will transform Ethereum as we know it. But what is the philosophy underpinning ETH 2.0? And what is Ethereum building towards? It all starts with the idea that Ethereum is the foundation of a social contract for the global economy. >Ethereum is a global public good that is open, borderless, neutral, transparent, and censorship-resistant.Ethereum provides a system of property rights, rules, and economic opportunity for anyone in the world with an internet connection. With Ethereum users and builders are sovereign and able to determine their own economic destinies. >This is important in an age of declining trust in institutions where many people don’t have access to stable systems of property rights or economic opportunity. With this in mind ETH 2.0 was designed with five key principles: - Simplicity - Long-term stability - Sufficiency - Defense in depth - Full light-client verifiability >Simplicity - Allows ETH 2.0 to minimize development costs, reduce its attack surface, and clearly convince users that protocol parameter choices are legitimate because they’re easier to understand (key for credible neutrality). >Long-Term Stability - Although Ethereum so far has favored evolution over stability, ETH 2.0 is designed with the idea that once built, there should be little need to change it for long periods of time - a necessity for Ethereum to serve as public infrastructure. >Sufficiency - Blockchains must be powerful enough for it to be possible to build trust minimized layer2 protocols on top of it. In order to achieve this blockchains must include an expressive programming language, scalable data availability and computation, and fast block times. >Defense in Depth - Blockchains must work well under a variety of possible security assumptions. A key way to achieve this is to design the system so that it is as decentralized as possible to prevent faults, collusions, and attacks. And in the case where harmful collusion does take place, it’s important to make it extremely expensive for those colluding and easy for non-colluding participants to recover the system. >These are the core reasons underlying Ethereum’s shift to Proof of Stake. >Full Light-Client Verifiability - Many users will only interact with Ethereum through light clients. Thus it’s important for those users to be able to verify that the data in the full system is available and valid, even under a 51% attack (under certain assumptions). [1] Ethereum is on course to settle $1 trillion in one year more than double the transaction volume of Bitcoin. [0] https://twitter.com/RyanWatkins_/status/1333588739277414401 https://twitter.com/RyanWatkins_/status/1333588739277414401 [1] https://cointelegraph.com/news/ethereum-set-to-become-first-blockchain-to-settle-1-trillion-in-one-year https://cointelegraph.com/news/ethereum-set-to-become-first-...
3np 6y ago
The main thing that's being enabled by "blockchain" is a way for mutually distrustful parties to agree on a timeline of events. That's it. But it has huge implications. The trust factor requirement is removed from the physical infrastructure and operators. For bitcoin and most cryptocurrencies, this is used for a ledger of value transactions. Now we have an way to transfer ownership and value. What the internet did for information transfer, we now have for value transfer. Ethereum generalizes this with a virtual machine that can run arbitrary computation and store arbitrary state. A trustless global value transfer machine that requires no PII (which could be regulated, and added as a requirement in compliant applications, of course), central point of trust, or custodian of data. Where the security layer between the service/application/protocol and the end-user is abstracted away and taken care of by the Ethereum ecosystem. In the phase we're in right now, a lot of applications are related to finance. There is both transformation of traditional finance[0], and the new sector of "defi" that IMO is here to stay and grow but is in the early half of a huge bubble that will burst hard). That aside, this is enabling a new way to structure ownership, applications and anything between. If blockchain-based currencies and smart contract platforms end up as Orweillan tools of control, or liberating and improving our society, is mostly lot up to developers, teams, and users. I hope more people get it. But not not too many too soon, because the infrastructure wouldn't handle it. Eth2 improves on that by magnitudes, so this news is a crucial step. [0]: Source: Working at a digital asset service provider with some bigger and more well-known financial institutions as clients, and friends in the industry.
- louwrentius 6y ago
  > I hope more people get it. I really didn't. Why should I care about any this? How can you explain this to an average person in the street?
  - 3np 6y ago
    No one told you you should care. It's not like I go rant in the Apple Big Sur release how I can't relate to any of it, you know?
dbetteridge 6y ago
On a personal level I to have no need or want of cryptocurrencies, but the stated benefits are not for first world, white, city dwellers with ready access to the existing monetary system. - Someone lives somewhere that the U.S refuses to bank with (Sanctions) - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?) - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example) These are examples where one could build processes around something like Ethereum, with the understanding that you are primarily just adding another input to the existing system but with the trade-offs being more access and lower fees but also less protections and greater risk.
- dsg42 6y ago
  Just to be clear, these reasons are: - To commit a crime - Not a real use case (If someone has no access to normal financial infrastructure, including Venmo and similar, how would they ever use crypto) - To avoid processing fees by paying higher fees?
  - sixhobbits 6y ago
    TIL its a crime to live in Iran
  - cameronh90 6y ago
    Living somewhere the US has sanctions against isn't a crime.
- louwrentius 6y ago
  > - Someone lives somewhere that the U.S refuses to bank with Cryptocurrencies won't solve this problem. If that happens, there are much bigger issues. > - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?) Let's be honest. The whole blockhain / cryptocurrency was never about that ever. > - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example) I think there are more than plenty online sites where people can pay for that kind of content without any problems. I just don't understand any of this.
Shorel 6y ago
Advice: if you don't understand, never invest. About your other points: I see no benefit whatsoever in investing my own time trying to teach you about cryptocurrencies. Think about it as a secret. Act as it doesn't exist and both our lives will be better.
rorykoehler 6y ago
>I can do all these things already. While I understand why you are confused you must understand that many people can't do what you can do and it's not guaranteed you will be able to do it in the future either. Just look at the situation in Venezuela for example. Even in SE Asia loads of people are still unbanked with no way of changing that.
- louwrentius 6y ago
  Then I don't understand this keen interest in crypto by Americans and Europeans. I think this is not why there is such a hype around cryptocurrencies.
  - rorykoehler 6y ago
    Because they want to get rich quick
  - Acrobatic_Road 6y ago
    I went to order a book recently. At the bottom of the shopping cart it reads: "Note: We have been deplatformed by our credit card processor. To complete your order, please print or otherwise make a copy of the information on this page and mail it with your cash, check, or money order to:" and then their address. I don't live in a third world country, but I do think cryptocurrency would help in this situation.
giffarage 6y ago
It’s digital money. You buy things with it.
voxl 6y ago
People have said a lot to you already, and your only response has been "big words, what about average citizen, don't understand." I think it's time to just say it, Ethereum is not for you and is never going to be, you seem to have an agenda in thinking it's a useless waste of time. Ethereum is a decentralized commerce and application network. And no, you simply cannot do that with anything else but cryptocurrency. It has hefty aspirations to remove currency control from government entities and banks, but its unlikely that will ever happen.
- zadler 6y ago
  Perhaps not, but blockchains, as well central bank digital currencies, will definitely have a big impact on society. People will have an alternative to the monetary system provided by their government. Eventually this could well lead to alternative governmental systems becoming available. There is also a chance that old tax codes will never adaquetely adapt to the way that crypto currencies are used. It looks set to reduce the role of central governments and banks in finance.
- shortstuffsushi 6y ago
  > Ethereum is not for you and is never going to be This is a problem though, because it needs to be "for everyone" for it to really work, right?
  - voxl 6y ago
    No, it doesn't, no more than the United States government needs to be "for everyone."
  - ZephyrBlu 6y ago
    It _works_ for everyone, but not everyone needs to understand it.
  - everfree 6y ago
    Linux is not "for everyone", yet it works in the background serving up major internet apps and running databases and computer systems for the benefit of everyone. Ethereum (and its competitors) aspire to be the "linux" of value transfer, in some respects.
joeblau 6y ago
I can do all these things already. You're absolutely right, but just like you can send a letter in the mail, email does the same thing but is digitally native to the internet. Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it. What problem / which problems are being solved here? The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer" I don't understand what this means. What does this do for real-life applications? Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. I need to send my shares to a brokerage (they take cuts and fees and do insider trading crap that they disguise as legal) then you buy the shares from then. If it's mine, why can't I just transfer the shares straight to you for the listed price (Currently $567.60)? Because there is no platform digital trustless value transfer that will ensure that we both get what we want: Me getting the money, and you getting the shares.
- louwrentius 6y ago
  > Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it. Maybe because it's not a need most people have? > The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer" This still means nothing to me. I can't relate to this. > Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. (they take cuts and fees..) So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
  - WnZ39p0Dgydaz1 6y ago
achempion 6y ago
Hi, here is most simple explanation what it does: Simple solution for illegal/semi-legal activities. Think some goods, money laundering (try to transfer money to North Korea, Iran) even to your relative. Also, there are some privacy minded individuals as well who would like to pay for things like VPN, domains, servers who don't want to get their account tied to theirs credit card. Speaking of Ethereum, think of it like digital money + some js function which can be executed on demand. It allows you to make scams like bitconnect. In other words casino / gambling. Really hard to do legally but very easy to deploy casino function to Ethereum. Those markets are huge.
- floatboth 6y ago
  Yes, buying weed and VPN accounts is the good use of censorship-resistant money. Unfortunately there's also the bad uses like, you know, any kind of extortion (especially ransomware), fraud, scams.. oh you even mentioned the scams! :)
markkat 6y ago
It makes me sad, because I expected a comment like this to be the highest on HN. In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life. As an example, already, anyone in the world can buy property in the US: https://realt.co/ https://realt.co/ What the web did for infomation, Ethereum will do for value.
- louwrentius 6y ago
  > In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. Does this sentence actually mean anything? > In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. What does this mean in concrete terms? > Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life. Who wants this?
  - seibelj 6y ago
    You just keep acting like the “caveman lawyer” from Saturday Night Live and refusing to learn or acknowledge anything. You are being obnoxious and just continuing the HN trope of “blockchain is totally worthless despite it being worth hundreds of billions - the whole world is wrong not me!”
    - louwrentius 6y ago
      An ad-hominem, thank you. Do you know anything about human psychology, by the way?
wilde 6y ago
How might we create a digital commodity that is: 1) Consistent with a specific set of ideals (anyone can issue, what happens on the network is a matter of individual responsibility, establish economic incentives to funnel people into good behavior, finders keepers, etc.) 2) Obfuscated enough that it’s not immediately regulated into oblivion by the existing financial system Many people on this site subscribe to the ideals in #1, thus the fervor. The CFTC has decided to do away with #2 (in the states) but it took them over a decade.
- moron4hire 6y ago
  > what happens on the network is a matter of individual responsibility That sounds like the opposite of solving trust.
  - wilde 6y ago
    Indeed. I don’t agree with all of these principles. I’m just stating what I’ve observed.
ForHackernews 6y ago
Imagine an extremely slow CPU, where every opcode cost money to run. Imagine you could deploy code to this machine, and it would be guaranteed to execute in a publicly verifiable way, and nobody could change it or modify it (unless you get several influential people to agree to a fork that changes the rules). I think that's basically Ethereum. Oh, also imagine that instead of costing money directly, you instead have to pay somebody to run their car engine at full speed while up on blocks in a garage. Oh, and if they ever stop revving their car engine, somebody else might rev their engines faster/more and then they can steal all your money. Edit: Apparently ETH 2.0 has reduced the amount of pointless engine-revving.
rjknight 6y ago
This is a bit like saying that nobody needs a Linux desktop because Windows is good enough. Some people just care more than you do about certain principles, even if caring about those principles means that they have to endure a lower "quality" product. Most blockchains are strictly inferior to a modern financial system when it comes to things like speed and cost of transferring small sums of money - which is the use case that most people have. But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments. Does anyone else need it? Right now, I think the answer is "no". But nobody really needed a Linux desktop either, and 25 years on we have Chromebooks and Android. Ethereum allows you to upload complex scripts to it, where those scripts are executed by a variety of different nodes which compare results and ensure that the script was executed faithfully. Do I personally need this? Probably not, no. There's a competitive market in cloud hosting and very few circumstances where I would be afraid that Amazon, Google, or Microsoft is going to tamper with my computation, or refuse to execute it. But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Maybe at some point we will want to use blockchain systems to maintain audit trails or even to coordinate our computations. If these systems can prove robustness and reliability over a long period of time, maybe it makes sense to write the rules for multi-party computations as Ethereum scripts, and it becomes a ubiquitous low-level part of the stack. Maybe everyone ends up having an Ethereum account and we use it in place of the current payment system. Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.
- louwrentius 6y ago
  I don't understand why this topic is in any way relatable to the Linux vs. Windows discussion, even as an analogy. > But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments. That's not a good example to justify any of this, in my opinion. > But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Such as? I don't read anything I can relate to. > Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux. I think that's just false equivalence.
Triv888 6y ago
Have you ever tried to cash a foreign check? Not that easy... You have to go to the bank to do it unlike any regular check... Also it is easier to move large amount of crypto then cash (even when both are digital.
- speedgoose 6y ago
  In my opinion, moving a large amount of money using crypto currencies, legally and without risks, it not easy for most people. I would say it's a lot harder than going to the bank and letting them manage the transactions database.
  - Triv888 6y ago
    Cryptos are not considered currencies under the current laws so I dont see how it would be a problem, legally....
m0llusk 6y ago
The programmable part is most interesting and unknown. Payments can be made to go to one party or have built in alternatives if they die prior to transfer. Payments can also require specific documentation or have a time limit for transfer. How exactly this might most commonly be used is all conjecture, but there are many possibilities and few built in limits. Oddly enough making payments programmable also introduced some of the first bugs in payment programming which raises many issues with the whole concept. In any case, it is all moving forward very fast.
51stpage 6y ago
I too don't need any of the features that cryptocurrency brings. However, cryptocurrencies are making substantial headway on solving the hardest class of problems that humans face: coordination problems. Common examples include the Tragedy of the Commons and collusion [1]. Vitalik has written some surprisingly approachable pieces on the various problems that cryptocurrencies face. It's not too much of a leap to see how these problems appear in non-cryptocurrency contexts. The value I see in cryptocurrencies is that they must develop robust/antifragile solutions to the coordination problems that have plagued society forever. Even if some problems can't be solved, then there are mental tools for making sense of what's going on. [1]: https://vitalik.ca/general/2019/04/03/collusion.html https://vitalik.ca/general/2019/04/03/collusion.html [2]: https://vitalik.ca/general/2020/08/20/trust.html https://vitalik.ca/general/2020/08/20/trust.html
face_mcgace 6y ago
So, I believe you're thinking about this in the classic sense of security, transactions, and decentralizations. It's actually better to think of Ethereum as an ATM that replaces bank tellers - i.e. a fundamental technology shift. Forget about decentralization/transactions for a second and let's take an example of your company transitioning your 401k to another plan. Think of all the people moving this money, all the legal process that it has to go through, all the find print that must be followed, etc. There's a TON of work to move a 401k and the process typically takes months. What if I told you that you could transfer your 401k plan, without the additional overhead of people, and you could do it in seconds? That's Ethereum. Let's take another example of buying a house. If you've ever gone through this process it takes months to finish, theres tons of middlemen (bank loan process, approval, selling the loan, lawyers to secure the property, real estate agents, etc). What if I told you that you could buy a house, without this overhead, in seconds? That's Ethereum. The bottom line is our current financial system is based on an army of lawyers, middlemen, banks etc. and large transactions take time and money to solve. With a concept like Ethereum you just don't need any of that, you can transfer large amounts of value instantly and you don't need this army of people. It is frankly the difference between horses and cars. It's a technological shift that makes previously impossible actions possible.
nootropicat 6y ago
>What does this do for real-life applications? You can lend dollars on ethereum for 4% APR at the moment. That's a good reason to use this even for someone not interested in other functions. The interest comes from borrowers, who are mostly speculators going long on crypto. https://compound.finance/markets https://compound.finance/markets USDC is tokenized dollar that can be swapped to/from dollars in a bank account on coinbase. Recently it was even used by the US Treasury to transfer dollars to Venezuela.
- benwad 6y ago
  What happens with these loans if the recipient defaults on repayment?
  - nootropicat 6y ago
    Loans are overcollateralized and collateral is automatically liquidated once the collateral ratio falls below the liquidation threshold. Eg. for eth as collateral the liquidation threshold is 75%, meaning $75 borrowed for $100 in collateral. Compound itself has survived multiple violent price crashes and lenders didn't lose anything.
    - hiq 6y ago
      To be clear, you mean that I can borrow $75 by giving $100 first, then pay back the $75 with interest and get back my $100? Why don't I use my $100 directly instead? There are a few cases outside the blockchain where you get loans although you already have the cash (e.g. for tax reasons), but I don't understand how it makes financial sense in this case, if everything happens on the blockchain with no other incentive. Maybe another direct question would be: as a lender, for which risk are you getting paid some interest?
      - nootropicat 6y ago
        >Why don't I use my $100 directly instead? Because it's not $100 in dollars, but $100 worth of eth or something else. Borrowed dollars can be used to buy something else, hoping the price of that something rises. >as a lender, for which risk are you getting paid some interest? It's theoretically possible for prices to fall fast enough so that the liquidated value of the collateral isn't enough to pay the debt. I don't think rewards are risk adjusted at all. More like same people that could provide dollars are likely to speculate on cryptocurrencies themselves, or take part in more risky and active yield generating schemes.
eric_cc 6y ago
> I don't understand this. At least you are honest.
DecoPerson 6y ago
In person, I can exchange information with someone without anyone interfering. In person, I can exchange value (e.g.: chocolate for firewood) without anyone interfering. Online, I can exchange information without anyone interfering (using encryption). Online, I cannot exchange value without anyone interfering. Exchanging value at a distance is complicated, because there’s so many different laws, bank APIs, apps, regulations, etc etc. We use middle-man services to simplify these problems for us — but they charge hefty fees. There’s delays, and arbitrary restrictions. All these complications also introduce additional risk (compared to exchanging the value in person). A single, perfect global bank, or a perfect standard for all banks to follow, would allow me to exchange value online without anyone interfering. However, such a thing isn’t likely to happen. Cryptocurrencies, if executed well, offer a real pathway to “I can exchange value online without anyone interfering.”
- DecoPerson 6y ago
  This also applies to storing value. See what happened to Greece in 2010, where many individuals lost large amounts of cash stored in their bank accounts. This would not happen with Ethereum. If you hold 10 ETH, you’ll continue to hold 10 ETH until it’s transferred elsewhere (or you lose your keys).
whazor 6y ago
Ethereum and other blockchain systems are very foundational, they do not need to care about real-life applications. You probably also don't understand what your central bank is doing, while it supports all your financial transactions. The good news is that the new version of Ethereum is at least more climate friendly.
dmak 6y ago
I’m really surprised to read this far down without anyone mentioning DeFi. Decentralized finance is already happening. You can take out loans against your Ethereum or borrowing or lend already without a bank or an intermediary like LendingClub. The orchestration of money and being able to program money is limitless without the intermediary is huge. True peer to peer financial instruments are now possible.
kemonocode 6y ago
My issue with these kind of questions is that they're hardly ever done in good faith, and they show over and over again whenever crypto is brought up on HN. Crypto has its good uses, and I've relied on it for my livelihood before (and even wished it wasn't just used as a speculation vehicle) when traditional banking couldn't meet my needs, so it's a very Americentric/Eurocentric thing to assume it's only ever good to speculate on and buy drugs on the Dark Web. That's it- that's its killer app, it's an alternative to existing money transfer and store of value mechanisms, anything else like "smart contracts" or reduced carbon footprints from better Proof-of-Stake implementations are a nice bonus and worth developing, of course.
- shortstuffsushi 6y ago
  Could you expand on a scenario where "traditional banking couldn't meet your needs," but crypto was able to?
  - fsewe20 6y ago
    https://twitter.com/arbingsam/status/1333669126125068289 https://twitter.com/arbingsam/status/1333669126125068289 Heres one novel idea I have just seen in my twitter feed for a yearn strategy[1]. You deposit tokens to the yearn contract which employs different strategies to lend/spend those tokens in ways that generate profit for everyone participating in the contract. This strategy is taking up the rest of the bets that trump wont be re-elected on a decentralised prediction market (blah blah see crypto is all gambling). This ability to be able to program collectively program money is fascinating (and is scary with bugs, but with time hopefully becomes more robust). [1]https://yearn.finance/vaults https://yearn.finance/vaults
    - shortstuffsushi 6y ago
      I don't entirely understand this, but am I gathering that it's holding money for a "bet," similar to paying into a horsetrack and then going back to collect if your horse wins? Or is it an escrow where, during the time the money is held, it "generates profit" (invested elsewhere?) and then pays a return to those who contributed later? fwiw - I don't have a yearn account, and am consequently unable to view your yearn link.
fsewe20 6y ago
Remember Bowie talking about the internet in '99 "I think we're actually on the cusp of something exhilarating and terrifying.... Its an alien life form, just landed."[1] Many of us feel the same about programmable money. It seems pretty interesting, unexplored, and has exciting, scary potential. It seems like a great place to build community groups openly, fairly, freely(in the libre sense). It reminds me of being a kid in the 90s dialing up to the internet and discovering peoples homepages and forums, sharing ideas and playing with new ways of organising and working together, playing and having fun. The ethereum dev community is inspiring to me. But you dont have to agree that it is world changing, thats ok. I think there is value in it and will work to prove you wrong! We're all on the same side in the end. [1] https://www.youtube.com/watch?v=LaHcOs7mhfU https://www.youtube.com/watch?v=LaHcOs7mhfU
deleted 6y ago
[deleted]
CryptoPunk 6y ago
It's a credibly neutral ledger that guarantees access to any one in the world indefinitely.
dheera 6y ago
Moreover, why is ETH not mooning already with the new release? I thought not enough "mooning" was the main problem alt-coins solved ...
capnorange 6y ago
Maybe it's not useful to you, maybe if you kept an open mind you could find some use! 1. There is $14.17B of value locked in DeFi, so it's clearly useful to someone(and scams don't account for the majority of it). 2. USD is not my primary currency, I'm fortunate my employer agrees to pay me in USDC. The fees are usually around $1.5, previously when I used PayPal fees used to be 5.5% deducted from my side. 3. I keep most of my money in USD, which earns interest around 8% APY monthly on yearn.finance/earn. Contrast with the savings account on my bank which gives me 3%. I don't trade, I don't speculate. I own a small amount of ETH to pay for fees. If you are from TradeFi you will find it much more useful!
literallycancer 6y ago
Have you ever been refused service by a bank because of where you are from? Have you ever had your property nationalized? Have you ever had to leave everything behind and start from scratch somewhere else? Have you ever lost your savings because the government tried to print its way out of debt? Maybe you enjoy the privilege of living in a country where these are very unlikely to happen. Most people don't.
gge 6y ago
Check out defi, insane amount of innovation has been happening with defi protocols on Ethereum. I use defi protocols like Aave every day.

RikNieu 6y ago

I feel that no one is using crypto currency for it's original intended purpose, and in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions. Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. But alas.

dylkil 6y ago
>Everyone just seems to want to use it like gold, to store wealth or speculate with. Except ethereum has a decentralized composable financial ecosystem gaining traction as we speak with over $15b locked up. [1]https://blog.coinbase.com/a-beginners-guide-to-decentralized-finance-defi-574c68ff43c4?gi=137fd23cc28f https://blog.coinbase.com/a-beginners-guide-to-decentralized... [2]https://defipulse.com/ https://defipulse.com/
twox2 6y ago
Well, it's very useful for LARGE and semi-clandestine cross-border transactions, but yes it's not a liquid currency. It's more of a separate economy. It's just programmable money so it's really the beginnings of a new financial system that is a bit divorced from our current one. It's not panacea for the world financial problems, but it's cool and fun.
busterarm 6y ago
> in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions. Hawala has succeeded in performing that role for centuries.
- ichbinwiederda 6y ago
  Yes but Hawala it is the anti-thesis of crypto. Crypto is born out of the dream of cyberpunks to have a trustless society.
  - louwrentius 6y ago
    That's funny, Bruce Schneier has written something on that topic. https://www.schneier.com/essays/archives/2019/02/theres_no_good_reaso.html https://www.schneier.com/essays/archives/2019/02/theres_no_g...
  - zadler 6y ago
    Cypherpunks* https://en.m.wikipedia.org/wiki/Cypherpunk https://en.m.wikipedia.org/wiki/Cypherpunk
  - busterarm 6y ago
    That's why it's no surprise that crypto has mostly sucked at a role that Hawala has been filling just fine.
RamshackleJ 6y ago
Iran is using btc to settle international trade transactions[1]. Using a gold backed coupon for settling trade has been talked about for a really long time by a bunch of people. If you're confused why people are speculating about crypto they might know something you don't. The rewiring of the global economy off of the USD _is_ coming, the USD introduces counter-party risk (albiet small for most people) and if btc can avoid that its an improvement. 1 https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:~:text=0-,Iran%20Adopts%20Bitcoin%20for%20International%20Trade%20Amid%20Heavy%20Sanctions%2C%20Falling,imposed%20by%20the%20U.S.%20government https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:....
worldsayshi 6y ago
> Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. Isn't this to be expected when there's no way to balance the currency value by adjusting the supply dynamically?
dmihal 6y ago
I get paid in stablecoins on Ethereum. Then, I deposit them in lending protocols like Aave to earn ~6% interest. Would you say that I'm using them for their original intended purpose?
- RikNieu 6y ago
  A lot more so than most! Is this your regular and main form of income?

xiphias2 6y ago

Ethereum is very different from Bitcoin, so this comment is offtopic, and it's tackling a different problem space, but if you are really interested, I'm reading the Bitcoin Standard book, and I can recommend it if you really want to understand what problem Bitcoin solves. There's no simple answer, only learning about the history of money and monetary theory from a non-Keynsian view. https://www.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861 https://www.amazon.com/Bitcoin-Standard-Decentralized-Altern...

louwrentius 6y ago
I'm not looking for links to books. I'm looking for an explanation in plain English that shows why any of this matters.
- mikro2nd 6y ago
  The world needs a form of money that is not under the control of any one sovereign power or group of sovereigns. Understanding this may necessitate reading some books, but in short, sovereigns have historically proven to be untrustworthy, so a trust-free form of money is a powerful notion.
  - louwrentius 6y ago
    > The world needs a form of money that is not under the control of any one sovereign power or group of sovereigns. Why? Why can't you explain this in simple, easy terms?
    - zdkl 6y ago
      Simple is going to be a caricature: Diversification of risk.
      - louwrentius 6y ago
        Have you bought a loaf of bread with Ethereum or Bitcoin? And internet is shut down btw...

speeder 6y ago

As for Ethereum itself: It is basically a distributed computing platform designed to handle money, idea is you make a program that handles money, and it runs in a decentralized manner, this way noone can interfere with it, for example you could make a program that tells the users the password to login on a dissident newspaper if they donate something, since it is decentralized the government would have a harder time taking it down. (that is just a simple example, people doing all sorts of stuff with this)

louwrentius 6y ago
I read a lot of difficult words that I can't relate to. What does this mean for the average citizen in America or Europe? Also, I read this: > Ethereum clients use a listener (TCP) port and a discovery (UDP) port, both on 30303 by default. > If you need to run JSON-RPC, you'll also need TCP port 8545. Note that JSON-RPC port should not be opened to the outside world, because from there you can do admin operations. Sounds like quite easy to block by any government. Or just cut off internet access at all.
- speeder 6y ago
  "Just cut off internet" indeed would work... but it would work for a lot of things. But saying that is same saying that a normal bank is useless because the government can just "just cut off the power" and thus the bank servers would be down. And indeed in some siege situations, that would be possible, but Ethereum never promised to be siege-proof. As for what it means to the average citizen in America or Europe? Well, one of the popular uses of Ethereum is gambling, that in some places is legal, in some others is not. Another use is create business that can't operate in some jurisdictions for whatever reason (for example because sanctions, or just plain old outdated laws that were forgotten).
  - louwrentius 6y ago
    > Well, one of the popular uses of Ethereum is gambling, You are really selling this to me...
- 6y ago

csolorio 6y ago

I first used it to pay a contractor in Argentina, since then I stick with the store of value hypothesis. It’s like gold but easier to hold and trade without having the government devalue it by printing more dollars. Or put another way, why does a dollar have value?

louwrentius 6y ago
We already have solutions for paying people in other countries. Why would I use this one? I read a lot of difficult words I don't understand. It doesn't explain anything to me.
- NotUsingLinux 6y ago
  Today’s (normal)money system is complex and still many of it is not transparent to the public. Ethereum is trying to build something with more transparency but also tries to create a space in which people can experiment with funding. ( see quadratic voting experiments)
- csolorio 6y ago
  Argentina at the time had an official rate that was 4 to 1 the black market rate. If I used the official methods I'd be paying the contractor 25% of what I promised. In the US, this is not a large issue, but there are many countries where the gov't can manipulate their currency and exchange rates.
- vbezhenar 6y ago
  There are lots of hoops I would need to jump around if someone would send be US dollars. Those would be frozen in my bank account, I would need to get an official papers (contract or something like this), translate it to the local language, notarize it and prove that those moneys are not from laundering stuff. And even then I might be denied to get those money if those papers were unconvincing. With Bitcoin it just works with 0 issues. Also I don't need to pay taxes which is good thing as I don't like this government and don't want to fund it.

pmachinery 6y ago

> I don't understand cryptocurrencies. People buy cryptocurrencies and hope the price rises and they can dump it back into the USD it has always been valued in, before everyone else does the same. Since spamming forums to inflate the price doesn't work as it did a decade ago, in order to prevent them crashing to the floor, all kinds of nonsense white elephant use-cases have to be imagined/invented. We all understand cryptocurrencies. (You're just not supposed to admit it out loud.)

jesusthatsgreat 6y ago
Same could be said about the stock market. Lots of companies aren't in profit and would die without the ability to dump shares and without speculators (and indeed the government itself - the ultimate speculator) propping it all up. Many of them die anyway, sometimes right after raising fresh capital from suckers who believed in their vision. We've been here before in tech with the dotcom bubble. Lots of noise, nonsense and white elephants. Most projects will crash and burn, some will go on to change our daily lives.

PycptN2MH 6y ago

It is deceptive to say 'I don't understand' when what you mean is 'I disagree.' Your central argument is: 'You offer a service to everyone. I already have that service. Therefore you are not creating value'

louwrentius 6y ago
I don't even understand if they even provide a real service. But - for the sake of argument - if they do, I don't see the unique selling points.
- prussian 6y ago
  Honestly, the selling point is it is a demonstration of global consensus. whether that is useful as a service is debatable I suppose.
- anonymousab 6y ago
  Crypto is easy to transfer and keep and has more lasting value in countries that are facing hyperinflation, often moreso than USD. This particularly applies to Venezuela, which is exerting extra pressures and taxes in foreign currencies.
  - louwrentius 6y ago
    So it's basically irrelevant for the USA and Europe. Then why is it such a hot topic on Hacker News? I have some ideas, but they are not kind.
    - dmihal 6y ago
      Forget about the developing world. I'm an American living in Europe. My money is in the US banking system and in crypto. There's no easy way for me to "Venmo" money to my friends here, I'd have to use an international bank transfer which would take over a week and cost high fees. But with my friends in crypto: I can just transfer them Dai. It takes about 15 seconds and costs less than a dollar (and will get cheaper with things like Eth2)

sweetheart 6y ago

https://lmgtfy.app/?q=what+is+the+point+of+ethereum https://lmgtfy.app/?q=what+is+the+point+of+ethereum

rakoo 6y ago

I'm not specially a believer in cryptocurrencies, but it's probably the best way to implement micropayments, which will solve the biggest problem we have on the internet: monetization of content and of effort (think open source), which today is mostly sustained by ads.

lkbm 6y ago

> What problem / which problems are being solved here? I think mostly it's for people don't want the government/Federal Reserve fiddling with the value of their money. Personally, I think monetary policy is an incredibly valuable and important tool, but I recognize that trusting the powers that be to wield it properly is a bit naïve of me.

bjarneh 6y ago

> What problem / which problems are being solved here? I guess all crypto-currency is an attempt at digital cash. I.e. the ability to send "money" between people who do not trust each other digitally; with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc. Why people want to solve this problem through a scheme of chained hash-values and mining (which I guess is just padding the data you compute hash-values from until it hits a certain number of 0's at the end), is still unclear for me.

louwrentius 6y ago
> I.e. the ability to send "money" between people who do not trust each other digitally; How does a cryptocurrency actually solve the lack of trust? From the few things I do understand, I think it doesn't at all. I think this article by Bruce Schneier is interesting: https://www.schneier.com/essays/archives/2019/02/theres_no_good_reaso.html https://www.schneier.com/essays/archives/2019/02/theres_no_g... > with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc. I don't have a need for that kind of secrecy. I understand the Silk Roads of the world would like it though. But that doesn't sell cryptocurrencies to me. If you need to hide stuff from the government, there are bigger problems that cryptocurrencies can't solve, as I can tell.
- bjarneh 6y ago
  > How does a cryptocurrency actually solve the lack of trust? I said it was an attempt, I'm not sure it solves it.. > If you need to hide stuff from the government All governments are not good. The US government for instance "froze" (basically took) all the money WikiLeaks had, and made it impossible to send them money through traditional banking systems. So crypto-currencies have already been important in funding an organization that uncovered war-crimes; which is a good thing. Not all secrecy/privacy is criminal behavior, sometimes it is actual journalism. I guess we have seen so little journalism in the last few years we barely remember what it looks like.
101008 6y ago
> the ability to send "money" between people who do not trust each other digitally How is this solved with crypto? I bought a few things with crypto that they were never delivered, so I got scammed. Yes, crypto helps the part receiving money, not the part sending money. This is not a solution, it's just moving the problem to the other side.

hated 6y ago

The problem is payment processors deciding who you can and cannot give money to. Crypto currencies solve this problem by not requiring traditional payment processors to make an exchange of value between parties.

prussian 6y ago
Thus, a new problem is born. Governments regulate what securities people can buy or exchanges simply deny you services. then you're back to your former problem. Most people participating are doing so with fiat on-ramps.

s_dev 6y ago

>What problem / which problems are being solved here? Lets say I want to transfer some assets to a guy without anyone knowing from any internet connection. There is a demand for this global service. Crypto-currency faciliates this. You buy crypto with your normal currency. Transfer. Switch back to normal currency. Yes you've endured some volatility in price but the whole operation was done in an hour or so. So legit business will set up as "Bitcoin Banks" allowing people to trade in and out of them. It's truly "digital cash".

prussian 6y ago
so basically, we're inefficiently reinventing payment processing with the added tax burden of buying/selling securities?
- apexalpha 6y ago
  Well for what's it worth I've only ever needed it once. I was moving out of China and wanted to take my money with me. It was really hard to get this done, there are tons of capital restrictions and the banks literally wouldn't help me out. So I put all my money in the BTC blockchain in China and pulled it out in the EU. The other option was to get it in cash and physically bring it over the border, which I considered riskier.
- s_dev 6y ago
  >reinventing No reinventing -- this tech doesn't require a middleman. Unprecedented.
dmihal 6y ago
> Yes you've endured some volatility in price Not if you use stablecoins like Dai :)

seibelj 6y ago

Ethereum is a platform for decentralized computing. It's like a web server that is always on, never goes down, and you only pay for exactly what services you use (and no more). It is also uncensorable and perfectly immutable - which as a consequence is very useful for money. So one of the high-value services Ethereum supports is moving money and applications around money. This "money" is sometimes referred to as "tokens", which are like digital equity, bonds, currency, but are very hard to put in a single bucket and kind of operate like all of them at once. One interesting aspect is they are bearer instruments, meaning no one can seize them from you. It's an alternative financial system that anyone can hack on and no one can prevent you from using. Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. But there is a sizable community of programmers around the world that value a completely open, transparent, hackable, and protocol-oriented financial system. Its network effects have allowed it to be greater than the sum of its parts, and novel financial applications continue to be constructed on it.

1996 6y ago
> Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. Neither do I. I believe it's sour grapes: they missed up on crypto following the advice of people/websites they trusted (given the negative outlook on HN since 2009), and it's becoming harder and harder to justify their past mistakes. So it turns into cognitive dissonance. Said differently, just like how it's hard for someone to understand something when them making a living depends on NOT understanding it, they must keep not understanding to justify their past mistakes. Eventually, I think it will turn into a Ballmer-esque throwing chairs, and calling it a cancer, before coming to terms with reality.

jules-jules 6y ago

You might want to start here, focusing on the transformation of ethereum's ecosystem [0] >ETH 2.0 is finally here and will transform Ethereum as we know it. But what is the philosophy underpinning ETH 2.0? And what is Ethereum building towards? It all starts with the idea that Ethereum is the foundation of a social contract for the global economy. >Ethereum is a global public good that is open, borderless, neutral, transparent, and censorship-resistant.Ethereum provides a system of property rights, rules, and economic opportunity for anyone in the world with an internet connection. With Ethereum users and builders are sovereign and able to determine their own economic destinies. >This is important in an age of declining trust in institutions where many people don’t have access to stable systems of property rights or economic opportunity. With this in mind ETH 2.0 was designed with five key principles: - Simplicity - Long-term stability - Sufficiency - Defense in depth - Full light-client verifiability >Simplicity - Allows ETH 2.0 to minimize development costs, reduce its attack surface, and clearly convince users that protocol parameter choices are legitimate because they’re easier to understand (key for credible neutrality). >Long-Term Stability - Although Ethereum so far has favored evolution over stability, ETH 2.0 is designed with the idea that once built, there should be little need to change it for long periods of time - a necessity for Ethereum to serve as public infrastructure. >Sufficiency - Blockchains must be powerful enough for it to be possible to build trust minimized layer2 protocols on top of it. In order to achieve this blockchains must include an expressive programming language, scalable data availability and computation, and fast block times. >Defense in Depth - Blockchains must work well under a variety of possible security assumptions. A key way to achieve this is to design the system so that it is as decentralized as possible to prevent faults, collusions, and attacks. And in the case where harmful collusion does take place, it’s important to make it extremely expensive for those colluding and easy for non-colluding participants to recover the system. >These are the core reasons underlying Ethereum’s shift to Proof of Stake. >Full Light-Client Verifiability - Many users will only interact with Ethereum through light clients. Thus it’s important for those users to be able to verify that the data in the full system is available and valid, even under a 51% attack (under certain assumptions). [1] Ethereum is on course to settle $1 trillion in one year more than double the transaction volume of Bitcoin. [0] https://twitter.com/RyanWatkins_/status/1333588739277414401 https://twitter.com/RyanWatkins_/status/1333588739277414401 [1] https://cointelegraph.com/news/ethereum-set-to-become-first-blockchain-to-settle-1-trillion-in-one-year https://cointelegraph.com/news/ethereum-set-to-become-first-...

3np 6y ago

The main thing that's being enabled by "blockchain" is a way for mutually distrustful parties to agree on a timeline of events. That's it. But it has huge implications. The trust factor requirement is removed from the physical infrastructure and operators. For bitcoin and most cryptocurrencies, this is used for a ledger of value transactions. Now we have an way to transfer ownership and value. What the internet did for information transfer, we now have for value transfer. Ethereum generalizes this with a virtual machine that can run arbitrary computation and store arbitrary state. A trustless global value transfer machine that requires no PII (which could be regulated, and added as a requirement in compliant applications, of course), central point of trust, or custodian of data. Where the security layer between the service/application/protocol and the end-user is abstracted away and taken care of by the Ethereum ecosystem. In the phase we're in right now, a lot of applications are related to finance. There is both transformation of traditional finance[0], and the new sector of "defi" that IMO is here to stay and grow but is in the early half of a huge bubble that will burst hard). That aside, this is enabling a new way to structure ownership, applications and anything between. If blockchain-based currencies and smart contract platforms end up as Orweillan tools of control, or liberating and improving our society, is mostly lot up to developers, teams, and users. I hope more people get it. But not not too many too soon, because the infrastructure wouldn't handle it. Eth2 improves on that by magnitudes, so this news is a crucial step. [0]: Source: Working at a digital asset service provider with some bigger and more well-known financial institutions as clients, and friends in the industry.

louwrentius 6y ago
> I hope more people get it. I really didn't. Why should I care about any this? How can you explain this to an average person in the street?
- 3np 6y ago
  No one told you you should care. It's not like I go rant in the Apple Big Sur release how I can't relate to any of it, you know?

dbetteridge 6y ago

On a personal level I to have no need or want of cryptocurrencies, but the stated benefits are not for first world, white, city dwellers with ready access to the existing monetary system. - Someone lives somewhere that the U.S refuses to bank with (Sanctions) - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?) - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example) These are examples where one could build processes around something like Ethereum, with the understanding that you are primarily just adding another input to the existing system but with the trade-offs being more access and lower fees but also less protections and greater risk.

dsg42 6y ago
Just to be clear, these reasons are: - To commit a crime - Not a real use case (If someone has no access to normal financial infrastructure, including Venmo and similar, how would they ever use crypto) - To avoid processing fees by paying higher fees?
- sixhobbits 6y ago
  TIL its a crime to live in Iran
- cameronh90 6y ago
  Living somewhere the US has sanctions against isn't a crime.
louwrentius 6y ago
> - Someone lives somewhere that the U.S refuses to bank with Cryptocurrencies won't solve this problem. If that happens, there are much bigger issues. > - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?) Let's be honest. The whole blockhain / cryptocurrency was never about that ever. > - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example) I think there are more than plenty online sites where people can pay for that kind of content without any problems. I just don't understand any of this.

Shorel 6y ago

Advice: if you don't understand, never invest. About your other points: I see no benefit whatsoever in investing my own time trying to teach you about cryptocurrencies. Think about it as a secret. Act as it doesn't exist and both our lives will be better.

rorykoehler 6y ago

>I can do all these things already. While I understand why you are confused you must understand that many people can't do what you can do and it's not guaranteed you will be able to do it in the future either. Just look at the situation in Venezuela for example. Even in SE Asia loads of people are still unbanked with no way of changing that.

louwrentius 6y ago
Then I don't understand this keen interest in crypto by Americans and Europeans. I think this is not why there is such a hype around cryptocurrencies.
- rorykoehler 6y ago
  Because they want to get rich quick
- Acrobatic_Road 6y ago
  I went to order a book recently. At the bottom of the shopping cart it reads: "Note: We have been deplatformed by our credit card processor. To complete your order, please print or otherwise make a copy of the information on this page and mail it with your cash, check, or money order to:" and then their address. I don't live in a third world country, but I do think cryptocurrency would help in this situation.

giffarage 6y ago

It’s digital money. You buy things with it.

voxl 6y ago

People have said a lot to you already, and your only response has been "big words, what about average citizen, don't understand." I think it's time to just say it, Ethereum is not for you and is never going to be, you seem to have an agenda in thinking it's a useless waste of time. Ethereum is a decentralized commerce and application network. And no, you simply cannot do that with anything else but cryptocurrency. It has hefty aspirations to remove currency control from government entities and banks, but its unlikely that will ever happen.

zadler 6y ago
Perhaps not, but blockchains, as well central bank digital currencies, will definitely have a big impact on society. People will have an alternative to the monetary system provided by their government. Eventually this could well lead to alternative governmental systems becoming available. There is also a chance that old tax codes will never adaquetely adapt to the way that crypto currencies are used. It looks set to reduce the role of central governments and banks in finance.
shortstuffsushi 6y ago
> Ethereum is not for you and is never going to be This is a problem though, because it needs to be "for everyone" for it to really work, right?
- voxl 6y ago
  No, it doesn't, no more than the United States government needs to be "for everyone."
- ZephyrBlu 6y ago
  It _works_ for everyone, but not everyone needs to understand it.
- everfree 6y ago
  Linux is not "for everyone", yet it works in the background serving up major internet apps and running databases and computer systems for the benefit of everyone. Ethereum (and its competitors) aspire to be the "linux" of value transfer, in some respects.

joeblau 6y ago

I can do all these things already. You're absolutely right, but just like you can send a letter in the mail, email does the same thing but is digitally native to the internet. Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it. What problem / which problems are being solved here? The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer" I don't understand what this means. What does this do for real-life applications? Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. I need to send my shares to a brokerage (they take cuts and fees and do insider trading crap that they disguise as legal) then you buy the shares from then. If it's mine, why can't I just transfer the shares straight to you for the listed price (Currently $567.60)? Because there is no platform digital trustless value transfer that will ensure that we both get what we want: Me getting the money, and you getting the shares.

louwrentius 6y ago
> Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it. Maybe because it's not a need most people have? > The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer" This still means nothing to me. I can't relate to this. > Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. (they take cuts and fees..) So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
- WnZ39p0Dgydaz1 6y ago

achempion 6y ago

Hi, here is most simple explanation what it does: Simple solution for illegal/semi-legal activities. Think some goods, money laundering (try to transfer money to North Korea, Iran) even to your relative. Also, there are some privacy minded individuals as well who would like to pay for things like VPN, domains, servers who don't want to get their account tied to theirs credit card. Speaking of Ethereum, think of it like digital money + some js function which can be executed on demand. It allows you to make scams like bitconnect. In other words casino / gambling. Really hard to do legally but very easy to deploy casino function to Ethereum. Those markets are huge.

floatboth 6y ago
Yes, buying weed and VPN accounts is the good use of censorship-resistant money. Unfortunately there's also the bad uses like, you know, any kind of extortion (especially ransomware), fraud, scams.. oh you even mentioned the scams! :)

markkat 6y ago

It makes me sad, because I expected a comment like this to be the highest on HN. In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life. As an example, already, anyone in the world can buy property in the US: https://realt.co/ https://realt.co/ What the web did for infomation, Ethereum will do for value.

louwrentius 6y ago
> In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. Does this sentence actually mean anything? > In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. What does this mean in concrete terms? > Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life. Who wants this?
- seibelj 6y ago
  You just keep acting like the “caveman lawyer” from Saturday Night Live and refusing to learn or acknowledge anything. You are being obnoxious and just continuing the HN trope of “blockchain is totally worthless despite it being worth hundreds of billions - the whole world is wrong not me!”
  - louwrentius 6y ago
    An ad-hominem, thank you. Do you know anything about human psychology, by the way?

wilde 6y ago

How might we create a digital commodity that is: 1) Consistent with a specific set of ideals (anyone can issue, what happens on the network is a matter of individual responsibility, establish economic incentives to funnel people into good behavior, finders keepers, etc.) 2) Obfuscated enough that it’s not immediately regulated into oblivion by the existing financial system Many people on this site subscribe to the ideals in #1, thus the fervor. The CFTC has decided to do away with #2 (in the states) but it took them over a decade.

moron4hire 6y ago
> what happens on the network is a matter of individual responsibility That sounds like the opposite of solving trust.
- wilde 6y ago
  Indeed. I don’t agree with all of these principles. I’m just stating what I’ve observed.

ForHackernews 6y ago

Imagine an extremely slow CPU, where every opcode cost money to run. Imagine you could deploy code to this machine, and it would be guaranteed to execute in a publicly verifiable way, and nobody could change it or modify it (unless you get several influential people to agree to a fork that changes the rules). I think that's basically Ethereum. Oh, also imagine that instead of costing money directly, you instead have to pay somebody to run their car engine at full speed while up on blocks in a garage. Oh, and if they ever stop revving their car engine, somebody else might rev their engines faster/more and then they can steal all your money. Edit: Apparently ETH 2.0 has reduced the amount of pointless engine-revving.

rjknight 6y ago

This is a bit like saying that nobody needs a Linux desktop because Windows is good enough. Some people just care more than you do about certain principles, even if caring about those principles means that they have to endure a lower "quality" product. Most blockchains are strictly inferior to a modern financial system when it comes to things like speed and cost of transferring small sums of money - which is the use case that most people have. But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments. Does anyone else need it? Right now, I think the answer is "no". But nobody really needed a Linux desktop either, and 25 years on we have Chromebooks and Android. Ethereum allows you to upload complex scripts to it, where those scripts are executed by a variety of different nodes which compare results and ensure that the script was executed faithfully. Do I personally need this? Probably not, no. There's a competitive market in cloud hosting and very few circumstances where I would be afraid that Amazon, Google, or Microsoft is going to tamper with my computation, or refuse to execute it. But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Maybe at some point we will want to use blockchain systems to maintain audit trails or even to coordinate our computations. If these systems can prove robustness and reliability over a long period of time, maybe it makes sense to write the rules for multi-party computations as Ethereum scripts, and it becomes a ubiquitous low-level part of the stack. Maybe everyone ends up having an Ethereum account and we use it in place of the current payment system. Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.

louwrentius 6y ago
I don't understand why this topic is in any way relatable to the Linux vs. Windows discussion, even as an analogy. > But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments. That's not a good example to justify any of this, in my opinion. > But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Such as? I don't read anything I can relate to. > Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux. I think that's just false equivalence.

Triv888 6y ago

Have you ever tried to cash a foreign check? Not that easy... You have to go to the bank to do it unlike any regular check... Also it is easier to move large amount of crypto then cash (even when both are digital.

speedgoose 6y ago
In my opinion, moving a large amount of money using crypto currencies, legally and without risks, it not easy for most people. I would say it's a lot harder than going to the bank and letting them manage the transactions database.
- Triv888 6y ago
  Cryptos are not considered currencies under the current laws so I dont see how it would be a problem, legally....

m0llusk 6y ago

The programmable part is most interesting and unknown. Payments can be made to go to one party or have built in alternatives if they die prior to transfer. Payments can also require specific documentation or have a time limit for transfer. How exactly this might most commonly be used is all conjecture, but there are many possibilities and few built in limits. Oddly enough making payments programmable also introduced some of the first bugs in payment programming which raises many issues with the whole concept. In any case, it is all moving forward very fast.

51stpage 6y ago

I too don't need any of the features that cryptocurrency brings. However, cryptocurrencies are making substantial headway on solving the hardest class of problems that humans face: coordination problems. Common examples include the Tragedy of the Commons and collusion [1]. Vitalik has written some surprisingly approachable pieces on the various problems that cryptocurrencies face. It's not too much of a leap to see how these problems appear in non-cryptocurrency contexts. The value I see in cryptocurrencies is that they must develop robust/antifragile solutions to the coordination problems that have plagued society forever. Even if some problems can't be solved, then there are mental tools for making sense of what's going on. [1]: https://vitalik.ca/general/2019/04/03/collusion.html https://vitalik.ca/general/2019/04/03/collusion.html [2]: https://vitalik.ca/general/2020/08/20/trust.html https://vitalik.ca/general/2020/08/20/trust.html

face_mcgace 6y ago

So, I believe you're thinking about this in the classic sense of security, transactions, and decentralizations. It's actually better to think of Ethereum as an ATM that replaces bank tellers - i.e. a fundamental technology shift. Forget about decentralization/transactions for a second and let's take an example of your company transitioning your 401k to another plan. Think of all the people moving this money, all the legal process that it has to go through, all the find print that must be followed, etc. There's a TON of work to move a 401k and the process typically takes months. What if I told you that you could transfer your 401k plan, without the additional overhead of people, and you could do it in seconds? That's Ethereum. Let's take another example of buying a house. If you've ever gone through this process it takes months to finish, theres tons of middlemen (bank loan process, approval, selling the loan, lawyers to secure the property, real estate agents, etc). What if I told you that you could buy a house, without this overhead, in seconds? That's Ethereum. The bottom line is our current financial system is based on an army of lawyers, middlemen, banks etc. and large transactions take time and money to solve. With a concept like Ethereum you just don't need any of that, you can transfer large amounts of value instantly and you don't need this army of people. It is frankly the difference between horses and cars. It's a technological shift that makes previously impossible actions possible.

nootropicat 6y ago

>What does this do for real-life applications? You can lend dollars on ethereum for 4% APR at the moment. That's a good reason to use this even for someone not interested in other functions. The interest comes from borrowers, who are mostly speculators going long on crypto. https://compound.finance/markets https://compound.finance/markets USDC is tokenized dollar that can be swapped to/from dollars in a bank account on coinbase. Recently it was even used by the US Treasury to transfer dollars to Venezuela.

benwad 6y ago
What happens with these loans if the recipient defaults on repayment?
- nootropicat 6y ago
  Loans are overcollateralized and collateral is automatically liquidated once the collateral ratio falls below the liquidation threshold. Eg. for eth as collateral the liquidation threshold is 75%, meaning $75 borrowed for $100 in collateral. Compound itself has survived multiple violent price crashes and lenders didn't lose anything.
  - hiq 6y ago
    To be clear, you mean that I can borrow $75 by giving $100 first, then pay back the $75 with interest and get back my $100? Why don't I use my $100 directly instead? There are a few cases outside the blockchain where you get loans although you already have the cash (e.g. for tax reasons), but I don't understand how it makes financial sense in this case, if everything happens on the blockchain with no other incentive. Maybe another direct question would be: as a lender, for which risk are you getting paid some interest?
    - nootropicat 6y ago
      >Why don't I use my $100 directly instead? Because it's not $100 in dollars, but $100 worth of eth or something else. Borrowed dollars can be used to buy something else, hoping the price of that something rises. >as a lender, for which risk are you getting paid some interest? It's theoretically possible for prices to fall fast enough so that the liquidated value of the collateral isn't enough to pay the debt. I don't think rewards are risk adjusted at all. More like same people that could provide dollars are likely to speculate on cryptocurrencies themselves, or take part in more risky and active yield generating schemes.

eric_cc 6y ago

> I don't understand this. At least you are honest.

DecoPerson 6y ago

In person, I can exchange information with someone without anyone interfering. In person, I can exchange value (e.g.: chocolate for firewood) without anyone interfering. Online, I can exchange information without anyone interfering (using encryption). Online, I cannot exchange value without anyone interfering. Exchanging value at a distance is complicated, because there’s so many different laws, bank APIs, apps, regulations, etc etc. We use middle-man services to simplify these problems for us — but they charge hefty fees. There’s delays, and arbitrary restrictions. All these complications also introduce additional risk (compared to exchanging the value in person). A single, perfect global bank, or a perfect standard for all banks to follow, would allow me to exchange value online without anyone interfering. However, such a thing isn’t likely to happen. Cryptocurrencies, if executed well, offer a real pathway to “I can exchange value online without anyone interfering.”

DecoPerson 6y ago
This also applies to storing value. See what happened to Greece in 2010, where many individuals lost large amounts of cash stored in their bank accounts. This would not happen with Ethereum. If you hold 10 ETH, you’ll continue to hold 10 ETH until it’s transferred elsewhere (or you lose your keys).

whazor 6y ago

Ethereum and other blockchain systems are very foundational, they do not need to care about real-life applications. You probably also don't understand what your central bank is doing, while it supports all your financial transactions. The good news is that the new version of Ethereum is at least more climate friendly.

dmak 6y ago

I’m really surprised to read this far down without anyone mentioning DeFi. Decentralized finance is already happening. You can take out loans against your Ethereum or borrowing or lend already without a bank or an intermediary like LendingClub. The orchestration of money and being able to program money is limitless without the intermediary is huge. True peer to peer financial instruments are now possible.

kemonocode 6y ago

My issue with these kind of questions is that they're hardly ever done in good faith, and they show over and over again whenever crypto is brought up on HN. Crypto has its good uses, and I've relied on it for my livelihood before (and even wished it wasn't just used as a speculation vehicle) when traditional banking couldn't meet my needs, so it's a very Americentric/Eurocentric thing to assume it's only ever good to speculate on and buy drugs on the Dark Web. That's it- that's its killer app, it's an alternative to existing money transfer and store of value mechanisms, anything else like "smart contracts" or reduced carbon footprints from better Proof-of-Stake implementations are a nice bonus and worth developing, of course.

shortstuffsushi 6y ago
Could you expand on a scenario where "traditional banking couldn't meet your needs," but crypto was able to?
- fsewe20 6y ago
  https://twitter.com/arbingsam/status/1333669126125068289 https://twitter.com/arbingsam/status/1333669126125068289 Heres one novel idea I have just seen in my twitter feed for a yearn strategy[1]. You deposit tokens to the yearn contract which employs different strategies to lend/spend those tokens in ways that generate profit for everyone participating in the contract. This strategy is taking up the rest of the bets that trump wont be re-elected on a decentralised prediction market (blah blah see crypto is all gambling). This ability to be able to program collectively program money is fascinating (and is scary with bugs, but with time hopefully becomes more robust). [1]https://yearn.finance/vaults https://yearn.finance/vaults
  - shortstuffsushi 6y ago
    I don't entirely understand this, but am I gathering that it's holding money for a "bet," similar to paying into a horsetrack and then going back to collect if your horse wins? Or is it an escrow where, during the time the money is held, it "generates profit" (invested elsewhere?) and then pays a return to those who contributed later? fwiw - I don't have a yearn account, and am consequently unable to view your yearn link.

fsewe20 6y ago

Remember Bowie talking about the internet in '99 "I think we're actually on the cusp of something exhilarating and terrifying.... Its an alien life form, just landed."[1] Many of us feel the same about programmable money. It seems pretty interesting, unexplored, and has exciting, scary potential. It seems like a great place to build community groups openly, fairly, freely(in the libre sense). It reminds me of being a kid in the 90s dialing up to the internet and discovering peoples homepages and forums, sharing ideas and playing with new ways of organising and working together, playing and having fun. The ethereum dev community is inspiring to me. But you dont have to agree that it is world changing, thats ok. I think there is value in it and will work to prove you wrong! We're all on the same side in the end. [1] https://www.youtube.com/watch?v=LaHcOs7mhfU https://www.youtube.com/watch?v=LaHcOs7mhfU

deleted 6y ago

[deleted]

CryptoPunk 6y ago

It's a credibly neutral ledger that guarantees access to any one in the world indefinitely.

dheera 6y ago

Moreover, why is ETH not mooning already with the new release? I thought not enough "mooning" was the main problem alt-coins solved ...

capnorange 6y ago

Maybe it's not useful to you, maybe if you kept an open mind you could find some use! 1. There is $14.17B of value locked in DeFi, so it's clearly useful to someone(and scams don't account for the majority of it). 2. USD is not my primary currency, I'm fortunate my employer agrees to pay me in USDC. The fees are usually around $1.5, previously when I used PayPal fees used to be 5.5% deducted from my side. 3. I keep most of my money in USD, which earns interest around 8% APY monthly on yearn.finance/earn. Contrast with the savings account on my bank which gives me 3%. I don't trade, I don't speculate. I own a small amount of ETH to pay for fees. If you are from TradeFi you will find it much more useful!

literallycancer 6y ago

Have you ever been refused service by a bank because of where you are from? Have you ever had your property nationalized? Have you ever had to leave everything behind and start from scratch somewhere else? Have you ever lost your savings because the government tried to print its way out of debt? Maybe you enjoy the privilege of living in a country where these are very unlikely to happen. Most people don't.

gge 6y ago

Check out defi, insane amount of innovation has been happening with defi protocols on Ethereum. I use defi protocols like Aave every day.