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This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as act

by wyck 5y ago

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except crypto has the potential to be more efficient and secure. One of the key reasons money exists is "currency velocity", crypto improves upon this a lot. Banks make money with money, they don't make money with real use cases. Good crypto projects act like decentralized banks, nothing more. In other words ignore all the bullshit projects and look at the ones who are structured like banks, financial instruments, or risk management. Then the use cases of cypto become very clear.

deleted 5y ago
[deleted]
akkartik 5y ago
Examples?
klodolph 5y ago
> Banks make money with money, they don't make money with real use cases. Banks make money with money + effort. They provide loans and vet the recipients of those loans, because the banks are exposed to the risk of default (at least, ideally, obviously this failed in 2008). If you want a small business loan, then you typically have to have not only a good credit rating, but a business plan. Sounds like a real use case to me.
- steveBK123 5y ago
  Exactly - banks make money with money, but it's the money that real people use in the real world for real goods & services!! Want to buy a house? (Mortgage) Want to spread out the cost of a large purchase (car/boat/appliance)? (Credit card, consumer loan) Want to borrow money to pay contractors for home improvements? (HELOC) Want to pay for a coffee with a payment that is accepted in seconds? (Credit/Debit card or you know.. paper money) Want to save excess income in an interest-bearing account? (Savings, Money markets, etc) Want to invest excess income in partial ownership of income producing businesses? (IPOs, stock market) If banks don't make money with real use cases, please close all your accounts and attempt to live a week or a month without any interaction with the banking system. The banking system matches borrowers and savers of different risk profiles & durations so that people can go about their lives in a more convenient fashion. Right now DeFi is replicating some aspects of this in a fraud-laced decentralized manner except with an alphabet soup of crypto "money" which you can't do anything with other than trade it for more/other crypto "money" or the dirty-word "fiat".
asah 5y ago
+1 - crypto-based lending is an incredibly smooth digital process vs legacy dollar-based lending, which is frankly a nightmare of "wire cutoff deadlines," entering the same info 40 times for 6 people, "security theatre" like call-to-confirm and notary public with people who don't know you and are trusting pieces of paper, etc etc etc
- timy2shoes 5y ago
  What you call bugs I call features. See e.g. https://news.ycombinator.com/item?id=25443212 https://news.ycombinator.com/item?id=25443212
- valuearb 5y ago
  Yep, no deadlines when you don’t do due diligence.
  - the_sleaze_ 5y ago
    Cute. Please keep this kind of input on Twitter.
MomoXenosaga 5y ago
But we already have banks. Seems like nobody is aware of exactly what problems they're trying to solve here. "crypto has the potential to be more efficient and secure" Sounds charmingly vague.
crazygringo 5y ago
> except crypto has the potential to be more efficient and secure Except that's not clear at all. It's currently less efficient than electronic bank ledgers by many orders of magnitude, in any way you measure -- energy consumption, cost, speed, etc. And it's paradoxically less secure, as tons of successful hacks/thefts have proven. If my bank gets hacked, I'm still FDIC-insured. The courts will make me whole. Crypto is exactly the opposite. And there is no indication any of this is changing. Crypto is inherently inefficient because of the need for proof, and for the average person it's far riskier so your money is far less secure in that sense -- and that's inherent too because illegal transactions like hacking and theft can't be undone, by design. So the use cases of crypto are... not at all clear, except, really, for illegal transactions. Which is why the main real-world use cases, so far, have been... ransom payments, online recreational drug sales, and cross-border transactions. Not even remotely the "banks, financial instruments, and risk management" you're suggesting.
- hanklazard 5y ago
  Agreed on the FDIC (although not everyone banks in the US) part but “speed” is not an area where traditional banks beat the right crypto solutions. My wife and I just had a major fiasco trying to transfer mortgage payments from one major bank to another. Our credit score was damaged severely. I’ll spare you the details but the diagnosis was eventually determined to be “not enough time for clearance” as in I need to have the money transfer start a full week before it needs to be in the second account. This allows for the typical BS 1970’s SWIFT transaction clearance time, including of course that these transactions “can’t” process on the weekends. If I could pay with USDC on either the Ethereum or Solana networks, my transaction would clear a few orders of magnitude faster (irreversibly buried in the blockchain within an hr). A friend who works in real estate foreclosures told me that everyone he works with is using stable coins now for this very reason.
  - short_sells_poo 5y ago
    Are you being purposely disingenuous here? Perhaps crypto is an improvement over some archaic US banking standards but in the UK transactions will clear basically immediately and cost nothing. A money transfer is asymptotically just updating a couple of database records in a transaction. Execution speed is a technical problem, and one that is not solved efficiently by cryptos. Finally, most western countries offer an analogue of FDIC for bank accounts. Countries which don't have such a scheme in place need to install one, again its not something that cryptos solve in any (novel) way. Same goes for half a dozen countries in Europe that I had the fortune to live in.
intuitionist 5y ago
Money classically has three use cases: a unit of account (I have X dollars in my bank account, Y dollars in my 401(k), etc.); a medium of exchange (I trade my labor for dollars and trade those dollars for rent, food, etc.); and a store of value (I save up for a house, car, engagement ring in dollars because I expect them to be fairly stable). Nobody in the real economy uses crypto as a unit of account. Most tokens are too volatile to be very useful as media of exchange, and this use case has traditionally been limited to goods (drugs) and services (hitmen) you can’t legally buy in the dollar system. “Store of value” is in the eye of the beholder, of course, but generally speaking you don’t want your store of value to be something that can depreciate 40% against the dollar in two days.
- dehrmann 5y ago
  > Most tokens are too volatile to be very useful as media of exchange I wonder if this was half of the motivation behind Tesla no longer accepting Bitcoin.
humaniania 5y ago
Use cases of blockchain maybe. What part of that requires a separate "crypto currency"? Not any legal ones that I can think of.
- dheera 5y ago
  If you think legal is good, and you agree with the law, congratulations, you live in a developed country with a mature law system, AND you are probably at least middle class or higher in that society. There are a lot of people in the world for which the law itself is unethical.
  - MomoXenosaga 5y ago
    Well yes the developed world has a tendency to go after terrorists and criminals who use crypto.
steveBK123 5y ago
The potential future use cases become clear in some future world where you can pay for real goods & services in said crypto. Then all the DeFi stuff replicating the existing dollar financial services industry in decentralized form makes sense. In the current world, its just circular references with a lot of fraud.
mmcnl 5y ago
> Money facilitates economic velocity and growth in the same way crypto does, except crypto has the potential to be more efficient and secure. Does crypto do that? I highly doubt that. Real-world economies based on crypto are none existent, or so small they are insignificant. I feel like what you are saying is a huge simplification and may not be true at all.

by wyck 5y ago

deleted 5y ago

[deleted]

akkartik 5y ago

Examples?

klodolph 5y ago

> Banks make money with money, they don't make money with real use cases. Banks make money with money + effort. They provide loans and vet the recipients of those loans, because the banks are exposed to the risk of default (at least, ideally, obviously this failed in 2008). If you want a small business loan, then you typically have to have not only a good credit rating, but a business plan. Sounds like a real use case to me.

steveBK123 5y ago
Exactly - banks make money with money, but it's the money that real people use in the real world for real goods & services!! Want to buy a house? (Mortgage) Want to spread out the cost of a large purchase (car/boat/appliance)? (Credit card, consumer loan) Want to borrow money to pay contractors for home improvements? (HELOC) Want to pay for a coffee with a payment that is accepted in seconds? (Credit/Debit card or you know.. paper money) Want to save excess income in an interest-bearing account? (Savings, Money markets, etc) Want to invest excess income in partial ownership of income producing businesses? (IPOs, stock market) If banks don't make money with real use cases, please close all your accounts and attempt to live a week or a month without any interaction with the banking system. The banking system matches borrowers and savers of different risk profiles & durations so that people can go about their lives in a more convenient fashion. Right now DeFi is replicating some aspects of this in a fraud-laced decentralized manner except with an alphabet soup of crypto "money" which you can't do anything with other than trade it for more/other crypto "money" or the dirty-word "fiat".

asah 5y ago

+1 - crypto-based lending is an incredibly smooth digital process vs legacy dollar-based lending, which is frankly a nightmare of "wire cutoff deadlines," entering the same info 40 times for 6 people, "security theatre" like call-to-confirm and notary public with people who don't know you and are trusting pieces of paper, etc etc etc

timy2shoes 5y ago
What you call bugs I call features. See e.g. https://news.ycombinator.com/item?id=25443212 https://news.ycombinator.com/item?id=25443212
valuearb 5y ago
Yep, no deadlines when you don’t do due diligence.
- the_sleaze_ 5y ago
  Cute. Please keep this kind of input on Twitter.

MomoXenosaga 5y ago

But we already have banks. Seems like nobody is aware of exactly what problems they're trying to solve here. "crypto has the potential to be more efficient and secure" Sounds charmingly vague.

crazygringo 5y ago

> except crypto has the potential to be more efficient and secure Except that's not clear at all. It's currently less efficient than electronic bank ledgers by many orders of magnitude, in any way you measure -- energy consumption, cost, speed, etc. And it's paradoxically less secure, as tons of successful hacks/thefts have proven. If my bank gets hacked, I'm still FDIC-insured. The courts will make me whole. Crypto is exactly the opposite. And there is no indication any of this is changing. Crypto is inherently inefficient because of the need for proof, and for the average person it's far riskier so your money is far less secure in that sense -- and that's inherent too because illegal transactions like hacking and theft can't be undone, by design. So the use cases of crypto are... not at all clear, except, really, for illegal transactions. Which is why the main real-world use cases, so far, have been... ransom payments, online recreational drug sales, and cross-border transactions. Not even remotely the "banks, financial instruments, and risk management" you're suggesting.

hanklazard 5y ago
Agreed on the FDIC (although not everyone banks in the US) part but “speed” is not an area where traditional banks beat the right crypto solutions. My wife and I just had a major fiasco trying to transfer mortgage payments from one major bank to another. Our credit score was damaged severely. I’ll spare you the details but the diagnosis was eventually determined to be “not enough time for clearance” as in I need to have the money transfer start a full week before it needs to be in the second account. This allows for the typical BS 1970’s SWIFT transaction clearance time, including of course that these transactions “can’t” process on the weekends. If I could pay with USDC on either the Ethereum or Solana networks, my transaction would clear a few orders of magnitude faster (irreversibly buried in the blockchain within an hr). A friend who works in real estate foreclosures told me that everyone he works with is using stable coins now for this very reason.
- short_sells_poo 5y ago
  Are you being purposely disingenuous here? Perhaps crypto is an improvement over some archaic US banking standards but in the UK transactions will clear basically immediately and cost nothing. A money transfer is asymptotically just updating a couple of database records in a transaction. Execution speed is a technical problem, and one that is not solved efficiently by cryptos. Finally, most western countries offer an analogue of FDIC for bank accounts. Countries which don't have such a scheme in place need to install one, again its not something that cryptos solve in any (novel) way. Same goes for half a dozen countries in Europe that I had the fortune to live in.

intuitionist 5y ago

Money classically has three use cases: a unit of account (I have X dollars in my bank account, Y dollars in my 401(k), etc.); a medium of exchange (I trade my labor for dollars and trade those dollars for rent, food, etc.); and a store of value (I save up for a house, car, engagement ring in dollars because I expect them to be fairly stable). Nobody in the real economy uses crypto as a unit of account. Most tokens are too volatile to be very useful as media of exchange, and this use case has traditionally been limited to goods (drugs) and services (hitmen) you can’t legally buy in the dollar system. “Store of value” is in the eye of the beholder, of course, but generally speaking you don’t want your store of value to be something that can depreciate 40% against the dollar in two days.

dehrmann 5y ago
> Most tokens are too volatile to be very useful as media of exchange I wonder if this was half of the motivation behind Tesla no longer accepting Bitcoin.

humaniania 5y ago

Use cases of blockchain maybe. What part of that requires a separate "crypto currency"? Not any legal ones that I can think of.

dheera 5y ago
If you think legal is good, and you agree with the law, congratulations, you live in a developed country with a mature law system, AND you are probably at least middle class or higher in that society. There are a lot of people in the world for which the law itself is unethical.
- MomoXenosaga 5y ago
  Well yes the developed world has a tendency to go after terrorists and criminals who use crypto.

steveBK123 5y ago

The potential future use cases become clear in some future world where you can pay for real goods & services in said crypto. Then all the DeFi stuff replicating the existing dollar financial services industry in decentralized form makes sense. In the current world, its just circular references with a lot of fraud.

mmcnl 5y ago

> Money facilitates economic velocity and growth in the same way crypto does, except crypto has the potential to be more efficient and secure. Does crypto do that? I highly doubt that. Real-world economies based on crypto are none existent, or so small they are insignificant. I feel like what you are saying is a huge simplification and may not be true at all.