4 ms·

Cryptocurrency has no real world utility. It's a tool for gambling, speculative investment, and pump-and-dump schemes. There, I said it. I was an Ethereum enth

Cryptocurrency has no real world utility. It's a tool for gambling, speculative investment, and pump-and-dump schemes. There, I said it. I was an Ethereum enthusiast back in 2017, but it didn't take long for me to see that cryptocurrency as it stands will never work. Smart contracts are too fragile, trading is too inaccessible, and keeping assets safe is too difficult. There has been barely any innovation in scalability over the years, and I'm wondering if that's because proof of work has become too big to fail. Too profitable for it to end.

Bombthecat 5y ago
I think, smart contracts work, but only the super simple ones. Everything else is proned for bugs
- root_axis 5y ago
  Smart contracts also have near (but not completely) zero utility since they're only useful when applied to entities that are entirely contained on the blockchain.
  - hanniabu 5y ago
    Lol all your comments scream bitcoin maxi
- hanniabu 5y ago
  That's a property of software in general
arcticbull 5y ago
The big challenge is actually the set of core features: decentralization, trustlessness and permissionlessness. These are the features that allow the pricing to be manipulated beyond any semblance of connection to reality. Any number you see, any stat you see, any data presented to you is likely fake. This is made possible because of trustlessness, permissionlessness and decentralization. Nobody can stop it by design. 95% of all trading volume is fake. Exchanges fake volume to draw in new gamblers. [1] The pricing is determined by Tethers, which account for 65% of all trading volume [2, 3] but are backed by $0.03USD per USDT and hot air and are not redeemable by anyone [4]. Even USDC is now backed by "approved investments" instead of dollars [5]. That's just a small sliver. Aparently 1/3 of all small and medium businesses in America accept crypto! Fun fact. Are you sure? Because I haven't seen a single one. [6] The actual market is roughly speaking totally unrecognizable. The only thing we know for a fact is that new money has to come into PoW coins equal to the cost of mining just to keep the price stable. Anything above and beyond that is almost impossible to know for sure. This is what libertarianism looks like (humorous take [7]). It kinda sucks. [1] https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-reported-bitcoin-trading-volume-is-fake-says-bitwise/ https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-repor... [2] https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 [3] https://coinlib.io/coin/BTC/Bitcoin https://coinlib.io/coin/BTC/Bitcoin - among others. [4] https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b4d9 https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b... [5] https://www.coindesk.com/circle-is-not-winning-stablecoin-transparancy-race https://www.coindesk.com/circle-is-not-winning-stablecoin-tr... [6] https://bitcoinist.com/36-of-u-s-smes-accept-cryptocurrency-payments/ https://bitcoinist.com/36-of-u-s-smes-accept-cryptocurrency-... [7] https://www.newyorker.com/humor/daily-shouts/l-p-d-libertarian-police-department https://www.newyorker.com/humor/daily-shouts/l-p-d-libertari...
kart23 5y ago
I think silk road and all the other markets have proven you wrong. That being said, you're right about it not being a suitable replacement for traditional finance.
cwkoss 5y ago
"The stock market has no real world utility. It's a tool for gambling, speculative investment, and pump-and-dump schemes. There, I said it."
- rawtxapp 5y ago
  Especially when you consider that a large percentage of stocks don't pay dividends, so you're only holding it because you think the company will do better which may or may not translate into increased share value.
  - hanniabu 5y ago
    Plus the term ponzi is rooted in traditional markets
  - fossuser 5y ago
    This does give me pause and is pretty weird when you think about it. The 'old way' makes a nice kind of sense. Company goes to the public to raise money to build a factory or something. In exchange the public gets a share of the company. The company builds the factory and is able to grow as a result, the public ownership of the stock rewards owners with some small cut of the profits. Today almost none of that is true. There's enough private money that there's no financial need to go to public markets a lot of the time. Going public is mostly done for recruiting and giving employees that helped build the company liquidity. Public share holders no longer even have impactful voting rights a lot of the time (something I'm fine with, but still is relevant in comparing the value). The public invests because of the stock being tied to growth without dividends (and large passive index funds investments in retirement funds). Why does stock value track company value when there's no actual value coming from it? Am I missing something obvious? The above is the best case too - the bad case is best described by Matt Levine [0]. In some ways crypto assets are easier to understand - they're often tied to supporting the network infrastructure itself, or in the case of tokens whatever the protocol is doing. It aligns incentives around adoption of a decentralized protocol. The same is sort of true for share holders, but not really to the same extent and not as direct. [0]: >"There are other business models. For instance you could make a product that people kind of want, or that they would want if it were affordable. Then you convince people to buy it by selling it for much less than it costs you to make it, or by paying them to buy it. If you do this well, you will have high revenue and rapid revenue growth, because lots of people are buying your product. You will not, however, get rich, because you’ll be spending more money making the product than you get from your customers. Your revenue will be high but your net income will be negative; it will cost you money to run this business. > But then you will go to investors, and you will say “look, I have a company with rapidly growing revenue, that’s worth something, you should pay me for a share of my company.” And they will agree—“we love rapid revenue growth,” they will say—and you will sell stock in the company for hundreds of millions of dollars. And then it will cost them money to run the business, and you will be rich. There are various possible endgames; in some of them you go to prison but in quite a lot of them you just stay rich and become an elder statesman admired for your business acumen."

Bombthecat 5y ago

I think, smart contracts work, but only the super simple ones. Everything else is proned for bugs

root_axis 5y ago
Smart contracts also have near (but not completely) zero utility since they're only useful when applied to entities that are entirely contained on the blockchain.
- hanniabu 5y ago
  Lol all your comments scream bitcoin maxi
hanniabu 5y ago
That's a property of software in general

arcticbull 5y ago

The big challenge is actually the set of core features: decentralization, trustlessness and permissionlessness. These are the features that allow the pricing to be manipulated beyond any semblance of connection to reality. Any number you see, any stat you see, any data presented to you is likely fake. This is made possible because of trustlessness, permissionlessness and decentralization. Nobody can stop it by design. 95% of all trading volume is fake. Exchanges fake volume to draw in new gamblers. [1] The pricing is determined by Tethers, which account for 65% of all trading volume [2, 3] but are backed by $0.03USD per USDT and hot air and are not redeemable by anyone [4]. Even USDC is now backed by "approved investments" instead of dollars [5]. That's just a small sliver. Aparently 1/3 of all small and medium businesses in America accept crypto! Fun fact. Are you sure? Because I haven't seen a single one. [6] The actual market is roughly speaking totally unrecognizable. The only thing we know for a fact is that new money has to come into PoW coins equal to the cost of mining just to keep the price stable. Anything above and beyond that is almost impossible to know for sure. This is what libertarianism looks like (humorous take [7]). It kinda sucks. [1] https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-reported-bitcoin-trading-volume-is-fake-says-bitwise/ https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-repor... [2] https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 [3] https://coinlib.io/coin/BTC/Bitcoin https://coinlib.io/coin/BTC/Bitcoin - among others. [4] https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b4d9 https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b... [5] https://www.coindesk.com/circle-is-not-winning-stablecoin-transparancy-race https://www.coindesk.com/circle-is-not-winning-stablecoin-tr... [6] https://bitcoinist.com/36-of-u-s-smes-accept-cryptocurrency-payments/ https://bitcoinist.com/36-of-u-s-smes-accept-cryptocurrency-... [7] https://www.newyorker.com/humor/daily-shouts/l-p-d-libertarian-police-department https://www.newyorker.com/humor/daily-shouts/l-p-d-libertari...

kart23 5y ago

I think silk road and all the other markets have proven you wrong. That being said, you're right about it not being a suitable replacement for traditional finance.

cwkoss 5y ago

"The stock market has no real world utility. It's a tool for gambling, speculative investment, and pump-and-dump schemes. There, I said it."

rawtxapp 5y ago
Especially when you consider that a large percentage of stocks don't pay dividends, so you're only holding it because you think the company will do better which may or may not translate into increased share value.
- hanniabu 5y ago
  Plus the term ponzi is rooted in traditional markets
- fossuser 5y ago
  This does give me pause and is pretty weird when you think about it. The 'old way' makes a nice kind of sense. Company goes to the public to raise money to build a factory or something. In exchange the public gets a share of the company. The company builds the factory and is able to grow as a result, the public ownership of the stock rewards owners with some small cut of the profits. Today almost none of that is true. There's enough private money that there's no financial need to go to public markets a lot of the time. Going public is mostly done for recruiting and giving employees that helped build the company liquidity. Public share holders no longer even have impactful voting rights a lot of the time (something I'm fine with, but still is relevant in comparing the value). The public invests because of the stock being tied to growth without dividends (and large passive index funds investments in retirement funds). Why does stock value track company value when there's no actual value coming from it? Am I missing something obvious? The above is the best case too - the bad case is best described by Matt Levine [0]. In some ways crypto assets are easier to understand - they're often tied to supporting the network infrastructure itself, or in the case of tokens whatever the protocol is doing. It aligns incentives around adoption of a decentralized protocol. The same is sort of true for share holders, but not really to the same extent and not as direct. [0]: >"There are other business models. For instance you could make a product that people kind of want, or that they would want if it were affordable. Then you convince people to buy it by selling it for much less than it costs you to make it, or by paying them to buy it. If you do this well, you will have high revenue and rapid revenue growth, because lots of people are buying your product. You will not, however, get rich, because you’ll be spending more money making the product than you get from your customers. Your revenue will be high but your net income will be negative; it will cost you money to run this business. > But then you will go to investors, and you will say “look, I have a company with rapidly growing revenue, that’s worth something, you should pay me for a share of my company.” And they will agree—“we love rapid revenue growth,” they will say—and you will sell stock in the company for hundreds of millions of dollars. And then it will cost them money to run the business, and you will be rich. There are various possible endgames; in some of them you go to prison but in quite a lot of them you just stay rich and become an elder statesman admired for your business acumen."