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What a great read. I really enjoyed the author's writing style and candor. As someone who lost 8 figures in crypto in 2017 - and someone who is still a huge ad

by 58x14 5y ago

What a great read. I really enjoyed the author's writing style and candor. As someone who lost 8 figures in crypto in 2017 - and someone who is still a huge advocate for defi in general - I can deeply empathize with the narrative. This quote stands out to me in particular: "... in many ways the sense of violation and helplessness I felt on Thursday was matched by the excitement and empowerment I felt at being able to recover my remaining assets." Reminds me of the first time I had a corrupted header on an encrypted drive back in 2012. I spent dozens of hours learning things I would have never learned, and while I wasn't able to recover that drive, I've kept header backups for every encrypted device I've had since. Mistakes in crypto are mercilessly punished, sure. But in an era where every major company database (Facebook, Equifax are front of mind) has been leaked and government organizations are frequently compromised (SolarWinds most notable) I can't help but find some solace that hardened blockchains and clients, and developers who follow stringent procedures, will lead us to more widespread technological stability. Maybe you haven't committed a cryptocurrency wallet private key to a repo, but I suspect many may have included vulnerable environmental variables like an API key before. An attacker using that could quickly rack up cloud bills that far exceed losses from the average hot wallet balance. FWIW I consider 80%+ of NFT transactions to be wash trading / 'creative accounting' and most of this recent growth in crypto prices to be a byproduct of hyperinflation. A major correction is coming within 18 months (if not much sooner). Nonetheless I'm still quite optimistic about the future :)

Deestan 5y ago
> But in an era where every major company database (Facebook, Equifax are front of mind) has been leaked and government organizations are frequently compromised (SolarWinds most notable) I can't help but find some solace that hardened blockchains and clients, and developers who follow stringent procedures, will lead us to more widespread technological stability. Can you elaborate a bit on this? It reads to me like blockchain will reduce problems of big tech data leaks, but I'm not following how. Or did you mean something else?
- 58x14 5y ago
  Sure, thanks for asking. My reasoning follows a few paths in parallel: * Distributed data storage like IPFS, built on open source software, should reduce (not eliminate) the number of vulnerabilities to large datasets. Code can be openly audited by many contributors in a way that commercial organizations can't quite support. Minor mistakes are more likely to be caught upstream, reducing the number of possible exploit chains. * Data ownership, sovereignty, and portability are much more possible in web3 than they have been historically. By reducing friction for no-code users to own, store locally, and selectively grant access to their data, we increase the collective resilience and integrity of data at scale. * Evolving the incentive layer, whether for open source contributors, or for end users allowing access to data, increases adoption, which encourages a virtuous cycle. Network effects should eventually compound. * Immediate financial penalties for failure increase the likelihood that application developers and platform operators will prioritize security; historically, security budgets are subject to organizational politics (source: former pentester / digital forensics for 5+ years, many colleagues in the space, much public commentary). TL;DR transparency decreases vulnerabilities, distributed user data ownership decreases attack surface, incentives increase adoption of these patterns, penalties increase operator diligence. For instance... I've never again made a mistake like I did in 2017.
ckwalsh 5y ago
> As someone who lost 8 figures in crypto in 2017 ... You could afford to lose 10+ million without your life being detrimentally impacted (at least I would assume, based on how calm you are about it). Most people can't. Most people can't imagine that amount of money. I'm not a crypto fan. While the technology is interesting and has some intriguing use cases, it feels like all the big coins far away from actually becoming a legitimate currency, and most of the optimistic posts I read miss that. Crypto is not stable. I think that's why so much money is flying into it. If the price of bread or milk goes up 10%, people get scared. In crypto, going up or down 10% is called "Wednesday". I'm aware of stablecoins, but the biggest ones (Tether, etc) all seem to A: be centralized, and B: be run by shady groups with whispers they could disappear at any moment. A breaks the promise that crypto is supposed to provide, and B only provides stability at a glance, until the whole house of cards tumbles apart (as it has). The bigger problem is that crypto is unforgiving. OP's story is all about this. Sure, that's fine for techies who can afford mistakes, and banks or other who might have extreme security procedures, but Mom and Pop on a farm in Iowa are neither of those. When they get a phone call from the "IRS", they are happy to go buy Walmart gift cards and read off the codes, or set up a money transfer. Sometimes that money can be reclaimed, sometimes it can't. With crypto, there is no chance. The financial institutions that exist now are certainly rigged towards the bigger players, but Mom and Pop have a (slim) shot of seeing the money again. Crypto is a fine gamble for those who can afford it, but I honestly doubt it will ever be an every day currency, because I can't see any concerted effort focused on solving those two problems. People can't afford to not know what everything costs at the grocery store, or that they could lose their entire savings by making a mistake when buying a Christmas gift. I don't think it's a great store of value either long term, because at least traditional stores of value (land, precious metals, commodities, etc) have uses to the entire population - blockchains provide no value to 73 year old grandma.
- 58x14 5y ago
  I appreciate your thoughts and, perhaps to your surprise, entirely agree. I'm calm about it now because I've had years to reflect and learn. I began in 2013 buying small sums of bitcoin around ~$50. I amassed ~$500k by 2017, the most I had ever seen in my life, and throughout the year I made some profitable trades on btc-e.com. I had a competitive advantage on that platform because my orders would be filled prior to the blocks those transactions would be in. btc-e was seized by US authorities in July, but much of their funds were already gone. This was entirely my failure. What did I learn? * diversify crypto holdings (such as OP's hot and cold wallets) * diversify outside of crypto * use regulated platforms (traditionally these are banks) * understand fundamentals (I was so painfully naive) * help others avoid these pitfalls (if I had a single friend I trusted to disclose my holdings, I'd almost certainly have made better choices) I just responded to another comment below, which you might find helpful https://news.ycombinator.com/item?id=28910361 https://news.ycombinator.com/item?id=28910361. The foundational elements a blockchain provides - namely transparency and ownership of digital assets - are absolutely critical to our future as a society. Crypto in its current forms is mostly noise, but there are also really pivotal things being build by people I choose to trust far more than the World Economic Forum.

by 58x14 5y ago

Deestan 5y ago

> But in an era where every major company database (Facebook, Equifax are front of mind) has been leaked and government organizations are frequently compromised (SolarWinds most notable) I can't help but find some solace that hardened blockchains and clients, and developers who follow stringent procedures, will lead us to more widespread technological stability. Can you elaborate a bit on this? It reads to me like blockchain will reduce problems of big tech data leaks, but I'm not following how. Or did you mean something else?

58x14 5y ago
Sure, thanks for asking. My reasoning follows a few paths in parallel: * Distributed data storage like IPFS, built on open source software, should reduce (not eliminate) the number of vulnerabilities to large datasets. Code can be openly audited by many contributors in a way that commercial organizations can't quite support. Minor mistakes are more likely to be caught upstream, reducing the number of possible exploit chains. * Data ownership, sovereignty, and portability are much more possible in web3 than they have been historically. By reducing friction for no-code users to own, store locally, and selectively grant access to their data, we increase the collective resilience and integrity of data at scale. * Evolving the incentive layer, whether for open source contributors, or for end users allowing access to data, increases adoption, which encourages a virtuous cycle. Network effects should eventually compound. * Immediate financial penalties for failure increase the likelihood that application developers and platform operators will prioritize security; historically, security budgets are subject to organizational politics (source: former pentester / digital forensics for 5+ years, many colleagues in the space, much public commentary). TL;DR transparency decreases vulnerabilities, distributed user data ownership decreases attack surface, incentives increase adoption of these patterns, penalties increase operator diligence. For instance... I've never again made a mistake like I did in 2017.

ckwalsh 5y ago

> As someone who lost 8 figures in crypto in 2017 ... You could afford to lose 10+ million without your life being detrimentally impacted (at least I would assume, based on how calm you are about it). Most people can't. Most people can't imagine that amount of money. I'm not a crypto fan. While the technology is interesting and has some intriguing use cases, it feels like all the big coins far away from actually becoming a legitimate currency, and most of the optimistic posts I read miss that. Crypto is not stable. I think that's why so much money is flying into it. If the price of bread or milk goes up 10%, people get scared. In crypto, going up or down 10% is called "Wednesday". I'm aware of stablecoins, but the biggest ones (Tether, etc) all seem to A: be centralized, and B: be run by shady groups with whispers they could disappear at any moment. A breaks the promise that crypto is supposed to provide, and B only provides stability at a glance, until the whole house of cards tumbles apart (as it has). The bigger problem is that crypto is unforgiving. OP's story is all about this. Sure, that's fine for techies who can afford mistakes, and banks or other who might have extreme security procedures, but Mom and Pop on a farm in Iowa are neither of those. When they get a phone call from the "IRS", they are happy to go buy Walmart gift cards and read off the codes, or set up a money transfer. Sometimes that money can be reclaimed, sometimes it can't. With crypto, there is no chance. The financial institutions that exist now are certainly rigged towards the bigger players, but Mom and Pop have a (slim) shot of seeing the money again. Crypto is a fine gamble for those who can afford it, but I honestly doubt it will ever be an every day currency, because I can't see any concerted effort focused on solving those two problems. People can't afford to not know what everything costs at the grocery store, or that they could lose their entire savings by making a mistake when buying a Christmas gift. I don't think it's a great store of value either long term, because at least traditional stores of value (land, precious metals, commodities, etc) have uses to the entire population - blockchains provide no value to 73 year old grandma.

58x14 5y ago
I appreciate your thoughts and, perhaps to your surprise, entirely agree. I'm calm about it now because I've had years to reflect and learn. I began in 2013 buying small sums of bitcoin around ~$50. I amassed ~$500k by 2017, the most I had ever seen in my life, and throughout the year I made some profitable trades on btc-e.com. I had a competitive advantage on that platform because my orders would be filled prior to the blocks those transactions would be in. btc-e was seized by US authorities in July, but much of their funds were already gone. This was entirely my failure. What did I learn? * diversify crypto holdings (such as OP's hot and cold wallets) * diversify outside of crypto * use regulated platforms (traditionally these are banks) * understand fundamentals (I was so painfully naive) * help others avoid these pitfalls (if I had a single friend I trusted to disclose my holdings, I'd almost certainly have made better choices) I just responded to another comment below, which you might find helpful https://news.ycombinator.com/item?id=28910361 https://news.ycombinator.com/item?id=28910361. The foundational elements a blockchain provides - namely transparency and ownership of digital assets - are absolutely critical to our future as a society. Crypto in its current forms is mostly noise, but there are also really pivotal things being build by people I choose to trust far more than the World Economic Forum.