5 ms·

It is almost like 99% of the 'pro crypto' people don't understand that a distributed database is interesting, but not world changing technology.

vineyardmike 5y ago
A "distributed database" is a willfully naive approach to understanding crypto. Most people frankly probably hype crypto as a get rich quick scheme. They see a green pasture with a lack of established players and hope they can be the next "Wolf of Blockchain Street" (or at least make some more modest profit). Many people hyping the tech on less greedy grounds see it as a way around governments. And it is.. sorta. You still need to follow laws, but now the government has a weaker arm to enforce them against you since you don't need big financial firms. On the flip side, Crypto also is potentially more egalitarian since you don't need big financial firms to do financial stuff - anyone can mine (at a small scale at least) to potentially make some small income, and certain complex financial actions can be done for "free-ish" in smart contracts (conditional swaps/lending, escrow, multi-sig transactions). Obviously you're not doing "real world" items in escrow like a house, but many financial transactions that are done in complex trades and wall-street type activities often require underwriting from big banks. This is good and bad. Take flash loans: > Flash loans are uncollateralized cryptocurrency loans structured so that they must be paid back instantly using smart contracts, making them attractive for things like arbitrage across exchanges. If the loan isn’t paid back, then it never happens, because both occur in the same transaction. The good: You can't do such transactions as a regular person in the real world, because most banks would never talk to you if you asked for such uncollateralized loans for trading. The bad: https://news.ycombinator.com/item?id=29033024 https://news.ycombinator.com/item?id=29033024
- gitfan86 5y ago
  Are you saying that it impossible to loan someone money in the real world without a bank being involved?
  - vineyardmike 5y ago
    LOL, of course not, people loan others money all the time. My parents loaned me money as a kid to buy candy. That is not the same thing as borrowing $130M for complex financial transactions like in the linked article. I bet there are very few transactions worth 130M that take place without major financial institutions (like a bank). The point was not about loans, per se, it was about broadly the complex financial services industry. Most of that is done by large wall-street like banks dealing with rich cash flush clients, and not very available to average people.
    - gitfan86 5y ago
      So the reason crypto is valuable is that it allows people to take part in complex crypto transactions.
      - vineyardmike 5y ago
        > So the reason crypto is valuable is that it allows people to take part in complex crypto transactions. So the reason crypto is valuable is that it allows people to take part in complex financial transactions. Fixed it for you :)
        gitfan86 5y ago
        Using crypto though. No one is trading real estate on DeFi. they are trading crypto. Obviously some people are converting the crypto back into cash and buying real estate with their gains, but those gains come from the losses of other people eventually. Crypto has no cash flow.
        vineyardmike 5y ago
        Imagine a regular, government-approved bank that only stores (government insured) deposits. If its only "job" is to store money, and it obviously can't operate for free, people have to pay for the right to store their money there. Weird bank, but easy to understand. People pay monthly fees for storage boxes and could theoretically store cash in it, for example - obviously no interest growth in box-money. In Europe they have had negative interest rates at times, which is essentially the same thing to a bank that costs money - in that regulatory environment, people pay for that government backed security of their money. Just because a bank uses EUR and not USD does not mean its bad, or invalid, or whatever. In crypto, it is a similar thing, but obviously without government insurance. To secure the ledger, you pay for it. It is paid by the holders and given to miners to secure the ledger (via deflation and tx costs). Its a similar idea. People find this distributed blockchain security to have value, so they pay for it. This should so far be easy to see parallels. People find value in the security, there is just a different provider and regulatory environment, but in both cases people pay for that security. You may not value one kind or the other, but do accept that some people somewhere values each of them. With this framing of the value provided by the blockchain, don't think of cryptocurrency like a typical stock market type trading. You can think of it more like currency. We legally treat it like a security (in US), but understand its value-proposition is more currency-like. --- --- ---- --- --- --- > Obviously some people are converting the crypto back into cash and buying real estate with their gains Yes people usually convert it back to fiat money to buy things like real estate. Not always, but usually. Nothing is absolute. Think of this like a European person taking euros to America. Most of the time, they'll change it to USD before buying things, but maybe they find a person in America who wants EUR because they're selling their American home to move to Paris. The EUR economy in America is small, and so is the BTC. > those gains come from the losses of other people eventually. Crypto has no cash flow. When you trade stocks, people buy/sell the security, and in theory the act of the business conducting itself (profits, etc) should impact the value, eg by generating a dividend or increasing share value. Therefore, overtime the market becomes worth "more" because more economic activity is represented by the shares. Therefore it is not a 0 sum game. In a rising market, the market increases in value (positive sum). This is not crypto. That is true, but this doesn't mean it should all be thrown out. Crypto gains are generated at the expense of others. That is also how FOREX trading works, and people do that and its not controversial to most anti-crypto people. Speculative investing is not something I'll push for or attack, but people seem to want to do it, but it is not a good or only reason d'être for crypto in my opinion. These financial transactions can sometimes be improved with more complex financial engineering. At times, is way more accessible with crypto than traditional financial institutions. International transfers are another crypto use that is common. There is no inherent reason that a blockchain has to be used to perform this, but somehow in this world it came to be that crypto is one of the cheapest ways to move money overseas. --- --- ---- --- --- --- TLDR: Crypto has a different value proposition than you think it should, and yes, it has value to people. Also speculative trading is not everything.
- deleted 5y ago
  [deleted]

vineyardmike 5y ago

A "distributed database" is a willfully naive approach to understanding crypto. Most people frankly probably hype crypto as a get rich quick scheme. They see a green pasture with a lack of established players and hope they can be the next "Wolf of Blockchain Street" (or at least make some more modest profit). Many people hyping the tech on less greedy grounds see it as a way around governments. And it is.. sorta. You still need to follow laws, but now the government has a weaker arm to enforce them against you since you don't need big financial firms. On the flip side, Crypto also is potentially more egalitarian since you don't need big financial firms to do financial stuff - anyone can mine (at a small scale at least) to potentially make some small income, and certain complex financial actions can be done for "free-ish" in smart contracts (conditional swaps/lending, escrow, multi-sig transactions). Obviously you're not doing "real world" items in escrow like a house, but many financial transactions that are done in complex trades and wall-street type activities often require underwriting from big banks. This is good and bad. Take flash loans: > Flash loans are uncollateralized cryptocurrency loans structured so that they must be paid back instantly using smart contracts, making them attractive for things like arbitrage across exchanges. If the loan isn’t paid back, then it never happens, because both occur in the same transaction. The good: You can't do such transactions as a regular person in the real world, because most banks would never talk to you if you asked for such uncollateralized loans for trading. The bad: https://news.ycombinator.com/item?id=29033024 https://news.ycombinator.com/item?id=29033024

gitfan86 5y ago
Are you saying that it impossible to loan someone money in the real world without a bank being involved?
- vineyardmike 5y ago
  LOL, of course not, people loan others money all the time. My parents loaned me money as a kid to buy candy. That is not the same thing as borrowing $130M for complex financial transactions like in the linked article. I bet there are very few transactions worth 130M that take place without major financial institutions (like a bank). The point was not about loans, per se, it was about broadly the complex financial services industry. Most of that is done by large wall-street like banks dealing with rich cash flush clients, and not very available to average people.
  - gitfan86 5y ago
    So the reason crypto is valuable is that it allows people to take part in complex crypto transactions.
    - vineyardmike 5y ago
      > So the reason crypto is valuable is that it allows people to take part in complex crypto transactions. So the reason crypto is valuable is that it allows people to take part in complex financial transactions. Fixed it for you :)
      - gitfan86 5y ago
        Using crypto though. No one is trading real estate on DeFi. they are trading crypto. Obviously some people are converting the crypto back into cash and buying real estate with their gains, but those gains come from the losses of other people eventually. Crypto has no cash flow.
        vineyardmike 5y ago
        Imagine a regular, government-approved bank that only stores (government insured) deposits. If its only "job" is to store money, and it obviously can't operate for free, people have to pay for the right to store their money there. Weird bank, but easy to understand. People pay monthly fees for storage boxes and could theoretically store cash in it, for example - obviously no interest growth in box-money. In Europe they have had negative interest rates at times, which is essentially the same thing to a bank that costs money - in that regulatory environment, people pay for that government backed security of their money. Just because a bank uses EUR and not USD does not mean its bad, or invalid, or whatever. In crypto, it is a similar thing, but obviously without government insurance. To secure the ledger, you pay for it. It is paid by the holders and given to miners to secure the ledger (via deflation and tx costs). Its a similar idea. People find this distributed blockchain security to have value, so they pay for it. This should so far be easy to see parallels. People find value in the security, there is just a different provider and regulatory environment, but in both cases people pay for that security. You may not value one kind or the other, but do accept that some people somewhere values each of them. With this framing of the value provided by the blockchain, don't think of cryptocurrency like a typical stock market type trading. You can think of it more like currency. We legally treat it like a security (in US), but understand its value-proposition is more currency-like. --- --- ---- --- --- --- > Obviously some people are converting the crypto back into cash and buying real estate with their gains Yes people usually convert it back to fiat money to buy things like real estate. Not always, but usually. Nothing is absolute. Think of this like a European person taking euros to America. Most of the time, they'll change it to USD before buying things, but maybe they find a person in America who wants EUR because they're selling their American home to move to Paris. The EUR economy in America is small, and so is the BTC. > those gains come from the losses of other people eventually. Crypto has no cash flow. When you trade stocks, people buy/sell the security, and in theory the act of the business conducting itself (profits, etc) should impact the value, eg by generating a dividend or increasing share value. Therefore, overtime the market becomes worth "more" because more economic activity is represented by the shares. Therefore it is not a 0 sum game. In a rising market, the market increases in value (positive sum). This is not crypto. That is true, but this doesn't mean it should all be thrown out. Crypto gains are generated at the expense of others. That is also how FOREX trading works, and people do that and its not controversial to most anti-crypto people. Speculative investing is not something I'll push for or attack, but people seem to want to do it, but it is not a good or only reason d'être for crypto in my opinion. These financial transactions can sometimes be improved with more complex financial engineering. At times, is way more accessible with crypto than traditional financial institutions. International transfers are another crypto use that is common. There is no inherent reason that a blockchain has to be used to perform this, but somehow in this world it came to be that crypto is one of the cheapest ways to move money overseas. --- --- ---- --- --- --- TLDR: Crypto has a different value proposition than you think it should, and yes, it has value to people. Also speculative trading is not everything.
deleted 5y ago
[deleted]