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> I’m interested in the tech/practical applications I've studied this for about ten years, and came to the conclusion there is none, other than crazy financial

> I’m interested in the tech/practical applications I've studied this for about ten years, and came to the conclusion there is none, other than crazy financial structures and mechanisms that make the 2008 subprime mortgage scandal look like a Fischer-Price toy. If you find an interesting, practical application for anything blockchain or cryptocurrency, please let me know as well.

SkyMarshal 5y ago
> other than crazy financial structures and mechanisms that make the 2008 subprime mortgage scandal look like a Fischer-Price toy. Funny, my impression is the opposite. Blockchain and DeFi are still quite limited in what they can do relative to what’s going on Wall St. It’s the blockchain stuff that’s still a toy. A novel and fun toy, but still comparatively a toy. Also fwiw, so far cryptocurrency is a debtless financial system, since without identity you can’t have credit ratings or any way of enforcing repayment. So a 2008-style credit collapse is impossible. It’s highly volatile of course, but at least not subject to a GFC or Great Depression style credit collapse. (There are flash loans, but those loans are made and repaid instantly in the same smart contract, and if they can’t repaid then the smart contract fails and the loan was never made. I don’t think a buildup of risk similar 2008 can happen with those)
- VHRanger 5y ago
  Uh, there's a ton of leverage in the ecosystem. Even DeFi creates gigantic leverage while being "debtless" - the typical usecase for DeFi is just financial leverage: - have BTC you lock up, get a stablecoins in exchange - buy volatile crypto with stablecoins - voila! You're leveraged You can see this very easily in how the Total Value Locked in various protocols is essentially an index of the price of Bitcoin
  - SkyMarshal 5y ago
    I should clarify, I don’t consider stablecoins to be decentralized nor cryptocurrency. So when I say “cryptocurrency is a debtless financial system”, I’m not referring to stablecoins, but only to the decentralized and trustless components of the overall ecosystem. Most stablecoins are run by a centralized, trusted third party maintaining a dubious peg to the centralized USD and will probably get taken down by some Soros breaking-the-pound style attack eventually. But Bitcoin and most other major cryptocurrencies predate stablecoins, and will survive them. Additionally, most of the collateralized DeFi leverage schemes you reference require over-collateralization. Since no identity makes margin calls impossible, effectively the margin call is done up front as a contingency in the form of over-collateralization. A debtless, over-collateralized financial system is an interesting case study in financial in/stability. It’s certainly a different beast from the traditional financial system.
  - ertian 5y ago
    Yeah...but you have to lock up crypto assets, usually with a value significantly over the stablecoins you get in return. And if the value of your assets fall, they're liquidated and the loan is repaid. It's risky for the borrower, but very low-risk for the lender: rarely do lenders have 150% collateral, literally locked in place and ready to sell at a moment's notice. So far I don't see any major systemic risks, except maybe to the reputation of the whole DeFi enterprise if positions start getting liquidated in a crash.
prakhar897 5y ago
Really, I thought torrents were a definitive part of my generation which were enabled by decentralization.
- 0des 5y ago
  Also git
- Jasper_ 5y ago
  The magic of torrents is that you download music or movies or whatever. And they did that the first year the Bittorrent protocol was released. Note that at the time, all peer coordination was centralized through trackers, the DHT wouldn't arrive for another five years after. By comparison, Bitcoin has existed for ten years and hasn't let anybody do anything yet, because a slow time stamping algorithm (proof of work) turns out not to be that practical for many important applications.
  - 0x008 5y ago
    bittorrent was not the first protocol and neither will bitcoin be the last blockchain. only because the first is not viable does not mean that blockchains as a whole is a stupid idea.
    - alephr 5y ago
      what were the first protocols? are these really comparable situations in your mind or are you grasping at straws here? genuinely curious if you can make an argument that they're similar
  - lowkey 5y ago
    > Bitcoin has existed for ten years and hasn't let anybody do anything yet .. Bitcoin created a scarce digital good, modeled after gold in many ways, that promised a sound money for the internet, digital cash, a reserve currency powered by proof of work. A currency that unlike fiat, could never be debased no matter how tempting it might be for a politician. I could see how one might not value these things as an individual but I think it's a bit much to boldly claim that "it hasn't let anybody do anything yet." After all, it's made many people rich, particularly those curious souls who went down the rabbit hole to investigate it early and were therefore rewarded. Growing wealth, providing a savings vehicle that beats inflation over time, or making the owner rich - are all valuable outcomes for a new technology designed to offer a new type of monetary asset. Bitcoin is incorruptible money with a fixed and predictable inflation rate and monetary policy that cannot be manipulated by any politician or central bank - no matter how tempting it may be. There is value in that, even if not everyone can see it.
davidmurdoch 5y ago
Not practical and not what you are looking for, but an interesting take: if you view today's NFTs through the lens of Gamification (or the desire to amass Fake Internet Points) or through an entertainment/celebrity lens then these things provide a sense of status to others that also give credence to that idea. Kind of like sports: the winner of a sporting event doesn't practically matter, it's just entertainment, but fans can feel extreme emotion from a win or loss, and many people form part of their identity around a team. That said, entertainment itself is practical and necessary, and had been around longer than our modern financial systems, so maybe it does answer your request ! I do still think crypto will eat the world in every way it can, even if it shouldn't.
bflesch 5y ago
I think it would be good to find an alternative to "proof of work" (bitcoin) and "proof of stake" (ethereum). It should be called "proof of traffic", basically a crypto coin which anonymizes internet traffic for everyone. If such technology is possible, it would merge the ideas of TOR and Bitcoin, while rendering VPN providers obsolete. It would also have societal benefit through anonymity.
- neilalexander 5y ago
  Not for anonymity, but it sounds like you’re describing https://pkt.cash/ https://pkt.cash/ otherwise. The “proof of work” is bandwidth-hard.
  - bflesch 5y ago
    Thank you, that's very interesting.
btmorex 5y ago
Supporting transactions on the darknet drug markets is a legitimate use case with practical value.
- Giorgi 5y ago
  also it was one and only driver behind the Bitcoin before speculation set in.
- Jasper_ 5y ago
  That's fair. People with needs outside of the current financial system, like paying for drugs or murderers or illegal pornography might enjoy using cryptocurrency. Let's keep just one cryptocurrency for that and stop talking about Web3, then.
  - tata71 5y ago
    Web3 sites are how these people (and oh by the way all of the legitimate ones!) are accessing each other! (Most popular: Coinbase?)
jmeister 5y ago
From Tim Roughgarden, top CS algorithms scholar: https://timroughgarden.github.io/fob21/l/l1.pdf https://timroughgarden.github.io/fob21/l/l1.pdf “Future generations of computer scientists will be jealous of your opportunity to get in on the ground floor of this new area—analogous to getting into the Internet and the Web in the early 1990s. I cannot overstate the opportunities available to someone who masters the material covered in this course—current demand is much, much bigger than supply.” EDIT: I made a new post for this: https://news.ycombinator.com/item?id=29140393 https://news.ycombinator.com/item?id=29140393 I wrote off blockchains after a cursory investigation into applications in supply chains about 4 years ago. I’m planning to take a second look after seeing so many accomplished people gush about it like TR here.
- Jasper_ 5y ago
  That is not a practical application. That is hype. And we have never been low on hype.
AnthonyMouse 5y ago
> If you find an interesting, practical application for anything blockchain or cryptocurrency, please let me know as well. The interesting application looks something like this. You have an internet connection, a Raspberry Pi and a USB hard drive. You get paid in cryptocurrency to host some data for the decentralized web. Now you have it and can use it to pay for things over the internet, anonymously. Having an anonymous digital payment system that regular people could use for small transactions would be a big advantage. No more Amazon keeping track of what books you read on your Kindle and having to worry about getting put on a list. It also provides funding for decentralized content hosting. The current problem with this is that existing popular blockchains have high transaction fees and low transaction volumes. That's a technical problem that could be solved in the future, but right now it's an impediment. The current solution is to use third party custodial services, which can handle arbitrary transaction volumes and have low fees because they're just rearranging numbers in their own private database. But then they're subject to KYC regulations and that's a blocker because people are going to get to the point where some shady internet company they've never heard of wants their social security number and say "hell no" and that's the end of it. Also, this erases the privacy benefit. So to be useful we need one of two things. Either solve that technical problem, or get regulatory changes that waive KYC requirements for small transaction amounts, e.g. for accounts with less than a $1000 balance.
- arcatech 5y ago
  How would you get those payments as cash in your bank account anonymously?
  - AnthonyMouse 5y ago
    You get cryptocurrency, you spend cryptocurrency, you're anonymous. The person you bought something from, if they want cash instead of cryptocurrency, isn't anonymous. Or they exchange their cryptocurrency for cash in some place or context without KYC rules. The seller could be anywhere in the world.
    - woodruffw 5y ago
kranke155 5y ago
NFTs are actually useful as there are tens of thousands of digital artists who can now sell their art in a liquid global marketplace for digital art. Their current implementation is more proof of concept, but they are useful and they are being used daily by at least a few hundred thousand people.

SkyMarshal 5y ago

> other than crazy financial structures and mechanisms that make the 2008 subprime mortgage scandal look like a Fischer-Price toy. Funny, my impression is the opposite. Blockchain and DeFi are still quite limited in what they can do relative to what’s going on Wall St. It’s the blockchain stuff that’s still a toy. A novel and fun toy, but still comparatively a toy. Also fwiw, so far cryptocurrency is a debtless financial system, since without identity you can’t have credit ratings or any way of enforcing repayment. So a 2008-style credit collapse is impossible. It’s highly volatile of course, but at least not subject to a GFC or Great Depression style credit collapse. (There are flash loans, but those loans are made and repaid instantly in the same smart contract, and if they can’t repaid then the smart contract fails and the loan was never made. I don’t think a buildup of risk similar 2008 can happen with those)

VHRanger 5y ago
Uh, there's a ton of leverage in the ecosystem. Even DeFi creates gigantic leverage while being "debtless" - the typical usecase for DeFi is just financial leverage: - have BTC you lock up, get a stablecoins in exchange - buy volatile crypto with stablecoins - voila! You're leveraged You can see this very easily in how the Total Value Locked in various protocols is essentially an index of the price of Bitcoin
- SkyMarshal 5y ago
  I should clarify, I don’t consider stablecoins to be decentralized nor cryptocurrency. So when I say “cryptocurrency is a debtless financial system”, I’m not referring to stablecoins, but only to the decentralized and trustless components of the overall ecosystem. Most stablecoins are run by a centralized, trusted third party maintaining a dubious peg to the centralized USD and will probably get taken down by some Soros breaking-the-pound style attack eventually. But Bitcoin and most other major cryptocurrencies predate stablecoins, and will survive them. Additionally, most of the collateralized DeFi leverage schemes you reference require over-collateralization. Since no identity makes margin calls impossible, effectively the margin call is done up front as a contingency in the form of over-collateralization. A debtless, over-collateralized financial system is an interesting case study in financial in/stability. It’s certainly a different beast from the traditional financial system.
- ertian 5y ago
  Yeah...but you have to lock up crypto assets, usually with a value significantly over the stablecoins you get in return. And if the value of your assets fall, they're liquidated and the loan is repaid. It's risky for the borrower, but very low-risk for the lender: rarely do lenders have 150% collateral, literally locked in place and ready to sell at a moment's notice. So far I don't see any major systemic risks, except maybe to the reputation of the whole DeFi enterprise if positions start getting liquidated in a crash.

prakhar897 5y ago

Really, I thought torrents were a definitive part of my generation which were enabled by decentralization.

0des 5y ago
Also git
Jasper_ 5y ago
The magic of torrents is that you download music or movies or whatever. And they did that the first year the Bittorrent protocol was released. Note that at the time, all peer coordination was centralized through trackers, the DHT wouldn't arrive for another five years after. By comparison, Bitcoin has existed for ten years and hasn't let anybody do anything yet, because a slow time stamping algorithm (proof of work) turns out not to be that practical for many important applications.
- 0x008 5y ago
  bittorrent was not the first protocol and neither will bitcoin be the last blockchain. only because the first is not viable does not mean that blockchains as a whole is a stupid idea.
  - alephr 5y ago
    what were the first protocols? are these really comparable situations in your mind or are you grasping at straws here? genuinely curious if you can make an argument that they're similar
- lowkey 5y ago
  > Bitcoin has existed for ten years and hasn't let anybody do anything yet .. Bitcoin created a scarce digital good, modeled after gold in many ways, that promised a sound money for the internet, digital cash, a reserve currency powered by proof of work. A currency that unlike fiat, could never be debased no matter how tempting it might be for a politician. I could see how one might not value these things as an individual but I think it's a bit much to boldly claim that "it hasn't let anybody do anything yet." After all, it's made many people rich, particularly those curious souls who went down the rabbit hole to investigate it early and were therefore rewarded. Growing wealth, providing a savings vehicle that beats inflation over time, or making the owner rich - are all valuable outcomes for a new technology designed to offer a new type of monetary asset. Bitcoin is incorruptible money with a fixed and predictable inflation rate and monetary policy that cannot be manipulated by any politician or central bank - no matter how tempting it may be. There is value in that, even if not everyone can see it.

davidmurdoch 5y ago

Not practical and not what you are looking for, but an interesting take: if you view today's NFTs through the lens of Gamification (or the desire to amass Fake Internet Points) or through an entertainment/celebrity lens then these things provide a sense of status to others that also give credence to that idea. Kind of like sports: the winner of a sporting event doesn't practically matter, it's just entertainment, but fans can feel extreme emotion from a win or loss, and many people form part of their identity around a team. That said, entertainment itself is practical and necessary, and had been around longer than our modern financial systems, so maybe it does answer your request ! I do still think crypto will eat the world in every way it can, even if it shouldn't.

bflesch 5y ago

I think it would be good to find an alternative to "proof of work" (bitcoin) and "proof of stake" (ethereum). It should be called "proof of traffic", basically a crypto coin which anonymizes internet traffic for everyone. If such technology is possible, it would merge the ideas of TOR and Bitcoin, while rendering VPN providers obsolete. It would also have societal benefit through anonymity.

neilalexander 5y ago
Not for anonymity, but it sounds like you’re describing https://pkt.cash/ https://pkt.cash/ otherwise. The “proof of work” is bandwidth-hard.
- bflesch 5y ago
  Thank you, that's very interesting.

btmorex 5y ago

Supporting transactions on the darknet drug markets is a legitimate use case with practical value.

Giorgi 5y ago
also it was one and only driver behind the Bitcoin before speculation set in.
Jasper_ 5y ago
That's fair. People with needs outside of the current financial system, like paying for drugs or murderers or illegal pornography might enjoy using cryptocurrency. Let's keep just one cryptocurrency for that and stop talking about Web3, then.
- tata71 5y ago
  Web3 sites are how these people (and oh by the way all of the legitimate ones!) are accessing each other! (Most popular: Coinbase?)

jmeister 5y ago

From Tim Roughgarden, top CS algorithms scholar: https://timroughgarden.github.io/fob21/l/l1.pdf https://timroughgarden.github.io/fob21/l/l1.pdf “Future generations of computer scientists will be jealous of your opportunity to get in on the ground floor of this new area—analogous to getting into the Internet and the Web in the early 1990s. I cannot overstate the opportunities available to someone who masters the material covered in this course—current demand is much, much bigger than supply.” EDIT: I made a new post for this: https://news.ycombinator.com/item?id=29140393 https://news.ycombinator.com/item?id=29140393 I wrote off blockchains after a cursory investigation into applications in supply chains about 4 years ago. I’m planning to take a second look after seeing so many accomplished people gush about it like TR here.

Jasper_ 5y ago
That is not a practical application. That is hype. And we have never been low on hype.

AnthonyMouse 5y ago

> If you find an interesting, practical application for anything blockchain or cryptocurrency, please let me know as well. The interesting application looks something like this. You have an internet connection, a Raspberry Pi and a USB hard drive. You get paid in cryptocurrency to host some data for the decentralized web. Now you have it and can use it to pay for things over the internet, anonymously. Having an anonymous digital payment system that regular people could use for small transactions would be a big advantage. No more Amazon keeping track of what books you read on your Kindle and having to worry about getting put on a list. It also provides funding for decentralized content hosting. The current problem with this is that existing popular blockchains have high transaction fees and low transaction volumes. That's a technical problem that could be solved in the future, but right now it's an impediment. The current solution is to use third party custodial services, which can handle arbitrary transaction volumes and have low fees because they're just rearranging numbers in their own private database. But then they're subject to KYC regulations and that's a blocker because people are going to get to the point where some shady internet company they've never heard of wants their social security number and say "hell no" and that's the end of it. Also, this erases the privacy benefit. So to be useful we need one of two things. Either solve that technical problem, or get regulatory changes that waive KYC requirements for small transaction amounts, e.g. for accounts with less than a $1000 balance.

arcatech 5y ago
How would you get those payments as cash in your bank account anonymously?
- AnthonyMouse 5y ago
  You get cryptocurrency, you spend cryptocurrency, you're anonymous. The person you bought something from, if they want cash instead of cryptocurrency, isn't anonymous. Or they exchange their cryptocurrency for cash in some place or context without KYC rules. The seller could be anywhere in the world.
  - woodruffw 5y ago

kranke155 5y ago

NFTs are actually useful as there are tens of thousands of digital artists who can now sell their art in a liquid global marketplace for digital art. Their current implementation is more proof of concept, but they are useful and they are being used daily by at least a few hundred thousand people.