12 ms·

The Case Against Crypto

93 points by djelal 5y ago

temptemptemp111 5y ago
I didn't think nerds would wake up to this to the degree that they'd be asking hard questions in the HN comments. Congrats!
netheril96 5y ago
Nothing in this article is new at all (except NFT which wasn't in fad before). I've heard the same arguments ten years ago and repeatedly during the ten years. They never stopped the spread or appreciation of BTC. Whether you like to dislike BTC, it is here to stay.
- arcticbull 5y ago
  Well, not in China though, huh. Yes the case remains the same, because the fundamentals remain the same. It was bad then and it's bad now. What's changed is the scale of the risk it poses to global economies. This is triggering a different response. Let's see how it plays out.
- adam_arthur 5y ago
  Big difference between making money on something and it having actual real world utility, and long run viability as anything other than speculative vehicle. "I made money so that proves me right" is a pretty weak argument, that could be said about any pyramid scheme. People who made money buying dotcom stocks in the late 90s or houses in the mid 2000s were "right" too, until they weren't. Things without intrinsic value tend not to hold their market value over the long term. I do think Bitcoin has some marginal value, e.g. for countries with hyperinflation and no capital markets, use as payment for illicit activities... But not very compelling overall. Still, gold is a close analogue. But there are important differences there.
  - MereInterest 5y ago
    > Still, gold is a close analogue. But there are important differences there, still. The biggest difference is that gold does not require significant upkeep to maintain. Mining gold extracts a resource, which can then be used at low marginal cost. Running proof of work computations enables transactions to occur, and is rewarded as compensation. If the proof of work computations stop, then the reward can no longer be spent. This is why I refuse to use the term "mining", as it brings in a large number of incorrect assumptions of the process.
    - adam_arthur 5y ago
      Yeah, didn't want to go into all the details in my original post. But over 50% of mined gold is actually used for industrial or jewelry purposes. Also you can't create "Gold 2.0" out of thin air. Or flash sell millions of ounces of physical gold tanking the price in a matter of minutes. Bitcoin is only valuable because it's called Bitcoin and has a cool origin story, yet the Blockchain mechanism backing it has been replicated quite exactly many times. There is power in shared belief, but something without a strong cushion of intrinsic value will inevitably get sold off when the hard times comes. Not that I'm big on gold for investing purposes...
- rvz 5y ago
  > Whether you like to dislike BTC, it is here to stay. Some cryptocurrencies are here to stay. However, with the Tether scam situation unveiling itself, Bitcoin and many other cryptocurrencies are in danger of losing their 'value' and it will cause a crash in prices in some useless cryptocurrencies.
  - arcticbull 5y ago
    They'll always be with us, like beanie babies. But like the fall of Steg the $40,000 stuffed Stegosaurus - now valued at $900 - history will not be kind to the valuations.
  - shawabawa3 5y ago
    > However, with the Tether scam situation unveiling itself The Tether scam situation has been unveiling itself since 2016. Is there any recent news that's made it more likely Tether will default soon?
- MereInterest 5y ago
  Well, yes, none of the points raised are new. But none of them have been satisfactorily addressed, either. If somebody is shouting that the emperor has no clothes, saying that you heard the same thing yesterday doesn't magically erase the emperor's nudity.
throwaway55421 5y ago
So don't use it. Done. Do people not get bored of telling others what to do? What next, "The Case Against Popcorn"?
- gostsamo 5y ago
  yes, I especially hate when someone shows up and starts telling me to invest in crypto.
  - carrja99 5y ago
    Then you'll enjoy this quick video from the "slumdoge millionaire" in why you should "invest" in dogecoin. https://twitter.com/TikTokInvestors/status/1467225714164264962 https://twitter.com/TikTokInvestors/status/14672257141642649...
  - sodality2 5y ago
    So don't do it. Done. Do you argue for banning the sale of something when someone shills it to you? No, you tell them to shut up
    - arcticbull 5y ago
      I do if it risks harming society. I certainly advocate against PFOAs. The answer to PFOAs isn't "just don't buy non-stick pans and tell anyone who encourages you to do so to 'shut up.'" It's a broad-based ban.
- MereInterest 5y ago
  If you don't like pollution, then don't pollute. Do people not get bored of telling others not to dump waste in the water supply?
  - throwaway55421 5y ago
    I agree, don't pollute. False equivalence. We can talk about carbon taxes and renewable energy if you'd like, but if we're going to go down the path of "any energy use is sin unless I approve of it", then I ask again; do you not bore of telling others what to do?
bob446 5y ago
Crypto is for morons
rvz 5y ago
While the points made by the author are still true of some cryptocurrencies (including Bitcoin, and Ethereum which are still unsuitable for fast, cheap and efficient payments), it is yet another cryptocurrency rant which bundles only Bitcoin and Ethereum as having the same characteristics and faults in all cryptocurrencies. Many cryptocurrencies will not survive new regulations once introduced, but it seems that Stellar has a great chance of surviving given that it is making the interesting case for CBDCs [0] [1] and being used by money transfer companies and also powering stable-coins. [2] So, some cryptocurrencies are more useful than others. [0] https://stellar.org/blog/the-case-for-cbdcs-on-stellar https://stellar.org/blog/the-case-for-cbdcs-on-stellar [1] https://resources.stellar.org/stellar-for-cbdcs https://resources.stellar.org/stellar-for-cbdcs [2] https://ir.moneygram.com/news-releases/news-release-details/moneygram-announces-innovative-partnership-stellar-development https://ir.moneygram.com/news-releases/news-release-details/...
- JumpCrisscross 5y ago
  > given that it is making the interesting case for CBDCs It's an interesting pitch, but irrelevant. If a central bank is launching a digital currency, they're going to do so on their own terms.
  - rvz 5y ago
    How so? Care to elaborate further? Why are you ignoring this valid use-case? Is it because you know it is relevant?
    - rvz 5y ago
      So, no explanation or elaboration as to why it is 'irrelevant'. So it has been admitted and my point is still not refuted.
  - rvz 5y ago
    So, no explanation or elaboration as to why it is 'irrelevant'. So it has been admitted and my point is still not refuted.
block_dagger 5y ago
BTC and ETH can not be stopped, ever. Their utility for society is far too high, despite the tradeoffs.
- bsagdiyev 5y ago
  And what, exactly, is this utility?
  - fnord123 5y ago
    Ecoterrorist Ponzi scheme.
  - rajamaka 5y ago
    Money laundering
- quietbritishjim 5y ago
  This sort of comment is exactly why articles like this will never result in constructive discussion on HN (or elsewhere). It doesn't address any of the comments in the article and doesn't even give any concrete examples of its point (in this case the "utility to society"). Don't take this personally, crypto always results in comments like this. It just turns into a vacuous slinging match. I tend to flag the articles about cryptocurrency/blockchain unless they contain some actually new technical innovation.
  - luka-birsa 5y ago
    Oh come on, we're on HN. This is the most anti-cryptocurrency tech page that I can think of, with daily negative sentiment articles popping up. It's either bitcoin will destroy the world, ether is a giant cesspool that can be implemented with a database or the favourite Tether is a huge scam and will destroy the world. Let's not forget the NFT's are full-on money laundering scheme and LOL why would you buy JPGs if you can right click and save. Trust me, people (as in cryptocurrency realists) tried explaining in the comments, but the sentiment is too strong. Due to the meteoric rise in value and the fact that a lot of HN somehow ended sitting on the sidelines, people can't stop foretelling the impending doom and gloom while being oblivious to the underlying tenet that all of this crypto technology brings. I fully agree with you that articles like this turn into vacuous slinging match between camps. It's not tho because there are no concrete answers from the crypto side, it's simply due to the population on HN - it's impossible to have a constructive discussion if the sentiment is so negative. So yes, I also flag such content, because these discussions represent catnip for me and provide zero value.
JumpCrisscross 5y ago
We're close to having the world's No. 1 and No. 3 economies, by GDP based on PPP, ban crypto. This lets us run a natural experiment. In ten or twenty years years, will the massive diversion of power and talent to cryptocurrencies leave the U.S., EU and others better off? Or will crypto be remembered as America's backyard steel furnaces [1]? Until we're there it will be difficult to either confirm this is the right course or build the political will to ban crypto. [1] https://en.wikipedia.org/wiki/Backyard_furnace https://en.wikipedia.org/wiki/Backyard_furnace
- NicoJuicy 5y ago
  Seems like FOMO without an actual use-case to be honest.
  - deleted 5y ago
    [deleted]
- krageon 5y ago
  > We're close to We've been close since it started becoming popular. At this point, "being close" is like the being close of fusion: It's really close, but always just too far away.
- arcticbull 5y ago
  It's less a backyard furnace and more the MLMs that everyone in Albania invested in in 1997. They at one point locked up [edit](50%) of their GDP - and their economic advisor - before having a civil war about it. This required the IMF to airdrop big bags of money to bail them all out. [1] There's nothing to wait for proof on, it's been 13 - almost 14 - years and it does nothing better than a classical system other than regulatory arbitrage, grift and crime. The fundamentals are crystal clear. It's hot garbage - rather, it's Mary Kay for young men. [2] And that's if we're lucky. [edit] It's an unholy fusion of a grey goo coal-powered linked list and anarchocapitalist libertarianism [3]. [1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht... [2] https://mobile.twitter.com/tracyalloway/status/1467720876741525504 https://mobile.twitter.com/tracyalloway/status/1467720876741... [3] https://i.redd.it/1fwrkwoec7281.jpg https://i.redd.it/1fwrkwoec7281.jpg
pennaMan 5y ago
>This is presented as an ownership record for the media, often with no legal basis Ah yes, the mystical "legal basis" meaning that a nation state can use violence and kidnapping to enforce ownership in whatever way it sees fit instead of having palpable, trustless, mathematical proof of ownership.
- maxerickson 5y ago
  There is no such thing as mathematical proof of ownership, because proof of ownership isn't something that exists in the abstract. You can have a claim of ownership that has some mathematical properties of course.
  - lostmsu 5y ago
    Oh, but there's. One can make a chip, that would only work when provided with a proof of ownership from some blockchain.
    - maxerickson 5y ago
      That's a physical thing not a mathematical proof.
      - lostmsu 5y ago
        The proof is mathematical, the physical thing is a validator.
- JohnFen 5y ago
  Proof of ownership is meaningless without some mechanism to enforce said ownership. If I take something of yours and you can prove it's yours, so what? Without some means of enforcement, your proof has no actual effect.
  - pennaMan 5y ago
    You are correct. I suggest you look up the paper Stasohi Nakamoto published about a proposed solution for a mechanism of enforcement :)
q-big 5y ago
> The Case Against Crypto Crypto != Cryptocurrencies (or more generally: cryptoassets)
- mnw21cam 5y ago
  I choose to interpret crypto as https://www.cdc.gov/parasites/crypto/index.html https://www.cdc.gov/parasites/crypto/index.html
- rvz 5y ago
  At this point, that battle has been lost and the ship has sailed years ago.
  - denton-scratch 5y ago
    Battle lost. Ship has sailed. Train has left platform. "Crypto", "cyber", "literally", "exponential": I wish language wouldn't change under my feet. I feel as if I'm standing on linguistic jelly.
- teekert 5y ago
  This, I mean one expects a piece from the government against Signal or something because the children, etc... No, crypto now seems to mean cryptocurrencies. Pretty bad trend. I can imaging you feel the same when you work with corona viruses these days ;) But what can we do?
- Aachen 5y ago
  I mean, yes, but also that ship has sailed. You can't force language upon people, this is going to be how people refer to it, similar to the media's hacker and what a hacker means in the field.
  - Findecanor 5y ago
    You can not choose which language people use when talking to you, but you can set a good example yourself. "Crypto" being an abbreviation will still only mean "cryptoasset" in some contexts, and retain other meanings in other contexts.
nicoburns 5y ago
Huh, that's a domain name I didn't expect to see here. For those who don't know, the Watershed is a not-for-profit organisation that comprises a cafe/bar, independent cinema, and a media studio and a bunch of other miscellaneous functions in a single building in Bristol, UK. The name is a pun in that it's a media organisation (with watershed being a common term in broadcast media), but it's also literally a shed near the water.
portportport 5y ago
The biggest case against crypto seems to be proof of work is inherently bad, because wasting power is bad for the environment. This completely side steps the fact that the entire world is moving towards carbon neutrality in electricity generation, in which case power consumption will no longer be an environmental issue. I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation.
- isoprophlex 5y ago
  The sheer wastefulness of it. Can you see the objection in making a million cookies (completely carbon neutral of course), and throwing 999.999 of them away? POW is that, but worse.
- arcticbull 5y ago
  No, it doesn't. Every TWh wasted on proof of work delays decarbonizing the rest of the economy. There's no benefit to anyone to build a whole ton of solar and wind capacity then literally wasting it on a sudoku puzzle of global scale. That doesn't help. If anything it hurts because it generates e-waste. 27 thousand tons of e-waste per year. [1] E-waste without a disposal strategy, that gets buried or burned or dumped on poor countries. 97% of all bitcoin miners will never mine a block in their entire useful lives. They will be manufactured, plugged in, they'll sit there, desperately guessing, never guess right, and be thrown out. [1] https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption
- Nursie 5y ago
  > in which case power consumption will no longer be an environmental issue. But it is right now. We don't live in a world with carbon neutral power generation. We're not there. PoW is even encouraging people to bring fossil-fuel based generation back online just for mining and making the transition to low-carbon economies slower. > I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation. Yeah, let's have that argument when we're closer to actually having that. Oh, and before you say "Increased demand will get us there sooner"... no, it won't, we already have a huge amount of demand that can't be met, it's making things worse.
mypastself 5y ago
“The laws of supply and demand mean that the amount of energy consumed closely tracks the price of the cryptocurrency in question: increases in demand correspond directly to increases in energy use. Although some newer cryptocurrencies avoid this through alternative protocols (“proof of stake” etc), they remain a distinct minority. Additionally, inter-currency trading means that their value closely tracks that of the larger cryptocurrencies, meaning that changes in their price have a similar effect on the total energy consumption.” I’m a little confused by that last part, maybe a more economically-minded commenter can help me. How does the price change of a small-cap proof-of-stake currency have a similar effect on energy consumption as a larger, proof-of-work one?
- deleted 5y ago
  [deleted]
- tubignaaso 5y ago
  I believe the author is saying the reverse is true. The larger currency directly correlates and effects the smaller one. In my experience watching the markets, it does seem to hold true. And the smaller currencies are too small to really effect the larger ones.
andrewdubinsky 5y ago
There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound. If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement. Why did the financial system seize up so quickly? How are settlements handled between financial institutions? How does the flow of assets actually work in practice? Who owns the settlement systems and where are financial assets kept and why? Not the digital accounting, but the actual custodial functions. Cryptocurrencies, especially NFTs, have a very important use case in these areas.
- arcticbull 5y ago
  > There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound. Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises. > Cryptocurrencies, especially NFTs, have a very important use case in these areas. Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
  - PretzelPirate 5y ago
    > Everyone with a finance background hates crypto. This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies. > Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can). Many people also trust large companies/their government not to freeze/confiscate their assets and think this is a silly use case. Those same people have likely never had their account closed and lost thousands of dollars of digital assets, and have never had to flee their homes for safety from their own governments. Having different trust models is why people fundamentally disagree on whether blockchain is valuable.
imtringued 5y ago
Let's write a microblog! The case against crypto. Crypto is credit money with zero obligations allowing all participants to walk away without notice. Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period. Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power. Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy. Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency. Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people. If you want to gamble buy cryptocurrencies, they are better than the casino.
- lostmsu 5y ago
  Most of these statements are the opposite of truth. For example, creation of crypto has no or extremely little variability in obligations for many years. Statement about no obligations is false. There's at least an obligation to be able to transact. Creation of fiat can be changed on a whim with a poorly formalized goals. Obligations change too.
- mgamache 5y ago
  You could replace Crypto with Gold to see your arguments make no sense. Including the energy required to mine. Also many cryptos aren't unlimited (like Ethereum).
- ItsMonkk 5y ago
  When the percentage increase of the currency is slower(gold, most crypto) than the value of that currency increases over time, and as you say, it becomes entrenched. When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched. The only fair system is one in which is stable over the long-term, and where past value is equal to current value.
oxymoran 5y ago
Only roughly 2% of my portfolio is in crypto so I am far from an evangelist but I don’t feel that this is a very compelling argument. I don’t disagree with these points, but it is only half the story. A)doesn’t mention that ethereum is in the process of changing to proof of stake so that should largely decouple the energy correlation. B)most importantly, fails to note rising global inflation and central banks running wild printing money. Large, Non meme coins can act as a store of value similar to gold given their network effects. C)of late, the stock market has become every bit the casino that crypto is so I don’t see this as a purely crypto problem. Hell, the stock market has been rife with fraud and greed for decades. Importantly, a criticism that he missed would be to the digital gold argument. If things ever do “hit the fan”, there is no guarantee of electricity or of governments not shutting down the internet. Poof, crypto all gone.
- bob446 5y ago
  How on earth is something that can and does drop up to 80% be a “store of value” you mad yin. Mental
- Nursie 5y ago
  > doesn’t mention that ethereum is in the process It's been in process for years. This is a meme in itself.
  - gordian-mind 5y ago
    Makes sense since it's a difficult problem. And it's progressed quite a bit during that time.
- onlyrealcuzzo 5y ago
  For the foreseeable future, crypto will be denominated predominately in fiat. Why does central banks printing money have anything to do with crypto? It affects crypto the same as it affects corn and soybeans and gold and the S&P and any other investment. Central banks printing money seems inherently unfair if you're a creditor and a boon if you're a debtor. Until the majority of global debt is denominated in Crypto (ie never) - it doesn't change anything WRT central banks.
tromp 5y ago
It's interesting to contrast these two observations: > The most popular blockchains use a protocol called “proof of work”, which requires vast amounts of computation (and thus electricity) to operate at scale. > One popular way of making money through cryptocurrency is to start a new currency, while retaining a large chunk of it for yourself. when the only way for coin creators to avoid retaining large chunks for themselves is to distribute it fairly through proof-of-work (most still end up concentrating wealth by issuing the majority of coins in the first few years, but a never changing block subsidy would avoid that).
amgando 5y ago
the most interesting news to come out of crypto in the last decade is the fact that we now have the means to stand up a globally accessible digital clock that pays people to keep it ticking 3 of 8 references in the Bitcoin whitepaper are about decentralized time keeping incentives around consensus (agreement about history, tick by tick by tick) can get a little confusing but basically all ticks hold some data (merkle proofs of a tree of transactions) and Proof of Work leaks some money per tick while Proof of Stake pays people interest on their "at risk" investment to keep ticking Ethereum adds a Turing complete virtual machine onto the clock, tracking function arguments, return values and code deployed to the virtual machine as data in each tick of the clock there are a bunch of modern implementations of the Ethereum model in NEAR, Solana, Polkadot, Avalanche and others who have found a viable way to parallelize the single threaded virtual machine of Ethereum -- driving to make everything faster and cheaper so this idea can operate at scale and www shopping cart speeds if you can get past the emotionally charged hype and news cycles vying for our attention, you will notice, with few exceptions, that the coins of 2017 and NFTs of 2021 are very early and relatable applications about things we care about and understand: money and shiny things. DeFi (decentralized finance) is about porting the financial system to this new new forever-clock but the brand new primitives of (a) identity, enabled by public/private key cryptography (b) money, enabled by irrefutable record of time-bound value (c) ownership, identity + money and (d) provenance, identity + money + time ... are all just starting to build up we're only just now learning to use this digital clock so we're thinking of it, naturally, as a permutation of what we already know, not something completely new. see tech adoption cycle, etc your best bet in this environment, imho, is to focus on the actual tech -- it's no more complicated than a slow, expensive database that can't tell a lie (as long as it's economically viable to keep the clock ticking, and who knows how long that will be). at least that's good enough for the first year or so until you get used to it. disclosure: I'm learning how to teach people about this stuff at https://near.university https://near.university and we're hiring 1000 teachers come help us, please (edit: formatting)

93 points by djelal 5y ago

I didn't think nerds would wake up to this to the degree that they'd be asking hard questions in the HN comments. Congrats!

netheril96 5y ago

Nothing in this article is new at all (except NFT which wasn't in fad before). I've heard the same arguments ten years ago and repeatedly during the ten years. They never stopped the spread or appreciation of BTC. Whether you like to dislike BTC, it is here to stay.

arcticbull 5y ago
Well, not in China though, huh. Yes the case remains the same, because the fundamentals remain the same. It was bad then and it's bad now. What's changed is the scale of the risk it poses to global economies. This is triggering a different response. Let's see how it plays out.
adam_arthur 5y ago
Big difference between making money on something and it having actual real world utility, and long run viability as anything other than speculative vehicle. "I made money so that proves me right" is a pretty weak argument, that could be said about any pyramid scheme. People who made money buying dotcom stocks in the late 90s or houses in the mid 2000s were "right" too, until they weren't. Things without intrinsic value tend not to hold their market value over the long term. I do think Bitcoin has some marginal value, e.g. for countries with hyperinflation and no capital markets, use as payment for illicit activities... But not very compelling overall. Still, gold is a close analogue. But there are important differences there.
- MereInterest 5y ago
  > Still, gold is a close analogue. But there are important differences there, still. The biggest difference is that gold does not require significant upkeep to maintain. Mining gold extracts a resource, which can then be used at low marginal cost. Running proof of work computations enables transactions to occur, and is rewarded as compensation. If the proof of work computations stop, then the reward can no longer be spent. This is why I refuse to use the term "mining", as it brings in a large number of incorrect assumptions of the process.
  - adam_arthur 5y ago
    Yeah, didn't want to go into all the details in my original post. But over 50% of mined gold is actually used for industrial or jewelry purposes. Also you can't create "Gold 2.0" out of thin air. Or flash sell millions of ounces of physical gold tanking the price in a matter of minutes. Bitcoin is only valuable because it's called Bitcoin and has a cool origin story, yet the Blockchain mechanism backing it has been replicated quite exactly many times. There is power in shared belief, but something without a strong cushion of intrinsic value will inevitably get sold off when the hard times comes. Not that I'm big on gold for investing purposes...
rvz 5y ago
> Whether you like to dislike BTC, it is here to stay. Some cryptocurrencies are here to stay. However, with the Tether scam situation unveiling itself, Bitcoin and many other cryptocurrencies are in danger of losing their 'value' and it will cause a crash in prices in some useless cryptocurrencies.
- arcticbull 5y ago
  They'll always be with us, like beanie babies. But like the fall of Steg the $40,000 stuffed Stegosaurus - now valued at $900 - history will not be kind to the valuations.
- shawabawa3 5y ago
  > However, with the Tether scam situation unveiling itself The Tether scam situation has been unveiling itself since 2016. Is there any recent news that's made it more likely Tether will default soon?
MereInterest 5y ago
Well, yes, none of the points raised are new. But none of them have been satisfactorily addressed, either. If somebody is shouting that the emperor has no clothes, saying that you heard the same thing yesterday doesn't magically erase the emperor's nudity.

throwaway55421 5y ago

So don't use it. Done. Do people not get bored of telling others what to do? What next, "The Case Against Popcorn"?

gostsamo 5y ago
yes, I especially hate when someone shows up and starts telling me to invest in crypto.
- carrja99 5y ago
  Then you'll enjoy this quick video from the "slumdoge millionaire" in why you should "invest" in dogecoin. https://twitter.com/TikTokInvestors/status/1467225714164264962 https://twitter.com/TikTokInvestors/status/14672257141642649...
- sodality2 5y ago
  So don't do it. Done. Do you argue for banning the sale of something when someone shills it to you? No, you tell them to shut up
  - arcticbull 5y ago
    I do if it risks harming society. I certainly advocate against PFOAs. The answer to PFOAs isn't "just don't buy non-stick pans and tell anyone who encourages you to do so to 'shut up.'" It's a broad-based ban.
MereInterest 5y ago
If you don't like pollution, then don't pollute. Do people not get bored of telling others not to dump waste in the water supply?
- throwaway55421 5y ago
  I agree, don't pollute. False equivalence. We can talk about carbon taxes and renewable energy if you'd like, but if we're going to go down the path of "any energy use is sin unless I approve of it", then I ask again; do you not bore of telling others what to do?

bob446 5y ago

Crypto is for morons

rvz 5y ago

While the points made by the author are still true of some cryptocurrencies (including Bitcoin, and Ethereum which are still unsuitable for fast, cheap and efficient payments), it is yet another cryptocurrency rant which bundles only Bitcoin and Ethereum as having the same characteristics and faults in all cryptocurrencies. Many cryptocurrencies will not survive new regulations once introduced, but it seems that Stellar has a great chance of surviving given that it is making the interesting case for CBDCs [0] [1] and being used by money transfer companies and also powering stable-coins. [2] So, some cryptocurrencies are more useful than others. [0] https://stellar.org/blog/the-case-for-cbdcs-on-stellar https://stellar.org/blog/the-case-for-cbdcs-on-stellar [1] https://resources.stellar.org/stellar-for-cbdcs https://resources.stellar.org/stellar-for-cbdcs [2] https://ir.moneygram.com/news-releases/news-release-details/moneygram-announces-innovative-partnership-stellar-development https://ir.moneygram.com/news-releases/news-release-details/...

JumpCrisscross 5y ago
> given that it is making the interesting case for CBDCs It's an interesting pitch, but irrelevant. If a central bank is launching a digital currency, they're going to do so on their own terms.
- rvz 5y ago
  How so? Care to elaborate further? Why are you ignoring this valid use-case? Is it because you know it is relevant?
  - rvz 5y ago
    So, no explanation or elaboration as to why it is 'irrelevant'. So it has been admitted and my point is still not refuted.
- rvz 5y ago
  So, no explanation or elaboration as to why it is 'irrelevant'. So it has been admitted and my point is still not refuted.

block_dagger 5y ago

BTC and ETH can not be stopped, ever. Their utility for society is far too high, despite the tradeoffs.

bsagdiyev 5y ago
And what, exactly, is this utility?
- fnord123 5y ago
  Ecoterrorist Ponzi scheme.
- rajamaka 5y ago
  Money laundering
quietbritishjim 5y ago
This sort of comment is exactly why articles like this will never result in constructive discussion on HN (or elsewhere). It doesn't address any of the comments in the article and doesn't even give any concrete examples of its point (in this case the "utility to society"). Don't take this personally, crypto always results in comments like this. It just turns into a vacuous slinging match. I tend to flag the articles about cryptocurrency/blockchain unless they contain some actually new technical innovation.
- luka-birsa 5y ago
  Oh come on, we're on HN. This is the most anti-cryptocurrency tech page that I can think of, with daily negative sentiment articles popping up. It's either bitcoin will destroy the world, ether is a giant cesspool that can be implemented with a database or the favourite Tether is a huge scam and will destroy the world. Let's not forget the NFT's are full-on money laundering scheme and LOL why would you buy JPGs if you can right click and save. Trust me, people (as in cryptocurrency realists) tried explaining in the comments, but the sentiment is too strong. Due to the meteoric rise in value and the fact that a lot of HN somehow ended sitting on the sidelines, people can't stop foretelling the impending doom and gloom while being oblivious to the underlying tenet that all of this crypto technology brings. I fully agree with you that articles like this turn into vacuous slinging match between camps. It's not tho because there are no concrete answers from the crypto side, it's simply due to the population on HN - it's impossible to have a constructive discussion if the sentiment is so negative. So yes, I also flag such content, because these discussions represent catnip for me and provide zero value.

JumpCrisscross 5y ago

We're close to having the world's No. 1 and No. 3 economies, by GDP based on PPP, ban crypto. This lets us run a natural experiment. In ten or twenty years years, will the massive diversion of power and talent to cryptocurrencies leave the U.S., EU and others better off? Or will crypto be remembered as America's backyard steel furnaces [1]? Until we're there it will be difficult to either confirm this is the right course or build the political will to ban crypto. [1] https://en.wikipedia.org/wiki/Backyard_furnace https://en.wikipedia.org/wiki/Backyard_furnace

NicoJuicy 5y ago
Seems like FOMO without an actual use-case to be honest.
- deleted 5y ago
  [deleted]
krageon 5y ago
> We're close to We've been close since it started becoming popular. At this point, "being close" is like the being close of fusion: It's really close, but always just too far away.
arcticbull 5y ago
It's less a backyard furnace and more the MLMs that everyone in Albania invested in in 1997. They at one point locked up [edit](50%) of their GDP - and their economic advisor - before having a civil war about it. This required the IMF to airdrop big bags of money to bail them all out. [1] There's nothing to wait for proof on, it's been 13 - almost 14 - years and it does nothing better than a classical system other than regulatory arbitrage, grift and crime. The fundamentals are crystal clear. It's hot garbage - rather, it's Mary Kay for young men. [2] And that's if we're lucky. [edit] It's an unholy fusion of a grey goo coal-powered linked list and anarchocapitalist libertarianism [3]. [1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht... [2] https://mobile.twitter.com/tracyalloway/status/1467720876741525504 https://mobile.twitter.com/tracyalloway/status/1467720876741... [3] https://i.redd.it/1fwrkwoec7281.jpg https://i.redd.it/1fwrkwoec7281.jpg

pennaMan 5y ago

>This is presented as an ownership record for the media, often with no legal basis Ah yes, the mystical "legal basis" meaning that a nation state can use violence and kidnapping to enforce ownership in whatever way it sees fit instead of having palpable, trustless, mathematical proof of ownership.

maxerickson 5y ago
There is no such thing as mathematical proof of ownership, because proof of ownership isn't something that exists in the abstract. You can have a claim of ownership that has some mathematical properties of course.
- lostmsu 5y ago
  Oh, but there's. One can make a chip, that would only work when provided with a proof of ownership from some blockchain.
  - maxerickson 5y ago
    That's a physical thing not a mathematical proof.
    - lostmsu 5y ago
      The proof is mathematical, the physical thing is a validator.
JohnFen 5y ago
Proof of ownership is meaningless without some mechanism to enforce said ownership. If I take something of yours and you can prove it's yours, so what? Without some means of enforcement, your proof has no actual effect.
- pennaMan 5y ago
  You are correct. I suggest you look up the paper Stasohi Nakamoto published about a proposed solution for a mechanism of enforcement :)

q-big 5y ago

> The Case Against Crypto Crypto != Cryptocurrencies (or more generally: cryptoassets)

mnw21cam 5y ago
I choose to interpret crypto as https://www.cdc.gov/parasites/crypto/index.html https://www.cdc.gov/parasites/crypto/index.html
rvz 5y ago
At this point, that battle has been lost and the ship has sailed years ago.
- denton-scratch 5y ago
  Battle lost. Ship has sailed. Train has left platform. "Crypto", "cyber", "literally", "exponential": I wish language wouldn't change under my feet. I feel as if I'm standing on linguistic jelly.
teekert 5y ago
This, I mean one expects a piece from the government against Signal or something because the children, etc... No, crypto now seems to mean cryptocurrencies. Pretty bad trend. I can imaging you feel the same when you work with corona viruses these days ;) But what can we do?
Aachen 5y ago
I mean, yes, but also that ship has sailed. You can't force language upon people, this is going to be how people refer to it, similar to the media's hacker and what a hacker means in the field.
- Findecanor 5y ago
  You can not choose which language people use when talking to you, but you can set a good example yourself. "Crypto" being an abbreviation will still only mean "cryptoasset" in some contexts, and retain other meanings in other contexts.

nicoburns 5y ago

Huh, that's a domain name I didn't expect to see here. For those who don't know, the Watershed is a not-for-profit organisation that comprises a cafe/bar, independent cinema, and a media studio and a bunch of other miscellaneous functions in a single building in Bristol, UK. The name is a pun in that it's a media organisation (with watershed being a common term in broadcast media), but it's also literally a shed near the water.

portportport 5y ago

The biggest case against crypto seems to be proof of work is inherently bad, because wasting power is bad for the environment. This completely side steps the fact that the entire world is moving towards carbon neutrality in electricity generation, in which case power consumption will no longer be an environmental issue. I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation.

isoprophlex 5y ago
The sheer wastefulness of it. Can you see the objection in making a million cookies (completely carbon neutral of course), and throwing 999.999 of them away? POW is that, but worse.
arcticbull 5y ago
No, it doesn't. Every TWh wasted on proof of work delays decarbonizing the rest of the economy. There's no benefit to anyone to build a whole ton of solar and wind capacity then literally wasting it on a sudoku puzzle of global scale. That doesn't help. If anything it hurts because it generates e-waste. 27 thousand tons of e-waste per year. [1] E-waste without a disposal strategy, that gets buried or burned or dumped on poor countries. 97% of all bitcoin miners will never mine a block in their entire useful lives. They will be manufactured, plugged in, they'll sit there, desperately guessing, never guess right, and be thrown out. [1] https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption
Nursie 5y ago
> in which case power consumption will no longer be an environmental issue. But it is right now. We don't live in a world with carbon neutral power generation. We're not there. PoW is even encouraging people to bring fossil-fuel based generation back online just for mining and making the transition to low-carbon economies slower. > I'm yet to hear a convincing argument against proof of work under the assumption of carbon neutral electricity generation. Yeah, let's have that argument when we're closer to actually having that. Oh, and before you say "Increased demand will get us there sooner"... no, it won't, we already have a huge amount of demand that can't be met, it's making things worse.

mypastself 5y ago

“The laws of supply and demand mean that the amount of energy consumed closely tracks the price of the cryptocurrency in question: increases in demand correspond directly to increases in energy use. Although some newer cryptocurrencies avoid this through alternative protocols (“proof of stake” etc), they remain a distinct minority. Additionally, inter-currency trading means that their value closely tracks that of the larger cryptocurrencies, meaning that changes in their price have a similar effect on the total energy consumption.” I’m a little confused by that last part, maybe a more economically-minded commenter can help me. How does the price change of a small-cap proof-of-stake currency have a similar effect on energy consumption as a larger, proof-of-work one?

deleted 5y ago
[deleted]
tubignaaso 5y ago
I believe the author is saying the reverse is true. The larger currency directly correlates and effects the smaller one. In my experience watching the markets, it does seem to hold true. And the smaller currencies are too small to really effect the larger ones.

andrewdubinsky 5y ago

There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound. If you don't understand why these new systems are so important, please read up about the 2008 crash before deriding trustless settlement. Why did the financial system seize up so quickly? How are settlements handled between financial institutions? How does the flow of assets actually work in practice? Who owns the settlement systems and where are financial assets kept and why? Not the digital accounting, but the actual custodial functions. Cryptocurrencies, especially NFTs, have a very important use case in these areas.

arcticbull 5y ago
> There's at least two of these articles a week written by people without a finance background. It's laughable now how completely foolish they sound. Everyone with a finance background hates crypto. Just like every doctor believes in vaccination. And every scientist believes in climate change. Just because you made money doesn't invalidate their premises. > Cryptocurrencies, especially NFTs, have a very important use case in these areas. Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. Just one. I know you can't because if you could you'd be richer than Bezos and Musk combined.
- PretzelPirate 5y ago
  > Everyone with a finance background hates crypto. This is clearly an exaggeration. There are many people in the finance industry who have put money into cryptocurrencies. > Name literally one concrete example of a concrete and specific problem better solved by crypto than a classical solution. There are people who believe that digital asset ownership (including money) via the blockchain is superior to classical solutions of centralized custodians/governments controlling those assets (while still having chargebacks, recovery from lost private keys, and all the things people think you can’t have on blockchains even though you can). Many people also trust large companies/their government not to freeze/confiscate their assets and think this is a silly use case. Those same people have likely never had their account closed and lost thousands of dollars of digital assets, and have never had to flee their homes for safety from their own governments. Having different trust models is why people fundamentally disagree on whether blockchain is valuable.

imtringued 5y ago

Let's write a microblog! The case against crypto. Crypto is credit money with zero obligations allowing all participants to walk away without notice. Modern fiat currency is credit money created in accordance to promised obligations that bind participants over a time period. Limited supply crypto is trying to be exclusive akin to feudalism, past economic power is strongly entrenched, families can pass their amassed wealth to their heirs while late comers are doomed to have very little economic power. Unlimited supply fiat is trying to be non exclusive akin to democracy, past economic power means very little and is eroded through inflation, new comers can go to a bank and get newly created money if there isn't enough in the economy. Fiat currencies are a tool of trade that serve their institutions/governments to increase the efficiency of their real world economy. Militaries protect themselves, the land and its people but not the currency. Cryptocurrencies do not interact with the real world beyond expending energy, they are bounded by their underlying blockchain. The miners(supposedly equivalent to militaries) only protect the blockchain/currency, they don't even protect themselves let alone the land and its people. If you want to gamble buy cryptocurrencies, they are better than the casino.

lostmsu 5y ago
Most of these statements are the opposite of truth. For example, creation of crypto has no or extremely little variability in obligations for many years. Statement about no obligations is false. There's at least an obligation to be able to transact. Creation of fiat can be changed on a whim with a poorly formalized goals. Obligations change too.
mgamache 5y ago
You could replace Crypto with Gold to see your arguments make no sense. Including the energy required to mine. Also many cryptos aren't unlimited (like Ethereum).
ItsMonkk 5y ago
When the percentage increase of the currency is slower(gold, most crypto) than the value of that currency increases over time, and as you say, it becomes entrenched. When the percentage increase of the currency is faster(most fiat) than the value of the assets increases over time, and opposite of what you say, it(being assets) also becomes entrenched. The only fair system is one in which is stable over the long-term, and where past value is equal to current value.

oxymoran 5y ago

Only roughly 2% of my portfolio is in crypto so I am far from an evangelist but I don’t feel that this is a very compelling argument. I don’t disagree with these points, but it is only half the story. A)doesn’t mention that ethereum is in the process of changing to proof of stake so that should largely decouple the energy correlation. B)most importantly, fails to note rising global inflation and central banks running wild printing money. Large, Non meme coins can act as a store of value similar to gold given their network effects. C)of late, the stock market has become every bit the casino that crypto is so I don’t see this as a purely crypto problem. Hell, the stock market has been rife with fraud and greed for decades. Importantly, a criticism that he missed would be to the digital gold argument. If things ever do “hit the fan”, there is no guarantee of electricity or of governments not shutting down the internet. Poof, crypto all gone.

bob446 5y ago
How on earth is something that can and does drop up to 80% be a “store of value” you mad yin. Mental
Nursie 5y ago
> doesn’t mention that ethereum is in the process It's been in process for years. This is a meme in itself.
- gordian-mind 5y ago
  Makes sense since it's a difficult problem. And it's progressed quite a bit during that time.
onlyrealcuzzo 5y ago
For the foreseeable future, crypto will be denominated predominately in fiat. Why does central banks printing money have anything to do with crypto? It affects crypto the same as it affects corn and soybeans and gold and the S&P and any other investment. Central banks printing money seems inherently unfair if you're a creditor and a boon if you're a debtor. Until the majority of global debt is denominated in Crypto (ie never) - it doesn't change anything WRT central banks.

tromp 5y ago

It's interesting to contrast these two observations: > The most popular blockchains use a protocol called “proof of work”, which requires vast amounts of computation (and thus electricity) to operate at scale. > One popular way of making money through cryptocurrency is to start a new currency, while retaining a large chunk of it for yourself. when the only way for coin creators to avoid retaining large chunks for themselves is to distribute it fairly through proof-of-work (most still end up concentrating wealth by issuing the majority of coins in the first few years, but a never changing block subsidy would avoid that).

amgando 5y ago

the most interesting news to come out of crypto in the last decade is the fact that we now have the means to stand up a globally accessible digital clock that pays people to keep it ticking 3 of 8 references in the Bitcoin whitepaper are about decentralized time keeping incentives around consensus (agreement about history, tick by tick by tick) can get a little confusing but basically all ticks hold some data (merkle proofs of a tree of transactions) and Proof of Work leaks some money per tick while Proof of Stake pays people interest on their "at risk" investment to keep ticking Ethereum adds a Turing complete virtual machine onto the clock, tracking function arguments, return values and code deployed to the virtual machine as data in each tick of the clock there are a bunch of modern implementations of the Ethereum model in NEAR, Solana, Polkadot, Avalanche and others who have found a viable way to parallelize the single threaded virtual machine of Ethereum -- driving to make everything faster and cheaper so this idea can operate at scale and www shopping cart speeds if you can get past the emotionally charged hype and news cycles vying for our attention, you will notice, with few exceptions, that the coins of 2017 and NFTs of 2021 are very early and relatable applications about things we care about and understand: money and shiny things. DeFi (decentralized finance) is about porting the financial system to this new new forever-clock but the brand new primitives of (a) identity, enabled by public/private key cryptography (b) money, enabled by irrefutable record of time-bound value (c) ownership, identity + money and (d) provenance, identity + money + time ... are all just starting to build up we're only just now learning to use this digital clock so we're thinking of it, naturally, as a permutation of what we already know, not something completely new. see tech adoption cycle, etc your best bet in this environment, imho, is to focus on the actual tech -- it's no more complicated than a slow, expensive database that can't tell a lie (as long as it's economically viable to keep the clock ticking, and who knows how long that will be). at least that's good enough for the first year or so until you get used to it. disclosure: I'm learning how to teach people about this stuff at https://near.university https://near.university and we're hiring 1000 teachers come help us, please (edit: formatting)