21 ms·

Crypto: The Good, the Bad and the Ugly

190 points by tagawa 5y ago

WoahNoun 5y ago
I don't think there is any good.
- deleted 5y ago
  [deleted]
Reichhardt 5y ago
The current fiat system (and the Governments that control it) are completely enslaved to the welfare (pension) and healthcare demands of baby boomers. These demands will only multiply as the populations age, until eventually consuming the host. You can already see this in countries like Italy, which are now in demographic death spirals. If we can craft a new financial system without spending 15%+ of our GDP and rising on Pensions[1], even with some inefficiency its still worth it. https://data.oecd.org/socialexp/pension-spending.htm https://data.oecd.org/socialexp/pension-spending.htm Avoiding sales taxes, platform commissions, and income taxes is a major advantage. The issue with Crypto right now is waste from Proof of Stake, and fraud/security risks. We need to resolve this before expanding.
- null_object 5y ago
  > The current fiat system (and the Governments that control it) are completely enslaved to the welfare (pension) and healthcare demands of baby boomers. If we can craft a new financial system without spending 15%+ of our GDP and rising on Pensions, even with some inefficiency its still worth it. Avoiding sales taxes, platform commissions, and income taxes is a major advantage. So you think the problem solved by crypto is no longer paying taxes or contributing any part of our incomes to the collective good? I guess you think that child mortality isn't something we should worry about? Or looking after the weak and sick, in general. Why pay for schools, or sanitation, or public transport, at all? And the rules that govern human behavior - we can just rid ourselves of the police in this libertarian-anarcho system where the rich do as they please, and the rest predate upon each other. Sounds like a great use-case for crypto.
  - Reichhardt 5y ago
    50% of healthcare costs are incurred in the final 5 years of life, and in much of the world private healthcare is accepted and efficient. I'd rather euthanize myself at age 80 and pay much lower taxes throughout my adult life than die at age 85 in a gold-plated Government hospital. Sanitation and public transport can be directly charged to end-users based on usage. Education can be funded with land value taxes. Federal Government bureaucracy just exists to support itself. Healthcare agencies have been turned against the population to promote lockdowns and big pharma, and intelligence agencies spy against their own citizens.
    - notch656a 5y ago
    - aemreunal 5y ago
      > in much of the world private healthcare is accepted and efficient. It is accepted in many parts of the world, unfortunately, but in what part of the world is it "efficient"? Can you give an example? Is "basic medicine costing $500 (see insulin) to the few that can afford it and the rest dying because they can't access it" what you define as efficient? > I'd rather euthanize myself at age 80 and pay much lower taxes throughout my adult life than die at age 85 in a gold-plated Government hospital. I'd rather not. I doubt many people would be okay with that. I like living and being healthy. You can still feel free to do that in either situation. > Sanitation and public transport can be directly charged to end-users based on usage. So the rich should get clean streets and running water while the poor walk on their own shit? Should we charge per poop? As for public transportation, you think it would work if I didn't pay taxes for it and it cost $80 for someone to take it because they can't afford the $20 Uber ride? > Federal Government bureaucracy just exists to support itself. This is objectively not true. Many techies (not just crypto people) tend to forget why societal structures were invented in the first place. No one's saying inefficiencies don't exist but disregarding all of society seems to be specifically tailored to get a rise out of people. I don't know how I can explain to you that we all need to care about each other, otherwise we'll all go extinct.
- yed 5y ago
  Governments collected taxes on cash and non-fiat for millenia (and still do so), they will have no issues taxing crypto if they need to.
  - Reichhardt 5y ago
    But at much lower rates. Taxes as a % of GDP didn't exceed 10% in the USA until WW1: https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%2C_state%2C_and_local_tax_revenue_as_a_percent_of_GDP.pdf https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%... You can see other spikes related to other wars. Wars sure are great if you want to expand Government power and taxation over your own citizenry!
    - 8note 5y ago
      Also if you want to build and maintain infrastructure and social services.
      - 0x0nyandesu 5y ago
        Given that I was born into this system with zero say in it what if I don't?
    - yed 5y ago
      Sure, but the claim is that crypto magically allows you to avoid all taxes. It doesn't. How much the government chooses to tax you is entirely unrelated.
    - mellavora 5y ago
      You know what is even better than wars? Government services. Like education, healthcare, roads & infra. Also some stuff of much more dubious value, like TSA and heavily militarized police
gcampos 5y ago
I think this is the most fair and sane opinion about crypto I ever read. The author acknowledges the benefits without falling for the “tulip mania”
simonw 5y ago
This is really good - definitely worth reading. There are a bunch of useful angles on what's going on here that I've not seen written about elsewhere.
Nursie 5y ago
> It seems if you want to do crypto things without burning the planet down, you can. Right, but what if you consider it a bad thing to introduce an economic incentive for other people to burn the planet down? This is beyond a matter of personal choice, until and unless we all get our own personal planets.
- pcthrowaway 5y ago
  I agree, but our problem is with proof of work, not crypto. I don't buy/use bitcoin any more because of this. Ethereum is moving (the sooner the better), and the only other PoW crypto I have a bit of is innovating PoW and (hopefully) becomes more environmentally friendly as a result. To be honest, I'm still unclear on if this is even possible, and if energy usage becomes significant relative to what it does, I would drop it as well.
  - varajelle 5y ago
    The price of cryptocurrencies are strongly correlated. I have the feeling that if you inject money in any cryptocurrency, you inject money in the "cypto market" which eventually mean that the price of PoW money also increase. And the energy usage follow the price of the PoW money.
    - leppr 5y ago
      The "crypto market" is also very correlated to the US stock market, and risk assets in general. The best way to push the energy usage of PoW money down is to get back fiat money under control and stop incentivizing reckless gambling, like the FED finally seems to be doing.
    - pcthrowaway 5y ago
      This may be true short term, but it doesn't hold long term. When you support a competitor you improve the narrative for its relative strength. Eventually I think Bitcoin will lose out to PoS cryptocurrencies (probably Ethereum), and many people such as myself are specifically rallying behind this narrative, which is why we see bitcoin dominance at near historic lows, and I suspect it's unlikely to recover to >70% and perhaps not even >60%.
bawolff 5y ago
Aww. I was all excited for this to be about block ciphers and that type of crypto :(
- quickthrower2 5y ago
  I was hoping for a deadly bacteria article
  - mypastself 5y ago
    I was hoping for an article about Westerns.
rasengan 5y ago
This article comes off very biased. There are a number of major problems blockchain solves - most importantly, ownership and control of things. Saying “crypto is for people who love money” is silly. Cryptocurrency is for people who wish to control their assets. Spending time writing a hit piece on these technologies is silly and I wonder what the actual motive is.
- exdsq 5y ago
  Easy front-page on HN, easy shares on twitter, easy to regurgitate the same complaints for blog SEO. I can't think of other reasons - they all same the same thing.
- nefitty 5y ago
  You mean like when ethereum split to reverse a transaction some of the devs didn't agree with? Or how huge Bitcoin mining operations basically decide what chain to work on, with no accountability to anyone who "owns" Bitcoin? Name any other shitcoin and I'll tell you why it's a scam. Blockchain and associated tech solve no real business problems that aren't better solved by other means. Einstein was offered the role of president of Israel but declined because he knew he was not qualified to lead a country. The devs working on crypto may be technical geniuses, Satoshi included, but that has no bearing on whether they have any understanding of economics.
  - exdsq 5y ago
    > Or how huge Bitcoin mining operations basically decide what chain to work on, with no accountability to anyone who "owns" Bitcoin? Out of interest do you have an example of the chain following a particular head due to collaborative mining over 51% of the network for this to work?
- etchalon 5y ago
  Why couldn't the motive be "person had thoughts and wanted to share them"?
- WA 5y ago
  > most importantly, ownership and control of things. I feel ownership and control of my house and my stuff. To some extend at least. Can the government theoretically seize my assets? Yes. Can the goverment seize my Bitcoins? Well, depends on whether or not I want to leave my social circle. The sense of ownership of Bitcoin is based on your willingness to leave everything behind. And your ability to cross borders into countries that won't send you back. I think, ultimately, crypto only works if your outlook on the world is very pessimistic and you have zero trust in existing structures of society.
astoor 5y ago
The author believes "a Twitter where your popular tweets earn you money" would be a good thing? Twitter is already full of people trying to shout the loudest - how can adding a financial incentive to shout even louder make things better rather than worse?
- sneak 5y ago
  People willing to pay for quality content is always a good thing for content authors. By nature of their willingness to pay, it's a good thing for content consumers (otherwise they wouldn't do it). Nobody requires anyone to use any website that they don't want to (except perhaps irs.gov). You are always free to ignore it, like you are free to ignore Twitter. Giving people more options rarely makes the world worse.
  - grey-area 5y ago
    Popularity is not quality, usually the inverse.
    - sneak 5y ago
      If people are willing to pay for it, the people consuming it find it valuable, which is frequently a proxy for quality (in the eyes of those consumers - the ones who count in this equation). Quality of content is, of course, subjective. I have paid for Lady Gaga albums.
      - hk__2 5y ago
        Don’t confuse "being paid for your popular content" and "people paying actual money for your content". On Quora you get paid for your popular content even if nobody willingly gave you money: it’s just that the website is now full of ads and you get a small percentage of that.
      - mathnmusic 5y ago
        The quality problems often come from the poor proxy. Money being fungible means that the rich get higher weight in determining what's considered valuable. In this marketized system, who will value journalism - especially the kind that people in power need to hear, not what they want to hear. If the rich want to suppress a fact, they can buy fake news - and because price = value, the fake news becomes the new truth. Quality of content is not quite "subjective" in general. Perhaps in entertainment.
mantenpanther 5y ago
NFTs in the current form might be pretty useless as such (just a proof you "first purchased" a jpeg). But I think in the gaming space this will become huge and actually makes sense - use elements (items, characters, stats,...) and their history in different and independent games if the developer wants to integrate them. No lock-in and portable, not tied to game-specific accounts.
- meheleventyone 5y ago
  > if the developer wants to integrate them What’s the incentive for the developer to do this? And more importantly how does my M4 rifle work in an epic fantasy role playing game?
  - mantenpanther 5y ago
    There might be many, this is a new field. A starter would be an existing userbase holding NFTs that enter the game. Different forms of monetarization (entering with NFTs, storing progress on the NFTs, marketplaces,...) might be a thing.
    - meheleventyone 5y ago
      There might be none as well, this is a new field. The problem with your first suggestion is that you do an awful lot of work to map another games NFTs to your own items but presumably get none of the money from them. You also have an immediate balancing problem. And the better way is to just make a game that those players want to play, which is how game populations move around now anyway. The only way I can see supporting external NFTs as worthwhile for a game developer is if they’re already table stakes for taking part. Or say you support BAYC, all that work to address 10k potential users?
      - mantenpanther 5y ago
        Valid points, time will tell. I can image there will be neutral intermediate services (NFT-platforms) that provide assets and smart contracts/APIs for integration for small fees.
sjtindell 5y ago
Easily the best take posted here in a while. These are money games. And if you think this will be a minor sector of the economy, look at Wall Street - there is huge demand for these types of games, and that's when only people with $1+ million in net worth can really play. Now anyone can play, at the same time that traditional paths to wealth are stagnating or closing off completely.
- dagmx 5y ago
  How does this enable new people to play? The rich can still gamble the most and come in early to earn the biggest rewards. The poor still take the highest risk. As the poor buy more into it , the rich get richer as well. Maybe the poor get richer but how much money can they lock away? What stopped them from investing that money in the stock market before crypto was around? I fail to see how this creates a new economy. It's the same economy just wearing a new skin. The players are the same players. The winners are the same winners with the same luck of making it big or not to inspire others to get into the hype.
  - ethbr0 5y ago
    Parent is referring to the accredited investor definition in the US [0] specifically ($1M+ in assets as one test), but more broadly to similar financial gatekeeping. I'm skeptical it's an overall social good to remove guard rails that prevent sophisticated sellers from fleecing unsophisticated buyers (say what you want about the SEC, but they do enforce some rules), but I agree the current scheme prevents all people from equally freely investing in all opportunities. [0] https://www.investopedia.com/terms/a/accreditedinvestor.asp https://www.investopedia.com/terms/a/accreditedinvestor.asp
    - dagmx 5y ago
      Thanks for the link. I do agree that playing without guardrails is problematic.
  - iskander 5y ago
    > How does this enable new people to play? The rich can still gamble the most and come in early to earn the biggest rewards. So far this stuff has circumvented the accredited investor regulations.
jayd16 5y ago
The "True cloud computing" angle is interesting if a little dubious in its over promising and under specified downsides. No closed source, after all. No private execution etc. Why not just open source the code and have those interested parties run the source directly? What does the blockchain add here? That said, I think there's probably a good idea in there though. AWS, GCP or a niche player could essentially add a donation API to their serverless platform. This would create a similar promise of a service that can be directly financially maintained by users with some added benefits like support for closed source, and a protected execution environment.
Animats 5y ago
'"Tokens align network participants to work together toward a common goal — the growth of the network and the appreciation of the token." That's great if what you're trying to do is create an ecosystem of tokens that appreciate in value all the time. What percentage of systems can be modeled that way?' That's the problem. "An ecosystem of tokens that appreciate in value all the time". The perpetual motion machine of finance. Bitcoin has actually been able to pull this off, more or less. Etherium, maybe. The rest, not so much. The NFT thing is winding down. NFTs are basically Axie Infinity, OpenSea, and the little guys. Axie Infinity is crashing. SLP is down to $0.02, from $0.35 at peak a few months ago. OpenSea is hard to measure. There's wash trading to pump up prices.[1] NFTs have no overall market price. NFT markets stall, rather than crashing - high asking prices, no sales. There's a lot of that on OpenSea. "So far, most new NFT collectors on the secondary market have yet to recoup the costs of their purchases"[2] In other words, the issuer makes money, but the suckers who buy NFTs lose. Many of them don't realize they've lost. Someday they will find out, when they try to liquidate their Bored Ape Yacht Club collection. I kind of liked the idea of NFTs as part of an asset portability system for virtual worlds. Goldman Sachs even endorsed that. I was thinking of this for items in the US$1 - US$100 range, like game items. The transaction costs would be too high if it took a blockchain transaction to walk through a portal, even for the cheap blockchains. Some big part of all this is probably going to come apart in 2021. Definitely Axie Infinity. Maybe Tether. [1] https://www.theverge.com/2021/9/15/22676075/opensea-insider-information-nft-trading-nate-chastain https://www.theverge.com/2021/9/15/22676075/opensea-insider-... [2] https://www.ft.com/content/e95f5ac2-0476-41f4-abd4-8a99faa7737d https://www.ft.com/content/e95f5ac2-0476-41f4-abd4-8a99faa77...
- mgaunard 5y ago
  Isn't money supposed to depreciate over time rather than appreciate?
  - Animats 5y ago
    Depends. Some gold seller used to advertise that in 1400 AD an ounce of gold would buy two good suits, and today it will buy about two good suits.
  - 5y ago
killjohncoulton 5y ago
keiferski 5y ago
I've been quietly following the development of cryptocurrencies and blockchain, although I only own a very small amount. Some thoughts I have: 1. If you study the history of technology, it becomes pretty clear that it often take decades or even centuries to see the full impact of an invention. Declaring the ultimate value of a technology barely a decade after it was invented is just ignorant. It's only been about 30 years since society became "networked" and it seems clear that some form of "Internet currency" is inevitable. If you had judged the impact of gunpowder, the printing press, or photography 10 years after their invention, you'd obviously be quite mistaken. We might not see the "killer app" (whew that's an old expression) for blockchain for years. 2. A lot of crypto-critics seem to focus on the people in the crypto world (scammers, NFT sellers, etc.) and the things that they supposedly do wrong, but then apply these criticisms to the technology itself. This is a flawed approach for obvious reasons, but I also understand it, as the crypto world is full of hero worship and hype machines. If you're interested in this tech, you have to learn how to ignore these things. 3. It's somewhat unfortunate that blockchain and crypto have become dominated by finance, as it drowns out discussion of other use cases. Hopefully, this will fade into the background more as the technology matures and is adopted by a larger percentage of the population.
- dagmx 5y ago
  Your first comment is a very common crypto talking point that isn't really borne in reality IMHO. It takes decades to see the impact. It almost never takes a decade to see the use, and that's what people are deriding. Crypto doesn't really solve a problem that needed solving and it is often the wrong solution for many things it's used for. All at a very high cost. Cryptocurrency hasn't really brought much in the way of new technology to the table.
  - keiferski 5y ago
    > It almost never takes a decade to see the use, If you study the history of technology, its ultimate impact is never manifest within a decade. It took decades for the Gutenberg Printing Press to spread around Europe and centuries for the consequences to see be seen (Protestant Reformation, newspapers, birth of the modern media, on and on.) This is the case for pretty much every other invention. > Crypto doesn't really solve a problem that needed solving Again, this may be because the problem hasn't arisen yet or isn't obvious yet. We have only just begun the era of networked communications.
rland 5y ago
I've gotten this feeling, ever since about 2008 or so, that the map that is asset prices is slowly, inexorably becoming uncoupled from the territory of the physical world. This economy-scale decoupling is the dual of each and every one of our very own psychological uncoupling from our own physical worlds, which has occurred because of the computerization of work, socialization, and life itself (the shimmering neuralink dream). Cryptocurrencies are what happens if you completely decouple the asset price from the physical world. To create the "value" of cryptocurrencies, we purposefully do nothing at all. The asset is valuable only because of the flow of entropy. Not the flow of energy (which generally has some physically useful function). But entropy itself -- a thing that exists only in the "map" of information, not the "territory" of the real world. Typically, moving entropy around is useful to us, because it actually corresponds to changes in an underlying physical process. Like, your job doing excel spreadsheets for warehouse inventory management is just changing the flow of entropy -- to you, it is decoupled from the physical world. But there is a link to the physical world: when you change a cell in a spreadsheet, so too a physical good moves somewhere else in the warehouse. With cryptocurrencies, not so. All this entropy is moving for the sake of itself. It's all virtual -- none of it can be coupled with the physical world (by design! if it could be, some physical force could go in and take your crypto-coins). Now, here's the delusion: unfortunately for us, moving entropy around is actually still coupled with moving energy around. It actually has a tremendous physical effect on the world around us. Something I've noticed about cryptocurrency people is that they are very, very plugged in. The evangelists never have a physical job; always a computer job, and they are always online, and believe in being online to the greatest extent possible. And I think, actually, there is a very obvious reason for that.
- ethbr0 5y ago
  The irony is that much of the criticism against the missing physical link / utility of crypto was surely levelled against the idea of money in its earliest days. "Coins? Why would I want those instead of food? I can't eat coins." To which the killer adoption feature was governments saying "Well, you have to pay taxes in coins, so you need some" to bootstrap & put a floor in under the system's value. Crypto doesn't appear to have had a "tax" moment yet. Is there anything I can only do with Bitcoin, Ethereum, etc? Which is to say, if the value of both absolutely collapse (to some fraction of a cent), who would still be buying, and to do what?
Cthulhu_ 5y ago
I've just read the intro, but imo the PRIMARY reason for the hype is simply money. People got rich off of crypto. Rich people that want to get richer simply pay people to hype up crypto (and stonks). And like the 2016 elections, this hype ended up having a snowball effect with people who do not get paid for it hopping onto the hype train to generate more hype. I'm not saying crypto is some fad or whatever, I'm just not convinced there's anyone into it that doesn't just want to get rich.
- hooande 5y ago
  The whole post is worth reading, it's quite good
jasongi 5y ago
I don't understand how any take on crypto can not mention that it is now the de-facto currency of online black markets, from pornhub to silk road 9.0 or whatever version we're up to. This is crypto's utility and the only thing I've seen crypto being used for seriously that isn't speculation. Cryptocurrency is disrupting the black markets the same way amazon/ebay/online shopping disrupted the retail markets. Crypto isn't a solution looking for a problem, the problem was found back in 2011 - it's just that nobody wants to admit it. It reminds how everyone used to say that BitTorrent was used for downloading Linix ISOs, but with less self-awareness.
- ls15 5y ago
  Speculation is a use case and a market too
  - secondcoming 5y ago
    How easy is it to convert gains back into fiat though?
    - lukeramsden 5y ago
      Extremely easy. The bookkeeping for tax is less easy though.
    - ls15 5y ago
      You send it from your wallet to the exchange where you bought it, sell it for fiat and withdraw it to your bank account. The most complicated parts are complying with KYC regulation and calculating taxes, as well as not losing or leaking your private keys. If the asset has only low liquidity, then it is difficult to sell it at the sticker price and your sale may actually lower the price, but this will not happen for most people with high liquidity assets, such as BTC or ETH and so on.
      - cuteboy19 5y ago
        Unless of course Binance disables withdrawals because of ""technical issues""
thomasikzelf 5y ago
Crypto needs to solve a problem. I think cryptocurrencies should focus on making a cheap currency that people can actually use. requirements: - low transaction costs - low volatility - many places where you can pay with it - secure - privacy - no tax problems - fast transactions - handle fraud - scalable If a crypto currency can solve above points by cutting out the middle man and making transactions virtually free instead of paying 1.29% + 0.25c per transaction that would be huge. But that is a big if. Bitcoin fails at almost all of the above points. The only coin that comes close is Nano (I've got no investment in it). They solve fast, secure, scalable and cheap transactions, which I think are the main problems right now. Read their whitepaper, it is interesting. Whether they can solve the other problems remains to be seen.
- streamofdigits 5y ago
  looks like cash has solved (most) of this some time ago: - V. costs nothing to exchange a bill - V. link to a real economy so little volatility (except when the real economy implodes) - V. accepted everywhere within a currency zone - V. mostly secure (ofcourse theft is as old as humanity) - V. private (only your counterparty knows about it) - V. fully integrated into financial accounts / tax systems - X. fast (local) transactions but remote remittances outside a currency zone a serious problem (expensive, slow) - V. counterfeit tech very sophisticated - V. you can print as much as you want The major flaw of cash is actually linked more to the international system of currencies (which underlies many more socioeconomic problems)
  - thomasikzelf 5y ago
    Yes and of course regular online payments such as visa or ideal (cheap payments in the Netherlands) also solve that. Global payments and handling taxes could still be cheaper and easier though. I see crypto having a small chance of succeeding in doing this. This small chance of succeeding is a reason for me not to invest in it right now, but I don't think it is impossible.
- GrumpyNl 5y ago
  Its very strange that a country like Kazakh can influence the value of bitcoin, just by its power supplies. https://cointelegraph.com/news/kazakh-government-resigns-shuts-down-internet-amid-protests-causing-bitcoin-network-hash-rate-to-tumble-13-4 https://cointelegraph.com/news/kazakh-government-resigns-shu...
neuronic 5y ago
1.5 decades into the tech, blockchain hasn't really provided any utility aside from easing drug transactions and money laundering. I agree with the author that some interesting tech issues were solved but apparently this still doesn't lead to anything legitimate and more useful than the non-crypto version of whatever problem you're trying to solve.
- hffft 5y ago
nbzso 5y ago
I don’t know. This hype-crypto-machine is not catching up with my “feelings” about the future of the Web. Maybe I am getting old, but aside from some communication protocol usage and some form of authenticity (which is questionable), I don’t see web3. I would go out on a limb and say that if this is web3, I don’t want to have anything to do with it. This is an outrageous waste of resources and energy with awful environmental impact, driven primarily by pure greed and wishful thinking. Looking at mindset of the VC’s, which are giving this “things” validation, scares the living sh*t out of me. More and more, implementation of modern ‘tech’ is pushing me towards abandoning the ship and moving into the woods somewhere. Don’t let me start with NFT’s. It is horrible. The impact of this thing over a lot of my friends is getting ridiculous. I somehow understand “the money” aspect (ponzi scheme, money laundering), but recently I got “the cult” vibes from some of them and closed the door permanently. So hard “no” from me. I already have a “Metaverse” in which I feel comfortable, it is called reality. And Web 2.0 is enough for my needs.:)
- rvz 5y ago
  OK. I am convinced. The entire cryptocurrency industry is a scam. So rather than saying the same thing over and over on every HN thread about it being a 'scam', let's do something about it then? How do we ban it all to save the planet and stop the scams everywhere then? Or are we going to complain on the next HN thread about cryptocurrencies and web3 once again?
  - randomhodler84 5y ago
    How do you wanna ban it? Break my fingers so I can’t run some open source software? Break my hardware so It can’t Hash, cut my power? Arrest me for doing math? The battle is between the libertarians and the authoritarians. The authoritarians want to ban things they don’t understand. They want to bully others with their choice of how they use energy. They want the state boot stomping on the face of humanity forever. Banning is always an act of violence. Don’t give in to violence.
    - _57jb 5y ago
zulrah 5y ago
>Every time I dig into crypto I find things that seem stupid, or useless, or actively bad. But so many people are into it! During my time in tech I've only knew two people who held crypto. However, I've know a lot of people(myself included) who got into crypto, got dissilusioned by the promises, and after seeing that nothing they promissed actually arrived left. 5 Years ago I've heard how crypto is going to be a killer usecase for e-commerse, banking, and even cloud computing but no actual work was ever done to acomplish these goals
doubtfuluser 5y ago
At least on the monetary side I liked Nassim Taleb‘s paper [1]. I don’t agree with everything he writes but for crypto-currencies he has some points that ring true. For crypto in general I see definitely the supply chain application, but still think it is in the hype part of the cycle. [1]: https://arxiv.org/abs/2106.14204 https://arxiv.org/abs/2106.14204
nmaley 5y ago
Some remarks from Captain Obvious here. The primary use case for crypto is simple: (1) People buy crypto because it keeps going up in value (2) It keeps going up in value because people keep buying it. (3) For why people keep buying Crypto, see (1). That's the logic of a Ponzi scheme. All previous Ponzi schemes failed because either (a) sooner or later the scheme runs out of new suckers, and/or (b) the authorities intervene and shut it down, and/or (c) The founders cash out and 90% of the money just disappears into thin air. The truly fascinating thing about crypto is that neither (a) or (b) appears likely in the near future. It's a Ponzi scheme with fungible shares. For (c), as with other Ponzi schemes, the founders make a lot of money, the later entrants lose a lot of money. Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually, so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile. At the same time as the BTC founders are trying to find the optimum point in their cash out equation, there is another use case for crypto which continues to drive demand: crime and money laundering. Crypto is a great way to move money between jurisdictions. For some criminals, it is well worth the risk of volatility. Ponzi logic and money laundering logic will continue to drive the price of established cryptos upwards. I suspect it might be quite a while before the game stops. That makes cryptos like BTC an interesting short term speculation. But to paraphrase Gurf Morlix: stay in too long, you're gonna get cut, and you're gonna bleed.
- klntsky 5y ago
  > so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile. I may not have all the data, but is there any evidence that at least one observable price drop was caused by someone's cash-out e.g. in BTC?
- lukeramsden 5y ago
  > Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually Who are these "BTC founders" that are cashing out gradually? The only actual founder of Bitcoin, the anonymous Satoshi, has not moved any BTC since they disappeared from the internet: https://whale-alert.medium.com/the-satoshi-fortune-e49cf73f9a9b https://whale-alert.medium.com/the-satoshi-fortune-e49cf73f9...
thenoblesunfish 5y ago
The author states without very specific evidence that "proof of stake" demonstrably works, and thus quickly dismisses the energy costs of cryptocurrency. I'd personally be very interested to hear more about that, since there is a lot of hand waving around proof of stake. The cynic in me says that it would already be broadly used, if there weren't fundamental problems with it. It does, however, seem like a handy way to support the idea, in the long term, wasting real-world resources isn't an essential element of crypto, which is of course very attractive to people who stand to make short term gains from crypto.
- mattdesl 5y ago
  many of todays popular chains that are not BTC and ETH are currently using PoS, especially those interacting with web dApps and smart contracts. See Tezos for a real world example that “currently works.” ETH (the devs and community) is also heavily committed to PoS—most of the value and rewards now locked in the $33B staking contract cannot even be withdrawn before a successful merge of PoS occurs (likely some time in the next several months, but let’s wait and see). The idea that crypto is inherently wasteful is inaccurate. PoW is extremely energy intensive, especially without L2s, but it need not be the only consensus mechanism for the future of these protocols.
2-718-281-828 5y ago
Would somebody maybe explain to me what an NFT is? I have good understanding of Bitcoin and Blockchain technology (not deep but sound). But I fail to see how an NFT could be applied to a video clip in a meaningful way. To me it sounds like an NFT is a signature signed with a key of the rightful owner for a digital object like a video clip and that signature is then integrated into a blockchain and associated there with that rightful owner in a verifiable way via that rightful owners public key. Is that it? I mean, I assume no b/c that whole process is meaningless as you may just change one bit in that video file and its no longer associated with that rightful owner - so I suppose I'm missing something here.
Gareth321 5y ago
I'm always surprised by the negativity towards crypto in tech focused forums. I understand the costs; disruptive technologies always come with enormous costs. The value proposition is much larger still. * Popular payment processors like visa and mastercard have become moral arbiters. Shutting down one's ability to donate to Wikileaks was a huge wake up call to the world. They've only ramped up efforts since then, blocking the purchase of marijuana, pornography, and donations to many organisations. It is clear that the centralisation of power in this space is not in the best interests of us. * Banking infrastructure is stuck in the 90s. It should never take a business day to settle payments. It should never take several business days to settle cross-boarder money transfers. It should never cost [$x|3%|whatever exorbitant exchange rate the bank is offering]. Payments should never be tracked by government agencies as a matter of course. Payments and transfers should be instant, virtually free, and private. * Confidence is low in government management of currency. Modern Monetary Theory appears to be winding its way into policy decisions which is basically the financial equivalent of formulating a nation-wide strategy based on moon crystals and horoscopes. Predictably, inflation is creeping up, and the desire for a stable store of wealth is increasing; or at least a hedge against inflation which isn't already inflated stocks. NONE of these drivers above can be completely satisfied with crypto yet, but I am amazed with the progress it has made to date, and I have no doubt these will all be solved in time - far ahead of the conventional banking industry.
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ramazanpolat 5y ago
Reading thru comments made me realize how narrow minded people are. You have to have embrace some principles and understanding of the life, ethics and technology before blaming the crypto world. 1- Anything can be abused, just because something is abused that doesn't mean it should be banned. Want to stop child abuse? Don't ask people to stop having children, go after abusers! 2- The fact that governments can print money whenever they want is a scam and some clever people want to be free of it. Demanding this is not a crime! 3- If you don't like it, then don't use it! It is simple as that. 4- If you don' know what decentralized means, you may start from what democracy means. And after finishing that, you should understand that when 51% of the population wants to ban the remanining 49% of people to live, it's no longor called as democracy, but fascism. 5- In order to understand crypto, you have to understand how paper money works and essentially how the world works in the first place.
- danuker 5y ago
  > And after finishing that, you should understand that when 51% of the population wants to ban the remanining 49% of people to live, it's no longor called as democracy, but fascism. I believe this scenario fits the definition of "democracy". > Democracy (Greek: δημοκρατία, dēmokratiā, from dēmos 'people' and kratos 'rule'[1]) is a form of government in which the people have the authority to deliberate and decide legislation ("direct democracy"), or to choose governing officials to do so ("representative democracy"). https://en.wikipedia.org/wiki/Democracy https://en.wikipedia.org/wiki/Democracy
  - ramazanpolat 5y ago
    I belive that democracy comes after the birth rights. So the %51 cannot cross freedom and rights of the anyone (although it is not true for most of the govts that claim practicing democracy). if the the scenario I've presented is indeed the democracy, then I would be against it already.
- yunohn 5y ago
  > you should understand that when 51% of the population wants to ban the remanining 49% of people to live Kinda disingenuous to frame crypto as a life essential to 49% (??) of the population. Also when most crypto users are aiming to avoid taxes while participating in the same society as the non-crypto majority. You need public infrastructure for things like the “internet” to function.

190 points by tagawa 5y ago

WoahNoun 5y ago

I don't think there is any good.

deleted 5y ago
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Reichhardt 5y ago

The current fiat system (and the Governments that control it) are completely enslaved to the welfare (pension) and healthcare demands of baby boomers. These demands will only multiply as the populations age, until eventually consuming the host. You can already see this in countries like Italy, which are now in demographic death spirals. If we can craft a new financial system without spending 15%+ of our GDP and rising on Pensions[1], even with some inefficiency its still worth it. https://data.oecd.org/socialexp/pension-spending.htm https://data.oecd.org/socialexp/pension-spending.htm Avoiding sales taxes, platform commissions, and income taxes is a major advantage. The issue with Crypto right now is waste from Proof of Stake, and fraud/security risks. We need to resolve this before expanding.

null_object 5y ago
> The current fiat system (and the Governments that control it) are completely enslaved to the welfare (pension) and healthcare demands of baby boomers. If we can craft a new financial system without spending 15%+ of our GDP and rising on Pensions, even with some inefficiency its still worth it. Avoiding sales taxes, platform commissions, and income taxes is a major advantage. So you think the problem solved by crypto is no longer paying taxes or contributing any part of our incomes to the collective good? I guess you think that child mortality isn't something we should worry about? Or looking after the weak and sick, in general. Why pay for schools, or sanitation, or public transport, at all? And the rules that govern human behavior - we can just rid ourselves of the police in this libertarian-anarcho system where the rich do as they please, and the rest predate upon each other. Sounds like a great use-case for crypto.
- Reichhardt 5y ago
  50% of healthcare costs are incurred in the final 5 years of life, and in much of the world private healthcare is accepted and efficient. I'd rather euthanize myself at age 80 and pay much lower taxes throughout my adult life than die at age 85 in a gold-plated Government hospital. Sanitation and public transport can be directly charged to end-users based on usage. Education can be funded with land value taxes. Federal Government bureaucracy just exists to support itself. Healthcare agencies have been turned against the population to promote lockdowns and big pharma, and intelligence agencies spy against their own citizens.
  - notch656a 5y ago
  - aemreunal 5y ago
    > in much of the world private healthcare is accepted and efficient. It is accepted in many parts of the world, unfortunately, but in what part of the world is it "efficient"? Can you give an example? Is "basic medicine costing $500 (see insulin) to the few that can afford it and the rest dying because they can't access it" what you define as efficient? > I'd rather euthanize myself at age 80 and pay much lower taxes throughout my adult life than die at age 85 in a gold-plated Government hospital. I'd rather not. I doubt many people would be okay with that. I like living and being healthy. You can still feel free to do that in either situation. > Sanitation and public transport can be directly charged to end-users based on usage. So the rich should get clean streets and running water while the poor walk on their own shit? Should we charge per poop? As for public transportation, you think it would work if I didn't pay taxes for it and it cost $80 for someone to take it because they can't afford the $20 Uber ride? > Federal Government bureaucracy just exists to support itself. This is objectively not true. Many techies (not just crypto people) tend to forget why societal structures were invented in the first place. No one's saying inefficiencies don't exist but disregarding all of society seems to be specifically tailored to get a rise out of people. I don't know how I can explain to you that we all need to care about each other, otherwise we'll all go extinct.
yed 5y ago
Governments collected taxes on cash and non-fiat for millenia (and still do so), they will have no issues taxing crypto if they need to.
- Reichhardt 5y ago
  But at much lower rates. Taxes as a % of GDP didn't exceed 10% in the USA until WW1: https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%2C_state%2C_and_local_tax_revenue_as_a_percent_of_GDP.pdf https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%... You can see other spikes related to other wars. Wars sure are great if you want to expand Government power and taxation over your own citizenry!
  - 8note 5y ago
    Also if you want to build and maintain infrastructure and social services.
    - 0x0nyandesu 5y ago
      Given that I was born into this system with zero say in it what if I don't?
  - yed 5y ago
    Sure, but the claim is that crypto magically allows you to avoid all taxes. It doesn't. How much the government chooses to tax you is entirely unrelated.
  - mellavora 5y ago
    You know what is even better than wars? Government services. Like education, healthcare, roads & infra. Also some stuff of much more dubious value, like TSA and heavily militarized police

gcampos 5y ago

I think this is the most fair and sane opinion about crypto I ever read. The author acknowledges the benefits without falling for the “tulip mania”

simonw 5y ago

This is really good - definitely worth reading. There are a bunch of useful angles on what's going on here that I've not seen written about elsewhere.

Nursie 5y ago

> It seems if you want to do crypto things without burning the planet down, you can. Right, but what if you consider it a bad thing to introduce an economic incentive for other people to burn the planet down? This is beyond a matter of personal choice, until and unless we all get our own personal planets.

pcthrowaway 5y ago
I agree, but our problem is with proof of work, not crypto. I don't buy/use bitcoin any more because of this. Ethereum is moving (the sooner the better), and the only other PoW crypto I have a bit of is innovating PoW and (hopefully) becomes more environmentally friendly as a result. To be honest, I'm still unclear on if this is even possible, and if energy usage becomes significant relative to what it does, I would drop it as well.
- varajelle 5y ago
  The price of cryptocurrencies are strongly correlated. I have the feeling that if you inject money in any cryptocurrency, you inject money in the "cypto market" which eventually mean that the price of PoW money also increase. And the energy usage follow the price of the PoW money.
  - leppr 5y ago
    The "crypto market" is also very correlated to the US stock market, and risk assets in general. The best way to push the energy usage of PoW money down is to get back fiat money under control and stop incentivizing reckless gambling, like the FED finally seems to be doing.
  - pcthrowaway 5y ago
    This may be true short term, but it doesn't hold long term. When you support a competitor you improve the narrative for its relative strength. Eventually I think Bitcoin will lose out to PoS cryptocurrencies (probably Ethereum), and many people such as myself are specifically rallying behind this narrative, which is why we see bitcoin dominance at near historic lows, and I suspect it's unlikely to recover to >70% and perhaps not even >60%.

bawolff 5y ago

Aww. I was all excited for this to be about block ciphers and that type of crypto :(

quickthrower2 5y ago
I was hoping for a deadly bacteria article
- mypastself 5y ago
  I was hoping for an article about Westerns.

rasengan 5y ago

This article comes off very biased. There are a number of major problems blockchain solves - most importantly, ownership and control of things. Saying “crypto is for people who love money” is silly. Cryptocurrency is for people who wish to control their assets. Spending time writing a hit piece on these technologies is silly and I wonder what the actual motive is.

exdsq 5y ago
Easy front-page on HN, easy shares on twitter, easy to regurgitate the same complaints for blog SEO. I can't think of other reasons - they all same the same thing.
nefitty 5y ago
You mean like when ethereum split to reverse a transaction some of the devs didn't agree with? Or how huge Bitcoin mining operations basically decide what chain to work on, with no accountability to anyone who "owns" Bitcoin? Name any other shitcoin and I'll tell you why it's a scam. Blockchain and associated tech solve no real business problems that aren't better solved by other means. Einstein was offered the role of president of Israel but declined because he knew he was not qualified to lead a country. The devs working on crypto may be technical geniuses, Satoshi included, but that has no bearing on whether they have any understanding of economics.
- exdsq 5y ago
  > Or how huge Bitcoin mining operations basically decide what chain to work on, with no accountability to anyone who "owns" Bitcoin? Out of interest do you have an example of the chain following a particular head due to collaborative mining over 51% of the network for this to work?
etchalon 5y ago
Why couldn't the motive be "person had thoughts and wanted to share them"?
WA 5y ago
> most importantly, ownership and control of things. I feel ownership and control of my house and my stuff. To some extend at least. Can the government theoretically seize my assets? Yes. Can the goverment seize my Bitcoins? Well, depends on whether or not I want to leave my social circle. The sense of ownership of Bitcoin is based on your willingness to leave everything behind. And your ability to cross borders into countries that won't send you back. I think, ultimately, crypto only works if your outlook on the world is very pessimistic and you have zero trust in existing structures of society.

astoor 5y ago

The author believes "a Twitter where your popular tweets earn you money" would be a good thing? Twitter is already full of people trying to shout the loudest - how can adding a financial incentive to shout even louder make things better rather than worse?

sneak 5y ago
People willing to pay for quality content is always a good thing for content authors. By nature of their willingness to pay, it's a good thing for content consumers (otherwise they wouldn't do it). Nobody requires anyone to use any website that they don't want to (except perhaps irs.gov). You are always free to ignore it, like you are free to ignore Twitter. Giving people more options rarely makes the world worse.
- grey-area 5y ago
  Popularity is not quality, usually the inverse.
  - sneak 5y ago
    If people are willing to pay for it, the people consuming it find it valuable, which is frequently a proxy for quality (in the eyes of those consumers - the ones who count in this equation). Quality of content is, of course, subjective. I have paid for Lady Gaga albums.
    - hk__2 5y ago
      Don’t confuse "being paid for your popular content" and "people paying actual money for your content". On Quora you get paid for your popular content even if nobody willingly gave you money: it’s just that the website is now full of ads and you get a small percentage of that.
    - mathnmusic 5y ago
      The quality problems often come from the poor proxy. Money being fungible means that the rich get higher weight in determining what's considered valuable. In this marketized system, who will value journalism - especially the kind that people in power need to hear, not what they want to hear. If the rich want to suppress a fact, they can buy fake news - and because price = value, the fake news becomes the new truth. Quality of content is not quite "subjective" in general. Perhaps in entertainment.

mantenpanther 5y ago

NFTs in the current form might be pretty useless as such (just a proof you "first purchased" a jpeg). But I think in the gaming space this will become huge and actually makes sense - use elements (items, characters, stats,...) and their history in different and independent games if the developer wants to integrate them. No lock-in and portable, not tied to game-specific accounts.

meheleventyone 5y ago
> if the developer wants to integrate them What’s the incentive for the developer to do this? And more importantly how does my M4 rifle work in an epic fantasy role playing game?
- mantenpanther 5y ago
  There might be many, this is a new field. A starter would be an existing userbase holding NFTs that enter the game. Different forms of monetarization (entering with NFTs, storing progress on the NFTs, marketplaces,...) might be a thing.
  - meheleventyone 5y ago
    There might be none as well, this is a new field. The problem with your first suggestion is that you do an awful lot of work to map another games NFTs to your own items but presumably get none of the money from them. You also have an immediate balancing problem. And the better way is to just make a game that those players want to play, which is how game populations move around now anyway. The only way I can see supporting external NFTs as worthwhile for a game developer is if they’re already table stakes for taking part. Or say you support BAYC, all that work to address 10k potential users?
    - mantenpanther 5y ago
      Valid points, time will tell. I can image there will be neutral intermediate services (NFT-platforms) that provide assets and smart contracts/APIs for integration for small fees.

sjtindell 5y ago

Easily the best take posted here in a while. These are money games. And if you think this will be a minor sector of the economy, look at Wall Street - there is huge demand for these types of games, and that's when only people with $1+ million in net worth can really play. Now anyone can play, at the same time that traditional paths to wealth are stagnating or closing off completely.

dagmx 5y ago
How does this enable new people to play? The rich can still gamble the most and come in early to earn the biggest rewards. The poor still take the highest risk. As the poor buy more into it , the rich get richer as well. Maybe the poor get richer but how much money can they lock away? What stopped them from investing that money in the stock market before crypto was around? I fail to see how this creates a new economy. It's the same economy just wearing a new skin. The players are the same players. The winners are the same winners with the same luck of making it big or not to inspire others to get into the hype.
- ethbr0 5y ago
  Parent is referring to the accredited investor definition in the US [0] specifically ($1M+ in assets as one test), but more broadly to similar financial gatekeeping. I'm skeptical it's an overall social good to remove guard rails that prevent sophisticated sellers from fleecing unsophisticated buyers (say what you want about the SEC, but they do enforce some rules), but I agree the current scheme prevents all people from equally freely investing in all opportunities. [0] https://www.investopedia.com/terms/a/accreditedinvestor.asp https://www.investopedia.com/terms/a/accreditedinvestor.asp
  - dagmx 5y ago
    Thanks for the link. I do agree that playing without guardrails is problematic.
- iskander 5y ago
  > How does this enable new people to play? The rich can still gamble the most and come in early to earn the biggest rewards. So far this stuff has circumvented the accredited investor regulations.

jayd16 5y ago

The "True cloud computing" angle is interesting if a little dubious in its over promising and under specified downsides. No closed source, after all. No private execution etc. Why not just open source the code and have those interested parties run the source directly? What does the blockchain add here? That said, I think there's probably a good idea in there though. AWS, GCP or a niche player could essentially add a donation API to their serverless platform. This would create a similar promise of a service that can be directly financially maintained by users with some added benefits like support for closed source, and a protected execution environment.

Animats 5y ago

'"Tokens align network participants to work together toward a common goal — the growth of the network and the appreciation of the token." That's great if what you're trying to do is create an ecosystem of tokens that appreciate in value all the time. What percentage of systems can be modeled that way?' That's the problem. "An ecosystem of tokens that appreciate in value all the time". The perpetual motion machine of finance. Bitcoin has actually been able to pull this off, more or less. Etherium, maybe. The rest, not so much. The NFT thing is winding down. NFTs are basically Axie Infinity, OpenSea, and the little guys. Axie Infinity is crashing. SLP is down to $0.02, from $0.35 at peak a few months ago. OpenSea is hard to measure. There's wash trading to pump up prices.[1] NFTs have no overall market price. NFT markets stall, rather than crashing - high asking prices, no sales. There's a lot of that on OpenSea. "So far, most new NFT collectors on the secondary market have yet to recoup the costs of their purchases"[2] In other words, the issuer makes money, but the suckers who buy NFTs lose. Many of them don't realize they've lost. Someday they will find out, when they try to liquidate their Bored Ape Yacht Club collection. I kind of liked the idea of NFTs as part of an asset portability system for virtual worlds. Goldman Sachs even endorsed that. I was thinking of this for items in the US$1 - US$100 range, like game items. The transaction costs would be too high if it took a blockchain transaction to walk through a portal, even for the cheap blockchains. Some big part of all this is probably going to come apart in 2021. Definitely Axie Infinity. Maybe Tether. [1] https://www.theverge.com/2021/9/15/22676075/opensea-insider-information-nft-trading-nate-chastain https://www.theverge.com/2021/9/15/22676075/opensea-insider-... [2] https://www.ft.com/content/e95f5ac2-0476-41f4-abd4-8a99faa7737d https://www.ft.com/content/e95f5ac2-0476-41f4-abd4-8a99faa77...

mgaunard 5y ago
Isn't money supposed to depreciate over time rather than appreciate?
- Animats 5y ago
  Depends. Some gold seller used to advertise that in 1400 AD an ounce of gold would buy two good suits, and today it will buy about two good suits.
- 5y ago

killjohncoulton 5y ago

keiferski 5y ago

I've been quietly following the development of cryptocurrencies and blockchain, although I only own a very small amount. Some thoughts I have: 1. If you study the history of technology, it becomes pretty clear that it often take decades or even centuries to see the full impact of an invention. Declaring the ultimate value of a technology barely a decade after it was invented is just ignorant. It's only been about 30 years since society became "networked" and it seems clear that some form of "Internet currency" is inevitable. If you had judged the impact of gunpowder, the printing press, or photography 10 years after their invention, you'd obviously be quite mistaken. We might not see the "killer app" (whew that's an old expression) for blockchain for years. 2. A lot of crypto-critics seem to focus on the people in the crypto world (scammers, NFT sellers, etc.) and the things that they supposedly do wrong, but then apply these criticisms to the technology itself. This is a flawed approach for obvious reasons, but I also understand it, as the crypto world is full of hero worship and hype machines. If you're interested in this tech, you have to learn how to ignore these things. 3. It's somewhat unfortunate that blockchain and crypto have become dominated by finance, as it drowns out discussion of other use cases. Hopefully, this will fade into the background more as the technology matures and is adopted by a larger percentage of the population.

dagmx 5y ago
Your first comment is a very common crypto talking point that isn't really borne in reality IMHO. It takes decades to see the impact. It almost never takes a decade to see the use, and that's what people are deriding. Crypto doesn't really solve a problem that needed solving and it is often the wrong solution for many things it's used for. All at a very high cost. Cryptocurrency hasn't really brought much in the way of new technology to the table.
- keiferski 5y ago
  > It almost never takes a decade to see the use, If you study the history of technology, its ultimate impact is never manifest within a decade. It took decades for the Gutenberg Printing Press to spread around Europe and centuries for the consequences to see be seen (Protestant Reformation, newspapers, birth of the modern media, on and on.) This is the case for pretty much every other invention. > Crypto doesn't really solve a problem that needed solving Again, this may be because the problem hasn't arisen yet or isn't obvious yet. We have only just begun the era of networked communications.

rland 5y ago

I've gotten this feeling, ever since about 2008 or so, that the map that is asset prices is slowly, inexorably becoming uncoupled from the territory of the physical world. This economy-scale decoupling is the dual of each and every one of our very own psychological uncoupling from our own physical worlds, which has occurred because of the computerization of work, socialization, and life itself (the shimmering neuralink dream). Cryptocurrencies are what happens if you completely decouple the asset price from the physical world. To create the "value" of cryptocurrencies, we purposefully do nothing at all. The asset is valuable only because of the flow of entropy. Not the flow of energy (which generally has some physically useful function). But entropy itself -- a thing that exists only in the "map" of information, not the "territory" of the real world. Typically, moving entropy around is useful to us, because it actually corresponds to changes in an underlying physical process. Like, your job doing excel spreadsheets for warehouse inventory management is just changing the flow of entropy -- to you, it is decoupled from the physical world. But there is a link to the physical world: when you change a cell in a spreadsheet, so too a physical good moves somewhere else in the warehouse. With cryptocurrencies, not so. All this entropy is moving for the sake of itself. It's all virtual -- none of it can be coupled with the physical world (by design! if it could be, some physical force could go in and take your crypto-coins). Now, here's the delusion: unfortunately for us, moving entropy around is actually still coupled with moving energy around. It actually has a tremendous physical effect on the world around us. Something I've noticed about cryptocurrency people is that they are very, very plugged in. The evangelists never have a physical job; always a computer job, and they are always online, and believe in being online to the greatest extent possible. And I think, actually, there is a very obvious reason for that.

ethbr0 5y ago
The irony is that much of the criticism against the missing physical link / utility of crypto was surely levelled against the idea of money in its earliest days. "Coins? Why would I want those instead of food? I can't eat coins." To which the killer adoption feature was governments saying "Well, you have to pay taxes in coins, so you need some" to bootstrap & put a floor in under the system's value. Crypto doesn't appear to have had a "tax" moment yet. Is there anything I can only do with Bitcoin, Ethereum, etc? Which is to say, if the value of both absolutely collapse (to some fraction of a cent), who would still be buying, and to do what?

Cthulhu_ 5y ago

I've just read the intro, but imo the PRIMARY reason for the hype is simply money. People got rich off of crypto. Rich people that want to get richer simply pay people to hype up crypto (and stonks). And like the 2016 elections, this hype ended up having a snowball effect with people who do not get paid for it hopping onto the hype train to generate more hype. I'm not saying crypto is some fad or whatever, I'm just not convinced there's anyone into it that doesn't just want to get rich.

hooande 5y ago
The whole post is worth reading, it's quite good

jasongi 5y ago

I don't understand how any take on crypto can not mention that it is now the de-facto currency of online black markets, from pornhub to silk road 9.0 or whatever version we're up to. This is crypto's utility and the only thing I've seen crypto being used for seriously that isn't speculation. Cryptocurrency is disrupting the black markets the same way amazon/ebay/online shopping disrupted the retail markets. Crypto isn't a solution looking for a problem, the problem was found back in 2011 - it's just that nobody wants to admit it. It reminds how everyone used to say that BitTorrent was used for downloading Linix ISOs, but with less self-awareness.

ls15 5y ago
Speculation is a use case and a market too
- secondcoming 5y ago
  How easy is it to convert gains back into fiat though?
  - lukeramsden 5y ago
    Extremely easy. The bookkeeping for tax is less easy though.
  - ls15 5y ago
    You send it from your wallet to the exchange where you bought it, sell it for fiat and withdraw it to your bank account. The most complicated parts are complying with KYC regulation and calculating taxes, as well as not losing or leaking your private keys. If the asset has only low liquidity, then it is difficult to sell it at the sticker price and your sale may actually lower the price, but this will not happen for most people with high liquidity assets, such as BTC or ETH and so on.
    - cuteboy19 5y ago
      Unless of course Binance disables withdrawals because of ""technical issues""

thomasikzelf 5y ago

Crypto needs to solve a problem. I think cryptocurrencies should focus on making a cheap currency that people can actually use. requirements: - low transaction costs - low volatility - many places where you can pay with it - secure - privacy - no tax problems - fast transactions - handle fraud - scalable If a crypto currency can solve above points by cutting out the middle man and making transactions virtually free instead of paying 1.29% + 0.25c per transaction that would be huge. But that is a big if. Bitcoin fails at almost all of the above points. The only coin that comes close is Nano (I've got no investment in it). They solve fast, secure, scalable and cheap transactions, which I think are the main problems right now. Read their whitepaper, it is interesting. Whether they can solve the other problems remains to be seen.

streamofdigits 5y ago
looks like cash has solved (most) of this some time ago: - V. costs nothing to exchange a bill - V. link to a real economy so little volatility (except when the real economy implodes) - V. accepted everywhere within a currency zone - V. mostly secure (ofcourse theft is as old as humanity) - V. private (only your counterparty knows about it) - V. fully integrated into financial accounts / tax systems - X. fast (local) transactions but remote remittances outside a currency zone a serious problem (expensive, slow) - V. counterfeit tech very sophisticated - V. you can print as much as you want The major flaw of cash is actually linked more to the international system of currencies (which underlies many more socioeconomic problems)
- thomasikzelf 5y ago
  Yes and of course regular online payments such as visa or ideal (cheap payments in the Netherlands) also solve that. Global payments and handling taxes could still be cheaper and easier though. I see crypto having a small chance of succeeding in doing this. This small chance of succeeding is a reason for me not to invest in it right now, but I don't think it is impossible.
GrumpyNl 5y ago
Its very strange that a country like Kazakh can influence the value of bitcoin, just by its power supplies. https://cointelegraph.com/news/kazakh-government-resigns-shuts-down-internet-amid-protests-causing-bitcoin-network-hash-rate-to-tumble-13-4 https://cointelegraph.com/news/kazakh-government-resigns-shu...

neuronic 5y ago

1.5 decades into the tech, blockchain hasn't really provided any utility aside from easing drug transactions and money laundering. I agree with the author that some interesting tech issues were solved but apparently this still doesn't lead to anything legitimate and more useful than the non-crypto version of whatever problem you're trying to solve.

hffft 5y ago

nbzso 5y ago

I don’t know. This hype-crypto-machine is not catching up with my “feelings” about the future of the Web. Maybe I am getting old, but aside from some communication protocol usage and some form of authenticity (which is questionable), I don’t see web3. I would go out on a limb and say that if this is web3, I don’t want to have anything to do with it. This is an outrageous waste of resources and energy with awful environmental impact, driven primarily by pure greed and wishful thinking. Looking at mindset of the VC’s, which are giving this “things” validation, scares the living sh*t out of me. More and more, implementation of modern ‘tech’ is pushing me towards abandoning the ship and moving into the woods somewhere. Don’t let me start with NFT’s. It is horrible. The impact of this thing over a lot of my friends is getting ridiculous. I somehow understand “the money” aspect (ponzi scheme, money laundering), but recently I got “the cult” vibes from some of them and closed the door permanently. So hard “no” from me. I already have a “Metaverse” in which I feel comfortable, it is called reality. And Web 2.0 is enough for my needs.:)

rvz 5y ago
OK. I am convinced. The entire cryptocurrency industry is a scam. So rather than saying the same thing over and over on every HN thread about it being a 'scam', let's do something about it then? How do we ban it all to save the planet and stop the scams everywhere then? Or are we going to complain on the next HN thread about cryptocurrencies and web3 once again?
- randomhodler84 5y ago
  How do you wanna ban it? Break my fingers so I can’t run some open source software? Break my hardware so It can’t Hash, cut my power? Arrest me for doing math? The battle is between the libertarians and the authoritarians. The authoritarians want to ban things they don’t understand. They want to bully others with their choice of how they use energy. They want the state boot stomping on the face of humanity forever. Banning is always an act of violence. Don’t give in to violence.
  - _57jb 5y ago

zulrah 5y ago

>Every time I dig into crypto I find things that seem stupid, or useless, or actively bad. But so many people are into it! During my time in tech I've only knew two people who held crypto. However, I've know a lot of people(myself included) who got into crypto, got dissilusioned by the promises, and after seeing that nothing they promissed actually arrived left. 5 Years ago I've heard how crypto is going to be a killer usecase for e-commerse, banking, and even cloud computing but no actual work was ever done to acomplish these goals

doubtfuluser 5y ago

At least on the monetary side I liked Nassim Taleb‘s paper [1]. I don’t agree with everything he writes but for crypto-currencies he has some points that ring true. For crypto in general I see definitely the supply chain application, but still think it is in the hype part of the cycle. [1]: https://arxiv.org/abs/2106.14204 https://arxiv.org/abs/2106.14204

nmaley 5y ago

Some remarks from Captain Obvious here. The primary use case for crypto is simple: (1) People buy crypto because it keeps going up in value (2) It keeps going up in value because people keep buying it. (3) For why people keep buying Crypto, see (1). That's the logic of a Ponzi scheme. All previous Ponzi schemes failed because either (a) sooner or later the scheme runs out of new suckers, and/or (b) the authorities intervene and shut it down, and/or (c) The founders cash out and 90% of the money just disappears into thin air. The truly fascinating thing about crypto is that neither (a) or (b) appears likely in the near future. It's a Ponzi scheme with fungible shares. For (c), as with other Ponzi schemes, the founders make a lot of money, the later entrants lose a lot of money. Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually, so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile. At the same time as the BTC founders are trying to find the optimum point in their cash out equation, there is another use case for crypto which continues to drive demand: crime and money laundering. Crypto is a great way to move money between jurisdictions. For some criminals, it is well worth the risk of volatility. Ponzi logic and money laundering logic will continue to drive the price of established cryptos upwards. I suspect it might be quite a while before the game stops. That makes cryptos like BTC an interesting short term speculation. But to paraphrase Gurf Morlix: stay in too long, you're gonna get cut, and you're gonna bleed.

klntsky 5y ago
> so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile. I may not have all the data, but is there any evidence that at least one observable price drop was caused by someone's cash-out e.g. in BTC?
lukeramsden 5y ago
> Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually Who are these "BTC founders" that are cashing out gradually? The only actual founder of Bitcoin, the anonymous Satoshi, has not moved any BTC since they disappeared from the internet: https://whale-alert.medium.com/the-satoshi-fortune-e49cf73f9a9b https://whale-alert.medium.com/the-satoshi-fortune-e49cf73f9...

thenoblesunfish 5y ago

The author states without very specific evidence that "proof of stake" demonstrably works, and thus quickly dismisses the energy costs of cryptocurrency. I'd personally be very interested to hear more about that, since there is a lot of hand waving around proof of stake. The cynic in me says that it would already be broadly used, if there weren't fundamental problems with it. It does, however, seem like a handy way to support the idea, in the long term, wasting real-world resources isn't an essential element of crypto, which is of course very attractive to people who stand to make short term gains from crypto.

mattdesl 5y ago
many of todays popular chains that are not BTC and ETH are currently using PoS, especially those interacting with web dApps and smart contracts. See Tezos for a real world example that “currently works.” ETH (the devs and community) is also heavily committed to PoS—most of the value and rewards now locked in the $33B staking contract cannot even be withdrawn before a successful merge of PoS occurs (likely some time in the next several months, but let’s wait and see). The idea that crypto is inherently wasteful is inaccurate. PoW is extremely energy intensive, especially without L2s, but it need not be the only consensus mechanism for the future of these protocols.

2-718-281-828 5y ago

Would somebody maybe explain to me what an NFT is? I have good understanding of Bitcoin and Blockchain technology (not deep but sound). But I fail to see how an NFT could be applied to a video clip in a meaningful way. To me it sounds like an NFT is a signature signed with a key of the rightful owner for a digital object like a video clip and that signature is then integrated into a blockchain and associated there with that rightful owner in a verifiable way via that rightful owners public key. Is that it? I mean, I assume no b/c that whole process is meaningless as you may just change one bit in that video file and its no longer associated with that rightful owner - so I suppose I'm missing something here.

Gareth321 5y ago

I'm always surprised by the negativity towards crypto in tech focused forums. I understand the costs; disruptive technologies always come with enormous costs. The value proposition is much larger still. * Popular payment processors like visa and mastercard have become moral arbiters. Shutting down one's ability to donate to Wikileaks was a huge wake up call to the world. They've only ramped up efforts since then, blocking the purchase of marijuana, pornography, and donations to many organisations. It is clear that the centralisation of power in this space is not in the best interests of us. * Banking infrastructure is stuck in the 90s. It should never take a business day to settle payments. It should never take several business days to settle cross-boarder money transfers. It should never cost [$x|3%|whatever exorbitant exchange rate the bank is offering]. Payments should never be tracked by government agencies as a matter of course. Payments and transfers should be instant, virtually free, and private. * Confidence is low in government management of currency. Modern Monetary Theory appears to be winding its way into policy decisions which is basically the financial equivalent of formulating a nation-wide strategy based on moon crystals and horoscopes. Predictably, inflation is creeping up, and the desire for a stable store of wealth is increasing; or at least a hedge against inflation which isn't already inflated stocks. NONE of these drivers above can be completely satisfied with crypto yet, but I am amazed with the progress it has made to date, and I have no doubt these will all be solved in time - far ahead of the conventional banking industry.

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ramazanpolat 5y ago

Reading thru comments made me realize how narrow minded people are. You have to have embrace some principles and understanding of the life, ethics and technology before blaming the crypto world. 1- Anything can be abused, just because something is abused that doesn't mean it should be banned. Want to stop child abuse? Don't ask people to stop having children, go after abusers! 2- The fact that governments can print money whenever they want is a scam and some clever people want to be free of it. Demanding this is not a crime! 3- If you don't like it, then don't use it! It is simple as that. 4- If you don' know what decentralized means, you may start from what democracy means. And after finishing that, you should understand that when 51% of the population wants to ban the remanining 49% of people to live, it's no longor called as democracy, but fascism. 5- In order to understand crypto, you have to understand how paper money works and essentially how the world works in the first place.

danuker 5y ago
> And after finishing that, you should understand that when 51% of the population wants to ban the remanining 49% of people to live, it's no longor called as democracy, but fascism. I believe this scenario fits the definition of "democracy". > Democracy (Greek: δημοκρατία, dēmokratiā, from dēmos 'people' and kratos 'rule'[1]) is a form of government in which the people have the authority to deliberate and decide legislation ("direct democracy"), or to choose governing officials to do so ("representative democracy"). https://en.wikipedia.org/wiki/Democracy https://en.wikipedia.org/wiki/Democracy
- ramazanpolat 5y ago
  I belive that democracy comes after the birth rights. So the %51 cannot cross freedom and rights of the anyone (although it is not true for most of the govts that claim practicing democracy). if the the scenario I've presented is indeed the democracy, then I would be against it already.
yunohn 5y ago
> you should understand that when 51% of the population wants to ban the remanining 49% of people to live Kinda disingenuous to frame crypto as a life essential to 49% (??) of the population. Also when most crypto users are aiming to avoid taxes while participating in the same society as the non-crypto majority. You need public infrastructure for things like the “internet” to function.