7 ms·

Crypto Andys like to extol the supposed virtues of crypto like being extra-governmental, distributed and robust. A lot of gold bugs have jumped on this, often o

by cletus 5y ago

Crypto Andys like to extol the supposed virtues of crypto like being extra-governmental, distributed and robust. A lot of gold bugs have jumped on this, often out of some misunderstanding of what central banks do and that "printing money" isn't the evil it's made out to be. Crypto skeptics (such as myself) point out the flaws in all this. For example: 1. It's not a currency. It's an asset; 2. Reversible transactions for fiat currencies is a feature not a bug; 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited; 4. Crypto has its own vulnerabilities (eg 51% attack); 5. This whole system is hugely energy wasteful; and (here's the big one) 6. Government action could shut down crypto tomorrow so how robust is it really? (6) seems to be contentious but there's a ton of evidence for this. China banned mining, for example, out of energy concerns so all the crypto miners moved to Kazakhstan, a country that may end up being invaded by Russia. What happens to those crypto farms then? Rising energy costs in the developed world are slowly going to turn the eye on crypto mining. You already see the US government cracking down on crypto anonymity and tax reporting. All of this is enough for me to wonder if the solution to the Fermi Paradox isn't just that civilizations end up choking on micro-plastics and cooking themselves to death with crypto-mining. But hey for awhile there they created a lot of shareholder value.

cute_boi 5y ago
Regarding 6 these crypto miners will simply prey for other country that has low electricity price (which may be using tax subsidized by citizen money.) You didn't mentioned one big disadvantage: 7. Cryptos are also used by naughty people for hacking, extorting etc. And we already know how many of them are involved in mlm strategy.
- cletus 5y ago
  Potential government action goes beyond chasing a friendly regime and low electricity prices. What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? That's not fantastical. We already do this with trading with countries that are sanctioned (eg Iran). The US uses this power to exert influence on foreign banks so it's not just a US banking issue. And I agree: governments don't willingly lose control.
  - JumpCrisscross 5y ago
    > What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? America isn't banning crypto because we, overwhelmingly, benefit from it. While the public pitch is fire and revolution, the ground-level truth of crypto is it exports cheap, often-subsidized, environmentally-ruinous energy from poor regions to financial centers.
    - rsynnott 5y ago
      > it exports cheap, often-subsidized, environmentally-ruinous energy from poor regions to financial centers. No it doesn't. I'm not sure where people are getting this from. It _wastes_ energy; it does not move it.
  - neatze 5y ago
    > What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? I don't see how such law can be enforced legally in not communist government.
    - evgen 5y ago
      Try conducting a financial transaction from the US with an entity in Iran or North Korea and get back to us about how it is impossible for the US government to enforce such a law. Now try to do it from some other country whose banks engage with US financial networks like Swift and tell us how the reach of the US government stops at their own financial borders.
      - neatze 5y ago
        The sanction on North Korea and Iran where not applied retroactively, eg. US did not say before sanctions where applied that; all business who wired money yesterday to Iran broke the law, this would be illegal law.
  - TAKEMYMONEY 5y ago
_jplc 5y ago
Plus, all it prevents Bitcoin from getting attacked with the 51% is that maintaining the network is more profitable than breaking it. As soon as an agent has some objective other than direct profit from Bitcoin, it won't stand a chance.
- bgroat 5y ago
  Not even. It just needs to be a profit objective that isn't a DIRECTLY from mining revenue. A well funded actor could 51% attack BTC, and short at several times leverage and make their money there. Or double-spend and make money there. Or both!
genocidicbunny 5y ago
The whole 'extra-governmental' thing is also a bit of a problem. How many governments would be happy to lose control like that?
mitchelldeacon9 5y ago
7. Primary use-value of crypto is to facilitate payments for ramsomware and other illegal activity.
- cletus 5y ago
  In the early days of crypto, this is what kept me away: the clear use case for illegal purposes (Silk Road anyone?). What I didn't realize was the big early driver was to transfer wealth out of China. China has strict capital controls and China's wealthy don't want their entire wealth to be at the behest of the CCP. There are limited reasons you can move money out of China. Bitcoin mining was a way around this. That's technically illegal too but not in the same category as, say, ransomware, drugs, etc. Anyway, I don't think the illegal use cases really matter. After all, cash can be used this way too. Sure cash can't be used for certain things crypto can be but crypto isn't fundamentally immoral any more than money is.
  - lmohseni 5y ago
    IMO, Proof of work crypto is fundamentally immoral because of the externalized environmental costs.
    - notch656a 5y ago
      Virtually all electricity has externalized environmental cost. Even electricity used to power a hospital. I agree this externality is immoral, not the hospital or PoW itself.
      - vorpalhex 5y ago
        You don't see any ethical difference between powering a hospital versus thousands of video cards to solve a useless puzzle? None? Not even a little tiny bit? What about the fact that those video cards use HUNDREDS of times more power than even a relatively busy hospital?
        deleted 5y ago
notch656a 5y ago
> 1. It's not a currency. It's an asset; Well sort of both, but many of us use exclusively as currency. For instance, I generally only hold it long enough to make some bitpay transactions to avoid CC fees. 2. Reversible transactions for fiat currencies is a feature not a bug; Feature of some fiat transactions, but you can avoid that with fiat too. Some people WANT irreversibility, but you're free to use fiat instead if you like. 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited; OK fine, they needn't use crypto. 4. Crypto has its own vulnerabilities (eg 51% attack); If 51% militantly attack the treasury and fed it won't exist either. 5. This whole system is hugely energy wasteful; and (here's the big one) Your beef is with externalities of electricity. I don't like that either. Lets fix that rather than play whack-a-mole with whatever use of electricity you disapprove of. 6. Government action could shut down crypto tomorrow so how robust is it really? All I can say is good luck with that.
- smitop 5y ago
  > If 51% militantly attack the treasury and fed it won't exist either. It is significantly harder to convince 51% of the population of something than to convince >51% of Bitcoin hashpower: the top 4 mining pools control 51% of the hashpower, so you'd really only need to convince a handful of people to execute a 51% attack.
  - notch656a 5y ago
    If 51% of the militants are allied with four factions (a la Libyan civil war) then you also only need to convince a 'handful' of people. But I think this also ignores that the factions and mining pools themselves are made of people with their own interest, including that of maintaining the value of their bitcoin by not sabotaging the entire system.
    - badRNG 5y ago
      It's genuinely absurd to try to map the Libyan civil war onto crypto currency. There was nearly a "51% attack" on Bitcoin, though it's not accurate to call it an attack (and it was far more than 51% of the hash power.) The SegWit2x upgrade almost went through despite upsetting many Bitcoin enthusiasts, but was ultimately squashed by the loose coalition of miners that proposed it when faced with fierce opposition. They could've forced the unpopular change, and only chose not to.
zivkovicp 5y ago
> 1. It's not a currency. It's an asset; I could even see it classified as a collectable. I agree with "asset", but the price volatility makes this a bit of a harder sell; and let's not kid ourselves, it's Bitcoins convertibility into fiat that is _exactly_ what makes it attractive (there is a reason it used to be "worth" only $1 before it was integrated into the financial system/exchanges). I love the idea of Bitcoin, but I'm not 100% convinced that it will usher in the paradigm shift in money that many talk about... but it certainly has stirred things up and gotten the conversation started, so that's something.
PretzelPirate 5y ago
> 1. It's not a currency. It's an asset; It's an asset that can easily be used as a currency using technology like payment channels or rollups. > 2. Reversible transactions for fiat currencies is a feature not a bug; I can make my blockchain transactions reversible if that's a shared priority between all parties taking part in the transaction. I can even assign some quorum of others who can facilitate the reversibility process if we want. Blockchain is about freedom to choose what is important to you and not be forced to give control to some anointed third-party. > 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited; Managing private keys can be difficult. Social recovery wallets make this much easier - you can choose to be the sole individual who can generate your private key, you can trust a group of friends/family members, or you can trust a combination of friends, family members, and private/public institutions. People who don't value decentralization or autonomy can let a third party manage their keys, and people who don't trust third parties can manage their own keys with a fallback plan if they lose it. > 4. Crypto has its own vulnerabilities (eg 51% attack); I don't think any informed member of the crypto/blockchain community pretends that crypto doesn't have its own vulnerabilities. What they talk about is the existence of vulnerabilities and the trade-off you take by using a blockchain. 51% attacks are very difficult to pull off in a meaningful way (rewriting history or stealing funds), but by using a blockchain you can own assets, do p2p transactions, and have a record of digital asset ownership on top of many other uses. For many of us, the benefits outweigh the risks of a 51% attack or potential contract bugs, though many people who are now "investing" in this space don't understand anything about blockchains and treat them as money-printing machines, often using highly centralized chains that would be better run as centralized gambling services. > 5. This whole system is hugely energy wasteful; and (here's the big one) You are talking about a specific implementation detail of proof-of-work blockchains. Proof-of-Stake (PoS) chains exist, and even the second largest chain by market cap has been running its PoS chain for over a year and will fully migrate over to it within months (cue jokes about dev delays). Blockchains can and do exist in a form that doesn't waste huge amounts of energy. > 6. Government action could shut down crypto tomorrow so how robust is it really? I see people have already replied about this point. Certainly there are ways that governments could hamper blockchain development and adoption, though they could also embrace the technology. Blockchains were created to give power to people over the governments and large financial institutions that control them - sadly, most people in the space have lost sight of this and are focused on getting rich. In a world where all assets (including currency) will soon be digital, having government control over these assets is a huge risk to individuals whose governments may someday freeze their assets or fall to an authoritative regime that creates an economic prison where fleeing oppression means losing what you've spent your life working to earn. People should have power over their governments, not the other way around, and giving people a way of holding assets that are beyond government control is a great start.
TAKEMYMONEY 5y ago
And money laundering! And ransomware! We don't need the same comment on every article about BTC. The only part slightly related to this article: > Government action could shut down crypto tomorrow "crypto" meaning...all cryptocurrencies? The ban mentioned in the article only applies to BTC. We've seen major governments try to ban it already and it didn't shut it down. Many currencies can't be mined and are much more difficult to trace than BTC.

by cletus 5y ago

cute_boi 5y ago

Regarding 6 these crypto miners will simply prey for other country that has low electricity price (which may be using tax subsidized by citizen money.) You didn't mentioned one big disadvantage: 7. Cryptos are also used by naughty people for hacking, extorting etc. And we already know how many of them are involved in mlm strategy.

cletus 5y ago
Potential government action goes beyond chasing a friendly regime and low electricity prices. What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? That's not fantastical. We already do this with trading with countries that are sanctioned (eg Iran). The US uses this power to exert influence on foreign banks so it's not just a US banking issue. And I agree: governments don't willingly lose control.
- JumpCrisscross 5y ago
  > What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? America isn't banning crypto because we, overwhelmingly, benefit from it. While the public pitch is fire and revolution, the ground-level truth of crypto is it exports cheap, often-subsidized, environmentally-ruinous energy from poor regions to financial centers.
  - rsynnott 5y ago
    > it exports cheap, often-subsidized, environmentally-ruinous energy from poor regions to financial centers. No it doesn't. I'm not sure where people are getting this from. It _wastes_ energy; it does not move it.
- neatze 5y ago
  > What if the US passed a law tomorrow that said that financial institutions who traded in crypto in any way lost access to the US financial system? I don't see how such law can be enforced legally in not communist government.
  - evgen 5y ago
    Try conducting a financial transaction from the US with an entity in Iran or North Korea and get back to us about how it is impossible for the US government to enforce such a law. Now try to do it from some other country whose banks engage with US financial networks like Swift and tell us how the reach of the US government stops at their own financial borders.
    - neatze 5y ago
      The sanction on North Korea and Iran where not applied retroactively, eg. US did not say before sanctions where applied that; all business who wired money yesterday to Iran broke the law, this would be illegal law.
- TAKEMYMONEY 5y ago

_jplc 5y ago

Plus, all it prevents Bitcoin from getting attacked with the 51% is that maintaining the network is more profitable than breaking it. As soon as an agent has some objective other than direct profit from Bitcoin, it won't stand a chance.

bgroat 5y ago
Not even. It just needs to be a profit objective that isn't a DIRECTLY from mining revenue. A well funded actor could 51% attack BTC, and short at several times leverage and make their money there. Or double-spend and make money there. Or both!

genocidicbunny 5y ago

The whole 'extra-governmental' thing is also a bit of a problem. How many governments would be happy to lose control like that?

mitchelldeacon9 5y ago

7. Primary use-value of crypto is to facilitate payments for ramsomware and other illegal activity.

cletus 5y ago
In the early days of crypto, this is what kept me away: the clear use case for illegal purposes (Silk Road anyone?). What I didn't realize was the big early driver was to transfer wealth out of China. China has strict capital controls and China's wealthy don't want their entire wealth to be at the behest of the CCP. There are limited reasons you can move money out of China. Bitcoin mining was a way around this. That's technically illegal too but not in the same category as, say, ransomware, drugs, etc. Anyway, I don't think the illegal use cases really matter. After all, cash can be used this way too. Sure cash can't be used for certain things crypto can be but crypto isn't fundamentally immoral any more than money is.
- lmohseni 5y ago
  IMO, Proof of work crypto is fundamentally immoral because of the externalized environmental costs.
  - notch656a 5y ago
    Virtually all electricity has externalized environmental cost. Even electricity used to power a hospital. I agree this externality is immoral, not the hospital or PoW itself.
    - vorpalhex 5y ago
      You don't see any ethical difference between powering a hospital versus thousands of video cards to solve a useless puzzle? None? Not even a little tiny bit? What about the fact that those video cards use HUNDREDS of times more power than even a relatively busy hospital?
      - deleted 5y ago

notch656a 5y ago

> 1. It's not a currency. It's an asset; Well sort of both, but many of us use exclusively as currency. For instance, I generally only hold it long enough to make some bitpay transactions to avoid CC fees. 2. Reversible transactions for fiat currencies is a feature not a bug; Feature of some fiat transactions, but you can avoid that with fiat too. Some people WANT irreversibility, but you're free to use fiat instead if you like. 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited; OK fine, they needn't use crypto. 4. Crypto has its own vulnerabilities (eg 51% attack); If 51% militantly attack the treasury and fed it won't exist either. 5. This whole system is hugely energy wasteful; and (here's the big one) Your beef is with externalities of electricity. I don't like that either. Lets fix that rather than play whack-a-mole with whatever use of electricity you disapprove of. 6. Government action could shut down crypto tomorrow so how robust is it really? All I can say is good luck with that.

smitop 5y ago
> If 51% militantly attack the treasury and fed it won't exist either. It is significantly harder to convince 51% of the population of something than to convince >51% of Bitcoin hashpower: the top 4 mining pools control 51% of the hashpower, so you'd really only need to convince a handful of people to execute a 51% attack.
- notch656a 5y ago
  If 51% of the militants are allied with four factions (a la Libyan civil war) then you also only need to convince a 'handful' of people. But I think this also ignores that the factions and mining pools themselves are made of people with their own interest, including that of maintaining the value of their bitcoin by not sabotaging the entire system.
  - badRNG 5y ago
    It's genuinely absurd to try to map the Libyan civil war onto crypto currency. There was nearly a "51% attack" on Bitcoin, though it's not accurate to call it an attack (and it was far more than 51% of the hash power.) The SegWit2x upgrade almost went through despite upsetting many Bitcoin enthusiasts, but was ultimately squashed by the loose coalition of miners that proposed it when faced with fierce opposition. They could've forced the unpopular change, and only chose not to.

zivkovicp 5y ago

> 1. It's not a currency. It's an asset; I could even see it classified as a collectable. I agree with "asset", but the price volatility makes this a bit of a harder sell; and let's not kid ourselves, it's Bitcoins convertibility into fiat that is _exactly_ what makes it attractive (there is a reason it used to be "worth" only $1 before it was integrated into the financial system/exchanges). I love the idea of Bitcoin, but I'm not 100% convinced that it will usher in the paradigm shift in money that many talk about... but it certainly has stirred things up and gotten the conversation started, so that's something.

PretzelPirate 5y ago

> 1. It's not a currency. It's an asset; It's an asset that can easily be used as a currency using technology like payment channels or rollups. > 2. Reversible transactions for fiat currencies is a feature not a bug; I can make my blockchain transactions reversible if that's a shared priority between all parties taking part in the transaction. I can even assign some quorum of others who can facilitate the reversibility process if we want. Blockchain is about freedom to choose what is important to you and not be forced to give control to some anointed third-party. > 3. People who can't manage passwords won't be able to manage a wallet so mass appeal is always going to be limited; Managing private keys can be difficult. Social recovery wallets make this much easier - you can choose to be the sole individual who can generate your private key, you can trust a group of friends/family members, or you can trust a combination of friends, family members, and private/public institutions. People who don't value decentralization or autonomy can let a third party manage their keys, and people who don't trust third parties can manage their own keys with a fallback plan if they lose it. > 4. Crypto has its own vulnerabilities (eg 51% attack); I don't think any informed member of the crypto/blockchain community pretends that crypto doesn't have its own vulnerabilities. What they talk about is the existence of vulnerabilities and the trade-off you take by using a blockchain. 51% attacks are very difficult to pull off in a meaningful way (rewriting history or stealing funds), but by using a blockchain you can own assets, do p2p transactions, and have a record of digital asset ownership on top of many other uses. For many of us, the benefits outweigh the risks of a 51% attack or potential contract bugs, though many people who are now "investing" in this space don't understand anything about blockchains and treat them as money-printing machines, often using highly centralized chains that would be better run as centralized gambling services. > 5. This whole system is hugely energy wasteful; and (here's the big one) You are talking about a specific implementation detail of proof-of-work blockchains. Proof-of-Stake (PoS) chains exist, and even the second largest chain by market cap has been running its PoS chain for over a year and will fully migrate over to it within months (cue jokes about dev delays). Blockchains can and do exist in a form that doesn't waste huge amounts of energy. > 6. Government action could shut down crypto tomorrow so how robust is it really? I see people have already replied about this point. Certainly there are ways that governments could hamper blockchain development and adoption, though they could also embrace the technology. Blockchains were created to give power to people over the governments and large financial institutions that control them - sadly, most people in the space have lost sight of this and are focused on getting rich. In a world where all assets (including currency) will soon be digital, having government control over these assets is a huge risk to individuals whose governments may someday freeze their assets or fall to an authoritative regime that creates an economic prison where fleeing oppression means losing what you've spent your life working to earn. People should have power over their governments, not the other way around, and giving people a way of holding assets that are beyond government control is a great start.

TAKEMYMONEY 5y ago

And money laundering! And ransomware! We don't need the same comment on every article about BTC. The only part slightly related to this article: > Government action could shut down crypto tomorrow "crypto" meaning...all cryptocurrencies? The ban mentioned in the article only applies to BTC. We've seen major governments try to ban it already and it didn't shut it down. Many currencies can't be mined and are much more difficult to trace than BTC.