6 ms·

> “Unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any use cases for a blockchain” It's

> “Unless you’re trying to create a cryptocurrency, buy drugs or blackmail a company using ransomware there aren’t really any use cases for a blockchain” It's time for the OP and people agreeing with the article look deeper into DeFI. https://compound.finance/ https://compound.finance/ & https://pooltogether.com/ https://pooltogether.com/ are two great examples. Borrow or lend (and earn interest (on dollars if you wish so by using stablecoins like USDC or DAI) much higher than in banks), or participate in no-loss lotteries. All you need is an internet connection and you can use it without any arbitrary rules imposed by governments or companies. If you are into technology and finance, you should be in awe with this stuff in my opinion.

Tenoke 5y ago
For me DEXs are an even better example - having p2p exchanges where you require much less trust from other parties (nobody holds your funds, you just trade via a single function call which you can read the code of as your only interaction) and with profits going to users instead of necessarily a central party - that's just something you can't do outside of blockchains.
pavlov 5y ago
> interest much higher than in banks > no-loss lotteries The Ponzi hallmarks are getting more obvious by the day, aren’t they.
- whitepaint 5y ago
  Have you actually looked into it? Have you used it? Do you know how it works on the deep level? Do you know what smart contracts are? Are you able to read them? If you answered yes to these questions, you wouldn't be saying what you're saying; I guarantee it.
  - Coding_Cat 5y ago
    you replied to a comment saying "[t]he Ponzi hallmarks are getting more obvious by the day" by... reguritating the typical reply given by Ponzi/scam artists when called out as scams?
  - AnIdiotOnTheNet 5y ago
    Not that, you know, you're going to try and explain it or anything. "You just don't get it" has long been the go-to response for scam artists. As any reasonable person would note: If it sounds too good to be true, it probably is. So either it isn't actually as good as it claims to be or you have to explain how it accomplishes the seemingly impossible.
    - whitepaint 5y ago
      1. Learn how blockchains work. 2. Go learn Solidity. Write a few smart contracts. Go try to hack a few. https://docs.soliditylang.org/en/v0.8.11/ https://docs.soliditylang.org/en/v0.8.11/ & https://ethernaut.openzeppelin.com/ https://ethernaut.openzeppelin.com/ is a good starting point. 3. Read Smart Contracts that you use. Understand them (if you can't, go ask people who created them on Discord or reddit). 4. Be in awe that we can have such applications without any 3rd party. Have more questions? Ask on reddit or Discord.
      - rapnie 5y ago
        From many of the cryptocurrency threads on HN that I encountered: 5. Learn to get Wallstreet-level smarts, or be the sheep that just moves along.
      - AnIdiotOnTheNet 5y ago
        That didn't explain anything, it's essentially "RTFM" but with phone book sized manuals. Look, you're the evangelist for the technology here. If you can't explain to people why they should give a damn, that's on you. As far as I can tell, you're just promoting a scam on too-good-to-be-true promises and FOMO.
        deleted 5y ago
        [deleted]
      - antihero 5y ago
        5. Be amazed when you realise it costs a lot to actually run your code and when you do a hard to spot bug means you lose all your money anyway.
  - criddell 5y ago
    Most of what I know about that stuff I've learned by reading https://web3isgoinggreat.com/ https://web3isgoinggreat.com/
  - cuteboy19 5y ago
    The people on this website already know all of this stuff. "Few understand" might work on less technological adept people but it is not appropriate on a tech forum
  - UncleMeat 5y ago
    > If you answered yes to these questions, you wouldn't be saying what you're saying; I guarantee it. I've published research on EVM issue detection in a top venue. The "if you weren't ignorant you'd agree with me" argument is a crap one.
- TAKEMYMONEY 5y ago
  Who runs a decentralized Ponzi scheme (not in an abstract way)? Do you know why the scheme is named that? Hint: going on Twitter and saying "Buy DOGE!" is not a Ponzi scheme. Ironically the author is a hedge fund founder, they are likely more acquainted with actual Ponzi schemes than a rando shilling for Compound. (and since when are "no-loss lotteries" hallmarks of Ponzi schemes?)
  - notreallyserio 5y ago
    "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors." Tweeting "buy DOGE" is a great example. "Buy DOGE" really means "buy DOGE from existing investors". It's a textbook case.
    - TAKEMYMONEY 5y ago
      > not in an abstract way No, that is market manipulation, you've made a common mistake, a Ponzi scheme is very specific. Is tweeting "Buy TSLA!" a Ponzi scheme? Do you know what Charles Ponzi's role in his scheme was? In a Ponzi, the operator actively channels the money to older investors. It's not an abstract "investors get richer" idea. Bitconnect was a true Ponzi scheme, and it used cryptocurrency. So if all cryptocurrencies are Ponzis by their nature, what makes it any different?
cletus 5y ago
This to me is another example of Crypto Andys so often just not understanding the financial system. I like this tweet [1]: > Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached. Put another way: there's no such thing as a free lunch. [1]: https://twitter.com/VitalikButerin/status/1274443124375523329 https://twitter.com/VitalikButerin/status/127444312437552332...
- whitepaint 5y ago
  Been using DeFI protocols quite successfully for over 2 years now. Have created and read many of Smart Contracts. Yes, there is no free lunch, you need to spend lots (and LOTS) of time to understand how all of this magic works. But you'll be regretting that you didn't. I can tell you that for sure.
  - s-lambert 5y ago
    I won't regret it, all of this is just more complicated ways of turning money into more money and is totally unnecessary. If working for a living isn't enough and I have to start spending time on DeFI or crypto to stay afloat then I would just rather die, this stuff is dystopian.
    - deleted 5y ago
      [deleted]
  - KptMarchewa 5y ago
    >But you'll be regretting that you didn't. I can tell you that for sure. You have financial interest in spewing propaganda like this.
  - AnIdiotOnTheNet 5y ago
    > But you'll be regretting that you didn't. I can tell you that for sure. FOMO statements like this do not at all help the cause of trying to show that this stuff isn't a giant scam.
echopurity 5y ago
notpachet 5y ago
> participate in no-loss lotteries This is such a charade. The money for the pool comes from somewhere: it's the returns you would otherwise accrue on the money you need to invest in the pool in order to play the lottery. There are definitely still losers; you're just losing your potential future interest instead of the money you have on hand today. Things like this only serve to highlight that the principal interest of the vast majority of crypto/defi proponents is to make money for nothing (and chicks for free?) But there is no free lunch. Someone always loses, regardless of how clever we are at masking the loss.
- AnIdiotOnTheNet 5y ago
  It is telling that you were downvoted for offering the clear explanation the parent was unwilling to provide.
  - notpachet 5y ago
    Par for the course these days. Some of the most interesting posts on HN tend to hover around zero votes as people from both sides of the divide press their respective arrow buttons.
notreallyserio 5y ago
> and earn interest (on dollars if you wish so by using stablecoins like USDC or DAI) much higher than in banks Who's paying this interest? Why are they paying more for this than they would with bank loans?
RandomLensman 5y ago
Not quite sure why the rules of land shouldn't apply? If I read it right, doesn't it say, e.g., "Compound Treasury Accounts are securities, exclusively offered to accredited institutional customers under Rule 506(c) of Regulation D." The other more important question is always: why is the interest so high? What risks are being taken? I do like DeFi, but I don't like getting to hand-wavy with laws, regulation, and risk, because that is always more towards wanting to have a different society/politics etc., which is not a technical point.
UncleMeat 5y ago
I do think that this is one of the few things that blockchains offer that is unique. It enables the financialization of everything. Suddenly I can make financial derivatives of ape jpegs or other transactions or any thing I can find on the blockchain. A big question is whether this is good. We've seen surveillance capitalism turn much of our lives into advertising derivatives over the last two decades and many people think that this is a bad thing, enabling megacorporations to extract value from our ordinary lives. I can see the same thing happening over the next two decades with megacorporations extracting value by creating financial derivatives of my behaviors as expressed on a public blockchain. And I'm not super excited about corporations betting on how much money I will pay to watch a superhero movie or whatever. We saw how much damage financialization of just mortgages could cause. Imagine how much damage the unregulated financialization of everything could cause.
015a 5y ago
Its very cool, technically. My biggest issue with a lot of the defi lending stuff is that it attempts to mix the on-chain concept of immutable trust, with the human and legal-level trust necessary to facilitate lending. When I borrow money from a bank, its being lent to a person, who can be tracked down, brought to court, assets repossessed, and all of this while being horrific for the person going through it, is necessary to increase the probability of loan repayment. Increasing the probability of loan repayment is directly correlative with increasing the amount of money capable of being lent out, and the frequency of loans. In other words; the US financial system actually consists of two inextricable systems: the financial system, and the legal system. One system is on the ledger, the other isn't. The way some lending platforms have gotten around this is to require 100% collateralization of the loan amount, with in-kind assets. There's some mildly interesting reasons why this is useful, primarily tax related, but it certainly looks quite different from how most loans work in traditional finance systems; examples, a SoFi personal loan is of-course not 100% collateralized; a mortgage is more-or-less a 100% collateralized loan but not with in-kind assets; for very high-wealth borrowers you oftentimes see loans that are structured like personal loans but 100% collateralized against physical assets the individual owns (eg house) or corporate shares; but "I'll give you $100, you give me $100, and I'll pay you back $105 in a year" just isn't common. To be clear: I think on-chain verification of off-chain trust/identities in web3 will happen eventually. It'll piss off a lot of crypto die-hards. It'll lead to a lot of anti-crypto chads screaming about "whats the point"; and they have a valid argument. But when viewed through the lens of a value addition which enables greater access to more traditional financial vehicles and regulation, without compromising the original promise of more equitable access to financial systems, it could be a best case of both worlds. In other words; it'd be like having access to the core American ACH system, but global, but maybe some institutions won't do business with you (or your wallet) unless that wallet has a verified real identity tied to it. You can still transact with people who don't require such a verification; which is more than you can say for the current system, and has been the source of tremendous socioeconomic hardship for massive portions of the world.

Tenoke 5y ago

For me DEXs are an even better example - having p2p exchanges where you require much less trust from other parties (nobody holds your funds, you just trade via a single function call which you can read the code of as your only interaction) and with profits going to users instead of necessarily a central party - that's just something you can't do outside of blockchains.

pavlov 5y ago

> interest much higher than in banks > no-loss lotteries The Ponzi hallmarks are getting more obvious by the day, aren’t they.

whitepaint 5y ago
Have you actually looked into it? Have you used it? Do you know how it works on the deep level? Do you know what smart contracts are? Are you able to read them? If you answered yes to these questions, you wouldn't be saying what you're saying; I guarantee it.
- Coding_Cat 5y ago
  you replied to a comment saying "[t]he Ponzi hallmarks are getting more obvious by the day" by... reguritating the typical reply given by Ponzi/scam artists when called out as scams?
- AnIdiotOnTheNet 5y ago
  Not that, you know, you're going to try and explain it or anything. "You just don't get it" has long been the go-to response for scam artists. As any reasonable person would note: If it sounds too good to be true, it probably is. So either it isn't actually as good as it claims to be or you have to explain how it accomplishes the seemingly impossible.
  - whitepaint 5y ago
    1. Learn how blockchains work. 2. Go learn Solidity. Write a few smart contracts. Go try to hack a few. https://docs.soliditylang.org/en/v0.8.11/ https://docs.soliditylang.org/en/v0.8.11/ & https://ethernaut.openzeppelin.com/ https://ethernaut.openzeppelin.com/ is a good starting point. 3. Read Smart Contracts that you use. Understand them (if you can't, go ask people who created them on Discord or reddit). 4. Be in awe that we can have such applications without any 3rd party. Have more questions? Ask on reddit or Discord.
    - rapnie 5y ago
      From many of the cryptocurrency threads on HN that I encountered: 5. Learn to get Wallstreet-level smarts, or be the sheep that just moves along.
    - AnIdiotOnTheNet 5y ago
      That didn't explain anything, it's essentially "RTFM" but with phone book sized manuals. Look, you're the evangelist for the technology here. If you can't explain to people why they should give a damn, that's on you. As far as I can tell, you're just promoting a scam on too-good-to-be-true promises and FOMO.
      - deleted 5y ago
        [deleted]
    - antihero 5y ago
      5. Be amazed when you realise it costs a lot to actually run your code and when you do a hard to spot bug means you lose all your money anyway.
- criddell 5y ago
  Most of what I know about that stuff I've learned by reading https://web3isgoinggreat.com/ https://web3isgoinggreat.com/
- cuteboy19 5y ago
  The people on this website already know all of this stuff. "Few understand" might work on less technological adept people but it is not appropriate on a tech forum
- UncleMeat 5y ago
  > If you answered yes to these questions, you wouldn't be saying what you're saying; I guarantee it. I've published research on EVM issue detection in a top venue. The "if you weren't ignorant you'd agree with me" argument is a crap one.
TAKEMYMONEY 5y ago
Who runs a decentralized Ponzi scheme (not in an abstract way)? Do you know why the scheme is named that? Hint: going on Twitter and saying "Buy DOGE!" is not a Ponzi scheme. Ironically the author is a hedge fund founder, they are likely more acquainted with actual Ponzi schemes than a rando shilling for Compound. (and since when are "no-loss lotteries" hallmarks of Ponzi schemes?)
- notreallyserio 5y ago
  "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors." Tweeting "buy DOGE" is a great example. "Buy DOGE" really means "buy DOGE from existing investors". It's a textbook case.
  - TAKEMYMONEY 5y ago
    > not in an abstract way No, that is market manipulation, you've made a common mistake, a Ponzi scheme is very specific. Is tweeting "Buy TSLA!" a Ponzi scheme? Do you know what Charles Ponzi's role in his scheme was? In a Ponzi, the operator actively channels the money to older investors. It's not an abstract "investors get richer" idea. Bitconnect was a true Ponzi scheme, and it used cryptocurrency. So if all cryptocurrencies are Ponzis by their nature, what makes it any different?

cletus 5y ago

This to me is another example of Crypto Andys so often just not understanding the financial system. I like this tweet [1]: > Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached. Put another way: there's no such thing as a free lunch. [1]: https://twitter.com/VitalikButerin/status/1274443124375523329 https://twitter.com/VitalikButerin/status/127444312437552332...

whitepaint 5y ago
Been using DeFI protocols quite successfully for over 2 years now. Have created and read many of Smart Contracts. Yes, there is no free lunch, you need to spend lots (and LOTS) of time to understand how all of this magic works. But you'll be regretting that you didn't. I can tell you that for sure.
- s-lambert 5y ago
  I won't regret it, all of this is just more complicated ways of turning money into more money and is totally unnecessary. If working for a living isn't enough and I have to start spending time on DeFI or crypto to stay afloat then I would just rather die, this stuff is dystopian.
  - deleted 5y ago
    [deleted]
- KptMarchewa 5y ago
  >But you'll be regretting that you didn't. I can tell you that for sure. You have financial interest in spewing propaganda like this.
- AnIdiotOnTheNet 5y ago
  > But you'll be regretting that you didn't. I can tell you that for sure. FOMO statements like this do not at all help the cause of trying to show that this stuff isn't a giant scam.

echopurity 5y ago

notpachet 5y ago

> participate in no-loss lotteries This is such a charade. The money for the pool comes from somewhere: it's the returns you would otherwise accrue on the money you need to invest in the pool in order to play the lottery. There are definitely still losers; you're just losing your potential future interest instead of the money you have on hand today. Things like this only serve to highlight that the principal interest of the vast majority of crypto/defi proponents is to make money for nothing (and chicks for free?) But there is no free lunch. Someone always loses, regardless of how clever we are at masking the loss.

AnIdiotOnTheNet 5y ago
It is telling that you were downvoted for offering the clear explanation the parent was unwilling to provide.
- notpachet 5y ago
  Par for the course these days. Some of the most interesting posts on HN tend to hover around zero votes as people from both sides of the divide press their respective arrow buttons.

notreallyserio 5y ago

> and earn interest (on dollars if you wish so by using stablecoins like USDC or DAI) much higher than in banks Who's paying this interest? Why are they paying more for this than they would with bank loans?

RandomLensman 5y ago

Not quite sure why the rules of land shouldn't apply? If I read it right, doesn't it say, e.g., "Compound Treasury Accounts are securities, exclusively offered to accredited institutional customers under Rule 506(c) of Regulation D." The other more important question is always: why is the interest so high? What risks are being taken? I do like DeFi, but I don't like getting to hand-wavy with laws, regulation, and risk, because that is always more towards wanting to have a different society/politics etc., which is not a technical point.

UncleMeat 5y ago

I do think that this is one of the few things that blockchains offer that is unique. It enables the financialization of everything. Suddenly I can make financial derivatives of ape jpegs or other transactions or any thing I can find on the blockchain. A big question is whether this is good. We've seen surveillance capitalism turn much of our lives into advertising derivatives over the last two decades and many people think that this is a bad thing, enabling megacorporations to extract value from our ordinary lives. I can see the same thing happening over the next two decades with megacorporations extracting value by creating financial derivatives of my behaviors as expressed on a public blockchain. And I'm not super excited about corporations betting on how much money I will pay to watch a superhero movie or whatever. We saw how much damage financialization of just mortgages could cause. Imagine how much damage the unregulated financialization of everything could cause.

015a 5y ago

Its very cool, technically. My biggest issue with a lot of the defi lending stuff is that it attempts to mix the on-chain concept of immutable trust, with the human and legal-level trust necessary to facilitate lending. When I borrow money from a bank, its being lent to a person, who can be tracked down, brought to court, assets repossessed, and all of this while being horrific for the person going through it, is necessary to increase the probability of loan repayment. Increasing the probability of loan repayment is directly correlative with increasing the amount of money capable of being lent out, and the frequency of loans. In other words; the US financial system actually consists of two inextricable systems: the financial system, and the legal system. One system is on the ledger, the other isn't. The way some lending platforms have gotten around this is to require 100% collateralization of the loan amount, with in-kind assets. There's some mildly interesting reasons why this is useful, primarily tax related, but it certainly looks quite different from how most loans work in traditional finance systems; examples, a SoFi personal loan is of-course not 100% collateralized; a mortgage is more-or-less a 100% collateralized loan but not with in-kind assets; for very high-wealth borrowers you oftentimes see loans that are structured like personal loans but 100% collateralized against physical assets the individual owns (eg house) or corporate shares; but "I'll give you $100, you give me $100, and I'll pay you back $105 in a year" just isn't common. To be clear: I think on-chain verification of off-chain trust/identities in web3 will happen eventually. It'll piss off a lot of crypto die-hards. It'll lead to a lot of anti-crypto chads screaming about "whats the point"; and they have a valid argument. But when viewed through the lens of a value addition which enables greater access to more traditional financial vehicles and regulation, without compromising the original promise of more equitable access to financial systems, it could be a best case of both worlds. In other words; it'd be like having access to the core American ACH system, but global, but maybe some institutions won't do business with you (or your wallet) unless that wallet has a verified real identity tied to it. You can still transact with people who don't require such a verification; which is more than you can say for the current system, and has been the source of tremendous socioeconomic hardship for massive portions of the world.