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The technological case against Bitcoin and blockchain

39 points by mikro2nd 5y ago

ludamad 5y ago
The itch.io response here is uniquely abrasive in the field (although undeniably a sentiment some hold). I hope we don't think that's a good example of dialogue.
- Lascaille 5y ago
  They think and believe that something is simply a scam. Why would you expect them to enter into dialogue with the scammers?
  - ludamad 5y ago
    This author presumably wants a dialogue, though? "database-key-provenance-as-art is always a scam" is a fine opinion, but I would have picked one with more nuance
- johnny_b_g 5y ago
  >The itch.io response here is uniquely abrasive in the field "Uniquely abrasive"?? I see you haven't seen all the trash-talking from the Laser-Eyed bros in Twitter.
  - ludamad 5y ago
    Among official responses from game platforms - what I meant by 'the field'. Note that I personally like the creator of itch and respect his opinion, I just did not think it was a professional use of platform.
olliej 5y ago
This was a pretty good write up on the issues with crypto, it also encouraged me to research proof of stake vs space, as I had conflated the two. It didn’t occur to me that someone had designed a “crypto” system that was essentially just an interest payout system and as such the only way to “earn” significant amounts is to already have significant amounts. Of course Chia has already demonstrated that all the pro-environmental claims of proof of space were also nonsense (of course at least it still isn’t as bad as bitcoin+with, but it’s still pretty terrible). The core problem with crypto as I see it, is that by design it cannot scale, and by design any increase in value requires an increase in energy cost - however unlike rare metals or what have you, the value/watt seems simply horrific.
- PretzelPirate 5y ago
  > The core problem with crypto as I see it, is that by design it cannot scale It’s worth looking into blockchain scaling solutions like ZKSync, Optimism, and Arbitrum. They use Rollups (basically transaction batching) paired with either validity or fraud proofs to allow for high throughput at a low cost with low trust requirements. > and by design any increase in value requires an increase in energy cost This isn’t the case with PoS coins anymore than an increase of value at Google requires an increase in energy cost as they spin up more servers to serve more traffic. They aren’t strongly correlated.
Graffur 5y ago
Complaining that distributed ledger tech needs to use.. a distributed ledger. Sorry to be snide but there's nothing new or interesting in this article. I would be interested in a write up about a newer tech though e.g. Algorand.
xiphias2 5y ago
The author clearly haven't read the top Bitcoin book (the bitcoin standard) as an introduction of what problem Bitcoin solves (inflation). He changed his whole life by moving away from Turkey to the country with the reserve currency status and then says that ,,everything's fine with the money and banking system''. I challenge him to move back to Turkey and interview some people there.
- duhast 5y ago
  Bitcoin solves inflation with deflation and transfer of surplus from labour to Bitcoin holders. Add inelastic coin supply, low transaction rate, no anonymity, high energy consumption, whales owning most coins, tendency to concentrate mining capacity in the hands of few players (7 pools own 50% of mining capacity), undemocratic governance and it looks even worse. Bitcoin is not money. At best it's a digital collectable. After a decade of trying Bitcoin's only application appears to be facilitation of ransom payments, speculation for rich and insecure middle class and evasion of sanctions by the likes of Iran or North Korea. Hard currencies simply don't work in practice and are fundamentally undemocratic. We tried this with gold and it didn't work.
  - xiphias2 5y ago
    The great thing with Bitcoin is that everybody gets the price what they deserve. Those ,,whales’’ are whales because they risked their capital when it was riskier to own, not because they were from wealthy families. It’s still a risky investment of course, so I understand that most people don’t want to own it.
    - duhast 5y ago
      Bonds are a form of lending and pay coupons. Shares experience capital appreciation from business growth and pay dividends from profits. Houses bring rent. How does Bitcoin create wealth?
      - landemva 5y ago
        Most understand a gold coin, or btc, don't generate wealth. They store wealth and shift it across space and time.
AtlasBarfed 5y ago
"If my bank goes bad, I have a guarantee of 85,000 pounds from the UK government" I'm not going to get on a soapbox for crypto, but ... I mean, if that fully insures your savings after a long career in tech ... but that's an ad hominem. I just thought it was funny. The only promise I see for cryptocurrency is a weird one, one that is the exact opposite of practically all crypto designs. It deals with a fundamental issue of "cash": Once you have "laundered" whatever it is you did into cash, you are mostly absolved of the sins you committed to getting that cash. Sure there are regulations, laws, and fees. But over the long haul of our civilization, there is far more money extracted for the detriment of the world and whitewashed by political influence, apathy, or legal precedent. So most cryptocurrencies are for furthering the "money laundering" aspect of cash. Make it even more laundered and flexible. I want it instead to represent something that anti-launders the measurement of wealth, by storing some facsimile datapath of the money being extracted and then intermingled in the economy. I want MORE karma in my currency, not less. What I would like is a cryptocurrency that could devalue currencies that represent activity that resulted in destruction. The ledger would track the source of money from transactions and payments, and devalue those monies that, say, resulted in the destruction of the environment, killed many people, gave an entire city cancer. With current money, once you have it in money, you're home free. There is no simplified "undo" function in the economy. Now, HOW you would do that? Ok, no idea, but a blockchain is a distributed way to do it. Well, ok you could use a database too. Really the best anti-crypto argument I saw was "think you want blockchain? You probably just need a database", posted here about a year ago.
- thehappypm 5y ago
  85,000 in a single bank account. Diversify to a few banks to minimize risk. Hold other assets. It’s nice to have a 0-risk piece of your portfolio.
  - landemva 5y ago
    Many nations now provide for bank bail-ins from deposited funds. Greece showed the modern way of theft. https://www.investopedia.com/articles/investing/070115/understanding-downfall-greeces-economy.asp https://www.investopedia.com/articles/investing/070115/under...
sebastien_b 5y ago
One point he didn’t make (though touched on about “web3”) is that basically the “whales” just want to create their own new finance system (ie. “DeFi” for “Deregulated Finance”)
randomhodler84 5y ago
Dupe of https://news.ycombinator.com/item?id=30577169 https://news.ycombinator.com/item?id=30577169
spupe 5y ago
I found it excellent. It summarizes the main paradox of crypto: if you make it truly decentralized, it costs too much and is useless as a mass medium of exchange, while also being a haven for fraud and theft. If you rely on any sort of ledger/layer 2 system, you are back to trusting a third party, in which case you would be better off with traditional banking.
- PretzelPirate 5y ago
  > If you rely on any sort of ledger/layer 2 system, you are back to trusting a third party It’s important to have definition of “trust” for this statement. If we use an Etheruem optimistic rollup with on-chain data availability guarantees as an example and we assume it’s out of beta, we have three situations where I can be in trouble: 1. Censoring my transactions 2. Refusal to allow me to withdraw my funds to L1 3. The network itself shuts down and there are no longer any operators If I am censored, I can force transaction inclusion by directly submitting the layer2 transaction to the inbox on Ethereum (the validator will get punished if they don’t include it). This will be more expensive for me since I have to interact with Ethereum, but it should only be done very rarely and my next rep should be to exit the L2 network. If the network refuses my withdraw transaction, I can perform an emergency exit by making a call to be L1 contract and demanding an exit happens (I can also use the strategy in the censoring case). If the network shuts down, then my only choice is to perform an emergency exit, which has probably already been started by other participants on the network. These options do get more complicated when you start using layer 2s with off-chain data availability committees (validiums and volitions) and that’s where you do need to trust third parties to ensure you can get the correct transaction data, but it only requires that one honest party is serving that transaction data. The trust requirements are actually pretty low for “out of beta” L2 networks while keeping the costs low enough that people can afford to use them. ZKRollups have similar features and even lower costs but ZK-proofs are still very new and harder to reason about.
  - spupe 5y ago
    Sure, but if you want to qualify the "trust" to such minute detail, you can also do the same with traditional banking. I don't have to "trust" the banks, I have legal guarantees and transparency mandates enforced by governments. Why should I believe that the quasi-experimental procedure you describe operates smoothly, rather than believe that the traditional banking system will uphold its obligations, as it has for decades?
jl2718 5y ago
So many moral arguments completely miss the point. Whether it is good or bad is irrelevant. It reminds me of the arguments against evolution, “no, we didn’t come from that”, or “no, we can’t be turning into that”. There are awful things happening in biological evolution, and yet it proceeds despite condemnation. Bitcoin and blockchain exist because the existing financial order is at best questionably sustainable for the next 50 years, and there must be something that replaces it. The new system only needs to be sustainable within a niche to have value, and this niche grows stronger the more it is alienated by the dominant system.

39 points by mikro2nd 5y ago

The itch.io response here is uniquely abrasive in the field (although undeniably a sentiment some hold). I hope we don't think that's a good example of dialogue.

Lascaille 5y ago
They think and believe that something is simply a scam. Why would you expect them to enter into dialogue with the scammers?
- ludamad 5y ago
  This author presumably wants a dialogue, though? "database-key-provenance-as-art is always a scam" is a fine opinion, but I would have picked one with more nuance
johnny_b_g 5y ago
>The itch.io response here is uniquely abrasive in the field "Uniquely abrasive"?? I see you haven't seen all the trash-talking from the Laser-Eyed bros in Twitter.
- ludamad 5y ago
  Among official responses from game platforms - what I meant by 'the field'. Note that I personally like the creator of itch and respect his opinion, I just did not think it was a professional use of platform.

olliej 5y ago

This was a pretty good write up on the issues with crypto, it also encouraged me to research proof of stake vs space, as I had conflated the two. It didn’t occur to me that someone had designed a “crypto” system that was essentially just an interest payout system and as such the only way to “earn” significant amounts is to already have significant amounts. Of course Chia has already demonstrated that all the pro-environmental claims of proof of space were also nonsense (of course at least it still isn’t as bad as bitcoin+with, but it’s still pretty terrible). The core problem with crypto as I see it, is that by design it cannot scale, and by design any increase in value requires an increase in energy cost - however unlike rare metals or what have you, the value/watt seems simply horrific.

PretzelPirate 5y ago
> The core problem with crypto as I see it, is that by design it cannot scale It’s worth looking into blockchain scaling solutions like ZKSync, Optimism, and Arbitrum. They use Rollups (basically transaction batching) paired with either validity or fraud proofs to allow for high throughput at a low cost with low trust requirements. > and by design any increase in value requires an increase in energy cost This isn’t the case with PoS coins anymore than an increase of value at Google requires an increase in energy cost as they spin up more servers to serve more traffic. They aren’t strongly correlated.

Graffur 5y ago

Complaining that distributed ledger tech needs to use.. a distributed ledger. Sorry to be snide but there's nothing new or interesting in this article. I would be interested in a write up about a newer tech though e.g. Algorand.

xiphias2 5y ago

The author clearly haven't read the top Bitcoin book (the bitcoin standard) as an introduction of what problem Bitcoin solves (inflation). He changed his whole life by moving away from Turkey to the country with the reserve currency status and then says that ,,everything's fine with the money and banking system''. I challenge him to move back to Turkey and interview some people there.

duhast 5y ago
Bitcoin solves inflation with deflation and transfer of surplus from labour to Bitcoin holders. Add inelastic coin supply, low transaction rate, no anonymity, high energy consumption, whales owning most coins, tendency to concentrate mining capacity in the hands of few players (7 pools own 50% of mining capacity), undemocratic governance and it looks even worse. Bitcoin is not money. At best it's a digital collectable. After a decade of trying Bitcoin's only application appears to be facilitation of ransom payments, speculation for rich and insecure middle class and evasion of sanctions by the likes of Iran or North Korea. Hard currencies simply don't work in practice and are fundamentally undemocratic. We tried this with gold and it didn't work.
- xiphias2 5y ago
  The great thing with Bitcoin is that everybody gets the price what they deserve. Those ,,whales’’ are whales because they risked their capital when it was riskier to own, not because they were from wealthy families. It’s still a risky investment of course, so I understand that most people don’t want to own it.
  - duhast 5y ago
    Bonds are a form of lending and pay coupons. Shares experience capital appreciation from business growth and pay dividends from profits. Houses bring rent. How does Bitcoin create wealth?
    - landemva 5y ago
      Most understand a gold coin, or btc, don't generate wealth. They store wealth and shift it across space and time.

AtlasBarfed 5y ago

"If my bank goes bad, I have a guarantee of 85,000 pounds from the UK government" I'm not going to get on a soapbox for crypto, but ... I mean, if that fully insures your savings after a long career in tech ... but that's an ad hominem. I just thought it was funny. The only promise I see for cryptocurrency is a weird one, one that is the exact opposite of practically all crypto designs. It deals with a fundamental issue of "cash": Once you have "laundered" whatever it is you did into cash, you are mostly absolved of the sins you committed to getting that cash. Sure there are regulations, laws, and fees. But over the long haul of our civilization, there is far more money extracted for the detriment of the world and whitewashed by political influence, apathy, or legal precedent. So most cryptocurrencies are for furthering the "money laundering" aspect of cash. Make it even more laundered and flexible. I want it instead to represent something that anti-launders the measurement of wealth, by storing some facsimile datapath of the money being extracted and then intermingled in the economy. I want MORE karma in my currency, not less. What I would like is a cryptocurrency that could devalue currencies that represent activity that resulted in destruction. The ledger would track the source of money from transactions and payments, and devalue those monies that, say, resulted in the destruction of the environment, killed many people, gave an entire city cancer. With current money, once you have it in money, you're home free. There is no simplified "undo" function in the economy. Now, HOW you would do that? Ok, no idea, but a blockchain is a distributed way to do it. Well, ok you could use a database too. Really the best anti-crypto argument I saw was "think you want blockchain? You probably just need a database", posted here about a year ago.

thehappypm 5y ago
85,000 in a single bank account. Diversify to a few banks to minimize risk. Hold other assets. It’s nice to have a 0-risk piece of your portfolio.
- landemva 5y ago
  Many nations now provide for bank bail-ins from deposited funds. Greece showed the modern way of theft. https://www.investopedia.com/articles/investing/070115/understanding-downfall-greeces-economy.asp https://www.investopedia.com/articles/investing/070115/under...

sebastien_b 5y ago

One point he didn’t make (though touched on about “web3”) is that basically the “whales” just want to create their own new finance system (ie. “DeFi” for “Deregulated Finance”)

randomhodler84 5y ago

Dupe of https://news.ycombinator.com/item?id=30577169 https://news.ycombinator.com/item?id=30577169

spupe 5y ago

I found it excellent. It summarizes the main paradox of crypto: if you make it truly decentralized, it costs too much and is useless as a mass medium of exchange, while also being a haven for fraud and theft. If you rely on any sort of ledger/layer 2 system, you are back to trusting a third party, in which case you would be better off with traditional banking.

PretzelPirate 5y ago
> If you rely on any sort of ledger/layer 2 system, you are back to trusting a third party It’s important to have definition of “trust” for this statement. If we use an Etheruem optimistic rollup with on-chain data availability guarantees as an example and we assume it’s out of beta, we have three situations where I can be in trouble: 1. Censoring my transactions 2. Refusal to allow me to withdraw my funds to L1 3. The network itself shuts down and there are no longer any operators If I am censored, I can force transaction inclusion by directly submitting the layer2 transaction to the inbox on Ethereum (the validator will get punished if they don’t include it). This will be more expensive for me since I have to interact with Ethereum, but it should only be done very rarely and my next rep should be to exit the L2 network. If the network refuses my withdraw transaction, I can perform an emergency exit by making a call to be L1 contract and demanding an exit happens (I can also use the strategy in the censoring case). If the network shuts down, then my only choice is to perform an emergency exit, which has probably already been started by other participants on the network. These options do get more complicated when you start using layer 2s with off-chain data availability committees (validiums and volitions) and that’s where you do need to trust third parties to ensure you can get the correct transaction data, but it only requires that one honest party is serving that transaction data. The trust requirements are actually pretty low for “out of beta” L2 networks while keeping the costs low enough that people can afford to use them. ZKRollups have similar features and even lower costs but ZK-proofs are still very new and harder to reason about.
- spupe 5y ago
  Sure, but if you want to qualify the "trust" to such minute detail, you can also do the same with traditional banking. I don't have to "trust" the banks, I have legal guarantees and transparency mandates enforced by governments. Why should I believe that the quasi-experimental procedure you describe operates smoothly, rather than believe that the traditional banking system will uphold its obligations, as it has for decades?

jl2718 5y ago

So many moral arguments completely miss the point. Whether it is good or bad is irrelevant. It reminds me of the arguments against evolution, “no, we didn’t come from that”, or “no, we can’t be turning into that”. There are awful things happening in biological evolution, and yet it proceeds despite condemnation. Bitcoin and blockchain exist because the existing financial order is at best questionably sustainable for the next 50 years, and there must be something that replaces it. The new system only needs to be sustainable within a niche to have value, and this niche grows stronger the more it is alienated by the dominant system.