50 ms·

LUNA is trading at below $0.00001, that is below 1/1000th of a cent right now. For many, getting rid of it may be much harder than just ignoring it. A few weeks

LUNA is trading at below $0.00001, that is below 1/1000th of a cent right now. For many, getting rid of it may be much harder than just ignoring it. A few weeks ago the price people were willing to pay for it hovered around $100. I say "the price people were willing to pay" instead of "value", because now that nobody wants to speculate with LUNA, it did fall down to its intrinsic value: Practically zero. Nobody needs it for anything besides buying and selling it from and to other people, which is not happening anymore. Cryptocurrency is gambling, plain and simple. The difficulty that fiat currency faces is inflation, which roughly means diluting the economy that backs it too much. The difficulty with cryptocurrency is that there is nothing of worth backing it. Factor in the horrifying externalities, and its worth is negative. For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost.

donkarma 4y ago
You have contradicted yourself. By your own admission, Bitcoin is backed by the world's energy and computing resources (at least what is used on the network)
- mondoveneziano 4y ago
  All energy and computing resources used on mining Bitcoin are spent and cannot be used for anything else. The concept of "backing" means that resources are available, and the entity backing them merely represents them. Stock is backed by the services and products a company provides. Fiat currency is backed by their respective part of the world economy. Resources are not depleted by backing those. Saying Bitcoin is "backed" by the world's energy and computing resources is like saying that a wildfire is "backed" by a state's forestry reserves.
  - light_hue_1 4y ago
    Let's also not forget that every bitcoin contributes massively to the destruction of our planet. From wasting massive amounts of energy (as much as a modestly sized developed nation) to wasting massive amounts of resources in terms of computing hardware.
    - louloulou 4y ago
      > contributes massively to the destruction of our planet. As with all human activity.
  - adnzzzzZ 4y ago
    >All energy and computing resources used on mining Bitcoin are spent and cannot be used for anything else. Bitcoin mining can be used to monetize excess energy (especially with renewables) that would otherwise be wasted, so what you said is not entirely true.
    - mondoveneziano 4y ago
      The statement you quoted is true, regardless of your assertion. As for addressing your assertion by itself: Energy storage and distribution networks constantly strive to minimize unstorable excess energy. Even under the assumption that that will not happen sufficiently, or, less hypothetically, by only taking into account the currently achieved levels: What you propose cannot be enforced. By design. Bitcoin is decentralized, and everyone with an Internet connection and energy available can participate. That includes anybody with an even mediocre Internet connection and access to precious resources that can be converted into a single Bitcoin block and a massive amount of heat, for personally enriching transaction fees and a block reward in return. One of Bitcoin's very core principles makes gapless regulation unlikely, if not impossible. What is your proposal for guaranteeing that only non-storable, non-transmissible excess energy is used for Bitcoin, other than individual goodwill?
- tptacek 4y ago
  The opposite is the case: whatever backs up Bitcoin's current valuation, it's all that allows the system access to those energy resources. Those energy resources in no sense support Bitcoin's valuation.
- Tao332 4y ago
  What, are you going to squeeze your bitcoins and get energy out of them? Get real.
  - andsoitis 4y ago
- ineedasername 4y ago
  Bitcoin isn't backed by energy,.it burns it. If a real estate bond was backed by physical buildings the same way that Bitcoin is backed by energy then the bond would be created by burning the buildings down.
wyager 4y ago
- chitowneats 4y ago
  > There is nothing of worth backing the dollar either What a ridiculous notion. Uncle Sam has the world's largest economy, the world's reserve currency, and more than a few aircraft carriers. Just to name a few of the backing assets.
  - droopyEyelids 4y ago
    Russia had a lot of dollars, and then suddenly they were worthless or disappeared, despite all the aircraft carriers and delta squad guys the USA has.
    - Afforess 4y ago
      I hate to say it, but the ruble has more than recovered. It's up.
      - chitowneats 4y ago
        IMHO it's far to early to assess the economical fallout from Russia's historic blunder in Ukraine.
      - megablast 4y ago
        Is it?? Try buying some.
    - chitowneats 4y ago
      > Russia had a lot of dollars, and then suddenly they were worthless or disappeared Yes, due to broad international sanctions orchestrated by the U.S. You're unwittingly supporting my point. If Beijing or Washington ever get around to treating cryptocurrency as an existential threat, make no mistake the market will be crushed and you will lose everything.
nly 4y ago
Cryptocurrencies still have the unique property of being able to function as permissionless digital cash between parties. There is nothing else in broad use that can perform this function (there were viable cryptographic proposals in the 90s but nothing ever took hold). Personally I think that's enough to justify a small market cap and a volatile price, but I agree it is speculation that has driven it to insane heights.
- _jal 4y ago
  > Personally I think that's enough to justify a small market cap and a volatile price Perhaps for some currency, but why that one? There's no realistic function for an infinite number of them; there probably isn't a realistic function for more than a very small number of them.
- gitfan86 4y ago
  I don't see the advantage of circumventing government controls via crypto over the alternative of laundering the money. Or is it that crypto helps with the laundering process?
- throw8383833jj 4y ago
  There's been a huge macro bubble in govt that has been coming whereby the govt spends ever larger and larger percentage of GDP. We're now over 40% in the US and that's just going to continue going up, if you look at the pattern over the last 100 years. They can't increase taxes and they can't cut spending. And yet the spending keeps increasing ever more and more. Who's paying for it all? everyone holding Cash and Bonds. Look at the govt deficit as percentage of GDP, it's been increasing more and more. in the last decade: it was 3-4% in the good years and 10-15% in the bad ones. That's going to continue. GDP is mostly inflation. Which means if the deficit average 6-8% then inflation will need to match that too in the long term, otherwise debt as percentage of GDP keeps increasing. i know this will get downvoted but I'd rather take an occassional 25% loss with the knowledge that I'll regain it in the future, rather than a guaranteed loss of 6%+ per year for the next 20 years that I will never regain. When fiat and the dollar goes down the tubes, people are going to want something else that can't be inflated away. There's something to be said for diversification. Now that cash and bonds are finished, that only leaves equities and gold. for some people that's not enough. and if you want more diversification then you'll need some crypto. Crypto is 1.5 trillion (bitcoin is 600B) and there are 300 trillion dollars in the world worth of assets. if the world invested 10% of assets in crypto, that's 30T. Gold is about 10T. How is 1.5T or even 3T insane? EDIT: when i say crypto, i mean Bitcoin because the supply is limited.
initplus 4y ago
Currently it's literally impossible to get rid of for any price, given that Terra have officially halted the blockchain at block 7607789 https://twitter.com/terra_money/status/1524935730308456448 https://twitter.com/terra_money/status/1524935730308456448 You can't even pay people to take your LUNA - it simply cannot be transferred.
- madeofpalk 4y ago
  12 hours ago they said > The Terra blockchain has resumed block production. > Validators have decided to disable on-chain swaps, and IBC channels are now closed." Does this mean you can sell it (for practically zero?) now? https://twitter.com/terra_money/status/1525095111389945857 https://twitter.com/terra_money/status/1525095111389945857
  - eudoxus 4y ago
    Technically you could've still sold it even when the chain was "halted", since there were still a few exchanges that kept their various Luna markets open, and centralized exchange trades happen off chain. The problem was that you couldnt transfer your Luna from your private wallet to exchange wallet. Now the chain has resumed, and you can transfer Luna between wallets, but they have disabled on chain swapping between Luna and UST, and closed the IBC channels which allow you to "bridge" your Luna or UST from the Terra chain, to another sovereign blockchain.
- nightpool 4y ago
  I mean, I could give you my wallet key and a contract not to use it myself, but then I wouldn't be a cryptocurrency fanatic :p
  - nightpool 4y ago
    (er, just to clarify, since I'm looking back at this comment a few days later: I'm not a cryptocurrency fanatic and i'm certainly not looking to trade any Luna, I'm just saying that there are ways to trade Luna if someone really wishes to, they're just not the kinds of ways that cryptocurrency fanatics are likely to support/think about)
glerk 4y ago
> Cryptocurrency is gambling, plain and simple Cryptocurrency is a lot of things. Bitcoin, Ethereum, Monero and LUNA are very different technologies/products/networks/concepts. The decentralized aspect is the only overlapping theme.
- lend000 4y ago
  The fact that your factual, noninflammatory comment is being downvoted reflects very poorly on the state of intellectualism on HN. Every time crypto drops 30% you see the same tired arguments and cringeworthy jealousy / schadenfreude. I'm not even pro-crypto and it's painful to watch. Luna never had a limited supply. That was its achilles heel. Bitcoin is inherently supply-limited. Whether Bitcoin will suffer a similar fate remains to be seen, but it certainly won't happen on the same timeframe (99.9% drop in a matter of days) without SHA-256 breaking or some other double spend vulnerability being successfully realized.
  - codedokode 4y ago
    As I understand, the value of Bitcoin is in an expectation that in future it will become a widespread payment method, and you can buy it cheap (well, relatively cheap) today in order to sell it later to those who will want to use it for transactions. If my understanding is correct, then as soon as it becomes clear that there are better alternatives or Bticoin is unfit for this purpose, the price will drop.
    - lend000 4y ago
      There is plenty of marketshare that will buy Bitcoin for plenty of other reasons (store of value, protection from governments, criminal transactions, etc.), such that a lot of those reasons would have to be painfully clear to a majority of capital for it to go down dramatically (e.g. LUNA-style). What is clear to one of us may not be clear to other market participants. Case in point: look at Gamestop stock, 15 months later. Still detached from reality, despite nobody -- even the buyers -- truly expecting the company to generate commensurate value.
javert 4y ago
Bitcoin has nothing to do with Luna. They are as similar as two unrelated Internet companies, like Google and eToys. Inflation doesn't dilute the economy. Rather, it grossly distorts resource allocation. How do we pay for endless wars? Fiat funny money. How do we pay for $110 Luna? Again, fiat funny money. Luna is actually a symptom of our underlying system being broken---the system you are kind of defending.
- ineedasername 4y ago
  Luna is intertwined with Bitcoin. The reserved to defend the peg were at least partly held in Bitcoin, which made the two asset correlated to at least some small degree.
  - javert 4y ago
    Luna tried to make itself look better by "affiliating" itself with bitcoin, that's all. That is the attempted laundering of integrity and prestige. It failed.
rspeele 4y ago
Stunningly, there are some people still trying to swing trade Luna. To a dyed-in-the-wool crypto investor the price is just a number that could go up or down. And people get dollar signs in their eyes thinking "If it's $0.00001 now, it only needs to go up to $0.001 for me to make 100X"! Of course, they usually miss that there is no liquidity left in Luna to realize that 100x on an investment larger than pocket change, even if the market swings in their favor for a moment. We won't see the bottom of crypto in general until more of the speculators with that mindset have been separated from their dollars.
- lampshades 4y ago
  Shit, I bought some. Never know what might happen.
  - kristopolous 4y ago
    So did I. I've got 150,000 now. I've certainly spent $8 more poorly. 7 days ago that was worth $12 million. It's crazy The team behind it did get up to 14 billion USD in deposits and they're encouraging (even at this price) people to continue to hold Luna. They're still on board apparently Crazier turnarounds have certainly happened. I feel bad for people who had money in it beforehand. I'm sure some of them were sick or out camping when all this went down and totally lost their shirt
    - Aperocky 4y ago
      As long as UST is linked to luna in its current way, luna is on hyperinflation and will not stop. The only way to save luna is to decouple it from UST entirely.
      - kristopolous 4y ago
        Hah my position is up 600%. I'm in at 200,000 now. I've got some limit orders set between $0.0001 and $0.001, apparently my investment adage holds, "i make the right bets at the wrong amounts" - maybe I should set them for a dollar. Let's see what tomorrow brings
deleted 4y ago
[deleted]
wnevets 4y ago
I would argue its not even gambling, they're just slightly more complicated ponzi/ pyramid schemes.
WaxedChewbacca 4y ago
gruez 4y ago
>The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. I can see that you're trying to paint this as some sort of tragedy, but I'm not really seeing it. How is what you described any different than all the rocks that are "thrown away" when mining for minerals? Is it supposed to be better that the energy went towards terraforming the earth (ie. open pit mines) and therefore created something tangible?
- radlad 4y ago
  A car uses roughly 40 kWh to go 100 miles. Bitcoin transactions uses 1,719 kWh every 10 minutes. I don't know that I understand the rock analogy - any unused rocks that are "thrown away" are easily repurposed if desired. The energy used in the other examples is lost to entropy and contributes to global climate change.
  - hailwren 4y ago
    Yeah, rocks was a bad example. The gas used by armored cars to move cash around is a good example of similar economic cost.
    - gruez 4y ago
      >The gas used by armored cars to move cash around is a good example of similar economic cost. No, both you and the OP seem to have pattern-matched my comment to "bitcoin's energy consumption is similar to [something else]" argument, which is not what I'm talking about.
  - gruez 4y ago
    > A car uses roughly 40 kWh to go 100 miles. >Bitcoin transactions uses 1,719 kWh every 10 minutes. 1. you're comparing the energy use of a single vehicle against the energy use of a global network. if you were at least somewhat honest you'd try to compare like with like. 2. You seem to be missing the point. The quoted paragraph seems to be upset that the trillions of other hashes are being "thrown away entirely", implying that if they weren't thrown away it would somehow be less bad. That's the point I'm disputing. If you think bitcoin isn't a worthwhile use of energy, that argument doesn't need to depend on whether you're "throwing away" hashes or not, so I'm presuming OP is actually concerned about something being "throwing away". >any unused rocks that are "thrown away" are easily repurposed if desired in theory yes, but in practice they're not.
barnbuilder 4y ago
> For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. All of those hashes and the energy required to generate them represent work that would need to be redone (along with all subsequent work) by an attacker in order to double-spend the transactions in that block. It's the most efficient way to use energy for security that there is.
- joshuamorton 4y ago
  By this metric, asymmetric cryptography is billions of times more efficient, as an attacker has to do tons of work, but I need to do very little. So no, it is incredibly inefficient compared to many other forms of security.
  - lampshades 4y ago
    I think you missed the double-spend part of OP's response.
  - eudoxus 4y ago
    To be fair, you are comparing a cryptographic algorithm to a consensus (leader election) algorithm. Not exactly apples to apples
  - mekster 4y ago
    Why are you comparing two trusted parties' communication against random amount of counterparty transactions? When it comes to cryptocurrency, suddenly comment quality goes down the floor in HN.
  - tromp 4y ago
    Proof of work has the same asymmetry: producing high PoW is very costly, but verifying PoW is trivial. That's very much the essence of PoW.
fortran77 4y ago
I always chuckle at the term "fiat currency." The USD, while at risk for inflation, is backed by the institution that is the United States of America and all its potential and resources. Sure it's not pegged to gold and is subject to inflation. But the purest form of "fiat currency" is crypto, which is only worth something because some people say it is. Bitcoin doesn't have an army and navy, and land from sea to shining sea.
- selectodude 4y ago
  And nobody is forced to pay their taxes in Bitcoin.
- UncleEntity 4y ago
  You realize that “fiat currency” really means “by fiat” as in “by law”. The law says the dollar is the legal currency of the US and they will (or would) literally take away your liberties if you threatened their monopoly over money.
  - fortran77 4y ago
    Sure, in modern times that's what it means, but more generally it means it's money because enough people believe it is.
    - cornel_io 4y ago
      Except that it quite literally means it's money because law. At the moment it seems much more likely that the US government will survive than that BTC will be popular (and I think the relative values are fairly reasonable), but a few GPTs from now when computer governance becomes not only plausible but likely and crypto will seem like the only reasonable option.
    - samatman 4y ago
      Compound nouns don't work that way. A bluebird isn't any bird which happens to be blue.
  - 4y ago
jack_pp 4y ago
On Bitfinex it is trading at 0.02 (2 cents) it never dropped below 0.005. So if this is the top comment and there doesn't seem to be anyone correcting you it seems HN has no skin in the game but loves to talk about stuff they can't even get accurate data on
bitxbitxbitcoin 4y ago
The energy spent on the others is used to make sure that the lucky one is honest.
RuggedPineapple 4y ago
Actually, the fact that Bitcoin can't inflate is the biggest tell it will never work as a currency. There are a set number of bitcoins that can be mined and no more after that. It's fundamentally incapable of inflating. And that's f**ing dumb for a currency. Inflation at certain levels is good and necessary. A deflationary currency makes certain low margin economic activity extremely unattractive versus just sticking your money under the mattress ('hodl' in other words). Inflation encourages spending, your money is worth more now then it is later, so if you're going to build that new building or design that new product, better to do it now. You want inflation low enough that it doesn't punish people for saving but still provides an incentive to spend now. Economists put that number at around 2 percent. Perfectly possible to save for a house or retirement but still enough to give a push. Deflationary currencies punish economic activity- if you have to take out a loan to accomplish something every day that goes by afterward the money you owe represents more and more real value without the numbers changing, representing a significant deterrent. Some of the worst economic crises in history, including the great depression, were marked by significant deflation.
- cercatrova 4y ago
  Indeed, the book Money by Jacob Goldstein, co-host of NPR podcast Planet Money, talks precisely about this in regards to the gold standard. One reason that it was taken off the gold standard was because monetary policy could not be fully leveraged well when every dollar was worth some amount of gold. One couldn't print new money during recessions to restart the economy, and one couldn't remove dollars from the money supply in a boom period.
  - mgamache 4y ago
    That model is based in Keynesian Economics. It's just not reality in many situations.
    - Retric 4y ago
      Every model is wrong, some models are useful. Economic models, Keynesian or otherwise, are attacked and misapplied because individual players are better off with a larger slice of a smaller pie. Which doesn’t inherently invalidate these models, but few care about accuracy when billions of dollars are involved. When people talk about say ‘cap and trade’ what they really mean is give us a giant subsidy.
ludamad 4y ago
"Cryptocurrency is gambling, plain and simple." I actually view it as a collectible, and find it a bit annoying when people assert that it is simply not valid to view it as anything but gambling (which it certainly can be). It has a certain aesthetic to me and I enjoy having it (if it needs to be said, I do not encourage anyone to buy it, and if you already do want it, I encourage a small position). Yes it is not rational. There is an aspect of 'this is inherently worthless', but that's been true of collectable cardboard for a long time. So has in-signalling and speculation. If collectable cards were algorithmically printed into oblivion they would lose all value too.
- cutler 4y ago
  Gambling is exactly how crypto is being used. Crypto is nothing more than a big casino and to anyone who just lost their shirt I say that's what you get for trying so desperately to get something for nothing.
  - ludamad 4y ago
    Again, mostly not wrong but a bit annoying. I enjoy money that works with a programmable remote procedure call system (what I refer to as aesthetic, as sure, I can't call this super useful in real economic terms) and I'm quite willing to take a loss. Not sure what you're adding to what hasn't already been said; you effectively ignored my post.
    - erosenbe0 4y ago
      That's a valid take individually but collectively it become invalid once widespread barter began and institional action bega. I don't see Chase offering Topps and Donruss in 401k plans, let alone Rolex and Omega packs. And criminal actors aren't asking to be paid with an amalgamation of granddaddy grade Colt 1911s and Spanish coins.
      - ludamad 4y ago
        Okay so let's say at face value: collectible is invalid, but the gambling take is valid. How does that explain 401k plans any better? Surely some aspect of both the gambling value and the perceived future appeal (what I call aesthetic) plays into this? Or what do you categorize crypto as, if not those two things? (I mean this curiously, as I appreciate these don't cover the illicit nature)
pc2g4d 4y ago
The difficulty of computing the hashes is the entire point of them, to enforce scarcity. It's not wasted if you belief that scarcity has worth, which in the digital world it certainly does. The price people are willing to pay for something _is_ the value of something. Cryptocurrencies are gambling in a similar manner to how owning risky stocks is gambling. A cryptocurrency provides various services, and the utility of those services is what ultimately drives the price. Bitcoin's services for example include borderless, permissionless value transfers. The reduction in friction is immense---if you're operating in Bitcoin. Thus one of the incentives to own Bitcoin.
- anonymousab 4y ago
  > The difficulty of computing the hashes is the entire point of them, to enforce scarcity. It's not wasted if you belief that scarcity has worth, which in the digital world it certainly does. A very succinct and clear indictment of the entire cryptocurrency space.
- sterlind 4y ago
  hashing has nothing to do with scarcity. mining is only hard to ensure that the canonical transaction order is set by the majority of the computing power in the network. otherwise you get double spends. hashing is an ugly, wasteful way of doing this; Proof of Stake would be another if anyone ever figures out how to make it work. scarcity is an implementation detail.
  - sharperguy 4y ago
    It's also basically the only way to have a permissionless verification system that is resistant to sibyl attacks. A sibyl attack, is where in an anonymous system, one person can easily pretend to be millions of people. If we had some magical way to prevent people from doing this, without having to verify their identity, and manually add them to a list of "trusted verifiers", we could do away with PoW.
  - Banana699 4y ago
    You're saying the exact same thing. Bitcoin is created by special coinbase transaction with no predecessors, each block contains at most 1 of those, if block proposal was easy then peers would be incentivized to create money out of nothing. Double spends are just another, smarter, subtler way to "create" money, by exploiting inconsistent versions of the same supposedly-shared state. It all boils down to scarcity in the end, that's a necessary condition for a currency. Value is scarce, so anything representing and storing it must be so too.
ekianjo 4y ago
> The difficulty that fiat currency faces is inflation Not just inflation. How many fiat currencies from 100 years ago still exist today? And for the one that still exist, how much value have they lost? I'll let you ponder on that.
- sakopov 4y ago
  > How many fiat currencies from 100 years ago still exist today? I don't know. How many? Fiat didn't even exist 100 years ago. Everyone was on the gold standard back than.
ekianjo 4y ago
> The difficulty with cryptocurrency is that there is nothing of worth backing it There is not much backing any other currency either, apart from the fact that: - the government forces their currency on you - the banks forces you to save that currency with them - people "trust" the fact that the currency will be worth something in the future But in fact what backs up every fiat currency is pure air. Let's say the dollar stops being the international currency, good luck explaining everyone what it's "worth" when nobody else wants it.
- atoav 4y ago
  Yes , but the fact that we built societies on those things means there is great incentive for keeping it going (as even critics of capitalism eepeatedly keep noting). The problem with cryprocurrencies is, that the one thing they are really not good at is being a practical, efficient replacement for fiat currency, which is why building societies on them is hard. You could as well speculate on the unique shape of certain types of sheashells and develope whole subsystems of people analyzing their shape, building seashell storage sacks and fake seashell prevention agency and it would be still be more efficient than crypto.
- yladiz 4y ago
  > But in fact what backs up every fiat currency is pure air. Let's say the dollar stops being the international currency, good luck explaining everyone what it's "worth" when nobody else wants it. This is a pretty simplistic view of how things work. Even if the dollar stopped being the main reserve currency, it would still have value, just like smaller reserve currencies like the Euro and Pound, because people trust the governments to be able to pay their debts later. Until the US government can’t pay its debt and really defaults (and not the default that happens due to political stalemate) the dollar will have value. Bitcoin and other cryptocurrencies will never have this, especially if over the span of a few days it can lose a significant chunk of its value because of a sale of a few tens of thousands of Bitcoin.
  - ekianjo 4y ago
    > it would still have value Sure, but it might be a 10th of what it is now. So in fact it's not backed by anything real. > because people trust the governments to be able to pay their debts later. Nobody in their right mind excepts the US to pay their debt (except through massive inflation) - the same goes for Japan and a few other countries where the debt is so massive it can never be repaid. > especially if over the span of a few days it can lose a significant chunk of its value because of a sale of a few tens of thousands of Bitcoin. We are still very early days in crypto. It's like saying the internet will never change anything in the mid-80s, well before the web actually started. There's very tangible reasons for crypto to exist, such as not needed any kind of official middle-man in the middle to use your cryptocurrency. The fact that it has value or not is tied to its utility on the market beyond speculation. Whether that will ever happen is a matter of how stable the fiat currencies are going to be, I'd wage.
Phiwise_ 4y ago
>I say "the price people were willing to pay" instead of "value" That's what value is, though.
- xg15 4y ago
  That's how the "people believe this box is worth a million dollars, so it's worth a million dollars" crowd would like to define "value". There are other definitions of "value" though, which are usually a lot more useful and a lot less dangerous to lead you into pyramid schemes.
015a 4y ago
Here's another stat: Over the past month, the entire cryptocurrency market lost over $1T USD in market capitalization; about 50%. There's different ways one can look at this situation. I take a bit of a grim view, for crypto as a whole. This was a "come to jesus" moment for institutional investors. Remember; Luna was a top 5 coin by market capitalization; over $50B USD in capitalization. Its unclear exactly what happened, but the prevailing thesis right now is that it was an "attack"; a valid one, by an extremely well capitalized entity, which played within the rules of the game. This wasn't a loss of faith; it was a failure of technology. The rules were bad; and scarily similar to the rules all coins play by. A loss of faith can stay isolated to a single security; but a much more fundamental failure, like this, is a mark against the asset class. Now, investors will look across the entire ecosystem and start questioning whether any coin is safe. The technologists will say "BTC, ETH, they're proven, they're safe", and they're not wrong, but they also said the same thing about Luna. What I think we'll see is: the crypto ecosystem will enter a depression over the next 12 months. Larger coins (BTC/ETH) will stabilize. Most other coins will struggle; and with their prices in a depressed state, they become tempting targets for attack by well-capitalized entities. We'll probably see more attacks like this one; not just against algorithmic stablecoins, but also more traditional consensus compromise attacks. Pressure will be applied to both USDT and USDC; Tether may implode, as many have predicted for a while, and USDC's future is also questionable if Coinbase has financial issues due to a drop in consumer & institutional activity. In short, I would evacuate any non-BTC/ETH crypto positions. Some people may look at today as the "end of the crash". I think it was a signal; that crypto's Dark Forest security model isn't working; it got big; it developed derivative securities which enable shorting; and now has drawn the attention of well-capitalized entities who can move against chains with no repercussion.
Baopab 4y ago
I was a user of a defi dapp that ran on the LUNA blockchain and allowed me to go short or long on various stocks. The LUNA price didn't matter to me, but their blockchain and the dapp was useful. Not wasting time to go through KYC/AML in order to go long or short on a stock is a good thing.
- glerk 4y ago
  Interesting. I didn't know much about the LUNA ecosystem outside of UST, but it looks like they had built quite a bit of applications: https://www.terra.money/ecosystem https://www.terra.money/ecosystem I don't know what stages these projects were in, but it is pretty sad to see all the engineering effort go to waste. I hope some of these will be salvaged and ported to other blockchains somehow.
s3tz 4y ago
At the end of the day, it's either proof of work or proof of force. You can't have a good society build on force, implicit or explicit. In a perfect world we could go with proof of stake, but the world is what it is.
- tromp 4y ago
  Proof of stake is far from perfect https://news.ycombinator.com/item?id=31366245 https://news.ycombinator.com/item?id=31366245
curiousgal 4y ago
> Cryptocurrency is gambling, plain and simple. Say what you will but when I was living in a Third World country with a pegged controlled currency (no access to international payments) it was thanks to bitcoin that I was able to pay for goods and services online (books, hosting, etc.). Never before then did I ever feel connected to the rest of the world. Nothing will change that in my mind. Bitcoin is a currency.
kgantchev 4y ago
> For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. That's still more energy efficient than the regulat fiat system.
- QuadmasterXLII 4y ago
  wat
- orestarod 4y ago
  Is there electrical energy just burnt for no purpose in fiat systems? You are talking about efficiency, not absolute value. The transactions of fiat systems are orders of magnitude more than the bitcoin chain's.
frankenst1 4y ago
> I say "the price people were willing to pay" instead of "value" The price people are willing to pay is how you estimate the value of something. > For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. You need to dig through 1 million gram of ore to find 1 gram of gold, depending entirely on luck. The rest is thrown away entirely. The energy is of course not lost but was necessary to find something of value (which also creates a lower price boundary). In contrast to gold, Bitcoin mining ensures provably fair probability of winning, has a tremendously lower barrier of entry, provides incentives to be run on renewable energy and produces far less waste. The culprit here is likely that you don't consider Bitcoin to be something of value. Particularly for those with less financial privilege, Bitcoin can provide uncensored access to financial services and a long-term hedge against inflation.
- 5350-uiop-1130 4y ago
  > long-term hedge against inflation lmao. no it's not. it failed as a currency, failed as a hedge and failed as a store of value. for 99% of holders like me it's just a speculative asset. nobody really cares about the pie in the sky idealism or libertarian nonsense spouted by maxis.
- schleck8 4y ago
  > Bitcoin can provide uncensored access to financial services Example needed here, how are people with less financial privilege censored by fiat? Loan conditions? Definitely not, that's just the financiers not wanting to issue risky loans.
  - frankenst1 4y ago
    Ukraine is a current example Fiat: - People unable to withdraw the money in Ukraine. - Refugees being robbed of their live saving during their escape. - Refugees unable to deposit/exchange Ukrainian currency. vs Bitcoin: - Refugees being able to flee with their live savings safely stored by memorizing 12 words - Refugees being able to access their savings in other countries simply by having access to a smart phone - Ukraine being able to receive global donations while national banks being not operational.
mfbx9da4 4y ago
> The difficulty that fiat currency faces is inflation Is inflation bad? Some inflation is healthy! If your “currency” is deflationary, it’s not a currency because the house you bought will be worth less in 10 years. Hasn’t deflation always lead to mass unemployment?

donkarma 4y ago

You have contradicted yourself. By your own admission, Bitcoin is backed by the world's energy and computing resources (at least what is used on the network)

mondoveneziano 4y ago
All energy and computing resources used on mining Bitcoin are spent and cannot be used for anything else. The concept of "backing" means that resources are available, and the entity backing them merely represents them. Stock is backed by the services and products a company provides. Fiat currency is backed by their respective part of the world economy. Resources are not depleted by backing those. Saying Bitcoin is "backed" by the world's energy and computing resources is like saying that a wildfire is "backed" by a state's forestry reserves.
- light_hue_1 4y ago
  Let's also not forget that every bitcoin contributes massively to the destruction of our planet. From wasting massive amounts of energy (as much as a modestly sized developed nation) to wasting massive amounts of resources in terms of computing hardware.
  - louloulou 4y ago
    > contributes massively to the destruction of our planet. As with all human activity.
- adnzzzzZ 4y ago
  >All energy and computing resources used on mining Bitcoin are spent and cannot be used for anything else. Bitcoin mining can be used to monetize excess energy (especially with renewables) that would otherwise be wasted, so what you said is not entirely true.
  - mondoveneziano 4y ago
    The statement you quoted is true, regardless of your assertion. As for addressing your assertion by itself: Energy storage and distribution networks constantly strive to minimize unstorable excess energy. Even under the assumption that that will not happen sufficiently, or, less hypothetically, by only taking into account the currently achieved levels: What you propose cannot be enforced. By design. Bitcoin is decentralized, and everyone with an Internet connection and energy available can participate. That includes anybody with an even mediocre Internet connection and access to precious resources that can be converted into a single Bitcoin block and a massive amount of heat, for personally enriching transaction fees and a block reward in return. One of Bitcoin's very core principles makes gapless regulation unlikely, if not impossible. What is your proposal for guaranteeing that only non-storable, non-transmissible excess energy is used for Bitcoin, other than individual goodwill?
tptacek 4y ago
The opposite is the case: whatever backs up Bitcoin's current valuation, it's all that allows the system access to those energy resources. Those energy resources in no sense support Bitcoin's valuation.
Tao332 4y ago
What, are you going to squeeze your bitcoins and get energy out of them? Get real.
- andsoitis 4y ago
ineedasername 4y ago
Bitcoin isn't backed by energy,.it burns it. If a real estate bond was backed by physical buildings the same way that Bitcoin is backed by energy then the bond would be created by burning the buildings down.

wyager 4y ago

chitowneats 4y ago
> There is nothing of worth backing the dollar either What a ridiculous notion. Uncle Sam has the world's largest economy, the world's reserve currency, and more than a few aircraft carriers. Just to name a few of the backing assets.
- droopyEyelids 4y ago
  Russia had a lot of dollars, and then suddenly they were worthless or disappeared, despite all the aircraft carriers and delta squad guys the USA has.
  - Afforess 4y ago
    I hate to say it, but the ruble has more than recovered. It's up.
    - chitowneats 4y ago
      IMHO it's far to early to assess the economical fallout from Russia's historic blunder in Ukraine.
    - megablast 4y ago
      Is it?? Try buying some.
  - chitowneats 4y ago
    > Russia had a lot of dollars, and then suddenly they were worthless or disappeared Yes, due to broad international sanctions orchestrated by the U.S. You're unwittingly supporting my point. If Beijing or Washington ever get around to treating cryptocurrency as an existential threat, make no mistake the market will be crushed and you will lose everything.

nly 4y ago

Cryptocurrencies still have the unique property of being able to function as permissionless digital cash between parties. There is nothing else in broad use that can perform this function (there were viable cryptographic proposals in the 90s but nothing ever took hold). Personally I think that's enough to justify a small market cap and a volatile price, but I agree it is speculation that has driven it to insane heights.

_jal 4y ago
> Personally I think that's enough to justify a small market cap and a volatile price Perhaps for some currency, but why that one? There's no realistic function for an infinite number of them; there probably isn't a realistic function for more than a very small number of them.
gitfan86 4y ago
I don't see the advantage of circumventing government controls via crypto over the alternative of laundering the money. Or is it that crypto helps with the laundering process?
throw8383833jj 4y ago
There's been a huge macro bubble in govt that has been coming whereby the govt spends ever larger and larger percentage of GDP. We're now over 40% in the US and that's just going to continue going up, if you look at the pattern over the last 100 years. They can't increase taxes and they can't cut spending. And yet the spending keeps increasing ever more and more. Who's paying for it all? everyone holding Cash and Bonds. Look at the govt deficit as percentage of GDP, it's been increasing more and more. in the last decade: it was 3-4% in the good years and 10-15% in the bad ones. That's going to continue. GDP is mostly inflation. Which means if the deficit average 6-8% then inflation will need to match that too in the long term, otherwise debt as percentage of GDP keeps increasing. i know this will get downvoted but I'd rather take an occassional 25% loss with the knowledge that I'll regain it in the future, rather than a guaranteed loss of 6%+ per year for the next 20 years that I will never regain. When fiat and the dollar goes down the tubes, people are going to want something else that can't be inflated away. There's something to be said for diversification. Now that cash and bonds are finished, that only leaves equities and gold. for some people that's not enough. and if you want more diversification then you'll need some crypto. Crypto is 1.5 trillion (bitcoin is 600B) and there are 300 trillion dollars in the world worth of assets. if the world invested 10% of assets in crypto, that's 30T. Gold is about 10T. How is 1.5T or even 3T insane? EDIT: when i say crypto, i mean Bitcoin because the supply is limited.

initplus 4y ago

Currently it's literally impossible to get rid of for any price, given that Terra have officially halted the blockchain at block 7607789 https://twitter.com/terra_money/status/1524935730308456448 https://twitter.com/terra_money/status/1524935730308456448 You can't even pay people to take your LUNA - it simply cannot be transferred.

madeofpalk 4y ago
12 hours ago they said > The Terra blockchain has resumed block production. > Validators have decided to disable on-chain swaps, and IBC channels are now closed." Does this mean you can sell it (for practically zero?) now? https://twitter.com/terra_money/status/1525095111389945857 https://twitter.com/terra_money/status/1525095111389945857
- eudoxus 4y ago
  Technically you could've still sold it even when the chain was "halted", since there were still a few exchanges that kept their various Luna markets open, and centralized exchange trades happen off chain. The problem was that you couldnt transfer your Luna from your private wallet to exchange wallet. Now the chain has resumed, and you can transfer Luna between wallets, but they have disabled on chain swapping between Luna and UST, and closed the IBC channels which allow you to "bridge" your Luna or UST from the Terra chain, to another sovereign blockchain.
nightpool 4y ago
I mean, I could give you my wallet key and a contract not to use it myself, but then I wouldn't be a cryptocurrency fanatic :p
- nightpool 4y ago
  (er, just to clarify, since I'm looking back at this comment a few days later: I'm not a cryptocurrency fanatic and i'm certainly not looking to trade any Luna, I'm just saying that there are ways to trade Luna if someone really wishes to, they're just not the kinds of ways that cryptocurrency fanatics are likely to support/think about)

glerk 4y ago

> Cryptocurrency is gambling, plain and simple Cryptocurrency is a lot of things. Bitcoin, Ethereum, Monero and LUNA are very different technologies/products/networks/concepts. The decentralized aspect is the only overlapping theme.

lend000 4y ago
The fact that your factual, noninflammatory comment is being downvoted reflects very poorly on the state of intellectualism on HN. Every time crypto drops 30% you see the same tired arguments and cringeworthy jealousy / schadenfreude. I'm not even pro-crypto and it's painful to watch. Luna never had a limited supply. That was its achilles heel. Bitcoin is inherently supply-limited. Whether Bitcoin will suffer a similar fate remains to be seen, but it certainly won't happen on the same timeframe (99.9% drop in a matter of days) without SHA-256 breaking or some other double spend vulnerability being successfully realized.
- codedokode 4y ago
  As I understand, the value of Bitcoin is in an expectation that in future it will become a widespread payment method, and you can buy it cheap (well, relatively cheap) today in order to sell it later to those who will want to use it for transactions. If my understanding is correct, then as soon as it becomes clear that there are better alternatives or Bticoin is unfit for this purpose, the price will drop.
  - lend000 4y ago
    There is plenty of marketshare that will buy Bitcoin for plenty of other reasons (store of value, protection from governments, criminal transactions, etc.), such that a lot of those reasons would have to be painfully clear to a majority of capital for it to go down dramatically (e.g. LUNA-style). What is clear to one of us may not be clear to other market participants. Case in point: look at Gamestop stock, 15 months later. Still detached from reality, despite nobody -- even the buyers -- truly expecting the company to generate commensurate value.

javert 4y ago

Bitcoin has nothing to do with Luna. They are as similar as two unrelated Internet companies, like Google and eToys. Inflation doesn't dilute the economy. Rather, it grossly distorts resource allocation. How do we pay for endless wars? Fiat funny money. How do we pay for $110 Luna? Again, fiat funny money. Luna is actually a symptom of our underlying system being broken---the system you are kind of defending.

ineedasername 4y ago
Luna is intertwined with Bitcoin. The reserved to defend the peg were at least partly held in Bitcoin, which made the two asset correlated to at least some small degree.
- javert 4y ago
  Luna tried to make itself look better by "affiliating" itself with bitcoin, that's all. That is the attempted laundering of integrity and prestige. It failed.

rspeele 4y ago

Stunningly, there are some people still trying to swing trade Luna. To a dyed-in-the-wool crypto investor the price is just a number that could go up or down. And people get dollar signs in their eyes thinking "If it's $0.00001 now, it only needs to go up to $0.001 for me to make 100X"! Of course, they usually miss that there is no liquidity left in Luna to realize that 100x on an investment larger than pocket change, even if the market swings in their favor for a moment. We won't see the bottom of crypto in general until more of the speculators with that mindset have been separated from their dollars.

lampshades 4y ago
Shit, I bought some. Never know what might happen.
- kristopolous 4y ago
  So did I. I've got 150,000 now. I've certainly spent $8 more poorly. 7 days ago that was worth $12 million. It's crazy The team behind it did get up to 14 billion USD in deposits and they're encouraging (even at this price) people to continue to hold Luna. They're still on board apparently Crazier turnarounds have certainly happened. I feel bad for people who had money in it beforehand. I'm sure some of them were sick or out camping when all this went down and totally lost their shirt
  - Aperocky 4y ago
    As long as UST is linked to luna in its current way, luna is on hyperinflation and will not stop. The only way to save luna is to decouple it from UST entirely.
    - kristopolous 4y ago
      Hah my position is up 600%. I'm in at 200,000 now. I've got some limit orders set between $0.0001 and $0.001, apparently my investment adage holds, "i make the right bets at the wrong amounts" - maybe I should set them for a dollar. Let's see what tomorrow brings

deleted 4y ago

[deleted]

wnevets 4y ago

I would argue its not even gambling, they're just slightly more complicated ponzi/ pyramid schemes.

WaxedChewbacca 4y ago

gruez 4y ago

>The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. I can see that you're trying to paint this as some sort of tragedy, but I'm not really seeing it. How is what you described any different than all the rocks that are "thrown away" when mining for minerals? Is it supposed to be better that the energy went towards terraforming the earth (ie. open pit mines) and therefore created something tangible?

radlad 4y ago
A car uses roughly 40 kWh to go 100 miles. Bitcoin transactions uses 1,719 kWh every 10 minutes. I don't know that I understand the rock analogy - any unused rocks that are "thrown away" are easily repurposed if desired. The energy used in the other examples is lost to entropy and contributes to global climate change.
- hailwren 4y ago
  Yeah, rocks was a bad example. The gas used by armored cars to move cash around is a good example of similar economic cost.
  - gruez 4y ago
    >The gas used by armored cars to move cash around is a good example of similar economic cost. No, both you and the OP seem to have pattern-matched my comment to "bitcoin's energy consumption is similar to [something else]" argument, which is not what I'm talking about.
- gruez 4y ago
  > A car uses roughly 40 kWh to go 100 miles. >Bitcoin transactions uses 1,719 kWh every 10 minutes. 1. you're comparing the energy use of a single vehicle against the energy use of a global network. if you were at least somewhat honest you'd try to compare like with like. 2. You seem to be missing the point. The quoted paragraph seems to be upset that the trillions of other hashes are being "thrown away entirely", implying that if they weren't thrown away it would somehow be less bad. That's the point I'm disputing. If you think bitcoin isn't a worthwhile use of energy, that argument doesn't need to depend on whether you're "throwing away" hashes or not, so I'm presuming OP is actually concerned about something being "throwing away". >any unused rocks that are "thrown away" are easily repurposed if desired in theory yes, but in practice they're not.

barnbuilder 4y ago

> For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. All of those hashes and the energy required to generate them represent work that would need to be redone (along with all subsequent work) by an attacker in order to double-spend the transactions in that block. It's the most efficient way to use energy for security that there is.

joshuamorton 4y ago
By this metric, asymmetric cryptography is billions of times more efficient, as an attacker has to do tons of work, but I need to do very little. So no, it is incredibly inefficient compared to many other forms of security.
- lampshades 4y ago
  I think you missed the double-spend part of OP's response.
- eudoxus 4y ago
  To be fair, you are comparing a cryptographic algorithm to a consensus (leader election) algorithm. Not exactly apples to apples
- mekster 4y ago
  Why are you comparing two trusted parties' communication against random amount of counterparty transactions? When it comes to cryptocurrency, suddenly comment quality goes down the floor in HN.
- tromp 4y ago
  Proof of work has the same asymmetry: producing high PoW is very costly, but verifying PoW is trivial. That's very much the essence of PoW.

fortran77 4y ago

I always chuckle at the term "fiat currency." The USD, while at risk for inflation, is backed by the institution that is the United States of America and all its potential and resources. Sure it's not pegged to gold and is subject to inflation. But the purest form of "fiat currency" is crypto, which is only worth something because some people say it is. Bitcoin doesn't have an army and navy, and land from sea to shining sea.

selectodude 4y ago
And nobody is forced to pay their taxes in Bitcoin.
UncleEntity 4y ago
You realize that “fiat currency” really means “by fiat” as in “by law”. The law says the dollar is the legal currency of the US and they will (or would) literally take away your liberties if you threatened their monopoly over money.
- fortran77 4y ago
  Sure, in modern times that's what it means, but more generally it means it's money because enough people believe it is.
  - cornel_io 4y ago
    Except that it quite literally means it's money because law. At the moment it seems much more likely that the US government will survive than that BTC will be popular (and I think the relative values are fairly reasonable), but a few GPTs from now when computer governance becomes not only plausible but likely and crypto will seem like the only reasonable option.
  - samatman 4y ago
    Compound nouns don't work that way. A bluebird isn't any bird which happens to be blue.
- 4y ago

jack_pp 4y ago

On Bitfinex it is trading at 0.02 (2 cents) it never dropped below 0.005. So if this is the top comment and there doesn't seem to be anyone correcting you it seems HN has no skin in the game but loves to talk about stuff they can't even get accurate data on

bitxbitxbitcoin 4y ago

The energy spent on the others is used to make sure that the lucky one is honest.

RuggedPineapple 4y ago

Actually, the fact that Bitcoin can't inflate is the biggest tell it will never work as a currency. There are a set number of bitcoins that can be mined and no more after that. It's fundamentally incapable of inflating. And that's f**ing dumb for a currency. Inflation at certain levels is good and necessary. A deflationary currency makes certain low margin economic activity extremely unattractive versus just sticking your money under the mattress ('hodl' in other words). Inflation encourages spending, your money is worth more now then it is later, so if you're going to build that new building or design that new product, better to do it now. You want inflation low enough that it doesn't punish people for saving but still provides an incentive to spend now. Economists put that number at around 2 percent. Perfectly possible to save for a house or retirement but still enough to give a push. Deflationary currencies punish economic activity- if you have to take out a loan to accomplish something every day that goes by afterward the money you owe represents more and more real value without the numbers changing, representing a significant deterrent. Some of the worst economic crises in history, including the great depression, were marked by significant deflation.

cercatrova 4y ago
Indeed, the book Money by Jacob Goldstein, co-host of NPR podcast Planet Money, talks precisely about this in regards to the gold standard. One reason that it was taken off the gold standard was because monetary policy could not be fully leveraged well when every dollar was worth some amount of gold. One couldn't print new money during recessions to restart the economy, and one couldn't remove dollars from the money supply in a boom period.
- mgamache 4y ago
  That model is based in Keynesian Economics. It's just not reality in many situations.
  - Retric 4y ago
    Every model is wrong, some models are useful. Economic models, Keynesian or otherwise, are attacked and misapplied because individual players are better off with a larger slice of a smaller pie. Which doesn’t inherently invalidate these models, but few care about accuracy when billions of dollars are involved. When people talk about say ‘cap and trade’ what they really mean is give us a giant subsidy.

ludamad 4y ago

"Cryptocurrency is gambling, plain and simple." I actually view it as a collectible, and find it a bit annoying when people assert that it is simply not valid to view it as anything but gambling (which it certainly can be). It has a certain aesthetic to me and I enjoy having it (if it needs to be said, I do not encourage anyone to buy it, and if you already do want it, I encourage a small position). Yes it is not rational. There is an aspect of 'this is inherently worthless', but that's been true of collectable cardboard for a long time. So has in-signalling and speculation. If collectable cards were algorithmically printed into oblivion they would lose all value too.

cutler 4y ago
Gambling is exactly how crypto is being used. Crypto is nothing more than a big casino and to anyone who just lost their shirt I say that's what you get for trying so desperately to get something for nothing.
- ludamad 4y ago
  Again, mostly not wrong but a bit annoying. I enjoy money that works with a programmable remote procedure call system (what I refer to as aesthetic, as sure, I can't call this super useful in real economic terms) and I'm quite willing to take a loss. Not sure what you're adding to what hasn't already been said; you effectively ignored my post.
  - erosenbe0 4y ago
    That's a valid take individually but collectively it become invalid once widespread barter began and institional action bega. I don't see Chase offering Topps and Donruss in 401k plans, let alone Rolex and Omega packs. And criminal actors aren't asking to be paid with an amalgamation of granddaddy grade Colt 1911s and Spanish coins.
    - ludamad 4y ago
      Okay so let's say at face value: collectible is invalid, but the gambling take is valid. How does that explain 401k plans any better? Surely some aspect of both the gambling value and the perceived future appeal (what I call aesthetic) plays into this? Or what do you categorize crypto as, if not those two things? (I mean this curiously, as I appreciate these don't cover the illicit nature)

pc2g4d 4y ago

The difficulty of computing the hashes is the entire point of them, to enforce scarcity. It's not wasted if you belief that scarcity has worth, which in the digital world it certainly does. The price people are willing to pay for something _is_ the value of something. Cryptocurrencies are gambling in a similar manner to how owning risky stocks is gambling. A cryptocurrency provides various services, and the utility of those services is what ultimately drives the price. Bitcoin's services for example include borderless, permissionless value transfers. The reduction in friction is immense---if you're operating in Bitcoin. Thus one of the incentives to own Bitcoin.

anonymousab 4y ago
> The difficulty of computing the hashes is the entire point of them, to enforce scarcity. It's not wasted if you belief that scarcity has worth, which in the digital world it certainly does. A very succinct and clear indictment of the entire cryptocurrency space.
sterlind 4y ago
hashing has nothing to do with scarcity. mining is only hard to ensure that the canonical transaction order is set by the majority of the computing power in the network. otherwise you get double spends. hashing is an ugly, wasteful way of doing this; Proof of Stake would be another if anyone ever figures out how to make it work. scarcity is an implementation detail.
- sharperguy 4y ago
  It's also basically the only way to have a permissionless verification system that is resistant to sibyl attacks. A sibyl attack, is where in an anonymous system, one person can easily pretend to be millions of people. If we had some magical way to prevent people from doing this, without having to verify their identity, and manually add them to a list of "trusted verifiers", we could do away with PoW.
- Banana699 4y ago
  You're saying the exact same thing. Bitcoin is created by special coinbase transaction with no predecessors, each block contains at most 1 of those, if block proposal was easy then peers would be incentivized to create money out of nothing. Double spends are just another, smarter, subtler way to "create" money, by exploiting inconsistent versions of the same supposedly-shared state. It all boils down to scarcity in the end, that's a necessary condition for a currency. Value is scarce, so anything representing and storing it must be so too.

ekianjo 4y ago

> The difficulty that fiat currency faces is inflation Not just inflation. How many fiat currencies from 100 years ago still exist today? And for the one that still exist, how much value have they lost? I'll let you ponder on that.

sakopov 4y ago
> How many fiat currencies from 100 years ago still exist today? I don't know. How many? Fiat didn't even exist 100 years ago. Everyone was on the gold standard back than.

ekianjo 4y ago

> The difficulty with cryptocurrency is that there is nothing of worth backing it There is not much backing any other currency either, apart from the fact that: - the government forces their currency on you - the banks forces you to save that currency with them - people "trust" the fact that the currency will be worth something in the future But in fact what backs up every fiat currency is pure air. Let's say the dollar stops being the international currency, good luck explaining everyone what it's "worth" when nobody else wants it.

atoav 4y ago
Yes , but the fact that we built societies on those things means there is great incentive for keeping it going (as even critics of capitalism eepeatedly keep noting). The problem with cryprocurrencies is, that the one thing they are really not good at is being a practical, efficient replacement for fiat currency, which is why building societies on them is hard. You could as well speculate on the unique shape of certain types of sheashells and develope whole subsystems of people analyzing their shape, building seashell storage sacks and fake seashell prevention agency and it would be still be more efficient than crypto.
yladiz 4y ago
> But in fact what backs up every fiat currency is pure air. Let's say the dollar stops being the international currency, good luck explaining everyone what it's "worth" when nobody else wants it. This is a pretty simplistic view of how things work. Even if the dollar stopped being the main reserve currency, it would still have value, just like smaller reserve currencies like the Euro and Pound, because people trust the governments to be able to pay their debts later. Until the US government can’t pay its debt and really defaults (and not the default that happens due to political stalemate) the dollar will have value. Bitcoin and other cryptocurrencies will never have this, especially if over the span of a few days it can lose a significant chunk of its value because of a sale of a few tens of thousands of Bitcoin.
- ekianjo 4y ago
  > it would still have value Sure, but it might be a 10th of what it is now. So in fact it's not backed by anything real. > because people trust the governments to be able to pay their debts later. Nobody in their right mind excepts the US to pay their debt (except through massive inflation) - the same goes for Japan and a few other countries where the debt is so massive it can never be repaid. > especially if over the span of a few days it can lose a significant chunk of its value because of a sale of a few tens of thousands of Bitcoin. We are still very early days in crypto. It's like saying the internet will never change anything in the mid-80s, well before the web actually started. There's very tangible reasons for crypto to exist, such as not needed any kind of official middle-man in the middle to use your cryptocurrency. The fact that it has value or not is tied to its utility on the market beyond speculation. Whether that will ever happen is a matter of how stable the fiat currencies are going to be, I'd wage.

Phiwise_ 4y ago

>I say "the price people were willing to pay" instead of "value" That's what value is, though.

xg15 4y ago
That's how the "people believe this box is worth a million dollars, so it's worth a million dollars" crowd would like to define "value". There are other definitions of "value" though, which are usually a lot more useful and a lot less dangerous to lead you into pyramid schemes.

015a 4y ago

Here's another stat: Over the past month, the entire cryptocurrency market lost over $1T USD in market capitalization; about 50%. There's different ways one can look at this situation. I take a bit of a grim view, for crypto as a whole. This was a "come to jesus" moment for institutional investors. Remember; Luna was a top 5 coin by market capitalization; over $50B USD in capitalization. Its unclear exactly what happened, but the prevailing thesis right now is that it was an "attack"; a valid one, by an extremely well capitalized entity, which played within the rules of the game. This wasn't a loss of faith; it was a failure of technology. The rules were bad; and scarily similar to the rules all coins play by. A loss of faith can stay isolated to a single security; but a much more fundamental failure, like this, is a mark against the asset class. Now, investors will look across the entire ecosystem and start questioning whether any coin is safe. The technologists will say "BTC, ETH, they're proven, they're safe", and they're not wrong, but they also said the same thing about Luna. What I think we'll see is: the crypto ecosystem will enter a depression over the next 12 months. Larger coins (BTC/ETH) will stabilize. Most other coins will struggle; and with their prices in a depressed state, they become tempting targets for attack by well-capitalized entities. We'll probably see more attacks like this one; not just against algorithmic stablecoins, but also more traditional consensus compromise attacks. Pressure will be applied to both USDT and USDC; Tether may implode, as many have predicted for a while, and USDC's future is also questionable if Coinbase has financial issues due to a drop in consumer & institutional activity. In short, I would evacuate any non-BTC/ETH crypto positions. Some people may look at today as the "end of the crash". I think it was a signal; that crypto's Dark Forest security model isn't working; it got big; it developed derivative securities which enable shorting; and now has drawn the attention of well-capitalized entities who can move against chains with no repercussion.

Baopab 4y ago

I was a user of a defi dapp that ran on the LUNA blockchain and allowed me to go short or long on various stocks. The LUNA price didn't matter to me, but their blockchain and the dapp was useful. Not wasting time to go through KYC/AML in order to go long or short on a stock is a good thing.

glerk 4y ago
Interesting. I didn't know much about the LUNA ecosystem outside of UST, but it looks like they had built quite a bit of applications: https://www.terra.money/ecosystem https://www.terra.money/ecosystem I don't know what stages these projects were in, but it is pretty sad to see all the engineering effort go to waste. I hope some of these will be salvaged and ported to other blockchains somehow.

s3tz 4y ago

At the end of the day, it's either proof of work or proof of force. You can't have a good society build on force, implicit or explicit. In a perfect world we could go with proof of stake, but the world is what it is.

tromp 4y ago
Proof of stake is far from perfect https://news.ycombinator.com/item?id=31366245 https://news.ycombinator.com/item?id=31366245

curiousgal 4y ago

> Cryptocurrency is gambling, plain and simple. Say what you will but when I was living in a Third World country with a pegged controlled currency (no access to international payments) it was thanks to bitcoin that I was able to pay for goods and services online (books, hosting, etc.). Never before then did I ever feel connected to the rest of the world. Nothing will change that in my mind. Bitcoin is a currency.

kgantchev 4y ago

QuadmasterXLII 4y ago
wat
orestarod 4y ago
Is there electrical energy just burnt for no purpose in fiat systems? You are talking about efficiency, not absolute value. The transactions of fiat systems are orders of magnitude more than the bitcoin chain's.

frankenst1 4y ago

> I say "the price people were willing to pay" instead of "value" The price people are willing to pay is how you estimate the value of something. > For Bitcoin, the most popular one, on the order of 100.000.000.000.000.000.000 of hashes get calculated to mine a single block, multiple trillion per second. Within ten minutes, only a single one of those 100.000.000.000.000.000.000 hashes is actually used, depending entirely on luck. The rest are thrown away entirely. They do not form part of the final hash or anything else, the energy spent on them is lost. You need to dig through 1 million gram of ore to find 1 gram of gold, depending entirely on luck. The rest is thrown away entirely. The energy is of course not lost but was necessary to find something of value (which also creates a lower price boundary). In contrast to gold, Bitcoin mining ensures provably fair probability of winning, has a tremendously lower barrier of entry, provides incentives to be run on renewable energy and produces far less waste. The culprit here is likely that you don't consider Bitcoin to be something of value. Particularly for those with less financial privilege, Bitcoin can provide uncensored access to financial services and a long-term hedge against inflation.

5350-uiop-1130 4y ago
> long-term hedge against inflation lmao. no it's not. it failed as a currency, failed as a hedge and failed as a store of value. for 99% of holders like me it's just a speculative asset. nobody really cares about the pie in the sky idealism or libertarian nonsense spouted by maxis.
schleck8 4y ago
> Bitcoin can provide uncensored access to financial services Example needed here, how are people with less financial privilege censored by fiat? Loan conditions? Definitely not, that's just the financiers not wanting to issue risky loans.
- frankenst1 4y ago
  Ukraine is a current example Fiat: - People unable to withdraw the money in Ukraine. - Refugees being robbed of their live saving during their escape. - Refugees unable to deposit/exchange Ukrainian currency. vs Bitcoin: - Refugees being able to flee with their live savings safely stored by memorizing 12 words - Refugees being able to access their savings in other countries simply by having access to a smart phone - Ukraine being able to receive global donations while national banks being not operational.

mfbx9da4 4y ago

> The difficulty that fiat currency faces is inflation Is inflation bad? Some inflation is healthy! If your “currency” is deflationary, it’s not a currency because the house you bought will be worth less in 10 years. Hasn’t deflation always lead to mass unemployment?