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In defense of cryptocurrency

• PaulHoule 4y ago
  If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. It's like the way Amway victims will try to sell you an $8 tube of toothpaste, "draw circles" to show that 7 people get a cut from that tube of toothpaste and then say "How does Amway bring you great prices on quality products?" (tap whiteboard) "By eliminating the middleman!"
  • latchkey 4y ago
    > If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. Source for this misinformation? https://ycharts.com/indicators/bitcoin_average_transaction_fee https://ycharts.com/indicators/bitcoin_average_transaction_f... Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee. Unlike credit card transactions, which are a percentage of size. Let's also remember that work is being done to do low cost smaller transactions on L2 networks.
    • Dylan16807 4y ago
      > Source for this misinformation? It spent half of 2021 in the 10 dollar range. > Remember that for bitcoin value transaction size is not a factor in the transaction fee. So if you want to transmit a billion dollars worth of bitcoin around the world, it is the same exact fee. You don't use a credit card to send huge amounts in the first place. Personally I need to do ten and hundred dollar transactions. One or two dollars for bitcoin would not be terrible for the latter, but it's still a lot more than a debit card ($0.21 + 0.05%), with no advantage to me over debit. I think that's a better comparison than the complex situation credit cards are in.
    • WJW 4y ago
      It's all good and well that bitcoin is cheaper than credit cards for billion dollar transactions, but that is not really important for all of us non-billionaires. For smaller amounts, the fixed cost of a bitcoin transaction can make it a significant amount of the total. L2 networks would be nice, but "work is being done" for years now so let's wait to see if they ever get that working properly before touting possible future innovations as a current benefit. I don't imagine anyone ever uses credit cards for billion dollar transfers anyway, normal banking is good enough for that. I just checked and the business account that I use for contracting has EUR 0.10 flat fee costs per transfer to anywhere in the SEPA region.
      • hajhatten 4y ago
        > but that is not really important for all of us non-billionaires. For smaller amounts, the fixed cost of a bitcoin transaction can make it a significant amount of the total. L2 networks would be nice, but "work is being done" for years now so let's wait to see if they ever get that working You gotta get up to speed with these things then. A lot has been happening the past year. Lightning in it self is used all over the world by small vendors in developing and western countries. And it's a mix of using a service provider for using this (usually in the west) to self custodian where they cannot motivate the cost. It was one of the big things needed before El Salvador's legal tender roll out. I can give you more examples if you want. https://twitter.com/HODLneverSODL/status/1518134911244320769?t=KA-FQC09Ji3B4WWRotJIgw&s=19 https://twitter.com/HODLneverSODL/status/1518134911244320769... https://twitter.com/CoinCornerMolly/status/1532314399762948096?t=n9j7mkzby5Nv9SPRESgiug&s=19 https://twitter.com/CoinCornerMolly/status/15323143997629480...
  • j_walter 4y ago
    Not really...the fees for Bitcoin, Ethereum and other L2 options are flat fees and are well under Visa/MC fees most of the time. Might want to look at Western Union and the like too...way way under those fees. Current transaction fee (for 1 cent or a billion dollars) Bitcoin - $1.62 per transaction Ethereum - $3.50 per transaction Ethereum L2 - as low as 12 cents https://l2fees.info/ https://l2fees.info/ Here are credit card fees by comparison (lowest fees assuming you have high volume): Visa 1.29% + $0.05 Mastercard 1.29% + $0.05 Discover 1.48% + $0.05 American Express 1.58% + $0.10 https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/ https://www.fool.com/the-ascent/research/average-credit-card...
    • notahacker 4y ago
      My fee for sending money to another UK bank account with instant settlement is $0.00 (or £0.00) Tell me more about the wonders of paying $1.62 plus currency conversion fees plus speculative asset volatility risk to send money to their bank account with eventually consistent settlement...
    • pavlov 4y ago
      Well, L2 systems aren't on a blockchain at all, so do they even count? If we get to cherry-pick from whatever money transfer systems exist, it's worth remembering that bank transfers within the Eurozone area are free and practically immediate. What crypto can beat that? Clearly you don't need cryptocurrency to deliver a service that's ideal for consumers, as regulation has achieved it in Europe.
      • hericium 4y ago
        > it's worth remembering that bank transfers within the Eurozone area are free and practically immediate In theory. Many banks are not using this system and stayed on old SEPA wire transfers: charges split between sender and receiver or covered by sender, 3 work days to process, ability to pay more to speed-up the process by two days etc. It's slow and/or costly.
      • sumy23 4y ago
  • BiteCode_dev 4y ago
    More accurately: - Transactions are more expensive in BTC for small amounts, and more expensive in Visa for big amounts. - However this is only true if you use on chain transactions for BTC. BTC transactions using lightning are always cheaper than Visa no matter the amount. - Lightning nodes do not yet form a network big enough to cover 100% of the transactions, and most transactions are small, so the idea that VISA transactions are cheaper for most people is, for all intents and purposes, mostly true at the moment. Lightning, though, is quite an interesting system. Half of the solution it offers is technical, but half of it will be the social construction of the network of channels. I doubt most people will open one consciously, but I assume wallet providers will make that automatic. Eventually, this means somebody needing the decentralized aspect of BTC will be able to open a channel and profit, while somebody who wants convenience will use a centralized wallet and be happy. I suspect most people will want the turn key solution and that the system will centralize a bit.
    • richardwhiuk 4y ago
      Large amounts aren't settled by VISA - they are settled by bank transfer.
      • BiteCode_dev 4y ago
        Depends. I buy electronics with my VISA card for thousands of dollar, and clients sometime prefer to pay my gigs with a card as well. Anything above 3000 will likely be cheaper using BTC. But I see your point.
        • woodruffw 4y ago
          The last time I transferred more than $3000, it cost me $0. I used ACH.
          • BiteCode_dev 4y ago
            Sure, like SEPA in Europe. Although you are probably going to use your card to buy this: https://www.apple.com/shop/buy-mac/pro-display-xdr https://www.apple.com/shop/buy-mac/pro-display-xdr But again, I see your point: our financial system is already very efficient, BTC will have to be way better than it current is before it can compete with it for day to day use. I'll keep an eye on lightning though. It makes any transaction, no matter the size, instant, and cost a tenth of a cent. It has potential.
  • dxhdr 4y ago
    > If you think Mastercard and Visa fees are too high, fees are higher on Bitcoin. Mastercard and Visa charge a percentage (?!), Bitcoin is a fixed amount per transaction. Plus Bitcoin won't deny your ability to make a transaction.
    • CharlesW 4y ago
      > Mastercard and Visa charge a percentage (?!), Bitcoin is a fixed amount per transaction. No, Bitcoin transaction fees are dynamic. https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y https://bitinfocharts.com/comparison/bitcoin-transactionfees...
      • dxhdr 4y ago
        That doesn't invalidate what I said, although maybe I should have said "flat" instead of "fixed" to be more precise. You pay a flat fee per transaction with Bitcoin, you pay a percentage fee with Mastercard and Visa. Yes, the Bitcoin fee changes with time based on a market. The Mastercard and Visa percentage changes based on how much they like you.
        • lottin 4y ago
          A flat fee isn't necessarily cheaper. A $25 fee on a $1 transaction is equivalent to a 2500% fee.
    • matkoniecz 4y ago
      > Plus Bitcoin won't deny your ability to make a transaction. Visa will not steal all my money.
    • adra 4y ago
      American express may be the best damn card that's not accepted anywhere I transact my business so in the end it doesn't matter how good American express is. It's a piece of plastic for the good it does me. Same with all crypto. Even if I was invested fully, there's still approaching zero of the number of purchases that I make that would ever be viable using crypto. The gold standard answers in this chat about big purchases are even more egregious. The ability for big money exchange without recourse spells disaster. The ability for big purchases which could be cheaper on crypto platforms also subjects that stored value to huge value shifts daily. Maybe in countries that are even more screwed up than crypto volatility there may be some sort of hedge assuming leaders don't lock you up for using them.
  • lbwtaylor 4y ago
    Just want to say the Amway example was pretty good and funny.
• matkoniecz 4y ago
  It is dishonest to mention > proof-of-time-and-space construction used by Chia as reason to reduce importance of induced waste. Chia just wastes something different and is not improvement in any form.
  • sumy23 4y ago
    It's dishonest to call the author dishonest for this one sentence. They mention Chia in passing at the end of a paragraph on proof-of-work alternatives.
    • matkoniecz 4y ago
      I have called this mention dishonest, not the author.
      • sumy23 4y ago
        You said it's "dishonest to mention." The author is the mentioner. If the mention is dishonest, then it necessarily follows that the author is dishonest.
        • matkoniecz 4y ago
          > if the mention is dishonest, then it necessarily follows that the author is dishonest. Not really. If someone did something stupid it does not follow they are stupid. The same for evil, dishonest or irritating acts. Though maybe "weird" would be better than "dishonest"? I posted in this form in comments on the original article.
          • sumy23 4y ago
            The issue with "dishonest" is that honesty implies intent. A statement has no intent, so it can't be honest or dishonest. A statement can only be right or wrong. An author can be honest or dishonest. An honest author can be wrong, and a dishonest author can be right. But to say that a statement is "dishonest" is to call the author, in the context of writing the statement, dishonest.
• wmf 4y ago
  As we speak, regulators are being captured by the bad cryptocurrencies; if we allow that to play out then of course regulators won't come up with nuanced policies. It'll be mining and gambling for everyone, everwhere. We'd be better off banning it all now then later adding a carve-out for non-PoW, non-deflationary, reversible, scalable, private, actual digital cash.
  • ls15 4y ago
    We'd be better off banning all speech now and later adding a carve-out for statements that I personally like.
  • cowtools 4y ago
    I agree that all cryptocurrencies should be banned. This would root out all of the weak cryptocurrencies which are not private or resistant to censorship.
• yieldcrv 4y ago
  > This is dishonest nonsense: estimates hold that at east 60% of mining energy consumption still comes from fossil sources. Ah so that number keeps going down! It's nice that you all hold Bitcoin/Proof of Work to such high standards that it cleans itself up so fast. I really doubt any other industry can do that or has such great metrics, so keep up the great work everyone.
  • matkoniecz 4y ago
    Even if it would be 0% then it is still wasting energy and removing that consumption would reduce overall waste. And "green" energy still have massive environmental and economical costs.
    • yieldcrv 4y ago
      I was waiting for this comment. I was going to preemptively write the acknowledgment and rebuttal to this in the earlier post but I didn't want to be accused of posting a "strawman argument", by different people, or maybe the same people that would chose to pretend they weren't going to say exactly what you did. Basically, the idea of "zero-sum energy" is incorrect. So the disdain for Bitcoin/Proof-of-work using any energy source is misplaced. There is plenty of energy currently out there, currently being wasted for decades, that would cost more to store, and cost more to transport. While proof-of-work can (and does) use it directly on the spot. These are often remote, low infrastructure, areas and so unlike other computationally intensive things, such as a data center, Proof-of-work requires very little bandwidth and doesn't even need a steady low-latency internet connection, so it works well. And so far, no other use case has been able to do this - or form the partnerships with the site owners to do this.
      • matkoniecz 4y ago
        > There is plenty of energy currently out there, currently being wasted for decades, that would cost more to store, and cost more to transport. (...) While proof-of-work can (and does) use it directly on the spot. These are often remote, low infrastructure, areas and so unlike other computationally intensive things, such as a data center this remain almost (or completely) theoretical, vast majority of POW wastes perfectly fine energy displacing productive use
• 99_00 4y ago
  My hot and uneducated take is that in 5 years we will see some Phoenix rise from the ashes of Cryptomania. If the entire field turn into toxic waste that no one wants to touch it will be extremely undervalued. Therefore it would be a tremendous opportunity.
  • hericium 4y ago
    > If the entire field turn into toxic waste that no one wants to touch it will be extremely undervalued. Bagholders will always try to find new victims. Crypto is praised even when it's in the shitter. "Buy the dip, it will be $200k before years end, I'd buy it myself but..." etc.
    • 99_00 4y ago
      Ok. I don't understand your point. If this clarifies: I'm talking about blockchain technology and its applications. Not a particular blockchain asset.
      • hericium 4y ago
        It does. Still, not many applications for blockchains, but shitty assets.
        • 99_00 4y ago
          Why can't block chain represent ownership of a real world asset? Obviously there would have to be an accompying legal document
• bowsamic 4y ago
  Cryptocurrency don’t need defense. I think that people outside of cryptocurrency communities don’t realise how accepted the technology is within them. HN is being misled into thinking they are widely hated
  • mrcus 4y ago
  • samvher 4y ago
    Accepted in what sense? Everyone I know who is involved with cryptocurrencies is so for “investment”, not for other kinds of usage.
    • bowsamic 4y ago
      Accepted as a speculation asset, yes
  • AlexandrB 4y ago
    Saying that cryptocurrency is widely accepted within cryptocurrency communities seems tautological. Meanwhile many attempts to force NFTs into games have been met with a lot of pushback from the "general" gaming public. I think it's fair to say that there's definitely a group of people for whom cryptocurrency is a "no way, no how" issue. Whether this group is large enough to justify the "widely" in "widely hated" is open to debate.
  • kkielhofner 4y ago
    The truth is they’re completely irrelevant to 99% of the internet population. Pick the top 20 coins. Look at their respective block explorers and check tx/day, unique address/day, etc. You’ll quickly come to the conclusion that maybe 100M people actually use cryptocurrencies in any meaningful way. The internet has 5B users. Cryptocurrency use is irrelevant. The cryptocurrency debate in technical circles reminds me of two extremely obscure religious sects screaming at each other while meanwhile the rest of the world doesn’t know either of them exists.
• propter_hoc 4y ago
  This article is a rebuttal to a letter, that in his interpretation, claims: >[...] that the entire technology field is worthless and cannot be used for any practical purpose. However, instead of addressing the core issue of whether cryptocurrency or DLT serves any practical purpose, the article instead cherry-picks specific issues that he thinks are resolvable: * Energy waste * Transaction speed * Privacy The author seems to be missing the forest (that he himself identified) for the trees. Why doesn't he provide a real world use case for DLT? I'm still waiting for that.
  • abirch 4y ago
    Crypto is antiprivacy. All of the transactions are public, it just offers psuedo-anonymity. If we used crypto for all transactions you could see when I go to my local watering hole and wait for me to close out my tab.
    • rvz 4y ago
      Do you know who is operating under the pseudonym of Satoshi Nakamoto then?
      • abirch 4y ago
        They didn't use Bitcoin for buying physical things. It's literally a public ledger. It's harder to hide see: https://www.foxbusiness.com/markets/crypto-bitcoin-money-laundering-couple https://www.foxbusiness.com/markets/crypto-bitcoin-money-lau...
  • MattPalmer1086 4y ago
    He says why he cares are the end. That it could be a viable payment system, if you solve the scaling and energy and regulation and a few other things.
    • tptacek 4y ago
      It does not sound plausible that all of this engineering, required to make these systems even viable in the real world (and, we hope, preventing it from eventually demanding approximately as much energy as Eastern Europe, despite the weak incentives to actually accomplish that) is the best, fastest way to lower transaction fees for the working class.
• yadaeno 4y ago
  You forgot to mention: if you lose your keys, youre fucked. That is, of course unless you trust a centralized unregulated entity to manage them for you.
  • doliveira 4y ago
    Yeah, and if you lose your private key apparently you deserve to lose everything.
    • throw_nbvc1234 4y ago
      In the same way as someone keeping their savings in cash under their mattress deserves to lose everything or in a different way?
      • wmf 4y ago
        Many fervent crypto advocates seem to have downright malicious attitudes toward people who either lose money on crypto or refuse to participate in it. They've spawned sarcastic memes like "sorry for your loss" and "have fun staying poor".
      • lottin 4y ago
        I think the comment you're replying to is ironic.
  • DennisP 4y ago
    Or use social recovery wallets. https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html
  • wmf 4y ago
    Wallet recovery is similar to reversing transactions: you can have it if you're willing to nominate some third party that you trust to manage it for you.
    • lottin 4y ago
• matkoniecz 4y ago
  > 60% of mining energy consumption still comes from fossil sources. Even if it would be 0% then it is still wasting energy and removing that consumption would reduce overall waste. And “green” energy still have massive environmental and economical costs.
  • adfjalkfja 4y ago
    Mining is heating my piece of shit house that would be filled with mould otherwise
  • seibelj 4y ago
    I find video games to be quite boring and useless. But somehow my opinion on the value of entertainment is ignored, and all the energy used on video games is fine.
• AlexandrB 4y ago
  I find the last section of this article particularly ironic considering cryptocurrency is one of the biggest steps back for technological efficiency I've seen in my lifetime. No, credit card fees have not improved in 30 years, but at least the energy required to process those transactions hasn't increased by orders of magnitude in the same time period.
  • danuker 4y ago
    So what? If the pollution is the problem, government should tax the externalities through a Pigovian tax. In the EU we have a functioning carbon cap, and as such mining is less profitable here. https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/emissions-cap-and-allowances_en https://ec.europa.eu/clima/eu-action/eu-emissions-trading-sy... But the US will hear none of it: https://www.youtube.com/watch?v=MondapIjAAM https://www.youtube.com/watch?v=MondapIjAAM
    • AlexandrB 4y ago
      I think you pointed out the problem yourself. Bitcoin and pollution don't care about borders, unless you get every country in the world to pass such a tax the miners will just move to wherever they can get away with not paying it.
      • danuker 4y ago
        I agree. But lawmakers would have a double standard if they imposed such a tax, but only on Bitcoin miners.
  • cesarb 4y ago
    > No, credit card fees have not improved in 30 years, A quick web search tells me that the law which capped credit card fees at 0.3% is from 2015. That's less than 10 years ago.
• jolux 4y ago
  The biggest problem I see with cryptocurrency is the transaction rate problem. It’s not like attempts haven’t already been made to solve it (Bitcoin Lightning), and Dr. Green fully admits that it’s not certain that any currently proposed changes can solve it either. How long is the world supposed to wait for reasonable transaction rates on this technology? If this is truly like the early internet, they should have vastly improved over the past ten years, and should definitely improve over the next five. But as far as I know they’ve been basically static throughout the technology’s life so far.
  • wmf 4y ago
    L1 transaction rate has improved from 7 TPS to over 1,000 TPS. If you didn't notice that's on you.
    • jolux 4y ago
      The article says Ethereum’s tx rate is 20-30 per second, and Bitcoin’s is 7. That’s what I’m going off.
  • randomran01234 4y ago
    Did you read the article? No?
    • jolux 4y ago
      I did. He lays out several possible solutions but notes that none are proven. That’s what I’m criticizing: I’ve seen these claims made before, and they were never proven.
      • randomran01234 4y ago
        The author reasonably concluded that these solutions are early and effectively “beta software” but I think it would be wrong to say they are completely unproven. L2s are currently securing billions of dollars and the amount of block space they take up is on increasing rapidly.[1][2] The unproven part is whether users will be satisfied enough with the security and censorship considerations of something like a ZK Rollup for it to scale to facilitate a significant part of the world’s economic activity. This is reasonable to question as we are only about 1 year into a range of this tech being heavily applied on mainnet. https://l2beat.com/ https://l2beat.com/ https://dune.com/funnyking/L2-Gas-Consumption https://dune.com/funnyking/L2-Gas-Consumption
• 99_00 4y ago
  >Proof-of-stake systems are not perfect: they still lead to some centralization of power, since in this paradigm the rich tend to get richer. What does this mean? Is there a central node in PoS, or are they saying that power is proportional to stake size?
  • DennisP 4y ago
    Depends on the PoS design. Some have a limited number of stakers, or give stakers voting rights in an on-chain governance system. Neither is true of Ethereum's proof-of-stake, but it's not quite in full production yet. As for the rich getting richer, that's no different from mining. Stakers have much lower ongoing costs, but the rewards are lower too so their percentage annual return isn't necessarily better. And everyone gets the same return so there's no economy of scale, which is not true of mining (or, for that matter, savings accounts).
  • randomran01234 4y ago
    The idea is that if you have more tokens, you will reap more reward in PoS. This is because you receive around 5% return on your stake, so if you set up multiple validators you will earn more per year. Note that PoW works exactly like this too, except far worse due to economies of scale. Purchasing mining facilities in bulk will give you a much better deal than buying rigs as a home miner. Whereas in PoS, both the ultra-whale (1000 ETH) and mini-whale (32 ETH) are earning the same exact % return on their investment. The average user delegating in a staking pool is also earning fairly similar return to all validators (with some % of their return paid to validators for their services). I do not think the claim that PoS is more centralizing or more “rich get richer” than PoW is necessarily true.
    • pcthrowaway 4y ago
      Your stake is really growing relative to the total supply as fast as a smaller holder's though. Like anything, rich have more opportunities to get richer, but I don't think these problems are specifically egregious in PoS. For chains which have on-chain governance, there's also the possibility that large holders will vote to change distribution in ways that favor them (though this hasn't happened yet), but this is a problem with any vote-by-stake system (imagine if equity share-holders could vote for larger shareholders to get more dividends). And there are theoretical solutions to this as well; projects like Bright-ID are working on proof-of-identity / proof-of-humanity.. maybe we'll see a proof-of-stake blockchain with governance tied to identity in the future? This could even be combined with zero-knowledge to ensure voters are unique humans without making their wallet<->identity associations publicly discoverable (though there may be situations where this is desireable as well)
• kelseyfrog 4y ago
  This is a genuine question. Is there a defense of cryptocurrencies that doesn't follow the pattern of, "yes, that is indeed true, however here is an edge case or counterexample which either doesn't exist yet, or is not in wide use so it's not actually a problem"? Every article or comment defending cryptocurrencies has followed this pattern and it isn't convincing to me. I'd love to have my mind changed, but when every rebuttal follows the same script, I remain am unmoved.
  • toolz 4y ago
    which argument do you find to be an "edge case"? My main argument in favor of crypto is the democratization of finance and leveling the playing field, which as we can already see crypto generally only has real benefits to the poor - for rich it's just a speculative play, but for the poor it can mean the difference between getting paid across borders without corruption stealing your money or being able to save wealth when banks won't help you out of lock you out.
    • kelseyfrog 4y ago
      The general form is that crypto can't do X. The response is that an obscure implementation Y does do X. The problem is that Y, while existing, largely doesn't address X in practice because Y's trading volume and/or market cap is insignificant. I guess to your point. How much corruption is avoided, and how much wealth is being saved that would otherwise be locked out? Without the means to quantify it, it feels like another, "this is theoretically possible"-type argument in the same way. The answer I expect to get is, "No one knows, but it is possible." I guess I'll keep waiting to be convinced. There are a lot of great things that are theoretically possible. Still waiting on them.
      • yellowapple 4y ago
        > The general form is that crypto can't do X. The response is that an obscure implementation Y does do X. The problem is that Y, while existing, largely doesn't address X in practice because Y's trading volume and/or market cap is insignificant. Sure, but this presupposes that Y's trading volume and/or market cap are indeed actually insignificant. A lot of people make that presupposition, but it's often about as accurate as a drunk chimpanzee playing darts. Proof-of-stake is the case-in-point: "but but Ethereum hasn't switched yet so therefore PoS is obscure", quoth the "skeptic", entirely ignoring that multiple of the top 10 cryptocurrencies by market cap and/or transaction volume are already proof-of-stake and have been for some time now. Even taking that presupposition at face value, what's experimental today is less so tomorrow. That experimental solutions do exist bodes well for the state of things even months (let alone years, let alone decades) from now. If you want to wait until then, then you do you; meanwhile, those of us willing to experiment will do so.
• photochemsyn 4y ago
  > "The top credit-card merchant fee actually rose in the United States between 1991 and 2009, and this is a goddamn tragedy, since these fees are baked into the cost of most retail goods and thus born by the working poor (who pay them even if they use cash.) . . . Why are these IT-focused industries so consistently immune to the same technological improvements and cost reductions we see everywhere else?" The simplest apparent answer is that this (the provision of payment services) is not a competitive market and as small retailers have nowhere else to turn, they're forced to pay high rents to what would have been called a trust in late 19th century Gilded Age terminology. The solution is also fairly clear: if you have what's called a 'natural monopoly' then it should be state-owned and state-managed (see the network of roads, water pipes, etc.), and if it's not actually a natural monopoly - meaning a system where competition doesn't make sense, i.e. having multiple networks of privately owned roads is silly - then you need anti-trust actions by the government to foster competition in the industry, which would reduce fees and costs for merchants. Arguably, if consumers had to pay the cost of transactions, rather than merchants, you might seem a lot more political pressure to make credit/debit card transactions the same cost as cash transaction, i.e. no added cost. Cash is a government-supplied taxpayer-supported service supplied free of charge for merchants and customers, so perhaps that's the best option for the credit/debit interface as well. Of course, this would allow government to track everyone's individual non-cash purchases, but then they already have access to the credit/debit ledgers, don't they?
  • fanf2 4y ago
    The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).
    • randomran01234 4y ago
      This solves inter-bank transfers in EU but does not mean payments going out of, or into, the EU are solved. Crypto takes a different approach: a single protocol that is shared across all countries.
• agentultra 4y ago
  There's nothing to defend. More ink has been spilled by some of the top experts in the field explaining that there is no use case for blockchain technology itself. It's old technology that has been around for a long time. There's nothing unique or special about it. It's interesting what the pro-regulation crypto-currency shills are advocating for. In the US a couple of pro-crypto senators proposed a bill that would introduce regulation to cryptocurrencies under the CFTC. They avoid classifying these things as "securities" in order protect crypto from stronger regulation. Despite these "currencies" quacking and walking like securities. This is more like a compromise made by a mob boss with corrupt government officials: we'll agree to your regulation as long as you agree to look the other way. In other words let's make it look legit and I'll keep scratching your back. What the letters to congress hope to achieve is stronger regulation on what are effectively unregulated securities. If companies want to dabble in crypto-assets let them: they will have to publicly report their activities, disclose their financials, and face the same penalties as those who are caught breaking the rules. I somehow doubt this is the outcome the crypto industry wants. A number of executives have been hauled to court over money laundering and fraud charges. I suspect a great deal more would follow suit were the government properly informed and willing to go after them.
  • Banana699 4y ago
    >It's old technology that has been around for a long time. There's nothing unique or special about it <sigh> I don't know how on earth can people be so confidently wrong, with almost religious fervor backing it up. It's not morally superior to be ignorant. Have you even read the post to the end ? Blockchains do solve a well known problem in distributed systems in a novel way. The main novelty is PoW consensus, a probabilistic equivalent to an Atomic Broadcast algorithm [https://en.wikipedia.org/wiki/Atomic_broadcast https://en.wikipedia.org/wiki/Atomic_broadcast] which ensures that a distributed network of computers all agree on the order of the same set of messages. The protocol uses bits and pieces of ideas that were invented in the 90s (Hash pointer data structures and the idea of PoW itself), but assembles them brilliantly into a novel whole that solves an extremly difficult and decades-old theoritical problem in way unheard of before. You can talk to the moon and back about how it's enviromentally wasteful or doesn't scale or not a currency or an attractive tool for scammers or etc etc etc..., but if you're unwilling to even understand the raw, neutral techonology it is built on, well, here goes all credibility of all your other non-obvious claims.
• JackC 4y ago
  "transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions. And indeed, this is a capability that many tokens now possess" I think this is arguing that reversibility is not antithetical to permissionless blockchains, because reversibility can be implemented on top of permissionless blockchains. But that doesn't answer the critique -- the critique is that most real world systems do need trusted parties, and if you build a system of trusted parties on top of a permissionless blockchain, then you could have saved a lot of complexity, risk, and proof-of-economic-waste burn by building on top of a permissioned distributed ledger instead. Reversibility is one example of a design requirement that undoes the claimed advantages of permissionless blockchains that are meant to justify their inherent downsides.
  • randomran01234 4y ago
    And it is fine to build systems with trusted parties on top of a permissionless network. The article cites USDC which does this, it is one of many applications users can choose to transact with. Attempting to bake reversibility into the protocol would lead to a tightly permissioned system with only a few trusted authorities. A loose analogy might be the internet, which aims to be a decentralized global protocol that we can then build centralized systems on top of.
    • adra 4y ago
      The internet is built on the 'A' server which is a tightly guarded centralized US tool. Commerce lives because the absolute power brokers of the system have chosen to not exercise strong enforcement. The internet technologies are certainly built in a way that could function in completely autonomous blobs all over the world, but that's certainly not the way it functions today.
    • lbriner 4y ago
      I'm not an expert but I think this is what the original letter authors objected to. If you build these mechanisms on top of a blockchain which is inherently baked in stone, then there is no point in having the blockchain be so strict. In other words, if you allow an organisation to change things like refund you, then they might as well just manage their own leger like they do at the minute.
• lamontcg 4y ago
  > In other words, transaction reversibility is not about the ledger, but rather about the transaction rules that a currency uses. A reversible currency requires that someone anoint this trusted party (or trusted parties) and that they use their powers to freeze/burn/transact currency in ways that are at odds with the recorded owners’ intentions. once you have a trusted third party, though, you no longer need permissionless blockchains and PoW/PoS. that also eliminates the need to "mine" and the environmental concerns. of course it also eliminates the get-rich-quick schemes as well. you wind up with VISA running on top of a permissioned DLT.
  • mirceal 4y ago
    That's not true. Think about the 3rd party as an escrow, not the bank. You wouldn't eliminate the escrow when you're buying a house, would you?
    • lamontcg 4y ago
      What's the fundamental difference between VISA, an escrow agent and a bank? Isn't VISA just an escrow agent between every transaction who also lends money and charges interest to the purchaser?
      • 7steps2much 4y ago
        Actually, isn't a bank an escrow agent? As in, historically it was a banks jobs to escrow your money. Then to act as an escrow agent for transactions/etc.
        • mirceal 4y ago
          At least for buying a house no. The bank is not the escrow. The escrow is a separate entity that is used by both parties. Before the transaction they setup the rules of the transaction (steps and what ifs) and once the transaction starts escrow just follow those rules. The key thing is that escrow receives a fee and after that they have no skin in the game. So in a sense, the escrow is sort of like a smart contract on the block chain. The disconnect happens between the physical and the virtual world (how would you know activity X took place in the physical world to advance the transaction through its lifecycle?)
• thawaya3113 4y ago
  This entire article does not even attempt to counter the claim being made in the letter it’s so up in arms about. > blockchain technology, specifically so-called “public blockchains”… are not an improvement on existing non-blockchain solutions. The article may have worked as a standalone article but doesn’t really provide a response to the letter it starts off with.
• Ologn 4y ago
  > it argues that the entire technology field is worthless and cannot be used for any practical purpose Which I concur with. Cryptocoins are worthless, the idea Bitcoin has a market cap of $5-6 hundred billion is absurd, and maybe the increasing fed funds rate etc. will pop this speculative bubble more than it already has (Bitcoin had the even more absurd market cap of $1 trillion toward the end of last year). Why is a Bitcoin worth anything? I know why my M1 Mac is worth something, I know why a box of raisins is worth something, I know why a bar of gold is worth something. I see no worth in a Bitcoin. I ask why it has any worth and the bag holders cast around looking for an equivalent, and only seem to find that dollars have been unmoored from value for half a century and the response is it's like the dollar (of course the dollar is implicitly, not explicitly like before 1971, backed by tens of thousands of tons of bullion gold among other things, but that's another tangent...)
  • Gatsky 4y ago
    Well your Mac is worth ‘something’ because of what people are willing to pay for it. It would be worthless to certain people, just as you find bitcoin worthless. What’s the difference?
    • strofcon 4y ago
      No, the Mac is worth something in and of itself. It is a tool of productivity, entertainment, education, creation, etc. And, failing all of that, it's valuable for its parts. A bitcoin is an ID number pointing to pretend money. It has zero intrinsic value.
      • birracerveza 4y ago
        I'm sure that if someone were to gift you one Bitcoin you would not refuse it on the basis that it's just an ID number pointing to pretend money with zero intrinsic value, would you?
        • strofcon 4y ago
          Sure - today, as the situation stands, I'd sell it in a heartbeat, because there is still a vast supply of greater fools. That doesn't mean it has intrinsic value, nor that it would be an ethical / moral choice. Just means that I have loose enough morals to be happy to take an idiot's money. When suddenly it loses its popularity and/or supply of greater fools, it'll fall apart, and I'll have taken some poor sap's actual money, even if it was delayed / distanced / distributed by some thousands of layers.
• evouga 4y ago
  This article doesn’t address the main objection I have about the practical value of cryptocurrency, namely, why I can’t take such an application, replace the distributed ledger with a SQL database, and get a solution that’s better in every way. As soon as you have a trusted central authority (monitoring and reversing payment transactions, interacting with government agencies to execute real estate transaction, etc.) I’m lost on why you need a blockchain.
  • binkHN 4y ago
    > ...trusted central authority... The major point is to not have this. No central authority, or government, will be able to alter the value of the currency.
  • lordofgibbons 4y ago
    >As soon as you have a trusted central authority You might have missed the entire point of cryptocurrency. The idea is that it is not centralized and a single entity can't "reverse" transactions.
    • wombat-man 4y ago
      It's all fun and games until someone steals your bored ape.
    • ouid 4y ago
      Right, and the parent comment is asserting that that is worse in every way. Which it is.
    • adgjlsfhk1 4y ago
      That works great except for the fact that 99% of crypto trades occur through exchanges which just put you back to the worst of both worlds.
      • denkmoon 4y ago
        If 99% of users stuck their fork in their eyeball, it wouldn't mean that a Fork is a bad design or a bad implement, it would mean that the users are using it wrong. FWIW, in my own usage of crypto, the lack of central authority is exactly why it is used. I don't really care that other people are just hodl-ing their funny money in someone else's wallet. Crypto, outside of an exchange, means I can send money to anyone I want, and no other entity can prevent that.
• strofcon 4y ago
  Anyone notice how the author goes to great lengths to 'bold' the claims in the original letter that talk about how worthless the technology is - and then fails entirely to address those points? Letter: "Crypo rests on tech that is useless." Blogger: "I disagree, I think there are some fascinating things to be done with blockchain tech! Just... don't expect me to share them. You should DYOR." sigh
  • igorkraw 4y ago
    Yeah, this is the classic playbook of hype vendors. The bigger the claim, the less specific, the better, because specifics can be settled one way or another.
  • jk7tarYZAQNpTQa 4y ago
    IMHO Matthew Green often makes bold yet unsubstantiated claims. He also creates and promotes FUD. He may be technically good, but I don't trust his personal opinion, not even on subjects he presumably knows very well.
• top_post 4y ago
  > "and I’m currently working on a startup that is trying to add regulatory compliance capabilities to public blockchains." (big sigh)
• npad 4y ago
  I was a crypto skeptic for many years. If you look at crypto purely from an engineering lens, you'll always find it wanting. What I didn't understand was that crypto is as much of an economic and political project, as it is an engineering project. If you think decentralisation and trustlessness are valuable, you should think crypto is important. If you don't care for decentralisation then being negative on crypto is a consistent position.
  • dfee 4y ago
    Replace “crypto” with “GPL” and the comment still makes sense. And, at the same time, still makes no sense.
    • danuker 4y ago
      The point of the comment is: governments have abused their position of power, by bailing out irresponsible banks, by giving them an oligopoly in the first place, and by doing all this through spending your savings through inflation. Therefore, an un-debaseable, trustless and liquid asset is crucial in making the powers-that-be accountable for their actions.
  • TapWaterBandit 4y ago
    Exactly, if you have complete faith and trust in conventional FIAT currencies and the systems they use to transact the use cases for crypto also seem far less compelling. As an example, the appeal of deflationary Bitcoin is much more salient to a citizen of Argentina than to a citizen of the USA (although recent inflation might make the appeal more obvious). Or on the even more extreme end, the citizen of Zimbabwe would much rather have decentralised solid crypto of one sort or another than their local currency.
    • lottin 4y ago
      No one has complete faith in anything. The institutional system in liberal democracies is such that no single institution has all the power, precisely because we don't completely trust the government. The answer to dysfunctional governments is not get rid of the government. This is just dumb. We need well-functioning governments to enforce human rights, and law and order.
• undoware 4y ago
  Most of Green's article goes through, except for the answer to the 'climate change' objection (Objection 1). Which is, of course, the most important, and without it, the article as a whole also fails to convince. The problem is in this passage (mine the emphasis): > But the question we should be asking is not whether to be angry about the power consumption of proof-of-work mining. We should be trying to figure out the right path out of this mess. And more concretely, whether there’s a path forward which is more likely to produce *a good outcome* than what is already happening in the industry — namely, that projects are rapidly deploying cleaner technologies to replace proof-of-work. 1. What is a "good outcome?" A good outcome for whom? A great outcome for most species, and most h.sapiens, would be an outright ban, because of the risk spread. Think actuarially: There is always the possibility the crypto industry trends cleaner, but legacy chains will be around for yonks, and bluechip crypto is unlikely to ever move off PoW. This means that, yes, while there is a possibility the industry might trend clean, this is an emormously polite way of saying that the downside risk is both severe and likely. Put another way: if you were selling planet insurance, and you found out they had a lot of PoW crypto going on but were thinking about maybe one day kicking the habit, you'd probably either charge them a fortune or tell them to take a hike, right? Think actuarially. There is also a suggestion that banning mining (or crypto transactions) might just move the action to other jurisdictions. This suggestion seems strained: for while a coordinated international treaty or ban might make time to confect, it's certainly not impossible. Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property. A ban on crypto mining would likely be even easier to implement and spread, as most nation-states correctly view crypto as a threat to their command&control. I mean, look at Ecuador. Finally, banning crypto would also be something nation-states could take back to their populations as proof of progress on climate change. And they'd even be right. As harsh as it is for a supporter of crypto (and former industry wonk and former whole-coiner) to say this, I'm sincerely beginning to think that the lasting value of this whole Blockchain Thing has been the thought it has provoked. I, for one, would never have had to think so deeply about the nature of value and currency. But you know what? These days, I stick to fiat.
  • yellowapple 4y ago
    > What is a "good outcome?" A good outcome for whom? A great outcome for most species, and most h.sapiens, would be an outright ban, because of the risk spread. This only logically follows if literally all cryptocurrencies are proof-of-work (let alone proof-of-work using a hashing algorithm as energy-intensive as SHA256). This is patently false, and therefore the assertion that an outright ban on the very concept of a cryptocurrency is somehow a net benefit to global society requires more of a supporting argument than "Bitcoin exists and is currently dominant". By your metric, banning only proof-of-work cryptocurrencies would be more than sufficient, assuming that such a ban could be enforced... > Powerful nations might, say, weave a crypto-ban requirement into multilateral trade agreements, like we already do for intellectual property. Right, and that totally eliminated (or hell, at least even significantly curtailed) copyright infringement in those jurisdictions, right? If you sincerely believe that, then I've got an NFT of Ecuador to sell you. The cat's out of Pandora's box. You can't "uninvent" peer-to-peer networking, and you can't "uninvent" decentralized ledgers. Nation-states can impose whatever bans they want; unless they're willing to pull a PRC or DPRK and start committing rampant privacy violations for censorship reasons, those bans are toothless.
• olalonde 4y ago
  Great article but let's get real, a great deal of the cryptocurrency criticism is rationalization. HN recently revealed the true motivation behind much of it[0]: > It's less that I'm glad the market is crashing, and more that I'm glad that the insufferable crypto bros are finally getting a punch to the mouth. Seriously, these people are the worst. Your average "crypto investor" has no skills, no mathematical foundations, nothing. Except for pure stupid luck, and the ability to spew inane crypto babble 24/7. And yes, they think they are much smarter than you, because they achieved better financial results than you did while only doing 1/1000 of the work to get there. I truly hate the fact that these people are so rich. It makes me want to move to Alaska and just try to ignore society for the rest of my days. > This came off as pretty bitter. I apologize, but I am bitter, and I'm having a shit couple weeks. [0] https://news.ycombinator.com/item?id=31356857 https://news.ycombinator.com/item?id=31356857
  • puranjay 4y ago
    I'm in this rationalization camp since I actually did make insane returns from cryptocurrency. Even then, I can't bring myself to defend this space because of the sheer a) amount of scams, and b) lack of utility. The scams wouldn't even be a problem - every fledgling platform has them - but the fact that the crypto community embraces scams and even encourages them. Scammers can rug a project for millions and turn around and launch another project within a week and everyone will still buy it because of greed. And this is the crypto dilemma: the crypto community has utterly failed at self-regulation. Ergo, it has to be regulated by the government. However, a cryptocurrency that's beholden to government rules is antithetical to the core crypto ideas of self-ownership, privacy, and freedom.
    • olalonde 4y ago
      There are plenty of existing laws for dealing with scammers and fraudsters, why not use them? Also, are victims really victims when they knowingly buy into scams "because of greed"? At the very least, they don't seem to be the ones calling for a cryptocurrency ban. I disagree that there is a monolithic "crypto community" that encourages scams. For example, a great deal of the Bitcoin community is fervently anti altcoin and many even consider Ethereum as a "shitcoin". Regarding utility, everyone is entitled to their opinion. I disagree. There was a time in my life when I was "unbanked" and Bitcoin was the only way I could transact online. In the end, utility is subjective and it is not the government's job to decide whether something has utility or not.
• 2442267934sv 4y ago
  Based on these comments I’m surprised that most of this user base is so crypto illiterate. Algorand or even Dash solves 99% of the problems you claim crypto has. Everyone savvy in the space knows btc and eth were always far from the crypto ideal, but they have large economic moat going for them. Crypto is going to change the world for good in a big way. Most of our modern problems stem from economic and political inefficiencies. Crypto can solve both.
  • lola-hart 4y ago
    And I am surprised there are still so many illiterates who believe "blockchain technology" is in any way useful. Or indeed anything new.
    • 2442267934sv 4y ago
      And AI can get the senior discount at rite-aid. You don’t have an argument
• egeozcan 4y ago
  I really don't want to be a downer but all I read in pro cryptocurrency posts are: It's still new! It needs time! You need to follow the latest developments! It has a lot of potential! It's time already that someone shows some of that potential and it better not be something like NFTs!
  • invasivemullet 4y ago
    [dead]
    • shakes_mcjunkie 4y ago
      Hilariously sad to see this, where crypto has gone from an idea of economic freedom to economic handcuffs. Imagine the even more nightmarish world where a person on welfare has their entire economic life controlled by a completely faceless, heartless algorithm.
      • AlexandrB 4y ago
        Despite the rhetoric, most of crypto subtly pushes for handcuffs of some kind. Consider how during the NFT craze some crypto proponents were claiming that, in the future, browsers will enforce NFT ownership so you can't copy/paste their apes. A lot of crypto seems to be about taking resources that are abundant and making them scarce. This even bleeds over into the real world, where crypto helped keep graphics cards a scarce commodity for years now. Crypto seems like a financial industry wet dream that pretends it exists to help the little guy.
      • invasivemullet 4y ago
        I understand your point from a politically liberal perspective. However, in a social market system, earmarked funds and appropriated money is already flowing through the financial system, e.g., agricultural EU funding or even donations: not using them for the assigned purpose may be considered fraud, which can be legally punishable. So some parts of society seem to have agreed that under certain circumstances using money not for the assigned purpose is not desirable. And programmable money could support that.
• colordrops 4y ago
  I appreciate the article but it's still disappointing to run into a typical misconception about Bitcoin from someone claiming to make a technical defense of cryptocurrency. He states that Bitcoin is now not so decentralized, presumably because of the concentration of mining power. This is a pretty fundamental misunderstanding of what decentralization means with regards to proof of work. What it means is that there is no central authority that can reverse or change transactions, add taxes, only operate from 9 to 5 on weekdays, etc. The protocol defines the behavior, not a centralized org, and it is perfectly decentralized. Anyone can add a mining node, because the protocol itself is decentralized. Having a smaller group of mining pools doesn't change this core characteristic of PoW blockchains.
  • jcbrand 4y ago
    I would be interested in seeing a similar breakdown of stakers and staking pools for the large PoS chains.
• hooby 4y ago
  The article basically says that crypto currency currently is a huge scammy mess with lots of unsolved problems - BUT those problems are solvable in theory. It then spends most of it's paragraphs explaining what some of those solutions could look like, before finally admitting that even with those problems solved, crypto currency might not actually improve on any of the problems that existing non-crypto payment systems have. Am I missing something?
• Termitiono 4y ago
  Good that he talks about the climate. Independent of this: "We should be trying to figure out the right path out of this mess. " For me I'm fine on thinking about how to solve the climate crisis before I will spend energy on solving crypto issues but that's something every one has to decide for themselves. Fixing climate change will be more beneficial for everyone who has kids and/or likes his/her family members kids or kids from friends. Which I do. I think overall people would prefer less energy costs, more food and more water and less extreme weather before crypto but that's just my guess. But at least on hn I'm reading more about crypto than that.
• zoigdev 4y ago
  I did not see any real pro crypto argument in this text. Nothing is really proven in practice and everything is in ideas. Meanwhile scammers are taking money from enthusiasts and existing blockchains are burning up a huge amount of energy.
  • once_inc 4y ago
    I defense of those existing blockchains: the annual worldwide energy usage of blockchain technology is roughly equal to the annual US energy waste from machines plugged in while in standby mode. It is also significantly lower than the annual worldwide usage of Christmas lights, and wash dryers.
    • bromuro 4y ago
      https://www.bbc.com/news/technology-56012952 https://www.bbc.com/news/technology-56012952 “Bitcoin consumes 'more electricity than Argentina'”
      • once_inc 4y ago
        "Christmas lights consume more electricity than Argentina." "Wash dryers consume more electricity than Argentina." "Steel foundries consume more electricity than Argentina." What is the point? Comparing global electricity usage of a single sector and comparing it to the usage of a whole country is meaningless.
        • headsupernova 4y ago
          Those things produce joy, dry clothes, and steel. Crypto produces... scams? We're facing climate collapse and need to choose what we burn electricity on very very wisely.
          • NoGravitas 4y ago
            Honestly, I'd be in favor of banning Christmas lights.
• cinnamonaed 4y ago
  It's always interesting to see opinions about crypto currencies by people that actually have no clue where it is about. Just wait until a few years from now when cash money will be phased out and replaced by CBDC's. That's when suddenly all those critics will wake up in horror and realize that money as we know it ceases to exist. What money is CBDC's than? Well, it's credits, social credits to be more precise, controlled by smart contracts, controlled by governments. So with these government controlled smart contracts in place, how are you going to give your kid a 1000 bucks? If the government only allows you to give a maximum of 100, than that 100 limit will be programmed into the smart contract and your 1000 bucks transfer will be rejected. Or imagine you want to go a second time on holiday in a year. The smart contract might be programmed to only allow you 1 holiday a year due to carbon footprint, now you cannot book your flight. This is just the tip of the iceberg, when you just take a little time to think about all the ramifications, you should get worried. They are even planning to control how and on what you can spend the money you earn, it's written in publications, and no it's not a conspiracy.. The total control of humanity that CBDC's will bring is a horror story. It's comparable to the Chinese Social Credit System, but then on steroids. Much of the smart contracts will be run by AI. So, what are you going to do when for whatever flaw in the system or whatever reason your credits are blocked? You don't own money, have no wallet, you might not even be able to buy a piece of bread, whatever you credit score was before. That's what's in store for you crypto currency critics. So please, do your due diligence and think twice before criticizing crypto currencies.
  • raverbashing 4y ago
    I like this. It's quaint in how they mix and match different dystopias without basis in reality except for what their cryptobros came up with (they can't even tell if 561 is prime or not) "Smart contracts" okay, the cryptobros can't even make smart contracts for bored monkey pictures without shooting themselves in the foot 10 times, why do you think a government will suddenly need one of those to do anything? Why do you think the government needs an immutable ledger powered by inneficient computations to keep track of transactions when current DBs work just fine? The cryptobros can't even make lightning scale to the size of a small ecommerce site and want us to believe that somehow that's the future? But to be fair crypto has its uses: speculation and separating fools from their money
• my80thaccount 4y ago
• SilverBirch 4y ago
  I think an interesting feature of defences of cryptocurencies is that they are similar in their composition as a block chain. In a block chain you have a cryptographically secure summary of the previous block in your current block - but you don't actually know what's in that previous block. Similarly in the arguments defending cryptocurrencies at the top of the article you have the description of the advantages of cryptocurrencies, but the later blocks of text hold no real understanding of what the previous blocks of text meant. So yes, blockchains are incredible because they solve "trust". No, it's not a problem that we can't reverse transactions because we can just have trusted intermediaries. Yes, Blockchains inherently get their robustness from an incredibly wasteful algorithm. No it's not a problem they're inefficient because we're actually just going to do everything off-chain. No, it's not a contradiction for my defence of cryptocurrencies to advocate for not using them. Ok, so I've been a bit snarky here, but the core of what I want to say is this: It is very difficult to read about the compromises made to achieve practical uses of crypto and still have the view that there's any of the original value proposition left. I think the best cryptocurrency defence is just "We've got a lot of smart people trying new things and maybe something of value will end up being created". That's about as compelling as you can get.
  • danuker 4y ago
    > and still have the view that there's any of the original value proposition left. While not usable as currency, cryptocurrency is still an asset crucial for holding government accountable for its spending. Government can dilute fiat currency, but not Bitcoin for instance.
    • SilverBirch 4y ago
      I think what we've seen in the last 2 years is that stimulus money flooded into the market, it inflated asset prices massively, and now with rates going up those bubbles are bursting, and crypto has absolutely been one of the bubbles. That doesn't hold the government to account, it let's crypto holders be the ones whose wealth disappears in the crash.
• LatteLazy 4y ago
  I find people's response to crypto really odd. It's either the messiah or the ultimate evil. There seems to be no in between in people's opinions...
  • danuker 4y ago
    I hold an in-between opinion. I believe cryptocurrency is one asset (of multiple ones including gold) that can not be debased by the government, and as such forces the government to be financially accountable (I include central banks under "government"). I also believe lots of them offer a wasteful amount of security - for instance, Bitcoin secures almost $1.2M per hour against double-spending: https://www.crypto51.app/ https://www.crypto51.app/ I also think Bitcoin's inflation should be curbed. Only specialized mining operations benefit from the inflationary mining subsidy. Once inflation is reduced, miners will be limited to spending from transaction fees, not from the future.
• hiq 4y ago
  To rephrase what has already been pointed out in other comments: this post focuses on 1) drawbacks of cryptocurrencies as solvable problems that could disappear thanks to X and Y, instead of what 2) essential benefits they supposedly (could) offer. 1) is much easier to address (at least in vague and aspirational terms) but rather uninteresting in the absence of clear examples of 2).
  • 676234e117 4y ago
    The article hints at some of these at the end of the article, but here's a few things maybe: - the option for non-custodial and semi-custodial ownership of things like digital assets, from currency to domain names to other types of online property. most of our digital assets today are custodial, owned by companies seeking to gain profit and create moats. maybe some users would like another option, despite the additional risk of having to maintain their own private keys. - fast settlement times for worldwide payments that do not require routing through a centralized intermediary that will skim a significant percentage off the top of each trade. fees paid in a PoS system can be redistributed to all participants in the network through burning + staking and delegation, which is a very different way of handling payment processor fees than what we have now - a network of financial applications and systems that is permissionless, so that anybody can fork an existing tool or deploy their own tool without going through regulatory hurdles and roadblocks based on an archaic tightly permissioned boys-club financial system - smart contract functionality like a 0% fee crowdfund contract that can support hundreds of thousands of participants, settle instantly, and even provide shares as tokens back to donors in case some future rewards should be distributed back to early investors - generally better payment systems that use new cryptographic primitives rather than pencil signatures on paper, insecure card numbers and 4-digit PINs, constant privacy invasive systems
• jmull 4y ago
  > In fact, I think there are some pretty exciting things happening in the field, even if most of them are further away from reality than their boosters would admit. Moreover, many of crypto’s technical problems are also amenable to some really exciting technical solutions, many of which are already here or on their way to deployment. Show me.
• rufusroflpunch 4y ago
  Disappointing article. Bitcoin IS the innovation. Its energy use will continue to grow for a while, but probably not by as much as alarmists think. In return, you get digital property that can't be debased, corroded, eroded, confiscated or corrupted. Not to mention it's fungible, transportable, custodial, so it can be used as money. It's also completely trustless. You don't need anyone's permission to send value to anyone else. Other cryptocurrencies are experiments in changing Bitcoin in ways that: 1) Are not enough of an improvement to break Bitcoin's network effects (Monero, Litecoin, etc). 2) Change the consensus rules so much that it ruins the incentives and wildly increases complexity and attack space (Proof of Stake blockchains). We haven't even come close to unlocking the value of the Bitcoin innovation. Thankfully, short-sighted articles like this won't be enough to stop it.
• deleted 4y ago
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• javert 4y ago
  This article repeats a common misunderstanding of how bitcoin works. Bitcoin's decentralization does not come from miners. It comes from the fact that users will not recognize blocks that do not follow the protocol rules, as being part of the blockchain. As a consequence, market participants will not pay as much for "bitcoins" that do not come from valid blocks. The fundamental service miners provide is that proof of work is used as a "tiebreak" so that bitcoin users can determine the "true" chain among all the chains that follow all the protocol rules. Miners really are just dumb utilities. A miner staying within the rules of the protocol can do two things that are negative. First, a denial of service attack by mining empty blocks or censoring transactions. Second, executing a "double spend" if he has more than 50% of the hash capacity. Those are serious considerations. But we cannot claim that bitcoin's decentralization is reducible to those two things. The current allocation of hash power among miners is actually far more distributed than what is really needed for bitcoin. Implicit in all the above is, miners do not "vote." That can be a helpful analogy, but it shouldn't be taken too far.
• ilaksh 4y ago
  The whole reason it is so important to be able to reverse digital payments now is because of their incredibly insecure and inferior design compared to cryptocurrency payments. That's the most obvious reason to move to cryptocurrency. Amazing that people don't see that. With crypto, I authorize a payment with a secure signature without revealing my credentials. With digital payments like credit cards, I have to give you my credentials and just hope you are honest. In the context of cryptocurrency this is laughably bad.
• Irongirl1 4y ago
  Finally and Thank Goodness. I have been so depressed lately listening to all the "crypto-haters" bash something "they don't see a need for" that we actually need very desperately that it was really messing with my head. Of course, you don't see the need...you either aren't actually looking at the pain and high costs those on the outside are forced to endure or you just don't care. Finally someone in an actual position to know has written a piece that isn't hampered by their bias. He doesn't run a FinServices company for oldsters or pretend that BTC is worthless while being a part of a group of companies using XRP for years. Thank You, Thank You, Thank You
• adderx 4y ago
  Jurat.io is a startup that has solved the transaction irreversibility problem without introducing trusted intermediaries. Instead their process follows court rulings about digital assets in particular blockchain accounts. In a sense the courts are occupying a position of authority but it’s the same authority that courts have over all property, digital and traditional.