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Cryptocurrencies Have Broken Almost All of Their Major Promises

132 points by rukshn 4y ago

once_inc 4y ago
Color me sceptical of the in depth knowledge of this author, if he insists on writing "BitCoin" which isn't the way the entire industry writes it. This leads me to believe that the author isn't well-versed enough in the industry to be able to make claims such as these.
- JellyYelly 4y ago
  Surely if you think the author isn't well versed enough in the industry you can explain why from the content they've written, rather than nitpicking on the capitalisation of a word. This just seems overly dismissive.
  - deleted 4y ago
    [deleted]
  - adastra22 4y ago
    I've been involved in bitcoin since 2010. (1) Not once have I ever encountered someone who knew what they were talking about and yet spelled it BitCoin. (2) Every time I've encountered "BitCoin" the author had a truly dismal understanding of the bitcoin protocol or incentive structure. Shibboleths are annoying, but they do serve as pretty accurate heuristics for assessing someone's familiarity with a domain, as in this particular case.
    - matsemann 4y ago
      The author lays out some pretty straight forward points, though. The fact that no one bothers to rebut them but instead focus on OPs credentials is quite telling of the typical crypto-bro-hype that dismisses all criticisms...
      - adastra22 4y ago
        Every single one of his points are against strawmwn arguments. The involved botcoiners I know talk about fixed supply, programmable money being inherently volatile and carry the extreme added risk of self-custody. There’s nothing new here.
    - randomhodler84 4y ago
      This is also my experience. Concur.
  - once_inc 4y ago
    please see my direct response to the original author.
- ggm 4y ago
  Isn't that almost definitionally ad hom? Maybe it's the one allowed form: Show me your competency to form an opinion. But that said, it feels ad hommy. I'm a crypto currency skeptic, I made $600 for $200 put in 5 years ago, it felt like gambling and I have no doubt it's hype and all my fellow CS peers seem to agree, as do most economists. It's not capable of doing what most people claim and also be the stonks vehicle most people in practice want, and the fundamentals under contract in code are pretty awful: formal verification won't fix the problem. Merkle trees and public signed ledger on the other hand, and trusted third parties and PKI are pretty rock solid. Do them, they're good.
- rukshn 4y ago
  OP here - True that I'm not a cryptocurrency expert. I'm just writing some observations that I've made after following cryptocurrencies for a while. Do everyone has to be an expert to voice their observations and opinions? I'm not an expert in anything.
  - once_inc 4y ago
    No, you don't have to be an expert to voice observations, but my point is that you have probably not investigated Bitcoin long enough if you write BitCoin to be able to see the nuances in most of the points you've made. An example: The comparison between the two charts of Bitcoin and Apple stocks looks similar at first glance, but if you exclude the last week, most of that similarity is gone. Yes, Bitcoin is being invested/speculated with in mostly the same way that tech stocks are getting invested/speculated with, but that doesn't prove inflation resistance; that's a long-term trend, not a short-term trend. Your points on stablecoins is fine; I agree that those networks tend to overpromise and underdeliver. Regarding regulation: I don't see the direct relevance, because most cryptocurrency projects don't explicitly (or even implicitly) promise to be/remain unregulated. Anonymity isn't a thing on a public blockchain, and never was. Your point on smart contracts is broadly correct, but I'd like to point out that most contracts were exploited because either the security was flawed (by human action mostly), the contract was poorly constructed and participants didn't care to actually read and understand it (also human action, though I do admit that most people on Earth won't ever (be able to) read a smart contract), or because of malicious actions of the smart contract creator (also human action). I agree with your final conclusions. We do need a way to prevent rugpulls. The most straightforward way to do this is by realising that most altcoins are insecure or technically flawed in such a way that rugpulls aren't disincentivised. If you built smart contracts on Bitcoin (see: RSK) people will be a lot more hesitant, because Bitcoin is the only blockchain that is both secure, and thus digitally scarce. You can easily spot the difference in perception between Bitcoin and altcoins in the way people describe their interactions and goals for them: Bitcoin is a means to store wealth, altcoins are investment/speculation vehicles generally used to make more money with. You can nitpick about wether those definitions boil down to the same thing, but the perception and philosophy differs.
- mtlmtlmtlmtl 4y ago
  Colour me sceptical of the in depth knowledge of this poster, since he insists on making nitpicks about orthography, without providing any substantive comments of his own. The leads me to believe that the poster isn't well-versed enough in the article to be able to make comments such as these.
  - once_inc 4y ago
    please see my response to the original author for my in-depth substantive comments.
highwaylights 4y ago
The assertions here are far from what I’d point at first with regards to broken promises. The article also implicitly backs up some claims that are just not true. The two biggest issues being that the market is heavy centralised and has unlimited supply, contrary to claims by holders on twitter. It’s amazing how many people still believe that only 21 million Bitcoins will ever exist, even in 2022, contrary to what the Bitcoin core team has said multiple times (that inflation will be needed for the network to function). Furthermore, there is already an infinite supply of alternative tokens whenever any of them spike in value, as has been shown in multiple cycles now. The market favours going to alternative tokens that have “moon” potential, making the forward supply also infinite, and thereby rendering the entire space worthless. In short the entire industry is an encrypted linked list with some hashes, recycled ideas that have been done better in the past (De-Fi), and the entire world is crazy and stupid.
bowsamic 4y ago
Regarding algorithmic stablecoins, Vitalik Buterin (Ethereum founder) wrote a great and easy to read blog post about why Terra failed and why a coin that continually beats the economy also isn't possible https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html
- tasuki 4y ago
  Compared to the post we're commenting on, Vitalik's article is substantive and well thought out.
  - syzygyhack 4y ago
    Yeah, that's because Vitalik writes his content in good faith.
Hellbanevil 4y ago
All I know is I'm buying Bitcoin if it gets below $1000. I made the mistake of not hooking up my rigs because I was afraid of the cost of electricity. Yes--I see it going below $1000.
- wruza 4y ago
  Why this specific number?
  - chrischen 4y ago
    It's nice and round.
  - Bost 4y ago
    It must be hard math, soft science and such. Definitely!
  - mschuster91 4y ago
    Cryptocurrencies will IMO always have some sort of residual value simply because of their usability for illicit activities. The specific value is debatable, but I'd guess a "round" number will be where psychological effects will naturally converge towards.
    - wruza 4y ago
      I don’t think these activities need a specific value, they can pay for a hedged position or just be fine with funding/withdrawal slippage tax (provided that exchanges are still functional). Also are you sure that psychological effects naturally converge to anything at all on the crypto market or in general? It’s usually strange attractors all the way down rather than a stable point.
Pilottwave 4y ago
I'm tired of the whole crypto discussion, because the articles that get traction are mostly echo chambering what the audience wants to hear; either pro - or against. Meanwhile crypto remains an enabler of a new application paradigm, a decentralized one. We are now in the dotcom crash of crypto. Lots of hype has created a bubble, but from the ashes the phoenix might rise. If you are a tech enthousiast, be happy that lots of research and development in an exiting new space was funded! If you are an investor, be happy that your investor accumen is being put to the test, which projects will flourish?
- highwaylights 4y ago
  False. It does not enable decentralised applications. The internet already did that decades ago. Comparing this to the dotcom crash is disingenuous - people were over-excited in the dotcom bubble because the potential was real and clear, and eventually realised with time. The potential here is deeply debatable and this is already the fourth or fifth such crash. As for the technology, here is a summary of everything novel that’s been built in the space: 1) A mechanism to avoid double-spending by burning obscene amounts of energy to make it prohibitively expensive to forge. 2) A mechanism to avoid double-spending by taking the word of rich guys that all is well. 3) End of list. Everything else already existed, and has been done significantly better in the past (e.g. De-Fi).
  - gjs278 4y ago
  - ilaksh 4y ago
    That's a gross mis-characterization of proof of stake. Also, take a look at Algorand's pure proof of stake.
theaeolist 4y ago
> For example, in Sri Lanka, there is no way for someone to accept payments or send money through PayPal or Stripe. However, people will be able to send money through the blockchain and bypass these restrictions if more people begin to trust crypto. If Sri Lanka blocks PayPal and Stripe are you sure they will not block commercial entities from converting between rupees and crypto-assets? Individual and small scale operators might still do it, flying under the radar, but that is not a scalable proposition.
- raverbashing 4y ago
  Obviously. A lot of crypto hucksters went into "firehose of falsehoods" mode some time ago already
  - once_inc 4y ago
    [citation needed]
- scoopertrooper 4y ago
  I think the eventual dream is that people will exchange goods and services in crypto and bypass the necessary step of currency conversion.
  - hajhatten 4y ago
    It's already started in developing countries https://twitter.com/HODLneverSODL/status/1518134911244320769 https://twitter.com/HODLneverSODL/status/1518134911244320769
    - scoopertrooper 4y ago
      Not sure how I feel about Twitter user HODLneverSODL as a source.
  - netsharc 4y ago
    There's a blog post I read once which title was something like "How I accidentally started a bank" about a dev who added a chatbot in his work's internal chat (I don't think Slack was a thing yet back then) that tracked what each colleague owed to each other for lunch, coffee, etc. The bot expanded to track monetary value, and in the end he realized he made a bank, where each colleague had their balance, and transactions can be made. In theory a group of people (expandable to a society, depending on trust) could just use such an app (or even just a WhatsApp chat) to do their business transactions, e.g. in China people probably just keep a balance in their WeChat accounts, and the money just moves between WeChat accounts.
DigiDigiorno 4y ago
The author speaks heavily of stable coins. The first stable coin came a half decade after BTC... Also, the author doesn't know how to spell Bitcoin... Also, wtf are major promises? 1 Bitcoin still equals 1 Bitcoin, and YRMV is the watchword of the space--snake oil salesmen aside. That said, for the space as a whole, plenty of people are pro and plenty are anti. Unfortunately either take gets upvoted these days due to the polarizing emotions.
- lordofgibbons 4y ago
  >1 Bitcoin still equals 1 Bitcoin How can this be true without fungibility? If 1btc equaled 1btc, then why does virgin bitcoin hold a premium over circulated ones? And why do coins seized by law enforcement sell for bellow market value? Clearly, when you have a transparent and traceable ledger, your coin's history will come back to bite you. https://cryptogeek.info/en/blog/what-is-virgin-bitcoin-and-why-is-it-more-expensive https://cryptogeek.info/en/blog/what-is-virgin-bitcoin-and-w... https://bitcoinmagazine.com/markets/us-government-to-auction-bitcoin-worth-over-300000 https://bitcoinmagazine.com/markets/us-government-to-auction...
  - DigiDigiorno 4y ago
    None of these examples include someone trading 1 BTC for X BTC, less, more, or equal to 1 BTC.
    - lordofgibbons 4y ago
      It's right there in the first paragraph: >..some prefer to purchase exactly the “Virgin Bitcoins” that has just been mined and overpay for them from 10% to 30%. >meaning that buyers were able to scoop bitcoin at more than 6% below market price
  - Grimburger 4y ago
    > why does virgin bitcoin hold a premium over circulated ones Because people doing bad things are happy to swap their dirty coins for clean ones that can be spent in the developed world. The people mining the clean coins in Mongolia couldn't care less about the other party selling weed on the internet in Germany and happily take the generous premium. > And why do coins seized by law enforcement sell for bellow market value? Because the onerous requirements to purchase such bitcoin from the government adds cost and simply buying the same amount on market has very little friction or overhead.
deleted 4y ago
[deleted]
lordofgibbons 4y ago
I know talking smack about crypto is in vogue, but the author clearly doesn't know anything about crypto. They really think inflation == price? Inflation is about total supply of something, not cross asset trade price (i.e BTC/USD, or EUR/USD). >This idea that a central entity can’t regulate cryptocurrencies is pushed around by crypto enthusiasts. However, governments are trying to bring regulations into cryptocurrencies and stable coins. Literally nobody claimed they were going to control the actions of governments and force them to not regulate crypto. Where did this idea come from? The claim is that they would be effective despite attempted control by governments (see Monero) There are so many valid criticisms of cryptocurrencies that you could make. But then you'd have to actually learn something about them and that's hard to do if you've already made up your mind on something.
- cmeacham98 4y ago
  Inflation is when the value of your money goes down because prices go up (i.e. the prices "inflate"). If I could buy 1000 loaves of bread with 1BTC last year, but this year I can only buy 900 loaves with that same 1BTC, that's inflation. The most common form of inflation is due to an increasing money supply, but it (as demonstrated with Bitcoin) can have other causes.
  - pishpash 4y ago
    Sure, the things being traded with a money supply can decrease and if the money supply doesn't decrease alongside, it also is inflationary. BTC was used to trade USD, supply of USD is decreasing while BTC is algorithmically not decreasing, so it shows a great deal of inflation in the purchase of USD (and the reverse during the run-up), which unfortunately you cannot prevent unless you instituted capital controls.
  - lordofgibbons 4y ago
    >If I could buy 1000 loaves of bread with 1BTC last year, but this year I can only buy 900 loaves with that same 1BTC, that's inflation. No, that's just an increase in the price of bread. If all the inputs in making the bread were in BTC, then it would be inflation. If all of the inputs that went into making that bread were paid for in USD, and the relative price in BTC went up, that's called "currency risk". That's a completely different thing from inflation.
lekevicius 4y ago
Time and time again, low-substance high-hate articles about cryptocurrencies rise to #1 spot. This is not healthy. At this point I think it would be good to discourage all cryptocurrency discussion: I don’t think we are yet capable of having them.
- jack_riminton 4y ago
  What you describe as 'hate' others see as fairly factual article. Which facts in the article are wrong or you disagree with?
  - rkho 4y ago
    Hi, I'm not the GP but I have a couple thoughts here. I can't speak to the first point because I do not know enough about that statement on inflation to either confirm or refute it. - The author singled out UST as their primary example of "stablecoins are anything but stable". This dismisses every other stablecoin out there which has not had issues, USDC being the main one I'm thinking of. Were they to make the claim that "algorithmic stablecoins are not stable" I would 100% agree with them, especially considering what may happen with USDD in the near future. They also bring up Tether in this section, which as far as I am aware was not at risk of being insolvent at the time. I do not like Tether. I find Patio11's take on Tether to be convincing enough and I would never consciously choose to hold any Tether. But to claim that Tether was close to collapsing a few weeks ago is, using Hanlon's Razor, a minsunderstanding of what happened during that time. There was fear that Tether would lose its peg, it lost its peg on exchanges for a few hours, and the company which issues Tether continued to process cashouts honoring the peg. If Tether Limited were to begin putting obstacles in the way of withdrawals, I would be incredibly worried. As of this time, it has not happend. And because it has not happened, this section was not factual. - The author stated that the claim of "no one can regulate cryptocurrencies" has been broken, but presented one example of mining being banned in one country and intended (but not enacted) legislation in another. This does not present enough evidence in my opinion to form a valid statement. - The author makes several claims about the presentation of smart contracts, and refrences a category of protocols and projects which had fatal flaws in the coding of their contracts. I agree that poorly written contracts and/or overlooked bugs have caused a lot of financial damage. But this point is made with the implication that all code should be perfect and flawless is a very odd approach to take. To be clear, I do expect better from the engineering efforts that come out of these DeFi protocols which get compromised. However, there was always going to be someone writing the code for the smart contracts being deployed and that means that bugs were always going to happen. Perhaps if there was more rigorous regulation in this space we will have protocols in the future staffed by hundreds if not thousands of individuals all working to ensure regulatory complicance first, just like big banks. But even then, I would never expect them to deploy code with zero bugs. I can't speak to the intended definition of the term "smart contract" nor the author's suggestion that the implication of having the word "contract" in the term would betray trust in users, that's just not a can of worms I'd like to try my hand at.
Kivutar 4y ago
We never implied that smart contracts were legally binding. They are just code, code can by buggy.
- EdwardDiego 4y ago
  The word "contract" implies that. Also "code is law" etc. etc.
EnKopVand 4y ago
Decentralised trust will likely never work because trust relies on consequences for when it’s broken. I think the author simultaneously gets and misses this with this article. The Sri Lanka example is really a perfect example of what happens when the consequences in a monetary system stop being enforced and how it drives people to lose trust in that system. You could maybe build a cryptocurrency with enough regulation and enough force of consequences that you could replace other financial systems, but at that point it would simply be a more globalised version of our current banking system. I think trust is easier understood with the “smart” contracts in the form of how we deal with landownership around the world. In countries with stable low-corruption governments you don’t need “smart” contracts because you can trust the system to uphold your rights, but, in countries with a high level of instability or corruption you can’t use your “smart” contract because nobody is going to enforce your right.
sammy2244 4y ago
prvit 4y ago
> USDT came to a near collapsing a few weeks ago The author has no evidence that this is true. USDT temporarily trading under $1 during extreme market conditions does not in any way suggest that Tether ever came near to stopping 1:1 redemptions.
- traveler01 4y ago
  According to Tether, USDT was never close to collapsing. Even USDD which depeged a bit still holding strong at 0,97$. Considering how unstable the market is I find that pretty good.
  - prvit 4y ago
    I wouldn’t place much value on what Tether has to say. However, market prices can be irrational and will not tell you if it’s close to collapsing or not. It’s in fact likely that Tether printed huge amounts of money by buying up large amounts of USDT at <$1
    - traveler01 4y ago
      > I wouldn’t place much value on what Tether has to say. However, market prices can be irrational and will not tell you if it’s close to collapsing or not. I don't think neither USDT or USDC are risking collapse. I'd be more worried with the state of global economy...
- rvz 4y ago
  Exactly. And USDT is not indicative of all stablecoins. For instance for fiat-backed stablecoins, USDC is still doing better than USDT in maintaining its peg and being more transparent than Tether was. But both did not have a full depegging like what happened to UST which is an algorithmic stablecoin. Thus, This post looks like a blanket outrage bait to get the worst out of either side.
mirzap 4y ago
I'm not quite sure where did the author found those "cryptocurrency promises". Bitcoin's promises from the start are straightforward: - P2P money/value transfer, no banks, no intermediary => delivered; - nobody owns Bitcoin network => delivered; - no government with no amount of regulation can stop a transaction from happening => delivered; - everybody can take a part in Bitcoin network, you don't need anyone permission to join (ie. oppressive government) => delivered; All currency systems are based on faith and trust. USD value comes from faith and trust in US government. If that trust is breached or lost, and it will eventually like with every empire before US, USD will collapse. With Bitcoin is similar. As long are there people who believe in those principles and promises I mentioned above, Bitcoin will have value. Bitcoin will live. And I think those are universal principles of freedom, which will outlive most (if not all) currencies and empires existing today.
- sgjohnson 4y ago
  > - nobody owns Bitcoin network => delivered; For a state actor it would actually be quite trivial to mount a >50% attack. If you own >50% of the hashrate, you own the network.
  - pharmakom 4y ago
    I doubt it would work in practice. If an actor repeatedly used ASICs to run a 51% attack, it wouldn’t take long for the community to switch hashing algorithm and render all that hardware useless.
    - pishpash 4y ago
      How is "the community" going to switch when "the community" includes the 51%?
      - pharmakom 4y ago
        Everyone in the community who isn’t the 51% attacker would want to switch because a crypto that is vulnerable in this way has little value.
ilaksh 4y ago
Any shite article is a great excuse for another cryptocurrency hatefest, right guys? The thing that really makes me feel a lack of respect for cryptocurrency haters is the fact that at the core cryptocurrency is an obvious and very important improvement to the way digital payments work. That is leveraging cryptography so that payments don't require giving away credentials (such as the way credit cards do) and to verify the integrity of the ledger.
- EdwardDiego 4y ago
  There's already solutions for this that don't involve a distributed ledger. https://en.wikipedia.org/wiki/Controlled_payment_number https://en.wikipedia.org/wiki/Controlled_payment_number
  - ilaksh 4y ago
    Incredibly inferior bandaid
yieldcrv 4y ago
Has anyone ever noticed how hard it is to criticize crypto? Like, when you do it you wind up defending it from anti-crypto people that were going to agree with you no matter what except they have stupid arguments and you’re like “dude wait no thats not how it works”
temptemptemp111 4y ago
jacknews 4y ago
"People are selling high-risk assets such as cryptocurrencies and stocks in favor of classical assets with little risks attached, such as gold." These trading explanations are nearly always completely made-up and usually BS. Almost everything has been going down lately, including gold and silver, albeit by far less than crypto. People move to cash in these conditions.
- pishpash 4y ago
  Gold is flat YTD and over 1 year. It may yet go down but probably won't unless inflation is checked. It's living up to promises.
  - thawaya3113 4y ago
    And gold doesn’t need ever increasing energy to be spent so it doesn’t vanish into thin air.
  - jacknews 4y ago
    It's also flat over 10 years, and lost in the last couple of month, meanwhile inflation is raging at 8%. I'm far from condoning the crypto trainwreck, but gold does not act as a safe haven in these conditions, it usually tanks along with everything else, just less maybe. And mining gold is probably not much better than mining crypto, and is often produced under similar 'less than open and enlightened' regimes.
    - pishpash 4y ago
      Not really. Gold is up about 10% over 10 years and CPI change over 10 years is about 27%. In the grand scheme of things that's flat. You forgot all the deflationary years in between.
      - jacknews 4y ago
        10% is the best case depending when exactly you measure, but even then it's still actually lost 15% purchasing power. Even against CPI, which must at this point be decisively regarded as fake news. For example, apparently your TV is much better now than 10 years ago, along with your your PC etc, thus you're better off with the same $$, and so in theory inflation is lower by that 'hedonic adjustment'. But let's be real, you still need to buy a TV, and the market no longer offers 2012-era specifications at the same relative price. And the slightly -cheaper or stagnant prices of what is on offer, if we ignore meaningless specification inflation, are a result of everything getting crappier (Eg Ads built into the TV!). Meanwhile DJIA and SP500 have almost doubled in 10 years, and almost everything essential; healthcare, tuition, housing, etc, has vastly outpaced 'CPI'.
jzellis 4y ago
There were like a billion ways this all could have been really simple, anonymous digital cash. But y'all had to make it overly complex and y'all had to get greedy and all y'all libertarian fedora vape ass dudes had to inject your absurd capitalist ideologies about currency speculation into it. Saying cryptocurrency isn't a grift is like saying Amway isn't a pyramid scheme because their cleaning products really can clean things. Maybe, but the wrong people got in the door and now the regular people, the non-cypherpunks and non-Galties wanting some way to buy ketamine on their little floating pirate utopia or whatever, have realized that you can't actually use a currency as a currency when even the "stable" ones are about as stable as Ezra Miller with an eight-ball at a karaoke joint. And all of this bullshit has managed to completely derail the tech industry as everybody tries to figure out a way to shoehorn crypto into every other useless idea, the same way they did with "social" for the last decade. Here's an NFT of my balls, go find some actor to pimp it for you at Super Bowl halftime. Between crypto and the various dippy con artists getting miniseries of the week made about them, people are starting to realize that the higher tiers of tech - not the people who, y'know, actually make things people use, but the hustlers and rain-makers who get all the column inches, so to speak - are just absolutely full of people you wouldn't leave in a room without double checking your wallet is still in your pocket and your napkin is still on top of your drink. You can drone on about economic and number theory all day - and a lot of you do - but it doesn't change the fact that everybody thinks this shit is one big Dutch flower market where you can trade black tulips for heroin or piss away your savings on ScroteCoins that some geek in Belarus will inevitably gank outta your virtual deposit box at the exchange, leaving you just as confused as when you started but twice as poor. So,y'know, good job, guys. :-D
5350-uiop-1130 4y ago
I stopped reading these crypto blogs/twitters with anime/pepe emojis. This market is full of grifters, I don't trust anyones intention - and it's difficult to ascertain any conflicts of interest. What happend to the so called leak that was all over HN last week, disappeared into the "ether" - pun intended.
- zekica 4y ago
  If I remember correctly, he said that the release would happen today.
  - Eduard 4y ago
    https://currency.com/telegram-hacker-threatens-bombshell-crypto-revelations https://currency.com/telegram-hacker-threatens-bombshell-cry...
syzygyhack 4y ago
HN upvoting garbage anti-crypto takes, what's new?
RickJWagner 4y ago
I have to admit I don't really understand cryptocurrency. But I've been leery of buying into something that is electronically produced and using it as money. (I know printed paper isn't any better. But people have accepted printed paper for a very long time.) The phenomenal returns given to people who put money into crypto also concerned me. Unlike stock trading, nothing of value was being produced, yet people were reaping huge sums of money from it. My best guess is that government will have to control it before it becomes viable. As long as it's just individuals running the show we'll probably continue to have boom/bust cycles.
trakl 4y ago
Another attempt to convince enthusiasts that they are not there for the money
atc 4y ago

132 points by rukshn 4y ago

Color me sceptical of the in depth knowledge of this author, if he insists on writing "BitCoin" which isn't the way the entire industry writes it. This leads me to believe that the author isn't well-versed enough in the industry to be able to make claims such as these.

JellyYelly 4y ago
Surely if you think the author isn't well versed enough in the industry you can explain why from the content they've written, rather than nitpicking on the capitalisation of a word. This just seems overly dismissive.
- deleted 4y ago
  [deleted]
- adastra22 4y ago
  I've been involved in bitcoin since 2010. (1) Not once have I ever encountered someone who knew what they were talking about and yet spelled it BitCoin. (2) Every time I've encountered "BitCoin" the author had a truly dismal understanding of the bitcoin protocol or incentive structure. Shibboleths are annoying, but they do serve as pretty accurate heuristics for assessing someone's familiarity with a domain, as in this particular case.
  - matsemann 4y ago
    The author lays out some pretty straight forward points, though. The fact that no one bothers to rebut them but instead focus on OPs credentials is quite telling of the typical crypto-bro-hype that dismisses all criticisms...
    - adastra22 4y ago
      Every single one of his points are against strawmwn arguments. The involved botcoiners I know talk about fixed supply, programmable money being inherently volatile and carry the extreme added risk of self-custody. There’s nothing new here.
  - randomhodler84 4y ago
    This is also my experience. Concur.
- once_inc 4y ago
  please see my direct response to the original author.
ggm 4y ago
Isn't that almost definitionally ad hom? Maybe it's the one allowed form: Show me your competency to form an opinion. But that said, it feels ad hommy. I'm a crypto currency skeptic, I made $600 for $200 put in 5 years ago, it felt like gambling and I have no doubt it's hype and all my fellow CS peers seem to agree, as do most economists. It's not capable of doing what most people claim and also be the stonks vehicle most people in practice want, and the fundamentals under contract in code are pretty awful: formal verification won't fix the problem. Merkle trees and public signed ledger on the other hand, and trusted third parties and PKI are pretty rock solid. Do them, they're good.
rukshn 4y ago
OP here - True that I'm not a cryptocurrency expert. I'm just writing some observations that I've made after following cryptocurrencies for a while. Do everyone has to be an expert to voice their observations and opinions? I'm not an expert in anything.
- once_inc 4y ago
  No, you don't have to be an expert to voice observations, but my point is that you have probably not investigated Bitcoin long enough if you write BitCoin to be able to see the nuances in most of the points you've made. An example: The comparison between the two charts of Bitcoin and Apple stocks looks similar at first glance, but if you exclude the last week, most of that similarity is gone. Yes, Bitcoin is being invested/speculated with in mostly the same way that tech stocks are getting invested/speculated with, but that doesn't prove inflation resistance; that's a long-term trend, not a short-term trend. Your points on stablecoins is fine; I agree that those networks tend to overpromise and underdeliver. Regarding regulation: I don't see the direct relevance, because most cryptocurrency projects don't explicitly (or even implicitly) promise to be/remain unregulated. Anonymity isn't a thing on a public blockchain, and never was. Your point on smart contracts is broadly correct, but I'd like to point out that most contracts were exploited because either the security was flawed (by human action mostly), the contract was poorly constructed and participants didn't care to actually read and understand it (also human action, though I do admit that most people on Earth won't ever (be able to) read a smart contract), or because of malicious actions of the smart contract creator (also human action). I agree with your final conclusions. We do need a way to prevent rugpulls. The most straightforward way to do this is by realising that most altcoins are insecure or technically flawed in such a way that rugpulls aren't disincentivised. If you built smart contracts on Bitcoin (see: RSK) people will be a lot more hesitant, because Bitcoin is the only blockchain that is both secure, and thus digitally scarce. You can easily spot the difference in perception between Bitcoin and altcoins in the way people describe their interactions and goals for them: Bitcoin is a means to store wealth, altcoins are investment/speculation vehicles generally used to make more money with. You can nitpick about wether those definitions boil down to the same thing, but the perception and philosophy differs.
mtlmtlmtlmtl 4y ago
Colour me sceptical of the in depth knowledge of this poster, since he insists on making nitpicks about orthography, without providing any substantive comments of his own. The leads me to believe that the poster isn't well-versed enough in the article to be able to make comments such as these.
- once_inc 4y ago
  please see my response to the original author for my in-depth substantive comments.

highwaylights 4y ago

The assertions here are far from what I’d point at first with regards to broken promises. The article also implicitly backs up some claims that are just not true. The two biggest issues being that the market is heavy centralised and has unlimited supply, contrary to claims by holders on twitter. It’s amazing how many people still believe that only 21 million Bitcoins will ever exist, even in 2022, contrary to what the Bitcoin core team has said multiple times (that inflation will be needed for the network to function). Furthermore, there is already an infinite supply of alternative tokens whenever any of them spike in value, as has been shown in multiple cycles now. The market favours going to alternative tokens that have “moon” potential, making the forward supply also infinite, and thereby rendering the entire space worthless. In short the entire industry is an encrypted linked list with some hashes, recycled ideas that have been done better in the past (De-Fi), and the entire world is crazy and stupid.

bowsamic 4y ago

Regarding algorithmic stablecoins, Vitalik Buterin (Ethereum founder) wrote a great and easy to read blog post about why Terra failed and why a coin that continually beats the economy also isn't possible https://vitalik.ca/general/2022/05/25/stable.html https://vitalik.ca/general/2022/05/25/stable.html

tasuki 4y ago
Compared to the post we're commenting on, Vitalik's article is substantive and well thought out.
- syzygyhack 4y ago
  Yeah, that's because Vitalik writes his content in good faith.

Hellbanevil 4y ago

All I know is I'm buying Bitcoin if it gets below $1000. I made the mistake of not hooking up my rigs because I was afraid of the cost of electricity. Yes--I see it going below $1000.

wruza 4y ago
Why this specific number?
- chrischen 4y ago
  It's nice and round.
- Bost 4y ago
  It must be hard math, soft science and such. Definitely!
- mschuster91 4y ago
  Cryptocurrencies will IMO always have some sort of residual value simply because of their usability for illicit activities. The specific value is debatable, but I'd guess a "round" number will be where psychological effects will naturally converge towards.
  - wruza 4y ago
    I don’t think these activities need a specific value, they can pay for a hedged position or just be fine with funding/withdrawal slippage tax (provided that exchanges are still functional). Also are you sure that psychological effects naturally converge to anything at all on the crypto market or in general? It’s usually strange attractors all the way down rather than a stable point.

Pilottwave 4y ago

I'm tired of the whole crypto discussion, because the articles that get traction are mostly echo chambering what the audience wants to hear; either pro - or against. Meanwhile crypto remains an enabler of a new application paradigm, a decentralized one. We are now in the dotcom crash of crypto. Lots of hype has created a bubble, but from the ashes the phoenix might rise. If you are a tech enthousiast, be happy that lots of research and development in an exiting new space was funded! If you are an investor, be happy that your investor accumen is being put to the test, which projects will flourish?

highwaylights 4y ago
False. It does not enable decentralised applications. The internet already did that decades ago. Comparing this to the dotcom crash is disingenuous - people were over-excited in the dotcom bubble because the potential was real and clear, and eventually realised with time. The potential here is deeply debatable and this is already the fourth or fifth such crash. As for the technology, here is a summary of everything novel that’s been built in the space: 1) A mechanism to avoid double-spending by burning obscene amounts of energy to make it prohibitively expensive to forge. 2) A mechanism to avoid double-spending by taking the word of rich guys that all is well. 3) End of list. Everything else already existed, and has been done significantly better in the past (e.g. De-Fi).
- gjs278 4y ago
- ilaksh 4y ago
  That's a gross mis-characterization of proof of stake. Also, take a look at Algorand's pure proof of stake.

theaeolist 4y ago

> For example, in Sri Lanka, there is no way for someone to accept payments or send money through PayPal or Stripe. However, people will be able to send money through the blockchain and bypass these restrictions if more people begin to trust crypto. If Sri Lanka blocks PayPal and Stripe are you sure they will not block commercial entities from converting between rupees and crypto-assets? Individual and small scale operators might still do it, flying under the radar, but that is not a scalable proposition.

raverbashing 4y ago
Obviously. A lot of crypto hucksters went into "firehose of falsehoods" mode some time ago already
- once_inc 4y ago
  [citation needed]
scoopertrooper 4y ago
I think the eventual dream is that people will exchange goods and services in crypto and bypass the necessary step of currency conversion.
- hajhatten 4y ago
  It's already started in developing countries https://twitter.com/HODLneverSODL/status/1518134911244320769 https://twitter.com/HODLneverSODL/status/1518134911244320769
  - scoopertrooper 4y ago
    Not sure how I feel about Twitter user HODLneverSODL as a source.
- netsharc 4y ago
  There's a blog post I read once which title was something like "How I accidentally started a bank" about a dev who added a chatbot in his work's internal chat (I don't think Slack was a thing yet back then) that tracked what each colleague owed to each other for lunch, coffee, etc. The bot expanded to track monetary value, and in the end he realized he made a bank, where each colleague had their balance, and transactions can be made. In theory a group of people (expandable to a society, depending on trust) could just use such an app (or even just a WhatsApp chat) to do their business transactions, e.g. in China people probably just keep a balance in their WeChat accounts, and the money just moves between WeChat accounts.

DigiDigiorno 4y ago

The author speaks heavily of stable coins. The first stable coin came a half decade after BTC... Also, the author doesn't know how to spell Bitcoin... Also, wtf are major promises? 1 Bitcoin still equals 1 Bitcoin, and YRMV is the watchword of the space--snake oil salesmen aside. That said, for the space as a whole, plenty of people are pro and plenty are anti. Unfortunately either take gets upvoted these days due to the polarizing emotions.

lordofgibbons 4y ago
>1 Bitcoin still equals 1 Bitcoin How can this be true without fungibility? If 1btc equaled 1btc, then why does virgin bitcoin hold a premium over circulated ones? And why do coins seized by law enforcement sell for bellow market value? Clearly, when you have a transparent and traceable ledger, your coin's history will come back to bite you. https://cryptogeek.info/en/blog/what-is-virgin-bitcoin-and-why-is-it-more-expensive https://cryptogeek.info/en/blog/what-is-virgin-bitcoin-and-w... https://bitcoinmagazine.com/markets/us-government-to-auction-bitcoin-worth-over-300000 https://bitcoinmagazine.com/markets/us-government-to-auction...
- DigiDigiorno 4y ago
  None of these examples include someone trading 1 BTC for X BTC, less, more, or equal to 1 BTC.
  - lordofgibbons 4y ago
    It's right there in the first paragraph: >..some prefer to purchase exactly the “Virgin Bitcoins” that has just been mined and overpay for them from 10% to 30%. >meaning that buyers were able to scoop bitcoin at more than 6% below market price
- Grimburger 4y ago
  > why does virgin bitcoin hold a premium over circulated ones Because people doing bad things are happy to swap their dirty coins for clean ones that can be spent in the developed world. The people mining the clean coins in Mongolia couldn't care less about the other party selling weed on the internet in Germany and happily take the generous premium. > And why do coins seized by law enforcement sell for bellow market value? Because the onerous requirements to purchase such bitcoin from the government adds cost and simply buying the same amount on market has very little friction or overhead.

deleted 4y ago

[deleted]

lordofgibbons 4y ago

I know talking smack about crypto is in vogue, but the author clearly doesn't know anything about crypto. They really think inflation == price? Inflation is about total supply of something, not cross asset trade price (i.e BTC/USD, or EUR/USD). >This idea that a central entity can’t regulate cryptocurrencies is pushed around by crypto enthusiasts. However, governments are trying to bring regulations into cryptocurrencies and stable coins. Literally nobody claimed they were going to control the actions of governments and force them to not regulate crypto. Where did this idea come from? The claim is that they would be effective despite attempted control by governments (see Monero) There are so many valid criticisms of cryptocurrencies that you could make. But then you'd have to actually learn something about them and that's hard to do if you've already made up your mind on something.

cmeacham98 4y ago
Inflation is when the value of your money goes down because prices go up (i.e. the prices "inflate"). If I could buy 1000 loaves of bread with 1BTC last year, but this year I can only buy 900 loaves with that same 1BTC, that's inflation. The most common form of inflation is due to an increasing money supply, but it (as demonstrated with Bitcoin) can have other causes.
- pishpash 4y ago
  Sure, the things being traded with a money supply can decrease and if the money supply doesn't decrease alongside, it also is inflationary. BTC was used to trade USD, supply of USD is decreasing while BTC is algorithmically not decreasing, so it shows a great deal of inflation in the purchase of USD (and the reverse during the run-up), which unfortunately you cannot prevent unless you instituted capital controls.
- lordofgibbons 4y ago
  >If I could buy 1000 loaves of bread with 1BTC last year, but this year I can only buy 900 loaves with that same 1BTC, that's inflation. No, that's just an increase in the price of bread. If all the inputs in making the bread were in BTC, then it would be inflation. If all of the inputs that went into making that bread were paid for in USD, and the relative price in BTC went up, that's called "currency risk". That's a completely different thing from inflation.

lekevicius 4y ago

Time and time again, low-substance high-hate articles about cryptocurrencies rise to #1 spot. This is not healthy. At this point I think it would be good to discourage all cryptocurrency discussion: I don’t think we are yet capable of having them.

jack_riminton 4y ago
What you describe as 'hate' others see as fairly factual article. Which facts in the article are wrong or you disagree with?
- rkho 4y ago
  Hi, I'm not the GP but I have a couple thoughts here. I can't speak to the first point because I do not know enough about that statement on inflation to either confirm or refute it. - The author singled out UST as their primary example of "stablecoins are anything but stable". This dismisses every other stablecoin out there which has not had issues, USDC being the main one I'm thinking of. Were they to make the claim that "algorithmic stablecoins are not stable" I would 100% agree with them, especially considering what may happen with USDD in the near future. They also bring up Tether in this section, which as far as I am aware was not at risk of being insolvent at the time. I do not like Tether. I find Patio11's take on Tether to be convincing enough and I would never consciously choose to hold any Tether. But to claim that Tether was close to collapsing a few weeks ago is, using Hanlon's Razor, a minsunderstanding of what happened during that time. There was fear that Tether would lose its peg, it lost its peg on exchanges for a few hours, and the company which issues Tether continued to process cashouts honoring the peg. If Tether Limited were to begin putting obstacles in the way of withdrawals, I would be incredibly worried. As of this time, it has not happend. And because it has not happened, this section was not factual. - The author stated that the claim of "no one can regulate cryptocurrencies" has been broken, but presented one example of mining being banned in one country and intended (but not enacted) legislation in another. This does not present enough evidence in my opinion to form a valid statement. - The author makes several claims about the presentation of smart contracts, and refrences a category of protocols and projects which had fatal flaws in the coding of their contracts. I agree that poorly written contracts and/or overlooked bugs have caused a lot of financial damage. But this point is made with the implication that all code should be perfect and flawless is a very odd approach to take. To be clear, I do expect better from the engineering efforts that come out of these DeFi protocols which get compromised. However, there was always going to be someone writing the code for the smart contracts being deployed and that means that bugs were always going to happen. Perhaps if there was more rigorous regulation in this space we will have protocols in the future staffed by hundreds if not thousands of individuals all working to ensure regulatory complicance first, just like big banks. But even then, I would never expect them to deploy code with zero bugs. I can't speak to the intended definition of the term "smart contract" nor the author's suggestion that the implication of having the word "contract" in the term would betray trust in users, that's just not a can of worms I'd like to try my hand at.

Kivutar 4y ago

We never implied that smart contracts were legally binding. They are just code, code can by buggy.

EdwardDiego 4y ago
The word "contract" implies that. Also "code is law" etc. etc.

EnKopVand 4y ago

Decentralised trust will likely never work because trust relies on consequences for when it’s broken. I think the author simultaneously gets and misses this with this article. The Sri Lanka example is really a perfect example of what happens when the consequences in a monetary system stop being enforced and how it drives people to lose trust in that system. You could maybe build a cryptocurrency with enough regulation and enough force of consequences that you could replace other financial systems, but at that point it would simply be a more globalised version of our current banking system. I think trust is easier understood with the “smart” contracts in the form of how we deal with landownership around the world. In countries with stable low-corruption governments you don’t need “smart” contracts because you can trust the system to uphold your rights, but, in countries with a high level of instability or corruption you can’t use your “smart” contract because nobody is going to enforce your right.

sammy2244 4y ago

prvit 4y ago

> USDT came to a near collapsing a few weeks ago The author has no evidence that this is true. USDT temporarily trading under $1 during extreme market conditions does not in any way suggest that Tether ever came near to stopping 1:1 redemptions.

traveler01 4y ago
According to Tether, USDT was never close to collapsing. Even USDD which depeged a bit still holding strong at 0,97$. Considering how unstable the market is I find that pretty good.
- prvit 4y ago
  I wouldn’t place much value on what Tether has to say. However, market prices can be irrational and will not tell you if it’s close to collapsing or not. It’s in fact likely that Tether printed huge amounts of money by buying up large amounts of USDT at <$1
  - traveler01 4y ago
    > I wouldn’t place much value on what Tether has to say. However, market prices can be irrational and will not tell you if it’s close to collapsing or not. I don't think neither USDT or USDC are risking collapse. I'd be more worried with the state of global economy...
rvz 4y ago
Exactly. And USDT is not indicative of all stablecoins. For instance for fiat-backed stablecoins, USDC is still doing better than USDT in maintaining its peg and being more transparent than Tether was. But both did not have a full depegging like what happened to UST which is an algorithmic stablecoin. Thus, This post looks like a blanket outrage bait to get the worst out of either side.

mirzap 4y ago

I'm not quite sure where did the author found those "cryptocurrency promises". Bitcoin's promises from the start are straightforward: - P2P money/value transfer, no banks, no intermediary => delivered; - nobody owns Bitcoin network => delivered; - no government with no amount of regulation can stop a transaction from happening => delivered; - everybody can take a part in Bitcoin network, you don't need anyone permission to join (ie. oppressive government) => delivered; All currency systems are based on faith and trust. USD value comes from faith and trust in US government. If that trust is breached or lost, and it will eventually like with every empire before US, USD will collapse. With Bitcoin is similar. As long are there people who believe in those principles and promises I mentioned above, Bitcoin will have value. Bitcoin will live. And I think those are universal principles of freedom, which will outlive most (if not all) currencies and empires existing today.

sgjohnson 4y ago
> - nobody owns Bitcoin network => delivered; For a state actor it would actually be quite trivial to mount a >50% attack. If you own >50% of the hashrate, you own the network.
- pharmakom 4y ago
  I doubt it would work in practice. If an actor repeatedly used ASICs to run a 51% attack, it wouldn’t take long for the community to switch hashing algorithm and render all that hardware useless.
  - pishpash 4y ago
    How is "the community" going to switch when "the community" includes the 51%?
    - pharmakom 4y ago
      Everyone in the community who isn’t the 51% attacker would want to switch because a crypto that is vulnerable in this way has little value.

ilaksh 4y ago

Any shite article is a great excuse for another cryptocurrency hatefest, right guys? The thing that really makes me feel a lack of respect for cryptocurrency haters is the fact that at the core cryptocurrency is an obvious and very important improvement to the way digital payments work. That is leveraging cryptography so that payments don't require giving away credentials (such as the way credit cards do) and to verify the integrity of the ledger.

EdwardDiego 4y ago
There's already solutions for this that don't involve a distributed ledger. https://en.wikipedia.org/wiki/Controlled_payment_number https://en.wikipedia.org/wiki/Controlled_payment_number
- ilaksh 4y ago
  Incredibly inferior bandaid

yieldcrv 4y ago

Has anyone ever noticed how hard it is to criticize crypto? Like, when you do it you wind up defending it from anti-crypto people that were going to agree with you no matter what except they have stupid arguments and you’re like “dude wait no thats not how it works”

temptemptemp111 4y ago

jacknews 4y ago

"People are selling high-risk assets such as cryptocurrencies and stocks in favor of classical assets with little risks attached, such as gold." These trading explanations are nearly always completely made-up and usually BS. Almost everything has been going down lately, including gold and silver, albeit by far less than crypto. People move to cash in these conditions.

pishpash 4y ago
Gold is flat YTD and over 1 year. It may yet go down but probably won't unless inflation is checked. It's living up to promises.
- thawaya3113 4y ago
  And gold doesn’t need ever increasing energy to be spent so it doesn’t vanish into thin air.
- jacknews 4y ago
  It's also flat over 10 years, and lost in the last couple of month, meanwhile inflation is raging at 8%. I'm far from condoning the crypto trainwreck, but gold does not act as a safe haven in these conditions, it usually tanks along with everything else, just less maybe. And mining gold is probably not much better than mining crypto, and is often produced under similar 'less than open and enlightened' regimes.
  - pishpash 4y ago
    Not really. Gold is up about 10% over 10 years and CPI change over 10 years is about 27%. In the grand scheme of things that's flat. You forgot all the deflationary years in between.
    - jacknews 4y ago
      10% is the best case depending when exactly you measure, but even then it's still actually lost 15% purchasing power. Even against CPI, which must at this point be decisively regarded as fake news. For example, apparently your TV is much better now than 10 years ago, along with your your PC etc, thus you're better off with the same $$, and so in theory inflation is lower by that 'hedonic adjustment'. But let's be real, you still need to buy a TV, and the market no longer offers 2012-era specifications at the same relative price. And the slightly -cheaper or stagnant prices of what is on offer, if we ignore meaningless specification inflation, are a result of everything getting crappier (Eg Ads built into the TV!). Meanwhile DJIA and SP500 have almost doubled in 10 years, and almost everything essential; healthcare, tuition, housing, etc, has vastly outpaced 'CPI'.

jzellis 4y ago

There were like a billion ways this all could have been really simple, anonymous digital cash. But y'all had to make it overly complex and y'all had to get greedy and all y'all libertarian fedora vape ass dudes had to inject your absurd capitalist ideologies about currency speculation into it. Saying cryptocurrency isn't a grift is like saying Amway isn't a pyramid scheme because their cleaning products really can clean things. Maybe, but the wrong people got in the door and now the regular people, the non-cypherpunks and non-Galties wanting some way to buy ketamine on their little floating pirate utopia or whatever, have realized that you can't actually use a currency as a currency when even the "stable" ones are about as stable as Ezra Miller with an eight-ball at a karaoke joint. And all of this bullshit has managed to completely derail the tech industry as everybody tries to figure out a way to shoehorn crypto into every other useless idea, the same way they did with "social" for the last decade. Here's an NFT of my balls, go find some actor to pimp it for you at Super Bowl halftime. Between crypto and the various dippy con artists getting miniseries of the week made about them, people are starting to realize that the higher tiers of tech - not the people who, y'know, actually make things people use, but the hustlers and rain-makers who get all the column inches, so to speak - are just absolutely full of people you wouldn't leave in a room without double checking your wallet is still in your pocket and your napkin is still on top of your drink. You can drone on about economic and number theory all day - and a lot of you do - but it doesn't change the fact that everybody thinks this shit is one big Dutch flower market where you can trade black tulips for heroin or piss away your savings on ScroteCoins that some geek in Belarus will inevitably gank outta your virtual deposit box at the exchange, leaving you just as confused as when you started but twice as poor. So,y'know, good job, guys. :-D

5350-uiop-1130 4y ago

I stopped reading these crypto blogs/twitters with anime/pepe emojis. This market is full of grifters, I don't trust anyones intention - and it's difficult to ascertain any conflicts of interest. What happend to the so called leak that was all over HN last week, disappeared into the "ether" - pun intended.

zekica 4y ago
If I remember correctly, he said that the release would happen today.
- Eduard 4y ago
  https://currency.com/telegram-hacker-threatens-bombshell-crypto-revelations https://currency.com/telegram-hacker-threatens-bombshell-cry...

syzygyhack 4y ago

HN upvoting garbage anti-crypto takes, what's new?

RickJWagner 4y ago

I have to admit I don't really understand cryptocurrency. But I've been leery of buying into something that is electronically produced and using it as money. (I know printed paper isn't any better. But people have accepted printed paper for a very long time.) The phenomenal returns given to people who put money into crypto also concerned me. Unlike stock trading, nothing of value was being produced, yet people were reaping huge sums of money from it. My best guess is that government will have to control it before it becomes viable. As long as it's just individuals running the show we'll probably continue to have boom/bust cycles.

trakl 4y ago

Another attempt to convince enthusiasts that they are not there for the money

atc 4y ago