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Comment by stevebmark | Hacker News Reader

The great irony is that the main interest in cryptocurrency is increasing fiat currency. There's some mildly interesting ideas for cryptocurrency other than a commodity, but none of them have shown any real public interest. There has yet to be a useful ICO and the majority of them are scams. Smart contracts are a hilariously bad idea. NFTs are a gold rush for fiat and memes. If cryptocurrency had any potential as a currency, bitcoin cash would have already won.

Another irony is the fundamentally terrible design of cryptocurrency seems to be why it's a gold rush to increase fiat. Generating random numbers until you find the right one as a means of verifying transactions is almost as a bad idea as a smart contract, and yet! This profound waste and inefficiency is precisely why the fiat price is going up, increasing interest, not at all increasing the desire for use.

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This is a big reason why I think Dogecoin, of all cryptocurrencies, is one of the better candidates for a cryptocurrency that's actually potentially useful as a currency. Since there's no hard cap on the money supply, said supply has at least some chance of scaling with the global economy in the long term, and you won't see nearly as many crazy surges in value.

For being meme money, it seems to do a better job of being actual money than more serious contenders.

> nearly as many crazy surges in value.

This is hard to explain, like explaining air to animals or water to fish. Deflationary currencies aren't surging in value. Fiat currencies are dropping in value.

Your frame of reference is a $ is a fixed unit of measurement, like a cm or gram. This is wrong. $ value is not fixed, and intentionally designed to decrease in value at fixed rate (but in practice does not decrease in value uniformly across all parts of the economy).

What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s.

Credit based inflationary fiat currencies have a lot of really bad properties. But it's very hard to see those effects, because it surrounds us (like air or water for a fish) and is often confused as the measuring stick of value.

If you are still skeptical, maybe another example: Do you think gold is really 100x more valuable now than it was in 1971? Or do you think a change in ratio of $ : gold available is what causes the 'crazy surge in value'.

> Deflationary currencies aren't surging in value. Fiat currencies are dropping in value.

At about this point in 2011, 1 BTC was worth $1. Today 1 BTC is worth about $60k. Are you suggesting that BTC has been mostly consistent in value in that time and that it's the USD which has dropped in value by 60000x in 10 years?

Your reply sound like a straw man, sorry.

Bitcoin is a relatively new asset. What I think he's saying is that some of the price increases are attributable to the loss of value of 1 USD and some to geniune BTC price discovery.

How is my question a strawman? They wrote this:

> What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else.

How can that sentence be read as anything other than saying the majority, or at least the largest and primary cause, of the increase in BTC value is the decrease in value of USD (and presumably other fiat currencies based on the rest of their comment)?

EDIT: For grins, a quick calculation on what 10% (3-10x higher than the official annual inflation numbers over that period) of inflation per year over 10 years does to the USD: $1 (2011) -> $2.60 (2021). That is, a 2.6x change in value over a decade.

BTC has increased in value by 60,000x. Even going with this very high estimate for inflation, we still have about 23,000x change in value to find an explanation for. I'd suggest looking at its deflationary nature.

GP's comment (emphasis added):

> What you see as surges in value of Bitcoin are more impacted by decreases in value of $s than anything else. Yes there are changes in demand to hold BTC vs. $, but that is dwarfed by expectations of future changes in the global supply of credit derived $$$s.

That particular word choice strongly suggests to me that GP sincerely believes that the 10× jump in BTC price is because the USD has (or will shortly) collapsed to well less than a quarter its prior value.

> Deflationary currencies aren't surging in value. Fiat currencies are dropping in value.

My comment has nothing to do with fiat currencies. Look at the gold/BTC or silver/BTC exchange rates. Or the exchange rates between BTC and the overwhelmingly vast majority of goods and services. Bitcoin's buying power has grown much quicker - by several orders of magnitude - than fiat's has decreased.

> Smart contracts are a hilariously bad idea

How exactly?

https://en.wikipedia.org/wiki/The_DAO_(organization) serves as an illustrative example.

> In June 2016, users exploited a vulnerability in The DAO code to enable them to siphon off one-third of The DAO's funds to a subsidiary account. On 20 July 2016 01:20:40 PM +UTC at Block 1920000, the Ethereum community decided to hard-fork the Ethereum blockchain to restore virtually all funds to the original contract.[11] This was controversial, and led to a fork in Ethereum, where the original unforked blockchain was maintained as Ethereum Classic, thus breaking Ethereum into two separate active blockchains, each with its own cryptocurrency.

Is this what you're referring to? The vulnerability has been patched, so I'm not sure what your argument here is. Are you saying we should never use code because code can have flaws?

I'm saying "smart contracts" nearly immediately wound up breaking the "code is law" principle it claimed to be built on. It didn't survive its first big challenge.

I think the more important lesson from the DAO hack was the fork itself, and that by organizing it, Vitalik and friends saved their own wallets (after hilariously asking exchanges to stop trading). If the people holding the reigns can get what they want by applying the right amount of influence, it's not any better than what we already have, and is probably not a great vehicle for realizing the utility of self-executing financial or legal agreements.

So one hack and we write off a whole set of revolutionary ideas and projects? Have you looked into all the other big projects that are providing useful services to people? Maker, compound, aave, uniswap comes to mind.

For me, the most illustrative aspect of the Dao was the hard fork that happened afterwards. For all the talk of smart contracts, the mess was eventually fixed by a small cadre of miners and Ethereum developers who agreed to a hard fork.

But that's just it: It's not a hack. The DAO was functioning exactly as intended.

I didn't write the comment... but I would probably second this. I suppose in general smart contracts "replace" escrow companies. There are escrows for tiny things like buying random stuff in Alibaba. There are escrows for large things - like buying a house/property.

I would say that in general it seems weird to handle either of those cases with a smart contract. For example. Let's say I am on Alibaba as a seller. The escrow unlock is probably based on arrival of an item - which is tied to freight companies or possibly a fedex tracking number. This "seems" like it's totally amenable to a smart contract. But where things break is fraud. Let's say an alibaba seller starts shipping empty boxes so that the funds are released.

Now one could say that a smart contract as well as an escrow company would make the same mistake. But it's still not the same. If that seller repeatedly sends empty boxes - it will quickly catch up to them with an escrow company. At some point the escrow company will stop believing the company and start trusting the pictures of empty boxes arriving. Not so with a smart contract. It would mean un-ending fraud. Now you could back things up by saying there could be a company that the smart contract is tied to, not specifically fedex tracking. But then what is that? It's an escrow company.

For houses - if anyone has been involved in a real estate transaction I would say you are probably familiar with the notion that there are 15 days to attempt getting your loan. Some contracts can be 45 or even 90 days (or years for complex business/government escrows). There are also situations where the seller decides to not cause grief because of some other issues or mistakes. Again a smart contract is not going to understand this shit. It's very peoply.

Again, not the OP on this, but just some perspectives. Maybe someone else has a great use case on people betting on weather outcomes - but what great societal use is that?

Providing a few examples of places where smart contracts do not replace existing solutions does not mean smart contracts are "a hilariously bad idea." Someone more creative than you will come up with a good application for them. Your lack of imagination is not a good enough argument to call something useless...

Maybe so, but “someone will come up with a good application for them” sure makes them sound like a solution in search of a problem.

What is wrong with that? There are lots of new technologies that don't solve some specific problem. They were just created in the name of science or curiosity or even just for fun. Real world , "useful" applications may not come for decades.

Nothing is wrong with that, but if it's true, then that doesn't do much to refute the notion that there aren't any good uses for smart contracts.

If the best argument in favor of them is "well, they're not really good for much right now, but someday somebody might figure out a good use for them," then it's hard to see why people are so excited.

(Though, maybe it's not so hard to see why people are excited if the folks who are excited are all crypto fans who want to build hype to drive the prices up....)

Two quick examples of the use of Bitcoin smart contracts:

1. https://suredbits.com/discreet-log-contracts-part-1-what-is-...

2. https://atomic.finance

I didn't say I'm the authority of what is useless in the entire world though. I added my perspective and agreed - hence the "just some perspective".

> For houses - if anyone has been involved in a real estate transaction I would say you are probably familiar with the notion that there are 15 days to attempt getting your loan.

For land transactions in the US (not houses yet), check out Fabrica (disclaimer: former co-founder). We/they have built something incredibly hard to plug into the existing legal structure in the US, but essentially you can transact on land properties in minutes, as opposed to days.

[0] https://www.fabrica.land/

Decentralized exchanges and smart wallets are useful applications of smart contracts. A smart wallet could include multisig functionality, estate management functionality, etc. For example, a friend has a wallet that will automatically be released to heirs one year after his attorney releases it. Of course he is able to cancel the transfer at any time, if he's alive. Is that a perfect system? I dont know. But it does sound useful.

It's definitely true that many ridiculous and farfetched bad applications of smart contracts have been attempted or proposed. None of these have any bearing on the utility of smart contracts.

I think there are some edge cases where you might want them, but for most situations they seem like they make things worse?

When you do have a contract that a computer can execute, the value of having that contract executed on a machine owned by a 3rd party seems pretty low. At the same time, contracts frequently have undefined behavior and, when they do, courts step in to work out what to do. The option to stop or roll back a contract is usually a feature, not a bug.

The great irony is that the main interest in cryptocurrency is increasing fiat currency.

I have no interest in acquiring more fiat, above and beyond what's needed to pay living expenses.

Using Strike, I can pay someone in USD (or any other fiat) using bitcoin with no capital gains taxes: https://jimmymow.medium.com/announcing-strike-by-zap-4f578c7...

This is the best short description I've found for bitcoin:

    Bitcoin is a non-sovereign, hard-capped supply, global,
    immutable, decentralized digital store of value. It’s an
    insurance policy against monetary and fiscal policy
    irresponsibility from central banks and governments
    globally.

    — @Travis_Kling

> Smart contracts are a hilariously bad idea.

Care to explain?

Bitcoin cash will win given a long horizon.

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