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Comment by pcwalton | Hacker News Reader

Can someone defend cryptocurrency to me, a person who emphatically does not believe that the government of the United States is comparable to Nazi Germany?

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It kinda sucks in its current state, but theoretically it has a lot of promise as a cheap and open source alternative to PayPal and a lot of banks’ services

At this rate, I don’t know if that’s ever going to come about.. looks like it’s just gotten bogged down in ways to increase its value at the cost of its utility..

> but theoretically it has a lot of promise as a cheap and open source alternative to PayPal and a lot of banks’ services

Even theoretically, how can they do this? I don't see it happening, even setting aside the much rehashed mining electricity consumption issue.

When eth was dirt cheap, you could send $5,000 overseas in 10 minutes for $2, with just a half percent of slippage on the trades to and from fiat currency and ~1% price movement up or down

Yeah, theoretically it just used $2 worth of electricity somewhere in the world, but I’m pretty sure PayPal is going to do something nefarious with the $100+ you’d have to give them for the same service

You build a second layer.

All the hype benefits of pretending to use blockchain, without ever actually using it.

For any newbies reading THIS IS FUD.

The tldr is thst Lightning is as safe as bitcoin because it uses bitcoin under the hood.

https://endthefud.org/

Calling things you don't like FUD doesn't make them less true.

The website you linked is just a collection of random (and often contradictory, just read a few of the “energy” topic) opinions posted on medium.

“FUD” is “Fear, Uncertainty, Doubt”.

The person you’re replying to was (sarcastically? I would’ve been) suggesting a solution, which isn’t any of those things.

Lightning depends on and USES the blockchain, grandparent said it doesn't which is patently untrue, thus fud.

What’s important is they’re not engaging in fear, uncertainty, or doubt. I’m not going to accuse bananas of being unsuitable for vegetarians just because they’re shaped like sausages.

As there are different ways to use a thing, and everything I’ve seen of Lightning (network not cable) is using the Blockchain in roughly the same sense as a USD denominated bank that happens to not ban accounts from trading Bitcoin uses the Blockchain — i.e. it does, but it’s very much also pretending — this seems reasonable, if not literal.

There are chains where mining costs a fraction of BTC or ETH, both in terms of money and electricity use. Cardano, Polygon.

As of today this is my belief too. It’s reached billions of $ of values,I can’t think of a place to use it and all (absolutely all) the persons I know who owns some look at it as an investment not as a currency

There used to be a cryptocurrency called Freicoin, which charged its holders X% per annum, deducting the proceeds directly from user savings and funneling the proceeds into charity “for the greater good”.

Freicoin failed to gain any appreciable adoption on the open market. Despite what people claim — e.g. “currency is supposed to be inflationary, cuz greater good” — when it’s their money on the line, they never choose inflationary money if they can easily opt out of it.

The failure of Freicoin underscores the reality that inflation is an anti-feature of money. No one actually wants inflation — if they have better options, they avoid it every time.

When the US government went off the gold standard, they doomed themselves to a Bitcoin future, because suddenly everyone could see the government’s money was backed by nothing. And if US dollars are backed by nothing, what stops a software developer from launching a competing money which is also backed by nothing? They removed all barriers to entry.

Now that everyone knows government money is backed by nothing, every available currency in this world has become an embarassingly hollow confidence racket. It’s merely a matter of whether you believe private sector confidence games made by competent engineers deliver superior technical/economic qualities compared to government confidence games.

Really, why would you want to hold a money in which a tiny group of people fully control the extent to which your money is debased year after year, when you could instead rely on an apolitical computer algorithm not controlled by anyone with a supply schedule known fully in advance which is auditable in real time using freely available open source software? Doesn’t that sound like a better form of money to you?

Visit “WTF Happened in 1971” [1] for another look at the impact of inflationary economics and currency debasement on middle and lower class people.

[1]: https://wtfhappenedin1971.com/

I would prefer to phrase that dynamic as, no one would knowingly opt into a money that can do that to them, so these kinds of schemes require first lulling/locking a population into that currency on a different promise, and only then debasing it, which is argued to solve certain public goods problems related to economies.

That is, people only accepted dollars in the understanding that convertibility wouldn't be suspended, just like they accepted the historical money that Freicoin was modeled after before knowing they'd do the Silvio Gesell scheme. It's an open question whether we've accurately modeled the full knock-on effects of reneging on the promise that got the currency off the ground (though personally I agree with you).

> No one actually wants inflation — if they have better options, they avoid it every time.

I don't like taxes either, but I also like living in a developed country. Inflation is a kind of tax, so nobody likes it, but at the same time pretty much everyone likes having what this tax provides (in the case of growing money supply, it's the ability to have money at all in circulation in the economy for the layperson).

Visit “WTF Happened in 1971” [1]. That argument doesn’t hold water for middle and lower class persons.

[1]: https://wtfhappenedin1971.com/

For the past 50 years the lower and middle class person where robbed, not by inflation (which was way higher before 71 than between 1981 and today) but by neoliberal policies (Thanks Raegan, thank you Bill Clinton, and all the others, really).

Interestingly enough those policies where grounded in the same ideological background as today's crypto enthusiasm: Austrian economics.

In the 70's, Keynesian's political influence died (because of inflation haters), and so died the golden age of America, and the lower-income families spiralled to straight poverty. Now, after the 2008 crisis, Keynesianism is in charge again, and some people are really bullish with crypto for ideological reasons (because they've drank too much of the 80-90's propaganda comparing Keynesianism with Communism, really). But using lower and middle class persons as an argument reveals either poor historical knowledge or bad faith. It's pretty ironic anyway.

I'm not interested in being sold libertarian ideology. I want someone to defend cryptocurrency on its nonpolitical merits. What can it do for me?

Year 0, you have $X dollars in your bank account with $Y purchasing power.

Year 1, you have $X dollars with $Y - 1 purchasing power.

Etc.

$Y > $Y - 1

Inflation is an anti-feature.

> What can it do for me?

It really sounds like you’ve never held Bitcoin. HN can change that for you really quickly if you’re open to it.

Currencies compete, and ones with inflation which punish holding the currency over the long term are fundamentally less user-friendly.

You talked about bank account, but people usually have much less money in their bank account than what they earn in salary. And with a deflationary currency, the value of your work declines year after year in that currency, meaning that your employer will be willing to pay you less and less every year!

As long as inflation is low enough, people don't really care about it in general because there salary increases as much (and given than the average American has much more debt than saving, the inflation is actually a gift to them).

So I talked about workers, but how about investors and entrepreneurs? Say I have $10 million today sitting in a bank account. I can either let it sit idle, losing value to inflation every year, or invest it somewhere where it can create value. Now if the value of my $10 million increases in real terms (meaning that my purchasing power will naturally increase when time passes) the most rational thing to do is not to invest that money. It's actually unlikely that my investment will pay off anyway, because the amount of money spent by people will decrease year after year (because that's what deflation means).

The idea that deflation is better than inflation (or, more broadly, that inflation is undesirable for the consumer) is libertarian ideology that I reject.

I don't think anyone is arguing that the US government is comparable to Nazi Germany. I think the implication is that the Weimar Republic rapidly devolved into Nazi Germany and the Roman Republic rapidly devolved into the Roman Empire. I'm sure I'm missing a few other good examples of authoritarian/totalitarian regimes arising surprisingly quickly from relatively liberal democracies. (In particular, I'm not familiar with how stable or liberal Italy, Spain, or Greece were before their mid-20th century dictatorships.) History has shown that liberal democracies are metastable forms of government, capable of self-correcting moderate pressures toward authoritarianism, but not immune to larger swings.

I don't think the US is close to spiraling into authoritarianism within my lifetime or my children's lifetimes, but I would caution against rounding the tail risk to zero. Political change is glacially slow, except when it isn't.

> Roman Republic rapidly devolved into the Roman Empire

Well, after 500 years...

It was pretty stable for hundreds of years. My understanding is that the collapse of the republic was pretty rapid.

It can allow some pretty cool things. For instance, a end-to-end open source VPN. The nodes are hosted on an open source 'decentralized cloud', that is made possible by crypto, which allows users to know exactly what the server providers are doing with their information and ensures fair play. This is something which you can use right now, and is cheaper (for my use case) than buying a VPN.

Here is another notion. If you want to be anonymous you have to use anonymous protocols. If you explicit want to be able to track the movement of the tokens you are providing, like if you are a government who wants to ensure money is not moving to incorrect places, this is enabled easily and openly through crypto protocols.

I didn't meant the Nazi Germany thing to be a strawman, I was trying to be humorous while also bringing a historical example of the failings of government that is un-doubtable.

I believe the principle of paying taxes on transactions (aka traceability and accountability) is a way to finance the infrastructure allowing you to safely operate your business (cops, army, schools, roads…). Total anonymity seems like you might try to outsmart society which might not payoff in the long run (not saying all societies are perfect)

If you are interested in how game theory might solve the tragedy of the commons, see Vitalik's article: https://vitalik.ca/general/2019/12/07/quadratic.html

You should keep in mind. Public traceability is the default mode of Crypto. Public ledgering is the foundation of crypto protocols, after all. Only Monero has emerged as a viable anonymous product, and the one most traded on the dark net.

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