A little bit of centralisation could make the whole network safer. Who is that centralised authority to decide what's a hack, I hear you ask. I don't know, but the authority could be elected and impeachable to make it more democratic.
The problem that you've correctly observed gets to the very root of why cryptocurrencies are a farce: if participants need the confidence of an ultimate human democratic process, you might as well kick the immutable public ledger to the curb, skip the tire burning, and use the financial system we already have.
It's a good final social check on bad behavior. I think Vitalik as written about this (I'm pretty sure I read about it in one of his long form posts).
Hahaha, no, the wealthy sided with the move. Of the 82,054,716 ETH in existence, only 4,542,416 voted, for a total voter turn out of 5.5% of the total supply on 16 July 2016; 3,964,516 ETH (87%) voted in favor, 1/4 of which came from a single address, and 577,899 ETH (13%) opposed the DAO fork.
Vitalik and his friends stood to lose a lot of money, and being the biggest players in town with their premined shitcoin, voted against them losing money.
What people continue to use and build on is the other.
The DAO "hack" was a bit different from this, around 14% of all Ether were in that contract. There isn't going to be another rollback, especially not for something like the here discussed attack. Trusting third parties is risky. It's like taking your money out of your bank account and sending it to a bank in Nigeria. Things can go wrong, the chain can't be rolled back every time someone loses money. People have to be more careful.
There is increased risk moving stuff off chain to third parties.
This should really be phrased "which is why the fork is called Ethereum and the original chain is called Ethereum Classic". And the majority (of what?) really had only indirect input - the exchanges decided which chain would get which ticker, and if they'd kept ETH=the original chain, it would still have the name Ethereum.
People focus on the algorithmic aspect of cryptocurrencies, but this is simply the weedy details that enable certain properties of interaction. Nothing terribly interesting has happened here since the initial idea of using proof of work to regulate authorship of a blockchain. It is the social aspect that has been interesting to follow. Alt coins, forks, and the enduring primacy of Bitcoin.
Axie's Ronin network was a centralized side-chain experiment. Unfortunately what got exploited was the bridge back to the more decentralized ETH Mainnet. They failed to have proper fail safes on the bridge, and they got looted. Maybe their project survives this, maybe it doesn't.
Disputes under the law are resolved in court.
As someone who has actually purchased real goods with bitcoin (silkroad) and has dealt with the blowback of the MtGox scandal (still receiving court details to this day...)
Those crypto people are snake oil salesmen. Full fucking stop. They aren't interested in making anything usable, they're interested in wild speculation, gambling, and outright scams.
Like most things it's not all or nothing and there are pros and cons.
- The cool metal might cool your head on a hot summer day
- Might knock yourself unconscious to avoid boredom (could be real handy during long flights!)
But these nice features are inseparable from the fact that you're hitting yourself in the head with a hammer, which has many serious downsides, too.
The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions. Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core.
Ignoring that and focusing on the substance:
> "The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions."
Yeah I don't disagree with this - the risks are real. Some of this can improve with better tools, but some is just higher risk that exists with self-custody. You don't need to move 100% of your wealth into crypto (and I'd argue you shouldn't in nearly all cases).
Crypto provides a new capability to take control in a way that other options don't or don't support as well. There is value in this capability even though it has associated risks.
> "Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core."
Not all governments are good and even good governments can implement bad policy. Self-custody is a lever against the kind of top down CCP like control of entire economies and a totally controlled cashless future. It's also a hedge against stupid actions from your government (like what we're seeing in Russia currently).
New world order suggests replacing the entirety of the existing thing. I'm not suggesting that, I'm focusing on the fact that it offers a new/improved capability that gives individuals more power. I think this is a good thing, but good/bad subjectivity aside it's just a true feature of crypto.
https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-deb...
Indeed! Many governments are truly awful. And it's a deeply complex problem to solve. The strategy of "screw it, let's just bypass the laws when I feel like it" is deeply troubling. And I think you needn't look further than the fact that so many despots have wholly embraced Bitcoin: Bukele, Putin, Kim Jong-un, Erdogan, Maduro, Assad, etc. Why do you suspect that is? Are they just clueless dummies who're getting fleeced by the Bitcoin pumper geniuses?
The problems with corrupt governments is the lack of accountability via regulation and legal redress. The solution is increasing accountability—often a difficult problem, no doubt. But advocating for crypto as the solution, is advocating for the harms done to people to be anonymized, and ultimately made unaccountable. That's a Very Bad Idea™.
A lot of your argued side-effects are also true of cash. Yet most (at least for now) are not arguing to get rid of cash because not every transaction can be monitored and controlled.
Crypto gives more capability to individuals which is good (similar to cash). It creates a store of value outside of government monetary policy (in the BTC case more similar to gold).
People tend to simplify these things into "crypto is entirely bad" or "crypto is entirely good". I think it's a new tool that gives individuals new capabilities, but also has its own risks. I value the new capabilities and acknowledge the risks.
> "Crypto, by design, bypasses the legal system. There are some heavy consequences to that design."
This is mostly false. In the case of public ledgers - it's even easier to see transaction history than it is with cash (though this is less true of Zcash). It doesn't bypass the legal system it just requires a higher degree of intervention for your money to be taken from you (which is often desirable, especially if living under an oppressive government). Does cash bypass the legal system by design?
Your keys your coins is obviously a situation rife for unreconcilable fraud, and is not a functional solution for anyone who might - ya know, want to spend these things as a currency.
With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc.
With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$.
Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
The savings associated with transactions fees (reasonable for very large spends - utterly ridiculous for small amounts, even today after the major drops, at more than 1.7 USD/tx)?
The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale)
The savings associated with being literally dragged into court because it turns out that fraud is still a thing, and the legal system still matters, and despite you saying that the transaction has settled - the courts can and WILL disagree?
I just don't see it. I see a very nice way to send money to folks who are working dark markets and understand escrow (which re-introduces the risk that your transaction isn't actually settled), and a really shitty transaction method for basically everything else.
On mainnet ETH, sure, but that arguably shouldn't be used for small payments like you are discussing. There are second layer networks that can do this for pennies on the dollar and make a lot more sense.
And arguably $1.7 USD / tx would compete quite well with credit card transactions. 0.17% vs credit card's 2-3%.
> The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale)
Again second layer networks, but even on ETH itself, you're talking 10 - 20 seconds for 1-2 blocks, which is PLENTY. It's not going to be worth carrying out a double spend attack for a few thousand dollar transaction.
I do get that you don't "get" it, but I'll just say - I happily send and receive both BTC and ETH, and it is a night and day difference from sending using traditional bank accounts. I actually feel like I own the money, I can send it to anyone I want at any time, and the transaction settles in seconds. Last time I sent money via ACH, it took a solid 4 days (since I initiated on a Friday). I can deposit money into my crypto backed debit card in under a minute in the middle of a weekend.
This is just a criticism of US banking, not 'TradFi' as a whole. Most countries have let you do the exact same thing for free or at a low cost out of your existing bank account, no overhaul required, for years. The EU has SEPA, the UK has FPS, Canada has Interac e-Transfers, Australia has NPP. I suspect you'd have a hard time finding a country other than America which doesn't support this.
... and the US has RTP for about half the population, and is getting FedNow for everyone next year. Not to mention Cash App and Venmo and so on.
This is a solved problem.
If you can even call it a problem. The thing is, if it were actually a meaningful source of friction instead of a talking point, it would have been resolved years ago.
I get it, moving money is boring unless the money is also a scratch-off lotto ticket.
> I can deposit money into my crypto backed debit card in under a minute in the middle of a weekend.
This is also how Cash App and Venmo support instant transfers/deposits to a dollar-denominated bank account 24/7. You can do this via unlinked refund or whatever the new mechanism is. That's not crypto related, it wasn't developed for crypto but rather coopted (not just by crypto, but by Venmo and Cash App). That's just how debit rails work.
But what these services offer is still fundamentally different from what crypto offers. The money shows up in your account instantly, but it doesn't actually settle for weeks afterwards [0]:
> Unlike cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud.
> A shopper can perform a chargeback online eight weeks after the purchase, with no questions asked.
[0] https://docs.adyen.com/risk-management/chargeback-guidelines...
However it's irrelevant to this conversation because it also doesn't apply to any of the networks I listed. Adyen != FedNow. The systems I listed actually do provide instant settlements - as the money hits your account it's yours to spend.
If for the bank, settlement isn't instant (and that's an if because again for the services I listed I don't believe it to be the case) they can just do what everyone else does and borrow against it for basically no cost while it settles.
Again, this is a solved problem and broadly not an issue.
[edit] Just as I suspected, FedNow settles instantly. [1] And all for the low, low price of $0.045 per payment, and $0.01 per invoice! I know, its pretty unbelievable they found a way to decrement a number in one database while incrementing it in another database without involving a global network of graphics cards, burning down the rainforest and re-inventing the very concept of money. (that is to say, without "going Rube Goldberg on it").
Unlike cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud.
Why does that sound like a good situation to anyone?
A blockchain can in theory support such things, which would allow a majority vote to approve the court’s judgement, but not ETH as it currently stands.
Alternatively if you could get enough miners to just collectively agree to replay the blocks without that transaction you could let the owners move the funds, but it’s monumentally difficult as time goes on and the number of blocks to rewrite increases.
If it was detected in seconds, an emergency protocol does exist between certain large mining pools for this sort of thing.
Specifically, if you have contracts holding that kind of balance, if a transaction appears on the network which touches a percentage of the funds, you get blistering alarms ringing and someone can “break glass / pull lever” to lock the contract balance into an emergency cold vault. It freezes the DEX but better that then lose the funds. You partner with mining pools to pre-clear that TX and ensure your transaction gets priority in the next block, before the attacker’s transaction goes thru (making theirs the double-spend).
But they weren’t even watching. They didn’t even know until the next DAY.
Courts can and do issue orders against any kind of asset in order to enforce justice and unlike smart contracts, their orders are backed by men and women with dogs and guns.
Put another way: a court will not say "gee, gosh, if only ETH had a mechanism I could give orders for! I guess I'm beaten". They will instead say "you owe $X and I will seize all assets you have today, or will ever possess in future, in order to pay that debt". And when it turns out that people thought they were clever by evading the court order by keeping everything in a coin, they will then learn that ethereum can't buy top bunk at the federal penitentiary if you don't have access to a computer.
For example, imagine the thief just burns the ETH. $600mm notional value is destroyed in a few bytes of crypto. Whether someone goes to jail or not is besides the point.
Can the funds be recovered, and what is the algorithmic mechanism to provide for that recovery?
Who owes?
Conceding that this situation sounds absurd destroys the entire raison d'être of crypto.
And it's not even law, it's consensus has value.
Shitcoins (all of them) remove the potential of violence as a means of corrective action. Instead, you have crazy hard math stopping you. Can't do the math? Then you're not forcing your decision.
Oh no they don't. You can still go to prison, and they can still smack you around. To pretend otherwise is to play emu.
Only problem is everyone would have to use their own wallets for it to work, and for most people it's safer to store large amounts of crypto on an exchange instead of a wallet for personal security reasons.
This is the opposite of what is usually recommended.
- Everyone can track your transactions and personal wealth on EtherScan or similar tools, whereas in an exchange it is significantly obfuscated by the exchange's own collection of wallets and databases.
- You could be robbed at gunpoint for your hardware wallet.
- You could lose your wallet in a fire or other natural disaster.
- While you can back up your wallet keys online, most people cannot remember the long passphrases, and end up writing them down on paper which isn't secure if someone were to break into your residence or office.
For most users the combination of these risks far exceed the risks of keeping money in an exchange.
But yeah, if you're a billionaire with a 24/7 personal security team and personal firefighter team, then yeah, by all means, keep your own wallets.
Nexus Mutual, and a few other on chain insurance protocols offer exactly this. You pay them some premium, and they pay out in case of losses due to hacks, smart contract vulnerabilities, etc. So far they've worked fairly well, and paid out in hacks like this that occurred.