The endless search for a crypto use case
networked.substack.com
networked.substack.com
1). Silk Road or dark net markets in general. Can't be done with Visa or other existing solutions at any kind of scale
2). Funding of political dissidents. Wikileaks, canadian truckers, etc. These people got blocked by traditional payment providers but still received crypto. (there are still other obstacles for dissidents but at least this solves 1)
3). Money laundering. Find someone who sells bitcoin miners, buy them with dirty money and use them to mine bitcoin sent to fresh address not tied to your other activity.
4). Uniswap and maybe flash loans in defi seems like new things I haven't seen in tradfi or elsewhere. Maybe some cool promise here
I'm sure they're others. But I think the key common thread is that all of them require censorship resistance. If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
While there might be cases you consider moral or ethical even though they’re illegal I’m not sure I’d consider this a net positive or any reason to think crypto will enjoy mass adoption.
It's also hard for me to understand these "payment outside of X authority system" ideas when the value shifts so wildly and so unpredictably. No one wants to get paid, not even criminals, in a currency that might be worth 20% less tomorrow, depending on what's going on with Matt Damon's Super Bowl ad for the criminal currency or whatever.
I'm imagining you want to run a server in which you want to prove a given open-source version of the code is processing the inputs, and the outputs are available for anyone to observe, verify, & store.
I imagine there's some ways to do this already, though.
Proof of Stake just seems like a protocol that isn't too wasteful and inefficient and could make for a decent standard.
So blockchain only makes sense when:
a) You have bad actors
b) You need decentralization
The use cases for that are, for the most part, "subvert government authority". There are some cool other things you can do, like web of trust stuff, but the vast majority of the market is in the "subvert government authority" in one way or another, or is an outright scam.
You use blockchain if you have one very specific type of bad actor, and know for sure that they won't try bad things
Might change your opinion of it.
I didn't make any judgment about doing so.
I will concede international transfers is not a very large use case, and definitely doesn't justify the market capitalization of the blockchain base currencies FWIW
For amounts under ~$500, cryptocurrency off-ramps are often less convenient and more expensive than an international cash-to-cash remittance with Western Union or Moneygram.
If you think they're more expensive to use than centralized providers, you're probably using ethereum or bitcoin. I can send USDC on Algorand in any quantity for less than a cent
I imagine folks receiving remittances in Manila, Mexico City, Nairobi, Delhi etc. would have difficulty using stablecoins (whether backed or algorithmic) to buy food and other necessities.
For example: https://www.bbc.com/news/business-60912789
These articles all follow a common pattern.
1. The trigger – Inflation/distrust in government/bank withdrawal restrictions/paypal freezes your funds/country is at war/etc
2. The response – People gravitate towards a system that is resilient to whatever failure mode they experienced
Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. Meanwhile in places that are smaller/less stable/not economically self-sufficient/on the fringe, people are increasingly turning to it as the best alternative.
https://www.coindesk.com/markets/2020/06/16/venezuela-is-a-t...
tldr; either the crypto itself is traded like real money, or a l2 or even centralized unconnected layer is - either way on/off ramps that currently exist (p2p and centralized) continue to exist and thrive.
> But a major part of Venezuela's crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.
> "Nobody is going to tell you 'every night when we do the books, we convert bolivars into bitcoin,' but yes, this is happening."
You pay fees for every single transaction: chain storage, gas, if you want to deposit or withdraw or exchange to another currency, etc; it's slow to go through and at peak times you get gassed out and it doesn't go through at all.
The value fluctuates wildly at all times of day, so your transaction might lose a significant percent of value before you've had a chance to even access it let alone trade it for a more stable currency or asset. Oh, and you have zero safety net for if something is entered wrong, a key is lost, if you end up not receiving the item you purchased, you're outta luck and there's no bank or credit card agency you can petition for a chargeback. Plus you lose ALL your money with no recourse if you can't keep track of a non human memorizable secret key, or if it gets in any way intercepted or stolen from your computer, or if you accept the wrong transaction...
For real, every time I try to answer my I do crypto, often people just don't understand. They just don't. They just don't understand why I don't trust entities.
If you don't understand this, then you don't understand crypto. Period. There is no other debate necessary. Period. Full stop. We go on our own way.
Full stop.
I understand that you are saying you were burned by a central authority. But the truth is that the only way to get everything to work is with a central authority. The article gives examples of crypto being fully reliant on central authorities, for instance.
Everything being done by crypto today could be done better by trusted companies putting together a semi-open peering arrangement that both doesn't waste pointless electricity and that doesn't allow just any potentially hostile actor join the group of authorized peers.
And for me it is at the moment the crypto side. I don't trust exchanges and I can't be bothered to do local transactions. So central government "approved" system is easier for my life.
In fact, given that ownership is fundamentally a mutually agreed upon social norm, and not any sort of real truth - Even if you trust the central authority of your locality less, they are likely a much better resource regardless.
I really think crypto advocates just don't actually understand how power works. Power is not the number in the ledger, it's the number of people who will step up to enforce it for you.
It turns out that number is very, very tiny for crypto. Much, much larger for your local currency - even if it's not as large as you'd like it to be, or "fair" as you think it should be.
Crypto companies with legal exposure? Yes can be censored.
Open source crypto protocols? As long as raspberry pi’s and digital comms exist, it’s akin to saying the govt can shut down Linux. This is the censorship resistance that matters. It’s not perfect (some ungodly amount of nodes are in AWS and the Trail of Bits report did a good write up as well).
The central authority here is open source software. The author spent a lot of words demonstrating they didn’t know this at all.
There's this fantasy that crypto can replace money, and that you would therefore never need to trade it for real dollars. That's not going to happen, for reasons outlined in the article and because no medium of exchange that's deflationary can ever be a currency.
If it goes up in value over time, it's an investment and people won't spend it.
Will the open source be free forever? Sure. Whatever. Can people run nodes that burn electricity? Yup. Does that matter? In no way that's relevant to the general public.
Worse, even the crypto networks themselves are subject to issues with their authority: Enough bad actors who join can steal the value of a large percentage of the network.
When we're looking at potential theft of billions of dollars, you better bet that someone will invest the hundreds of millions required to rewrite the chain and take control of a large number of coins.
Then what? Then everyone will need to get together and act like a central authority to either rewrite the chain back to its state before the attack, in which case you do need to rely on a central authority, or you need to admit that _allowing untrusted nodes into a financial network is a Bad Idea._
"Censorship resistance" is irrelevant too, by the way.
Bitcoin, an open source crypto protocol, launched without the existence of crypto companies.
Mt Gox, instead of helping btc, almost set it back years due to the hack.
Bitcoin grew adoption and scale on tor/DNMs and localbitcoins, both of which had organic, non-exchange economic activity which kept accounting in pure crypto vs returning to fiat/needing an exchange.
The attack you’re describing is a 51% attack, and it had yet to happen due to protocol design on the main chains. If it does, I suppose you’d be right.
But I generally think you don’t understand how the tech works and what proof of concepts exist to disprove your opinions, or at least strongly counter your opinions. and without addressing why they’re wrong you have a weak argument.
Your assertions are the ones that are extraordinary, so yours is the side that requires proof. You're effectively claiming that a distributed peer database with a somewhat secure history has some kind of intrinsic value. I'm calling that BS.
Where is the money? Where is the _value_?
The fact that a few people were trading Bitcoins doesn't mean it can ever go mainstream. Something that's a niche hobby isn't going to change the world. If you want to use Bitcoin as a hobby barter medium, then have fun, but that doesn't imply value outside of a tiny community.
Prove me wrong. A "proof of concept" is in the technology domain. For crypto to work outside of a community of crypto-libertarians, it needs to be usable by regular people. Libertarians are famous for not actually being able to design social systems that work in the real world; last time they tried they were chased away by bears. [1]
And as the article pointed out (did you read it?), most apps that support crypto rely on a centralized server since the chain can't be downloaded to mobile devices. How useful is a medium of exchange that requires you to bring a laptop with you everywhere?
[1] https://www.vox.com/policy-and-politics/21534416/free-state-...
Ah, or your assertions are akin in a technical sense to saying “the internet is a complex series of tubes, prove me otherwise!” Your criticism is based on a pretty clearly patchy technical understanding.
also, perhaps the cause of people not understanding you is not some kind of lack of mental faculties on their part, but your - what I would describe as - extremely obnoxious style of communication
But I think you're absolutely bonkers if you think that any crypto today is actually a real solution to your lack of trust.
Here's my take:
You think that by using crypto, you're avoiding trust in governmental and financial institutions - and in some (incredibly limited - aka drug/gun) markets you are, but the exchange that you are making (intentionally or not) is not trivial, and not acceptable for most people most of the time.
What you are giving up is the power of the governmental institutions to enforce any sort of agreement or contract you make using crypto. Not their currency, not their problem. It's now your problem to resolve scams and fraud, and you have to do it using your limited powers.
And to be clear - you have really, REALLY fucking limited powers here. Unless you are so wealthy that those "entities" that you so dislike are mere nuisances dealt with by the law firm you have on retainer, or you can fund your own black-ops team, you're living in lala land if you think you can personally enforce the contracts you make. You can't. You don't have the oomph. Full Fucking Stop.
---
So I understand your lack of trust, but hate to break it to ya, bud - crypto is not solving your problem.
Simple example: You hire a contractor to remodel your bathroom, and you pay him in crypto (and we'll ignore for a moment just how laughably absurd the chances of this actually happening are...). You agree to pay 20K for the remodel, with 10K up front. He runs off with your 10k. Now fucking what?
Now all you need is connected oracle that can judge completion percentage of a bathroom and communicate with the blockchain! /s
You are out the labor and materials with no payment and no recourse. It's not beautiful for the contractor why would he agree to this with no arbiter between the two of you. And as soon as you introduce an arbiter you are back to someone else enforcing the agreement not the blockchain. The blockchain adds nothing here that a standard court of arbitration doesn't.
I personally think Bitcoin is a terrible currency for non speculative trading due to scaling problems and it's volatility.
Your own way is a deadend. There is nothing there. A currency is about relationships and trust. You can't own those things, you can at best only enforce them against people's will if they don't maintain them voluntarily.
Some data points to support this:
- most major algorithmic hedge funds, market makers, etc are significantly involved. Not the janky crypto native one, the lethal ones from NY.
- Microstrategy had to convince a whole slew of board members and legal to convert their treasury to btc (“wealthy/elite”). Saylor is on record as saying that all but 1 of them where already on the space and fine with it, or something to that effect.
- this is old days btc lore, but there is a famous known event of Wences Cesares and I want to say Reid Hoffman having a SV get together with a few other who’s-who and sending a couple mil in btc around their phones while sitting in a living room. This And related Got most of the early day big tech people who are in it now to invest. This was years ago. Peter Thiel is the most public of this group today.
- CIA had the btc core lead Dev visit to explain the tech in 2011 (Gavin Andresen/spelling).
- Go to a digital assets event in DC that gets actual DC people to attend, and you’ll have notable elected officials discussing its use as a covert tool
- US has paid foreign fighters in it
- Bank of International Settlements is allowing member banks to hold a % of btc in reserves
- Fidelity has mined btc since early 2010s and is notably involved today.
There are a lot of examples like this out there. It’s a large wealth transfer currently benefiting really top crust people/orgs and the tinfoil hat crowd. Everyone else is reading Paul Krugman opeds and calling it a day, or missing the key so-what of the tech that’s worth committing to.
With Naira the currency being as stable as a pendulum gets on a windy day, many middle class fellows seek to store their money in some form of stable assets. Crypto seems to be the easiest to acquire for the common folks while the politicians prefer and have access to US Dollars.
The fact is there is no reason to believe holding crypto would retain value if the united states went through an country-ending economic crisis; it more likely that your crypto would also just become equally worthless and also crash in value. Treating the United States as a "future Argentina" makes no sense, especially when it's the US-based VC investors who are indirectly backing the value of Argentinian purchased bitcoin. If you end up in a situation where the USD worthless, then there is no wealthy counter party to prop up the value of your cryptocoin.
It makes no sense to look at third world countries with relatively tiny economies and believe that crypto will retain its value if the US went through a similar situation.
I mean, I'll happily concede that cryptocurrency was something that was actually stable in value, was widely accepted and understood in local markets in the global south so you could buy food, save for your kids education and bribe the border guard with it, then it would be even better than gold earrings, black market banknote swaps, hawala or trusting you would be able to access your offshore account in future. But it isn't, the fact that some people would dearly like it to be that way doesn't make it that way (especially not the "stable in value" part), and there isn't an obvious route for it to be that way.
Experienced hyperinflation, experienced civil war, experienced buying bread with 200,000 dinars one year and 2,000,000 next year etc. Experienced scary people with guns knocking at your door. My family and their ancestors all lost all their money and possessions numerous times over the last 100 years, including in the mid-90's.
And yet, I feel it's the people IN position of Western privilege, who have NOT experienced actual 'dystopian future', and what a hostile government actually CAN do, and what living under duress is ACTUALLY like, who think Crypto will somehow solve such problems based on their theoretical envisioning of only a specific part of dystopian future. I still believe Crypto, like anything else, survives at the mercy of your local government. It has a tremendous set of requirements, complexity, and telltale signs, to be helpful against hostile government which can and will knock at your door with a gun, or criminalize all crypto use/mining/exchange, etc.
"Those who haven't personally experienced #1 (such as world superpowers, the wealthy/"elite") seem not to be able to grasp the benefits. "
The tech is the easy part. If you're conducting illicit transactions in some kind of attempt to dodge regulations - however your (potentially) corrupt regime defines "illicit" and whether the "regulations" are just - then obfuscation isn't going to help you for very long.
The ability to use the internet at all is a function of the willingness of the people in charge of a government to 1) allow usage of the Internet by anybody and 2) the willingness of the people in charge to allow you in particular to use the Internet.
A lot of the arguments in this thread could apply to free speech as well. Pretty scary how many HNers feel that way.
In developed nations, populations who are unbanked/underbanked typically have much bigger fish to fry. In developing nations, they typically already have a solution to the banking problem... and also bigger fish to fry.
You'll notice that every article hyping up cryptocurrency as a solution for these things refers to "early adopters". The adopters are no longer early; they're now a perpetually fringe sub-population. (They're also presently experiencing inflation in crypto for the first time.)
>If what you're doing isn't likely to be censored by authorities then you're being incredibly wasteful by using blockchain
If the wasteful people doing non-crime activities on the blockchain weren't there it'd be incredibly easy for the authorities to crack down. In other words, if the only legitimate use cases of crypto is facilitating crime, it can only even achieve that goal as long as many people are using crypto for the other stuff you think is wasteful.
In Vietnam, the government does capital control by limiting what bank can do with my money (I can’t request them to send 20k to the US unless I have an approved list of reasons). However, it is not illegal for me to send the money abroad, providing I can do it legally myself. So bitcoin is useful to me
You also forget 5) Outright scams, like rugpulls or boiler room-style scams.
I do think the whole event has dredged up some interesting ideas and desires that were being ignored, but of lot of those "cool promise here" ideas could probably work without a blockchain.
Use a different company and hope another few million doesn't get locked up? That seems like the only alternative and I'm not sure many people would think that's a viable alternative.
I am sure countries will want to censor it, but I don't believe they will be able to, as such the only risk to bitcoins long term viability is the markets demand. There are numerous examples of illicit goods that governments have proven incapable of reducing the demand for, e.g. drugs. So I don't think bitcoin is going anywhere.
I think bitcoin will take a different censorable form and we'll start seeing companies on top of the blockchain that can do things like refund unauthorized transactions and things of that nature, but the base layer will remain uncensorable and thus bitcoin could become both convenient enough (although not better, in my opinion) for rich countries to use as currency while holding the characteristic of providing tremendous benefits to citizens in oppressed poor countries.
Want a $5000 loan from crypto? Better have at least $20000 in crypto assets.
How anyone is expected to get credit funding from this strange system is unclear.
Also the no custodian part is especially strange considering that most people who have crypto keep it on some exchangebank
Yup. That's potentially useful for speculators to earn expected gains from one cryptocurrency whilst also trading with another one.
But it's utterly useless for the common cases to borrow money (i.e. you don't have enough of it to buy what you need to buy)
This is in addition to the arbitrary Tether-eth printing that you ought to be well aware of.
https://nosafebets.com/2020/06/05/legos-the-new-gold-standar...
I thought their crypto payments were tracked (open ledger) and basically nixxed? I.e. this was the grand counter-example of crypto use case :-<
We can discuss our personal opinion on the Canadian protests of Winter of 2022, but I strongly believe that for average citizen, Crypto payments leave a HUGE exposure / attack surface. YES, there's going to be a Hacker News person who can figure out how to safely transfer crypto, and maybe even do something practical with it, in duress situations; but I feel that would end up complex enough to be achievable effectively with other crypto-less, equal-complexity methods. Meanwhile, average citizen's ability to safely and anonymously and SAFELY use crypto under duress is extremely limited.
https://www.vice.com/en/article/jgmnpd/the-freedom-convoy-bi...
There were technically superior and more anonymous ways to do that kind of particular transaction of course. But we may differ as to what "average person" is and what their technical competence will be in the near to medium future. I believe average person still has tremendous phishing and scam risk with a regular, regulated, fairly static, designed for ease of use, documented, go-to-branch-and-we'll-guide-you-through-it electronic banking. I am skeptical of our ability to create a safe path for the average person through the dynamic, unregulated, ever-changing, technically complex, myriad-clients-and-zillion-methods-and-gazillion-exchanges all chock-full of scammers world of crypto.
There is no need for crypto for money laundering when it can be done at scale at Deutsche Bank.
The anonymous use cases are a chicken/egg problem because you still need on/off ramps. but the other issues make global crypto currency a no go.
I don't think "censorship resistance" is the correct term. I think what you're really describing is "law enforcement resistance" (e.g. your activities are illegal).
And even in those cases, unless cryptocurrency is circulating as actual currency in the economy (which it isn't), most of the law-enforcement resistance is fatally compromised by the need for onramps and offramps.
In other words, it just so happens that the exact situations where crypto is useful, are the same situations where it is very hard for capitalists to earn a good return on their capital. Unstable places or illegal markets.
It's not that the existence of crypto doesn't make sense. It's that investing in it makes no sense, because it will only be successful in scenarios where "investing in things" at all is a lost cause.
A specific example is committing crimes: buying or selling drugs, money laundering, tax evasion, etc.. but maybe its building a nest egg to help escape an abusive relationship or God knows what. Hiding money from some sort of extortion.
Most "crypto" isn't hidden, it isn't crypto. It's gimmicky marketing. Not currency either.
Fully fungible (all units equal) crypto (hidden) currency (means of exchange, store of value) is incredibly useful. Everyone understands why untraceable money that you can send cheaply, globally and securely in an instant is useful.
Monero, maybe not the best or final ideal tech, but it has real utility.
> end users always want a way to get money out of crypto and back into fiat currency. And this desire hands governments all the tools they need to starve the crypto ecosystem at will, by cutting off access to inflows and outflows if participants don’t follow the rules. When a reasonably competent and powerful government cares enough about stopping something from happening, it is very difficult, if not impossible, to continue doing business as usual. And this reality continues to take the hand-wavily libertarian crowd of crypto enthusiasts by surprise.
> The persistent requirement for fiat on- and off-ramps is why virtually every anti-censorship technique that crypto comes up with instantly suffers from the same Achilles heel.
Want to get and move Bitcoin easily? You are going through an exchange, which will absolutely be regulated at some point.
Not going through an exchange? Well, I suppose you can try and find a local person who already has some Bitcoin to sell you and work out some sort of shady transfer and hope neither of you get scammed.
Now you have some "currency", and it's relatively easy (but not free) to move it to someone else's wallet. The value may have doubled or halved since you acquired it. So you want to move it quick. Except it's not quick. But you get the transfer done.
Now the person who receives it has to convert it into usable currency - no one is buying food or energy with Bitcoin. To be free from meddling, they too need to find and meet with someone who will give them cash for their coins.
But wait, that's not all! Most folks interacting with the coin are using exchanges. And they come from well regulated places. So the laws and financial planners of those countries will indirectly impact the price of the coin. If coins suddenly get taxed heavily, out a local fiat gets strong, or whatever, that will impact the value of existing coins as people either flee to or from the coins as a store of value. So even if countries don't directly regulate coins, they'll still be impacting them.
1) The fact that Bitcoin mining traffic is detectable by ISPs (similar to torrents), so if a country prohibits it, the ISPs could simply detect that traffic trivially and get you arrested. Or simply block downloads of the client, etc
2) The centralization (or lack of democratization) of mining. A few huge pools, mining rig operations instead of individuals running software on their computers. SHA-256 ASICs and lack of blockchain pruning caused this.
3) The overreliance on exchanges - not your keys, not your coins etc
4) Every transaction is trackable, no real anonymity
5) The -even daily- value fluctuations
6) Hard to understand for layman people
That said even with all of these drawbacks people do use it in real life for its original intended purpose (remove the middleman), specifically in third world countries. But I think it would be great to go back to 2009 with all of the current knowledge and redesign these bits
I think that inevitably, it will be banned at some point in the future due to 1) and 2).
Just to answer the author concerns about point #2. There are coins with entire Blockchain that can fit in my OnePlus 7. I am from Algeria (a country without a financial system), LTC and XMR are the coins that brought me out of poverty, not because of gambling but they allowed me to do software development consulting online without begging services like Wise to not ban my account for random suspicions.
The author somehow talks about Crypto currency but somehow keeps pointing to flaws in exchangers with KYC.. Again, a lot of progress has been made here, exchangers without KYC emerged (check out Bisq net)...
I just wish people would point out more honest reviews of the such technologies so we can improve together as a society.. Cryptocurrency might not add a lot to your life, but there are many people having access to instant, cheap and secure transactions is a game changer.. I don't care about the legality of it as those broken laws are probably not protecting the average citizen.
I'm from Nigeria. The Central Bank makes all sorts of policies around inflows and outflows.
E.g. DigitalOcean just has warned me that they will block my account. I checked and realised that the MasterCard issued by my bank has stopped honouring any payment denominated in dollars.
You could pay for this few months ago. But now nothing. I don't even know how to go about it. My friend had run around just to pay for Figma. Sometimes you have to even call friends in diaspora to make payments for you on International sites and just pay them back via crypto.
Inflow here is such a hustle.
I've used wise.com a lot and do like their services but they no longer support Nigeria.
As such it’s not a crypto specific benefit.
The frustrating truth is, the solution to corruption is: justice and accountability. Not just blindly throwing out democratic principles and bypassing the law.
[1] https://www.psychologicalscience.org/news/releases/high-weal...
Currently we have more than 0 staff who have been displaced by a war and do not have good access to local banking, so we pay them in dollar stablecoins. This does not cost ~15% and does not have a latency of days to a month.
> we've hired people through a global outsourcing company
> we have staff who have been displaced by a war
Using numbers in this fashion is a way of specifying the perfect condition while simultaneously letting the listener/reader know that the situation is either less or more than ideal.
Plus, it adds a subtle comical effect. Puts some supererogatory emphasis on things, so to speak :)
Combo x3!
The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
None of the cost savings are related to local taxes and insurance since they still need to pay for these things. ~15% is what's charged collectively by the outsourcing company, their bank, and their local partner. I agree that they provide a valuable service, but it's not clear to me that the service is worth 15% of the otherwise-gross cost of employing someone. One thing they could do to convince me it is worth more would be to transmit the funds promptly to the recipient.
> The only times I've transferred dollars -> crypto -> transfer -> crypto -> foreign currency the costs were much higher than 3%, not to mention there was far more risk because you couldn't reverse the transactions if you fat fingers an amount or a recipient.
Some centralized crypto exchanges currently have pretty competitive forex rates. You'd basically have to go to IBKR to do better.
Before Bitcoin it was practically impossible to do this without a bank as an intermediary and even then would require large fees, talking with people, lots of hang ups, just to manage your own money.
With crypto I can move money directly A to C at 4am on a weekend, any amount, without talking to anyone for a tiny fee.
Or if I want to move it into my wallet and hold it personally I can do that do. Before Bitcoin that was literally impossible without physically walking into a bank.
Instead of having to move money from wallet to bank to stock exchange, money can move directly from wallet to exchange and vice versa, no bank.
You can send it back and forth between wallets all day, doesn't make it into money.
To actually use it as money, you need to some kind of centralised service to cash out.
The only problem is that, yes, it is indeed early. I don't know why the author brings up the App Store, as if both Bitcoin and the iPhone App Store are even remotely comparable just because they came out in the same year. You can't expect to upend the global financial system in less than 15 years, give it some time. People are hitting the limits of international banking and quickly moving to crypto as an alternative. And as the hyperconnected cryptobro kids today become wealthy millionaires in a few decades, I expect a lot of value to be stored internationally in crypto.
The truth of the matter is, both of these extreme camps are going to be very disappointed in the future.
* A pyramidal scheme (with extra steps) "buy this, the price is always going up" * You are doing this on a parallel market where authorities have little/no vision (yet). * Plus you are marketing it to people who are distrustful of authorities
The last two points seem especially tailored to make scams and deception go unpunished.
1. Crypto is being designed by smart engineers who fully understand the financial system. Specifically they don’t understand why it is the way it is. It didn’t just magically appear this way full of obvious flaws. It grew over thousands of years; and
2. Most of the people pushing crypto are honestly just trying to get rich quick. Most missed out on the Bitcoin wealth transfer so they are eager to jump on or create the next Bitcoin. And pretty much all of them have a vested interest in convincing you.
That's just an argument in defense of status quo. It's actually pretty common for industry outsiders to disrupt old industries. Think Uber/Airbnb/Facebook/Tesla, etc. Thousand year old industries get disrupted all the time.
They really don't. The fundamentals of banking as an industry haven't changed in hundreds if not thousands of years. Real estate, etc.
https://www.businessinsider.com/5th-ave-1900-vs-1913-2011-3?...
The iPhone and smartphone revolution clearly did the same, last decade.
We're now 14 years into Bitcoin. Is it ever likely to change the world the same way?
This currency was made by a bloke on computer 14 years ago, and has revolutionised the way we view ownership, freedoms and money.
Benz made the first car in 1886, which in your analogy means today is 1900.
I will be curious to see how crypto holds up in recession or under monetary crisis.
One of the reasons it was created hasn't really been tested, since the economy in the west hasn't faced a major crisis since its invention.
It seems plausible (if unlikely) that external events could push crypto adoption into more "normal" use cases. E.g. Israel's recent ban on cash transactions points to one way more things may become untenable in traditional finance.
I don't actually have strong opinions on what will happen - I do find your analogy fun to think about though!
Yes, I'm aware the dates of invention don't quite align, and the time window is cherry-picked for dramatic effect. But it's food for thought.
Nobody was debating the utility of cars and phones 14 years later. With crypto, it's like we're still looking for something as fundamental as an essential use case.
That's still a big deal, but it's far short of the impact-for-everyone promised by some folks in the industry.
I don't know if I think cryptocurrency will be as transformative as the internet or the mobile phone, but I think it will be within a level or two of that scale. It makes good on its promise year after year. NFTs just became popular in the last few years, and that is only one example of many. Are you going to bet against NFTs in the long run? I certainly wouldn't. We don't even know all the technologies crypto is going to enable yet.
Have these people writing these kind of articles ever downloaded a browser wallet and played around with Defi? The amount of ignorance here is staggering. How is it on HN? HN is supposed to be a place for people who are tech savvy and are able to think about the future and imagine it different from yesterday.
It seems as though, the majority of HN users haven't invested any time into understanding it. So they just label it bad.
I wasted a year of my life working for a crypto company, I've actually committed code to Ethereum through the Geth project. I learned it's all a casino of completely useless money moving schemes.
What makes even ENS cool tech? The sole purpose of those .eth domains is to receive crypto, ohh and make the founders extremely wealthy. Why did they need to launch an ENS coin, other than to dump on the public when it was 5x the current price.
You don't even need to go that broad. I'm working in the cloud infrastructure field (think Kubernetes and such). Just following all developments in that narrow space is such a mind-boggingly huge task that it's physically impossible for a single person to follow all of it (except at extreme surface level). And that's before we consider other areas of tech. Or other areas of interest (politics, science, culture).
To make the task of navigating the world even somewhat tractable, we all have to rely on outside authorities whom we trust for a lot of our information diet. Hence why I am very grateful for known figures like Moxie Marlinspike to examine this topic and provide me with a succinct summary of their impression through writing. That's not to say that I take everything Moxie says as gospel, but I know enough about him to judge which of his statements can be trusted and which need to be taken with a grain of salt.
Looks like another polished scam to take advantage of ignorant users, or 'degens' in crypto vernacular.
* PoolTogether: that's literally a lottery. Hardly an innovation.
* Aave: oh, _another_ crypto lending platform. Aside from the fact that most of these are Ponzi/scams that have collapsed in spectacular fashion recently (see Anchor, Celsius, etc), this is another app that only exists within crypto to earn more crypto.
Those 3 examples illustrate the problem of "dApps". There may be a vibrant ecosystem of idea and apps, but when you try to unwind them you realize most of them are entirely self-referential within the crypto ecosystem and there's no utility connecting them to the real world. That's because the few apps that do try to connect to the real world quickly realize that the space of problems that can actually be solved by crypto there is ridiculously small.
(1) Marijuana paraphernalia
(2) Cigarettes
(3) Politically charged symbols like confederate flags and swastikas
(4) Knives
(5) MLM pamphlets
(6) Digital goods (MMORPG gold/items)
(7) "Adult" photos/videos/toys/...
...
Crypto provides an satisfactory solution _today_ for all of those things. It's a little inconvenient to have a currency exchange and fees tacked on just to avoid having bank accounts or whatever frozen, but it works, and governments don't bother to step in and block those transactions even where it might be feasible for them to interfere.
Moreover, the alternatives I'm aware of are all measurably worse in one or more factors including fraud potential, cost, and risk of frozen assets.
IMO it'd be better just to legislate that banks and payment providers are dumb infrastructure like an ISP should be so that it isn't a concern in the first place, but in a world where I don't see that happening crypto is a good enough workaround.
I agree with many of the crypto critics that the answer after this tedious search is that there exists no legitimate usecase in this industry and there never will be.
Yes, I like paying by card. No, I don't like it making everything I do traceable.
I do want to live in a sovereign nation. Probate court and criminal court orders are important. But make it generally really hard for governments to interfere legally, and prevent technically the casual inspection of data.
The typical flow of information, effort and money goes like this: the sponsor (me) creates the investment opportunity under Regulation D of the SEC ruleset with the help of some securities attorneys, a managing broker dealer (SEC compliance) signs off on it and circulates it to broker-dealers via selling agreements, then, wealth advisors who are registered with those broker-dealers can sell our offering to their clients, those clients then fill out a subscription agreement and send their money to a third party called a transfer agent, the transfer agent takes in the agreements and cash, logs all the details about the investor and manages the payment of distributions with a mixture of direct deposit and paper checks, and generates tax documents via mail, these distributions and tax documents then go to the financial custodian of the asset for each investor.
This process involves 8 to 10 different parties, multiple financial institutions and reams of paperwork. The cost of capital is approximately 11% using this method.
I dream of the day that I can offer a tokenized security on the blockchain, that is held by the investors themselves in their wallet, with distributions paid with USDC directly to their wallets. The reduction in cost would be incredible--all we need is the legal framework to allow it.
Suppose that blockchain did not exist but that securities law did not require you to consult securities attorneys to "create the investment opportunity". You would have an efficiency gain by cutting out the attorneys.
In particular I think about your "dream": you dream that in lieu of paying people with a mixture of direct deposit and paper checks, you could pay them with an electronic currency; but presumably at least some of the people being paid with paper checks want to be paid with paper checks (if not, you'd presumably pay them all with direct deposit) and while securities law probably doesn't let you disburse via Paypal or Venmo or any other electronic account transfer, if it did, doing so would be approximately the same as USDC, right?
It seems to me to make a sustainable case for blockchain, you need to basically say assuming the exact same regulatory posture and the exact same degree of technical laziness in terms of automating steps not currently automated, would blockchain make it better?
Already a 6 kW rack will soon cost 7500 Euro in Germany. After that that will be the case around the world. That is when Web 3.0 will make a comeback.
There are lots of others. My own company has spent 3 years building way more applications that you can see here https://intercoin.org/applications
They're open source, and fully documented, try to use them! We're currently building interfaces to power them:https://www.youtube.com/watch?v=ySi-wOB28y0
We also have an Intercoin Show every week where I interview some well-known people in the space. Some examples:
Ian Clarke, founder of Freenet, about decentralized systems: https://www.youtube.com/watch?v=JWrRqUkJpMQ
Sara Hanks, author of Regulation S, about regulations: https://community.intercoin.org/t/interview-with-sara-hanks-...
Thomas Greco, community currency economics: https://community.intercoin.org/t/interview-with-thomas-h-gr...
This is what we are working to accomplish: https://intercoin.org/proposal.pdf
And that is a perfect metaphor for 99% of crypto "usecases"
IPFS can be used like s3 with a third party shim for between free and 400x cheaper.
Unless you want a repeat of this [2] or this [3] with .io or someone on the other end changing the domain or address from one to another whenever they want to.
[2] https://news.ycombinator.com/item?id=21611677
[3] https://thehackerblog.com/the-io-error-taking-control-of-all...
The current offering of VISA, Mastercard, etc. is somewhat limited and there is a barrier to entry. Therefore, artificially high costs can be maintained.
We already are living in this future in India. If I want to pay for a 10₹ ($0.13) chai I simply scan the QR in my favourite payments app and enter my UPI pin. The money is transferred to their bank instantly and it is completely free! UPI is so ubiquitous that even most shops in villages have it by now.
Ironically UPI is far more decentralised because while Solana completely goes down every few months, the UPI network has never entirely gone down.
Why not? If it's been implemented by VISA then it can be implemented elsewhere. Your essentially talking about insurance and risk management, both of which can be done on-chain.
If you live in the US and notice that bank transfers are significantly cheaper and faster in the UK or EU, you cannot just set up a UK bank account in your town. You are forced into the American “bank protocol.”
In crypto, you can withdraw your funds from one entity auch as MetaMask and deposit it into another such as Argent, Gnosis or zkSync, because all of the tokens and applications are composable with each other and build on the same protocol.
Filecoin looks good too.
Industries like porn should also profit from a system that doesn't allow for chargebacks. Porn was a huge driver in the past.
If we look forward to the time all (most?) vehicles are autonomous, I can see a need for a ‘market mechanism’ which allows vehicles to request/cede priority.
Driver A wants to get to Point B in a hurry, so has an incentive to request Drivers C and D to allow their vehicle to pass. If Drivers C and D have no rush, they accept the incentive. Crypto (or a similar token), handled by the vehicles, enable this.
Ethernet was invented in 1973. Wifi didn’t come along until 1997. Crypto is wonky bc it’s a virtual infra layer that’s nonetheless a p2p application at the end of the day. However, the tech is clearly focused on building infra out. This view comes direct from core dev teams and general depth of knowledge about the space. Bridges, new chains, new wallets, new crypto approaches like MPC, scaling L1/L2 - this is all infra. There are niche early use cases like DeFi and NFTs, but that’s not the end state.
A common rebuttal from early internet people is “early internet was cool and useful from the beginning!” This is true, but it’s also true Gen pop had no idea what the hell computer people at MIT were doing with mainframes and why it mattered until wifi, dot com, all this showed up. Early adopters were keyed in more and more such as the govt, DoD, infra companies like Cisco. Scientists got involved early.
This mirrors what crypto is going through right now. Infra is getting built out. The tech and apps are cool and useful to a relatively small crowd of computer nerds. Scientists from MIT, UC berk do research for it. Govt and high net worth people are getting interested. Some early apps that get niche users interested are working. The sense of impatience is silly.
Of course, if you believe that governments are good stewards of money, you will probably not find a use case.
There is nothing preventing someone from accepting it and providing the services you need.
plus every time I sell or transfer, it's a taxable event, which makes use as a currency incredibly onerous
Everything has an upside and a downside. But in the regulated system, you at least have a chance at some sort of recourse if something goes sideways.
> Things like being able to stop or reverse mistaken or fraudulent transfers, protections from fraud, protections from whoever is handling your money for you (with crypto, someone is still handling your money for you) going out of business, etc.
That's only true when you do on-chain transactions, or in the case of fiat, when you pay with cash. If you worry about dispute arbitration, you could use the same dispute arbitration services that exist for fiat. For example, I don't see a reason why payment networks like Visa or Mastercard couldn't add support for Bitcoin eventually. You'd still get a currency that can't be arbitrarily debased and that you can easily transfer on and off the payment network.
As a side note, a lot of Bitcoiners would hate me for saying the above. A large chunk of the community believes that everything needs to be decentralized and it has probably hindered adoption.
And anyway, they don't actually need to run any new nodes, just compromise communication between them until all the blockchain records on the individual nodes are bunk.
> end users always want a way to get money out of crypto and back into fiat currency. And this desire hands governments all the tools they need to starve the crypto ecosystem at will, by cutting off access to inflows and outflows if participants don’t follow the rules.
If you think it has no use case, don't use it.
If you think it does have a use case and you need that, use it.
- They are always pushing their ideology into the spaces I frequent, forcing me to engage in some way, and
- They vent their mining CO2 to the same planet where I happen to live.
Personally, I think that's the right mindset to take here: I don't see the point, but people are allowed to do things I don't see the point of so <shrugs>
[1] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
Also, the number of people who accept Euro is definitely larger than those who accept any cryptocurrency combined.
still, the fact that I haven't heard of the counterexample, suggests that indeed TradFi isn't close in the US
sorry to move goalposts again ;-)
But the other cool thing about crypto is that it's programmable, so you can arrange 100s of transactions between parties. Micro finance loans, royalties and distribution, etc etc
Note: I don't save in BTC, just use it to get paid from overseas then convert it to local currency.
Giant long article and only one small mention of DeFi (which I'd argue is a great use case, despite all the hacks going on) and it isn't even accurate. DeFi isn't about betting.
A good example of the value of DeFi is a project like AAVE [1]. It isn't about asset appreciation, it is about creating a frictionless lending/borrowing market based on collateral that anyone can participate in.
If I have some crypto and I want to take a loan out against it for something else, I can do so without having to go to a bank, ask for permission, KYC, or anything. The protocol itself is fully decentralized and no single entity can shut it down (or even modify it). It literally happens in a single transaction. It is global. It is 24/7. It is transparent and on-chain. Oh and the rates are actually pretty decent (no middleman).
People might ask 'why' one would want to do that and it really is just an answer of something that happens every day in TradFi markets as it is. It may not be helpful for you, but it certainly has value. Sure, people can use this for speculation, drugs or whatever. But I personally see this as extremely empowering for a variety of my own reasons.
After spending the last year+ very deep into DeFi, I've seen my fair share of scams and hacks. But my eyes have also been opened to the potential of what is out there. DeFi is the first real use case of crypto that I've seen that has value.
We thought that it would be a great use case for crypto.
Disclaimer: former co-founder/CEO. Left in late 2018. I still have equity in the company.
Wether you like them or not, DEFI, ICOs and NFTs are all very valid use cases which attracted people with backgrounds different enough that we can call it mainstream. Yes you can do pretty much all of them without blockchain but so can you with drugs and ransomware. I don’t know what is it with crypto that it generates so much extremism in both sides.
Those are not exactly "use cases".
1. Transferring funds
I can transfer crypto faster and a lot cheaper than any money transfer. Hell I can receive and withdraw same day.
2. Earning interest
By parking my money in a stable coin and dropping it into an AMM like uniswap I can earn 10x-50x more interest than just parking it in my bank account. No volatility. Only risk is hacker risk.
Re: 2), uhh, yeah. I think that's what Celsius users believed too.
Not really.
One can do that with either XRP, Stellar, or Algorand blockchains with has virtually little to no fees, much faster and far cheaper than a wire transfer, all worldwide.
Perhaps is that why Moneygram realised that Stellar was a great use-case for their service? [0]
So when I use crypto I have a product that when compared to the current methods is faster, easier, cheaper with no transaction size or geography restrictions.
2) a centralized company taking deposits is not the same as a smart contract.
The earning interest is like picking up pennies in front of a bulldozer. You'll be OK 99% of the time but then you'll get flattened. You'll earn maybe 10% interest per annum, but be at risk of losing 100% of your deposit at any moment. Your deposit is completely uninsured. If you have no solid guarantee that you'll get your money out, use the precautionary principle to conclude that you won't.
Also, for 10% of something to be more than pocket change, you need to deposit much more than pocket change. If you're depositing pocket change into these services, you're not really investing. If you're depositing more than pocket change, you're running a big risk.
I recommend you get your money out now.
Are you comparing this to the abysmal US banking system, or the systems that exist in most of the rest of the world?
Because I can do that in GBP right now from all of my banks (both with old firms and the challenger banks) for free.
I’ve found crypto a great method when buying small apps and companies off people. Saves me $75 and a trip to the bank.
Essentially my deposit goes into a pool of two currencies. Let’s use USDC and EUROC for example.
The pool is used to facilitate people trading from USDC to EUROC and vice versa. To trade through the pool you’re charged a small fee. 0.01% to 0.3% in most cases.
Those fees are then distributed to all the people who deposited in the pool. Proportional to their share of the deposits.
I like to think of it as breaking up the fees charged by (now) unnecessary forex brokers and agents and distributing it back to the people.