Bitcoin is a solution looking for a problem
reuters.com
reuters.com
“The problem with money is all the trust that is involved” - Bitcoin Whitepaper
We can debate whether or not Bitcoin has truly solved the problem it set out to solve, but the problem Satoshi Nakamoto intended to solve was clearly articulated in the Bitcoin Whitepaper and immortalized in the genesis block.
Bitcoin was designed to solve all the trust required in the system, trust in institutions that have proven again and again not to deserve that trust.
With traditional currency you have to trust the bank not to lose your deposits through speculation.
You have to trust that the bank holds a sufficient fraction of your deposits to remain liquid and solvent when you go to withdraw “your” money.
You have to trust central bankers not to print more money out of thin air and dilute the purchasing power of you money, etc.
is there some sort of race to the bottom between all these vile super-rich goons?
Reddit moment
I, for one, appreciate your use of "goons".
It is important to highlight that now stable coins have replaced part of the original Bitcoin vision and that for many people it does not matter if the solution is decentralized or not, just if it is accessible.
The minute the illusion is ripped out, it gets LunaCoined and collapses. The illusion can be held seemingly perpetually at 0% interest rates, but now at 4.75% FFR, I have my doubts that stablecoins make much sense.
Which is more than the accounting going on at FTX by the way. And that's why those depositors lost everything.
--------
Many thousands, maybe 10s of thousands or even 100s of thousands have lost their entire accounts at FTX, Celsius, and other "cryptocoin" schemes or "stablecoin" schemes like Gemini. This is well documented and understood. Its a very simple issue: cryptocoin bros lie, your money isn't safe or kept with any kind of accounting practices with them.
And with all the bullcrap about "decentralized" or "trust-free" accounting, its all just lies to get people to deposit more money into shady accounts.
4.75% isn't even that much by historical standards of the past century.
"trust us, it's trustless. " -kleptocurrency huckster gospel pg 1 verse 1
Meanwhile, Tether regularly (every couple of weeks) drops to 98-cents or less. Celsius, Gemini, and FTX all imploded with 100% losses (at least, my friend's "stablecoins" in those accounts were completely lost and no one has given his money back yet)
2. The US has been the economic leader of the world for those hundred years, so of course nobody is losing money under the FDIC. But no guarantees on how long that will last
We're on track to people losing 100% of their stablecoins at some crappy fake online bank every 4 or 5 _months_.
Celsius, Gemini, FTX. Who is next? Your money was safer in Argentina than in FTX or LunaCoin.
Similar mechanism exists globally. Have a read:
There is an alarming frequency at which stablecoins break the buck. I'm pointing out imperfect dollar instruments like Money Market Funds that have no insurance and are free to invest into riskier bonds... but even these risky MMFs are far more stable in practice than USDC or Tether, or any other stablecoin for that matter.
The issue is that Stablecoins suck in general, and that cryptocoins in general are filled with Conmen who will misuse your money. And none of the cryptocoin community has _any_ form of defense (legal, or otherwise) that determines who is, or isn't, trustworthy. Because the cryptocoin community is too religious about believing that cryptocoins are innately trustless or something.
Make a stablecoin without any banking like Lunacoin, and you'll collapse. Make a stablecoin like USDC connected to banks, and you'll earn less than the FFR / Money Market funds. Lie about it all like Gemini and you lose your shirt (lol 18%+ APY returns. An obvious lie, to me at least. But my friends didn't believe me).
The naked cronyism, conmen, and assholes have ruined the cryptocoin experiment in every way possible. DeFi, CeFi, whatever. Its all just excuses, I'm fairly certain that I can list off a failure that matches whatever methodology you wish to bring up.
https://www.narrowbanking.org/
Caveat - the main problem with DeFi is that Solidity and the EVM are garbage and give programmers too many footguns to accidentally shoot themselves with. Most DeFi failures have been a result of those languages being based on Javascript (wtf!) and prioritizing familiarity and ease of use over security, correctness, and provability. But there are other more solid platforms for DeFi, and better and better tooling for EVM-based DeFi.
I acknowledge the plight of people in situations like Argentina, Venezuela, Lebanon, etc. I have many friends who fled such situations and Bitcoin/crypto absolutely would have been of benefit to them.
However, when looking at the numbers helping people in these situations is easily still a net negative when zooming out and tallying what crypto has done to the population generally. For every person that was able to maintain some wealth in these situations there are 100 people who have gambled away everything they have and enabled an entire cast of charlatans, scammers, cybercriminals, and oppressive regimes like North Korea. I don't even want to think what the actual human impact is from suicides, ruined families, etc.
I've provided data in multiple other comments and the fact is there has been tens if not hundreds of billions of dollars invested in crypto over more than a decade for a tiny number of people (one half of one percent of global internet users) to use this stuff for anything (mostly crime and speculation).
Oh yeah, plus the ridiculous environmental and broader societal impact of the complete insanity that is proof of work resource utilization.
Crypto is overwhelmingly evil and an absolute scourge.
No disagreement on the charlatans, scammers, cybercrims, NK's of the world, etc, FWIW.
I see it everyday - video poker "cafes" and here in Wisconsin the cultural acceptance and actual embrace of weird things like "pull tabs" and "dice games". Las Vegas is an entire city that has been built on financial ruin.
But we can simultaneously criticize, express concern, and work towards fixing multiple issues at the same time.
I personally take a very different view, which is that voluntary transactions are inherently ethical. The questions of ethics rests not in the outcomes for me, but in the question of whether any force was initiated. I can voluntarily donate so much money to charity that I make myself insolvent - if that's my choice, it's fine. Conversely, if a mugger puts a gun to my head and demands I give all of my money to charity, that is not fine, the mugger is infringing upon my life, liberty, and property.
Outcomes are the exact same - one situation is ethical and voluntary, the other is unethical because it is involuntary.
Swindlers and charlatans are kinda a grey area, since that reaches into the realm of transactions that appear voluntary but are rooted in false premises or concealed information, and might therefore be considered unethical if not outright theft.
At the same time, if the state is responsible for providing individuals with mathematical literacy and it fails so horribly at that such that individuals voluntarily play games with a mathmatical expexted value (EV) of <$1 for every $1 they put in, which they do with the sole hope of reaping an EV of >$1, the same argument can be made about the state, who, worse than the charlatans and scammers, had the responsibility of educating their own victim well enough for the victim to not fall for such schemes.
That abdication of the responsibility paired with the exploitation of those same individuals the state has failed to responsibly educate makes the state activity feel much more reprehensible, in my opinion.
My subjective views aside, your point about being willing and able to tackle two problems at once is a perfectly valid one, and I concede even that it can be more efficient to target the lesser of two evils if the rate of evil reduction is greater due to the smaller evil being a quicker/easier fix.
As for the rest... Pretty sure I'm following but it's a bit more philosophical than what I'm capable of.
With that said, if you follow the crypto space it's a symptom rather than problem. Just like the lottery many people will outright (essentially) say "crypto is my only chance to get out of my disadvantaged economic position".
It's really quite sad and as much as I bash crypto I have a tremendous amount of empathy for people who feel trapped in their economic situation and desperately play crypto/lottery. I cringe when I see people in the crypto hate/skeptic community cheer when average crypto "users" end up in financial ruin. It's disgusting.
I've told multiple people in the space something to the effect of "If you spent as much time, energy, and resources as you do pumping crypto bullshit on education - learning to code, trades, professional certifications, etc you'd be much better off". Hell - many of the shills pumping crypto could walk into any organization and get a great sales/marketing position. Crypto is truly "MLM for men" and the stats back that up.
The statistics are horrendous and people desperately hoping for another "moon coin" to get that lambo (or whatever) is remarkably similar to playing the lottery or thinking your six year child getting to the NBA/NFL/etc is your ticket out.
I don't want to put readers asleep, but I see cryptocurrency as a very complex technology that requires a bordering-on-academic understanding of privacy, autonomy, sovereignty, macroeconomics, the shortcomings of FIAT currency, centralized banking, the federal reserve, fractional reserve banking, asymmetric cryptography, computer security, and a litany of other topics to fully appreciate and realize the benefits offered by Bitcoin, Monero, etc.
I think it's an utterly fascinating real-world study into the crossroads of monetary economics, market economics, politics, computer science & cybersecurity, human psychology that has some very real utilities, but...
I suspect (many? most? majority? plurality?) of the people involved in crypto really don't even care about any of that, let alone understand it, they're just speculating purely on the basis of greater fool theory, and many of them do get hurt.
I tend to be against government regulation, but as a pro-crypto person for the right reasons, even I don't think it would be a bad idea to kill the FIAT<->USD exchanges that let people who are dangerously uninformed participate (and get burned) in this wild west ecosystem. The sad reality that these exchanges have widespread KYC but no accredited investor requirements shows that the regulators are really only concerned about Uncle Sam's bottom line, not about protecting people.
The whole thing really ought to go back to where it was circa ~2012, even it comes at the cost of BTC going back to 2012 market cap and prices.
Cryptocurrency is rightfully many things: a cutting edge payment network, an enormous boon to financial privacy, a way to enable entirely new types of organizations and funding models in the business world, a source of rapid developments to and applications of fascinating and obscure cryptographic concepts (e.g. zero-knowledge proofs), a hedge against systemic FIAT and some geopolitical risks, a driver of needed improvements in FIAT financial infrastructure (just like Google Fi was a driver of needed improvements in consumer internet infrastructure), I could go on and on...
But one thing it should absolutely NOT be treated as is an "investment". It generates no cashflow and investing based on greater fool theory only ever causes speculative bubbles where the nominal price spectacularly diverges from the true economic value, just like in the tulip mania. Any decent financial advisor will tell you to avoid that like the plague!
Legitimate question for you because this has been a remarkably civil dialog considering this is such a flash point on HN (I appreciate that):
If it really is all of these things, where is the user adoption? Every six months or so I undertake the following exercise:
1) Get the 10 most active chains (variety of sources for this). Always includes bitcoin, eth, a bunch of l2s/sidechains/etc.
2) Visit their respective block explorers.
3) To the extent the data is available, capture daily and monthly metrics for the following: number of total transactions, used unique addresses, and (ideally) unique TX/RX transaction pairs.
4) Add them all up (rounded up).
5) Assume each address is a distinct user (they aren't).
6) Assume each address on each chain is a distinct user (they aren't).
Every time I undergo this exercise I come to the same conclusion: based on actual network stats the number of blockchain users is incredibly low - even when strongly favoring crypto with the methodology above the DAU/MAU metrics are at best in the low 10s of millions. Even when you take the all time high metrics with the methodology above it's still well under 100 million.
Considering there are an estimated > 5 billion internet users (crypto TAM) ATH numbers represent approximately 2% adoption, and I'd argue if you used a methodology that could resemble legitimate DAU/MAU stats you see from Meta, etc real adoption is probably 10-50% of that.
I talked about my crypto journey - I looked at the technology over the past five-ten years and agreed with you. I was convinced it was the latest emerging technology that would provide a platform for the things you speak of and more. Then I started realizing no one I knew outside of the crypto-sphere actually used it for anything other than trading on CEXs. That's when I started performing this crude study and realized crypto/blockchain is completely irrelevant. The entire space could disappear tomorrow and barely anyone would notice.
You seem to be much more capable of looking at things more holistically than I do/can. Historically, prior platforms/technologies from everything to the PC, the web, social media, smartphones, etc, etc easily hit 1 billion users inside of ten years. Generally speaking I feel like people are able to embrace things that are actually useful and benefit their lives. Crypto has been around for 14 years, has the benefit of leveraging all of these platforms, and still has abysmal user adoption.
Why?
I understand it probably comes off a little misanthropic, but as I also said, I suspect (many? most? majority? plurality?) of the people involved in crypto really don't even care about any of that, let alone understand it. The unstated corollary to this is that I would presume the people who aren't involved in crypto, on average, understand and appreciate all of these things even less.
I understand that a lot of those 5 billion users weren't born with the privileges I was - I basically rolled all d20's for my stats by being born into one of the wealthiest and highest income countries in the world to a pair of responsible middle class parents and getting both the genes and parenting that I got, in an economic environment where I got to be exposed to having a home computers from the age of about 4, got lucky enough to be born into the highest income county of my state with a fantastic charter school that offered me a better early education than I deserved, all through no virtue of my own, and I think that opened life path doors for me that simply aren't open to an awful lot of people.
Even after all of that, to have the personality type that allows one to be extremely interested in what some would call "esoteric" topics like cryptography, monetary sovereignty, etc, as opposed to someone who just listens to whatever the popular music is, watches whatever the popular TV show is, and is glued to tiktok or Instagram 24/7 is far from guaranteed.
I think to be deeply interested in cryptocurrency for what I subjectively call "the right reasons" is in many ways to be an exception to the norm, both economically and culturally, compared to the user base of "all internet users".
In their defense, I wouldn't recognize any of the top players of the MLB, NBA, NHL, whatever the American football one is, whatever the big European football one is, any of the kardashians, virtually any actor or actress, or musicians, or other cultural figures if I was standing next to them in line at Microcenter - I think it's mostly a question of different interests being held by different people, and "the technical, economic, political, and philosophical aspects of electronic peer-to-peer distributed ledgers" is probably just not a very popular interest.
Again, sorry if any of that comes off as misanthropic, that's not my intention - I am trying to be completely civil.
> I understand it probably comes off a little misanthropic, but as I also said, I suspect (many? most? majority? plurality?) of the people involved in crypto really don't even care about any of that, let alone understand it. The unstated corollary to this is that I would presume the people who aren't involved in crypto, on average, understand and appreciate all of these things even less.
As a rough guess you could probably fit all of the people on the planet who could have a remotely coherent conversation across all of those topics on a mid-sized airplane.
But here's the thing - do you think people who use their cell phone to upload vides to their YouTube channel understand how the optics of the camera work? The intricacies of the HEVC codec? The baseband of the cell modem? Any clue of the internet? Payment processors for their subscribers? The ACH system for their payments? The logistics of UPS for the merch they send out to their fans? The broader economic effects of the gig economy?
No, they don't and they shouldn't. They're off doing their own exceptional things of interest just like Kim K or some professional athlete. All of our lives run on stacks of research papers even far more complicated than "the technical, economic, political, and philosophical aspects of electronic peer-to-peer distributed ledgers". The important thing here is none of this matters to them - what matters is they have this YouTube app, they make videos with it, and people watch them.
They don't understand or appreciate the benefits of the obscure component parts but what they appreciate is the sum - they got to quit their crappy job to be a YouTuber (or whatever). The hundreds of millions of people who "follow" Kim K presumably do so because they see value in it too.
My point is (other than getting fined by the SEC for unlawfully promoting crypto scams) when will the crypto ecosystem deliver something of value/utility to the masses - from Kim K to your grandmother?
On the flip side, what benefits does crypto actually offer? Before talking about economic policy, privacy, owning data, whatever, lets remember a few things:
- People play the lotto because they're bad at math and don't understand economics.
- Everyone has known the US government has been spying on them for decades and no one cares.
- People happily hand their entire lives to giant corporations that sell their data, abuse them, etc so they can post photos online "for free".
- So, so, much more.
For most of the benefits I hear of crypto (like what you've mentioned) my response is "No one cares about any of that". On the contrary - how many password resets do you think Facebook does everyday? Bank of America (60m customers)? How many credit card transactions are reversed?
The fundamental properties ("benefits") of crypto are an ANTI-ADOPTION pattern for people other than those in the airplane with you. They just don't align with fundamental human behavior (forgetting stuff and making mistakes).
I see it like Linux on the desktop. I love Linux. I've run it on the desktop since 1997. For a while there people were saying "Year of the Linux Desktop" because it was going to dethrone Windows. Well, obviously that's a joke for a reason.
The crypto community says the same (ridiculous) things - "replace fiat", "rebuild the entire web with web3 and displace literally everything", "get rid of banks", etc. It's delusional, wishful thinking largely driven by personal financial interests with roots in the economic desperation we referenced earlier.
Oh btw, for the record I NEVER thought Linux was going to have any considerable success on the desktop either ;).
> On the flip side, what benefits does crypto actually offer?
> For most of the benefits I hear of crypto (like what you've mentioned) my response is "No one cares about any of that". On the contrary ...
Right now admittedly, the benefits of Bitcoin are relatively hypothetical.
I think the chance that in a few decades (say 20-30 years) Bitcoin will have turned out to have been a system/technology that will have assisted the world's financial system with converging to principles that'll have brought with them significantly more stability in this financial system and following from this more stability of society .. this chance is greater than zero.
I'd argue that one key problem of the world's current financial system is its (in my opinion) inherent dependency on economic growth. As most people will agree, economic growth has been a good thing for centuries, but humanity has reached a level of (ab)use of natural resources that far outstrips the capacity of ecosystems to recover. Many people would be content with less material goods but for the sake of economic "stability" (and also because voters like presents) governments decide to hop from one growth stimulus package to the next, subsidizing consumption and thus nudging people to buy new stuff instead of maintaining/repairing existing stuff and incentivizing companies to churn out one new variant of an existing product that's often only minimally better and sometimes even worse than the previous one after the other.
Jobs/unemployment is _the_ justification for the never ending growth/stimulus policy that almost no voter will argue against, which is why politics isn't really able to solve this.
From this follows the key solution: for the sake of our ecosphere, the (IMO) inherent dependency on economic growth has to be done away with. Fiat currencies (through the expansive monetary policies they enable) are the basis for the growth dynamic and Bitcoin is a system that enables opting out of it.
You might say: now that's one vague kind of benefit.
Agree, it's vague. But the possibility that Bitcoin can help solve one of humanity's fundamental and existential problems _because_ unlike politicians it cannot easily be corrupted by big money is IMO enough hypothetical benefit to justify its adoption and use.
I mean if your intent is speculation, this is how the rest of the internet has been built.
TCP and OS security are so bad they ripped the internet a whole Cloudflare, but they all still exist and find their uses in real systems.
No comment on regulatory or legal frameworks in place since I have no idea what's gone on in the courts on that front. It's like entropy though and I have doubts that there's any long term value in trying to stop it.
Banks beget banks, because banks only invest in diversified quasi-banks, basically stockpiling non-cash assets, feast or famine. A reasonable structure for much of human history, if you like (often) dry, safe, grain/peas in the winter. Before global transport was fast and risk-free. In vogue right now: "all the PCs, all the business software, all the electrification efforts/grid modernization, all the goods manufacturers storefronts, all the films, all the personal sites, all the web pages." Maybe not such a relevant capability (large stockpiles) outside of, well, contingency.
Bitcoin, the machine, only invests in progress, cheaper more plentiful energy and faster processors or you lose. It has scarcity and inherits supporting stockpiling.
Ethereum? Presumably cooperation and transparent software, also good things! Perhaps in the next century proof of health, proof of satiety.
Predicting the future is often difficult.
The question no one asked is if everything should be stockpiled.
I think there's no question that we should make things better or more plentiful.
There's a tradeoff because prudent disaster preparation is expensive, but worth it if the disaster happens. The question is, who will pay for it? Often, the government.
If banks pick winners, everything becomes a bank.
Excessive risk taking is a human phenomenon. Sometimes that results in a bank failure. Sometimes that results in a stablecoin failure.
With the existing system, we have various backstops in place to ensure the return of bank deposits that people assume are safe.
> Excessive risk taking is a human phenomenon.
This is the exact trait that you do not want in your leveraged banker.
But a currency you can't print would make the current problems worse.
A "currency" with no physical representation, that physically cannot spread infectious pathogens (like COVID) the same way physical paper notes and coins do is worse than paper notes and coins for public health?
A "currency" with wide open and auditable transaction records is worse for combatting government corruption than briefcases full of paper notes with no auditability at all?
If you want to own FIAT, fine, but don't pretend BTC is automatically the root of all evil.