Comment by WorldMaker | Hacker News Reader

Comment by WorldMaker | Hacker News Reader

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> If you've been soured on these technologies because most of the currencies built with them are scams, I would encourage you to learn about them as if they were just incredibly robust databases that even governments would struggle to take down. Surely you can think of something cool to build with that, which doesn't involve money.

The problems with the technologies is that the "robust database" guarantee is often highly dependent on the currency mechanisms. They unfortunately go hand-in-hand.

Remove the currency from a blockchain and you have a merkle tree. (To be even further unfair, considering currencies in aggregate, blockchains are always a merkle tree. How many forks of Bitcoin are we up to now?)

Merkle trees are incredibly useful, and yes a sort of robust database. I use git every day, but I have to respect that git branches and git forks are real phenomena and coordination of branches/forks always a real ongoing concern when working with git. Not a lot of institutions want a "robust database" which is easily branched/forked. You still need a coordination engine to keep the tree a "chain" somehow. The currencies for better and a lot worse (given how many seem isomorphic to scams) are the coordination engine that still seems most (distributed/transactional/"robust") useful to making a "blockchain" out of a merkle tree.

> The problems with the technologies is that the "robust database" guarantee is often highly dependent on the currency mechanisms. They unfortunately go hand-in-hand.

I agree that economic incentives are important for robustness, but I don't agree with this use of the word "currency". The tokens have value in that they can be used to write to the ledger. That is the consumer aspect of the token, you can give it up in exchange for the ability to edit the ledger. The producer aspect of the token is that if you help participate in running the network, you can earn tokens, to edit the ledger yourself later. The tokens have to store value (ledger write access), and there needs to be a market for them, because the producers can't use them all themselves.

Just because something can store value, in this case the specific ability to write to the ledger, doesn't mean that thing is suitable as a currency. Copper ingots let you make cat6 cables, the are objectively valuable, but we don't use them as a currency. And as the world found out over the last decade, the distance from store of value to functioning currency is significant.

The store of value is sufficient to run the networks though, you don't need the tokens to work as a currency, and I think that has been empirically proven. The Ethereum mainnet is unlikely to disappear for a very long time, but Ethereum is also unlikely to ever be widely used as a currency.

The takeaway is that you should have as much of these tokens as you are likely to need for writing to the ledger. If you hold them in Coinbase and never use them to operate the ledger then you are participating in the speculative overvaluing of the tokens.

I think something I disagree with in trying to split the hairs between "token" and "currency" is that it can be a distinction without a sharp difference.

The US penny is a copper (plus specific additives) ingot. It's value as a currency has directly shifted with the cost of copper, to the point of a desire to end the production simply based on copper prices. Copper is still a commodity with commodity markets (and futures markets) and its fungibility to trading is sometimes currency-like.

(Plus we can get into deep weeds discussing things like the Gold Standard where the commodities in the not-so-distant past have been directly tied to currencies. Arguably that is a bad idea, but just because it is a bad idea doesn't mean that it isn't a common or recurring idea because the distinctions are so close to few differences. You can cross-reference the South American experiments with a "Bitcoin Standard" currency even.)

When I say "the currency mechanisms", I certainly mean "the token mechanisms". They are the same, from my perspective. The difference between "currency" and "token" in a cryptocurrency sense doesn't seem to mean anything to me (unless you are explicitly narrowing to "non-fungible token", but that's a different discussion and as far as I can tell you are not), it is a distinction without a difference. Especially in the context of how much cryptocurrencies are and are not isomorphic to scams. In my view Artificial Scarcity (inc., but esp. Premining tactics), Proof of Work, and Proof of Stake all have aspects that are isomorphic to scams, that can be indistinguishable from scams. With present technology/math I do not see a way to build tokens that have any value without those systems. Whether you call those "currency mechanisms" or "token mechanisms" isn't a meaningful distinction when talking about the parts of blockchain tech that are most problematically isomorphic to scams.

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