by kolchinski on 3/18/22, 11:16 PM with 507 comments
by pavlov on 3/19/22, 3:55 AM
But it’s not. Bitcoin is 13 years old. At that age, Windows was on >90% of the world’s computers. Java at age 13 had taken over enterprise software and was about to conquer mobile via Android. Cryptos are used by maybe 0.1% of computer users (if we’re very generous about what exactly constitutes usage). Considering the amount of investment they are an expensive failure by any normal metrics like monthly active users.
It’s not the early days. Rather these are the last days for VCs to sell you this tired old thing before the novelty wears off, and that’s why they are so frantic about pushing it via Hollywood celebrities and whoever else they can muster with money.
by jmcgough on 3/19/22, 12:14 AM
If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases.
If I purchase something and don't get what I paid for, I can contest it with customer service or my credit card company.
With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through.
With crypto, a xss attack or a misplaced password can cost me all of my coins.
With crypto, I have to triple check the address I'm sending coins to because I can't undo it.
With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete.
I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0.
by tippytippytango on 3/19/22, 4:08 AM
In the more distant future, if bitcoin survives, its utility will just be one thing, it will be regarded as a unit of measuring transaction value independent of any government. It will not be a replacement for any sovereign currency. Just this extra tool out there in the ether of finance. Notions of store of value, blockchain, proof of work etc. will be regarded as implementation details of achieving a global unit of account. Think of it like the SI unit of value, kilogram, meter, bitcoin. It's still far too illiquid to serve that purpose now; but, once it has at least an order of magnitude larger market cap it may.
by Nextgrid on 3/19/22, 1:37 AM
This is a very valid use-case when you need to transact against the will of a powerful adversary such as governments. It needs to be there and needs to be protected just like free speech needs to be protected.
However, day-to-day, if you're making transactions that the government approves of, it's better and more convenient to rely on said government to protect you and end up using a much more efficient (in terms of transactions per second, fees & energy usage) and convenient system such as credit cards.
Crypto is like a tank - useful if you need to go into battle and defend yourself, and while it can be used to go buy groceries at the mall, it's not the most convenient. When you're not in battle, you're better off just using a normal car and relying on local laws and subsequent enforcement to deter anyone from harming you, which, at least in civilized countries, works the majority of the time.
by paxys on 3/19/22, 12:06 AM
by paulpauper on 3/19/22, 2:47 AM
The same coins now like litecoin are unchanged even as far back as 2017. So either it's a weak bubble or a deflated one. Compared to stocks, Crypto is dead..nothing goes up for more than a day..tons of wash trading. tons of scams.
3x tech etfs are way better than bitcoin anyway. I would rather own TECL and TQQQ instead of bitcoin. TECL and TQQQ were up over 100% in 2021 compared to 60% returns for bitcoin.
by binwiederhier on 3/19/22, 2:01 AM
This was really off topic. My apologies for that, but I feel like I had to get that off my chest :-)
by newacc9 on 3/19/22, 12:07 AM
by acjohnson55 on 3/19/22, 12:31 AM
I would replace "non-monetery" with "non-financial". I think it's a perfectly reasonable (albeit, imperfect) solution as a ledger and exchange mechanism for new financial assets.
by javchz on 3/19/22, 1:02 AM
The easiest way for the regular Joe to use crypto it's with an exchange... that it's basically, just a centralized institution making changes in a private database for when transactions are made inside the exchange.
Only if the user wants to send money to a wallet the transaction enters into the blockchain, outside of that it's like a bank... without the regulation benefits.
I think the state of Crypto right now it's in similar to what HTML journals were at the start of the internet. The reason why social media won over everyone having their blog in a distributed network, was in big part to the easy-to-use experience.
I find it a little bit hard to believe that crypto will not be centralized at the end to some extent. This motto of "crypto it's a fight of the common folks against the big guy" feels like marketing made by people who control crypto now and who want to be the "big guy" this time, rather than the democratization of the banking system.
Look, I like concepts of the tech behind it and I hope to be wrong, crypto has proven useful in some scenarios like Venezuela. But seem naive to expect that, if they don't take into account the limitations of the tech itself, everyone it's going to use wallets and private keys with all the good security practices requires and never make a mistake.
by chizhik-pyzhik on 3/19/22, 12:11 AM
- a technology that solves coordination among untrusted parties can be useful
- the early usecases for blockchains are mostly profiteering and rent-seeking
by baby on 3/19/22, 1:34 AM
> Claim 1: Crypto is a Bubble (Confidence: High)
Are stablecoins not crypto? The DeFi built on top of stablecoins and other assets is basically what the market/banks had been doing for a long time (except that everything is transparent, fraud is easier to detect, etc.)
> Claim 2: Blockchain technology has no non-monetary applications (Confidence: High)
This one is easy to refute. A few ways:
1. The point of cryptocurrencies, is that we found that we could use monetary incentives to build and run services that have nothing to do with money. Sure bitcoin was only for transfers, but other projects have explored how to build services on top: smart contracts, identity registry, archiving of the web, file storage as a service, a tor-like mixnetworks, and I'm sure others can point out all sorts of projects.
2. The core of blockchain technology (although not all of it, see next point) is about protocols for distributed systems when faults can be malicious. Distributed systems are used EVERYWHERE, think distributed databases. As threat models are different for every products, why claim that we don't need distributed databases resistant to malicious faults? Banks are the first target of such products, so it's no wonder that cryptocurrencies were invented. Another example is the web PKI, which currently uses protocols like Certificate Transparency which are good are letting you audit your domain names and detect if any attacks have happened after the fact. I bet you that in the next 10-20 years the web PKI will run on a BFT consensus protocol, or an unknown breakthrough solving a similar problem, to prevent attacks from happening, period. And if nobody builds it I will.
3. What is blockchain tech exactly? Because I can tell you that many fields in cryptography have seen INSANE advances SOLELY because of cryptocurrencies: general-purpose zero knowledge proofs, multi-party computation (and threshold cryptography), broadcast protocols, etc.
> Claim 3: Future monetary use of blockchain technology will be minor (Confidence: Medium)
That really depends on regulations, and if they want to kill the beast (and replace it with a non-fault tolerant CBDC). But we're already seeing countries adopting cryptocurrencies (albeit the wrong ones) so I guess it depends on where you'll be in the world. The dream of crypto is really, no matter bitcoin maximalists will tell you, to make payments as easy as sending an email. And without an open standard that everyone can trust, how will this ever happen?
by rufusroflpunch on 3/19/22, 1:45 AM
Lightning is an engineering marvel.
by daenz on 3/19/22, 12:06 AM
by tobz1000 on 3/19/22, 3:50 AM
Sure, data would need to be verified by a trusted party when it's first entered. A blockchain still protects against forgery after this though.
by madrox on 3/19/22, 4:06 AM
It may or not end up looking exactly like traditional money, but it'll look like something.
by ttul on 3/19/22, 3:37 AM
by andrewmcwatters on 3/19/22, 12:58 AM
I believe some of these things are in direct contradiction to each other and there just isn't exactly a wide amount of academic discussion going on about it that I've been exposed to.
And what's interesting to me is that if you did effectively create such a system, how would it manifest in usage? If there isn't a digital gold rush, or a speculative aspect to its consumption, well ran monetary systems from established governments give you few reasons to utilize it.
by wrnr on 3/19/22, 12:01 AM
by ecocentrik on 3/20/22, 6:01 PM
by tzumby on 3/19/22, 5:08 AM
by jka on 3/19/22, 12:24 AM
Ironically that means that excessive amounts of money are being thrown at them in order to obtain any kind of small angular velocity towards funders that believe they can capture the next generation of the market -- or simply to prevent it from happening, for those with existing moats.
Simply wait. Give it another five years to a decade or so and the tide will recede and the valuable technology will remain above the silt.
by DennisP on 3/19/22, 12:32 AM
by SubiculumCode on 3/19/22, 1:00 AM
Claim 2: Blockchain technology has no non-monetary applications (Confidence: High) Gambling is definitely a non-monetary application of smart contracts and oracles that is truly viable as a product.
*Claim 3: Future monetary use of blockchain technology will be minor (Confidence: Medium) There are many forms of crypto, and many are not immutable. Many have systems of governance that allow for changes in monetary policy, just like in a fiat currency.
by stewbrew on 3/19/22, 4:20 AM
by fsociety999 on 3/19/22, 1:34 AM
People have been making similar claims about Bitcoin for over a decade now, and meanwhile it is still alive and kicking and shows no signs of slowing down. It is especially useful in places in the world that don’t have easy access to banking and countries where their currencies are being debased. I encourage you to watch this video if you have any interest in challenging your beliefs:
You shrug crypto off as not being “genuinely innovative” which I think shows a big lack of understanding. Personally, I think the invention of Bitcoin is perhaps the greatest innovation since the internet itself. It cannot be understated how powerful it is to create money whose supply cannot be controlled by a central institution or power. This is the kind of invention that could literally change the world (and likely will).
Your second point in claim 3 is the exact talking point used by the Federal Reserve and other central banks. I think this represents an extremely narrow view of the world. Look at the US dollar which is dangerously on the verge of falling into an inflationary spiral. If you feel safe keeping your money in dollars then godspeed. I personally feel very unsafe given the current political climate. The dollar has lost over 99% of its purchasing power since the creation of the Federal Reserve and the current strategy of printing more money to solve every problem has been much more of a “detriment to people’s lives and livelihoods” than the gold standard ever was. You should research The Cantillon effect which seems to be more and more relevant in today’s economy.
An alternative to the boom and bust narrative is that the banking elites of that time period created the boom and bust cycles themselves through control of the gold supply in order to lobby and justify the creation of a central banking system that would benefit them and ensure that if they ever got into a pinch they could bail themselves out by having easy access to the money spigot. Remember history is told by the victors.
I agree with you that governments are unlikely to let go of control over monetary policy and won’t do it willingly or eagerly, but I think it is already too late for them to kill Bitcoin. They can cut off exchange access to buy and sell for dollars, but by forcing people to use dollars and cutting off access to crypto, I think it will actually expedite people’s willingness and acceptance of crypto. People and businesses will start accepting crypto directly for payments. It will take a long time for this to actually materialize in the real world because there are so many people like you who have such a narrow-minded view of crypto, but when you are faced with accepting a currency that is losing 10-20% of its purchasing power every year, or accepting Bitcoin, eventually people will understand that Bitcoin is the better money.
I expect to receive an onslaught of downvotes for this reply and going against the grain, but so be it.
by stazz1 on 3/19/22, 3:42 AM
by a-dub on 3/19/22, 1:42 AM
as far as web3, i suspect that will be a few things. a move away from centralized platform economics and/or a rise in applied cryptography made accessible to ordinary business software developers.
so maybe a disruption of the venture capital buying out industries and replacing them big singleton companies with web/mobile interfaces business model and hopefully bigger advances in things like end to end encryption for all areas where modern technology has revamped how we conduct business. if we're lucky, we'll see actually secure operating systems as well.
to play my own devil's advocate: it could end up replacing a lot of finance, if only for the reason that it seems to attract a lot of the brightest minds in that space, and sometimes that's all you need.
by RichardHeart on 3/19/22, 12:50 AM
I accept down arrow fate.
by hestefisk on 3/19/22, 1:45 AM
by caidehen on 3/20/22, 2:24 PM
by anm89 on 3/19/22, 4:24 AM
by ThomPete on 3/19/22, 1:26 AM
by jasfi on 3/19/22, 6:25 AM
by trapatsas on 3/19/22, 3:20 PM
by BearsEatBeats on 3/19/22, 3:54 AM
crypto is good for the following:
1. when you're living in armageddon and/or under an authoritative regime and/or need an exit from fiat for wte reason. not saying it's easy to exit into it, but it's there
2. to create a recursive never-ending loop of collateralized lending. to trade tokens in order to create tokens that can then be traded for other tokens used to collateralize lending for a different set of tokens
for anything else, there are better and more efficient solutions.
by johanneskanybal on 3/19/22, 3:02 AM
by fmvab on 3/19/22, 12:27 AM
by throwaway76587 on 3/19/22, 7:43 AM
- Refilled my sim card in a foreign country for 0.0004 Lightning BTC
- Bought a VPN account for my friend in a country with heavy censorship for 0.0015 Lightning BTC
- Sent 100 and 150 USDT to my friends in a sanctioned country
- Donated 0.026 to EFF
- Donated 0.29 BTC to Ukrainian defense
- Donated 0.22 ETH to Navalny team
- Took my savings out of a country that forbids outwards money transfers
So it's been pretty productive for me. In addition, I protected my savings from inflation.
by karmafish on 3/19/22, 1:11 AM
First off, it is factually incorrect to say that transaction costs are higher than traditional banking. In fact, costs on some blockchains are negligible when compared to traditional banking fees -- literally fractions of a cent for moving large sums of money.
Moreover, it is very liberating to be free of banks, with all of their absurd controls, endless gouging, and inconvenience. Admittedly, in the beginning, it is somewhat scary to trust blockchains, but one gets over that fear very quickly and apps and services keep improving to make it easier and safer. It's not ready for grandma yet, but grandma may have a hard time with her normal bank app right now anyways.
Furthermore, blockchain based Web 3.0 technology with a wallet that automatically recognizes your account without having to ever enter a password or username actually solves a big problem and greatly improves the experience on most websites.
We can debate the philosophical merits of decentralization versus centralization of financial systems until the cows come home, but for me, the benefits of decentralization outweigh the costs.
Without getting into too much detail, the main ones for me are: Freedom over my money. Protection from inflation (since some coins limit supply). Transparency of markets (all transactions are public on the blockchain).
Also, I believe that for most governments there are real benefits to using crypto. After all, the transparency of public transactions facilitates taxation and the implementation of policy. In the long term, it should actually help to curb money laundering, rather than facilitate it. It is very easy to corrupt a banker. It is near impossible to corrupt the blockchain data. Also, in our complex financial system, blockchains and smart contracts can also unlock a lot of value that is currently trapped in our legal, administrative, and bureaucratic systems. Just solving the problem of custody of financial instruments, would unlock incredible value in the economy.
With regards to centralization, I suspect that the real argument that this author is trying to make -- and it really shows his bias -- is that the US should not/won't allow crypto to really gain mass adoption because it threatens its hegemony (the petro-dollar, World bank, dollar as the world's store of value, etc.).
The author ignores that for a lot of the world, solving inflation is a much bigger problem than maintaining central bank control. He assumes that US influence/control over world economics/affairs is a good thing. I'm American, but I don't buy that argument at all. It is manifestly unfair and illigical to ask the world to use the dollar as a store if value and then print trillions of dollars whenever banks or other bad economic actors crash the US economy. Think also of the damage that the petro-dollar has caused the environment, delaying the onset of renewable energy while even facing global catastrophe.
These are just some thoughts off the top of my head.
Lastly, I want to add that for me the most exciting thing about blockchain technology is the disruption and innovation that it will cause in many industries. NFTs are a great example, but just one. Defi is another. There is massive innovation going on right now in defi. New models for lending, raising capital, etc etc. Models that could probably never work with centralized control and current transaction technology. Granted it's something of a totalky deregulated Wild West right now, but there will be winners who may become (in size, hopefully not in spirit) the Amazons and Bank of Americas of tomorrow.
by jacknews on 3/19/22, 3:10 AM
Currently FX trades between banks are settled by a bank-owned coop type system, CLS bank.
by abetusk on 3/19/22, 2:51 AM
"""
“The four most expensive words in investing are: ‘This time it’s different.'”
"""
And then proceeds to talk about cryptocurrency as a bubble.
The same rhetoric was used for email, webcams, web browsers, and internet companies (dot-com bubbles, VCs etc).
This time is much the same. There's a lot of hype and a lot of hate. Behind the hype is real technology that is in the process of being deployed.
by worik on 3/19/22, 5:08 AM
This has to win a prize for the most redundantly true headline ever
by mudlus on 3/19/22, 12:11 AM
Claim 2: Google 'Bitcoin Spacechains'
Claim 3: On a long enough time scale all discoveries are minor, this is what it means to always be optimistically solving problems at the beginning of infinity.
by seibelj on 3/19/22, 12:03 AM
If you think art can be appreciated without being an NFT, then why pay any amount of money for any physical art when a super high resolution PNG does the same thing?
by stephc_int13 on 3/19/22, 1:13 AM
Is there a market to short crypto?
by woodruffw on 3/19/22, 12:01 AM
Even beyond this: there don't seem to be that many non-speculative monetary applications of cryptocurrencies and distributed ledgers. The few that do exist seem to exist primarily in conjunction with the demand for liquidity in speculative applications.
by sunshinekitty on 3/19/22, 4:54 AM
who cares?
by cwkoss on 3/19/22, 12:02 AM
by kkfx on 3/19/22, 9:07 AM
- to exchange crypto you need an internet-connected computer, you can't exchange anything from a human to another human being, many might state that's not different than bank transfer on X.25 but it's different from cash, and that's just the appetizer that simply mean: to participate to the economy you need to be connected, and you can choose between few big ISPs for that and you need a computer chosen between the very few manufacturers we have around the world, typically a computer filled of proprietary FWs like moderns ones;
- cryptos are based on a "blockchain" concept, witch means on a giant append-only file, that's means sooner or later home computer will have not enough storage nor bogomips nor bandwidth to operate cryptos "freely", exchanges will be mandatory by technical needs, not by laws, since only big server farms will be able to process transactions at a viable speed. At this point the "free" and "open" part is gone. At this time cryptos are like today's banks, BUT without State laws and protection, an exchange can be in an exotic place, can disappear and start over with another name etc it's costumers are and will be totally powerless;
- not only: since we pay "on-the-go" naturally with cryptos wildly adopted that means de facto mandatory smartphone always with any humans, like the wallet in your pocket, and smartphones not only means already mandatory exchange on a hyper-surveilled platform but also means depend on them for anything, being unable to even buy food without and integrate social scoring it's natural.
Take the above and observe what WEF want in terms of digital identities and payments systems https://www.weforum.org/agenda/2021/01/davos-agenda-digital-... perhaps together with https://www.protocol.com/entertainment/upland-augmented-real... and you close the circle: cryptos so far are not there, but have created a narrative that digital currencies are good and needed. Most people do no even know the difference between cryptos and CBDC, in the end for most means just numbers inside a mobile (cr)app or website. I expect in a decade a final success of the cash-less push, with the sole payment system remained a smart-phone based one, connected and surveilled, of course linked to a digital ID, of course linked to social score: wellcome to the "western version" of modern China, evolved to surveil even more.
Oh beware a thing: if you want to wait and see because seems too extreme to be true... Once inside such systems, once our IDs, payment systems, social scores are implemented only an improbable civil war can overthrown them, and in a hyper-surveilled and hyper-centralized society where from ovens to toothbrushes to cars anything is connected a civil war means a thing: any Citizen can only let itself die hoping that's enough to crash dictatorship dominance, because it's impossible to fight if you can't eat, you can't travel because all the means to do so are connected and centralized in few hands. Take then a look as software these days: we tell for decades that we need FLOSS etc, what happen in the meantime? Emails are still there, only for 99% are webmails, so nothing practically different than a proprietary service like WA or Telegram. Dependence on few giants is far bigger then ever, anything desktop-centric and P2P-centric is disappeared, even tech communities are now on Reddit, HN etc, witch means on proprietary third parties platforms instead on open Usenet no one really own. Most people, devs included, live on APIs and cloud. Did you really think we are so far from the society depicted above? In the IT we already almost owning nothing "and being happy", actually IT is the core of our society functioning. Companies, especially from the finance sector have internal social score since decades, people think a society like a company, witch means a hierarchy not a Democracy etc...
by epa on 3/19/22, 2:07 AM
by benreesman on 3/19/22, 12:34 AM
Crypto has no intrinsic value, it pays no dividend and doesn’t give you proxy rights, just like all the tech equities.
Proof of work burns a lot of electricity, though this is complicated because it drives up demand for renewables.
I also wish I had bought BTC when it was like a basis point, and if I had I’d be a booster instead of a skeptic, like everyone else.
Can we go back to arguing about Rust vs C? This horse has been flogged into quarks at this point.
by throwaway22032 on 3/19/22, 3:51 AM
That's about as productive of a thing as I can imagine. I suppose physically producing a thing might be a step above that depending on whether it's a useful thing.
Satoshi's words come to mind on this. If you don't get it (or it's not useful for you), that's fine.
Really it's just amusing 14 years in that you don't realise you're the old man ranting in the pub.
by asasidh on 3/19/22, 12:12 AM
Bitcoin is a tool for freedom.
by jmyeet on 3/19/22, 12:07 AM
What's funny is watching the crypto world relearn all the lessons that went into making the current financial system the way it is. Example: printing money aka managing the money supply. This is a feature not a bug. At least for a currency. Side note: let's stop calling these cryptocurrencies. They're crypt-assets.
It makes me wonder if th Great Filter responsible for the Fermi Paradox is civilizations boiling their planets alive mining crypto before they ever establish a presence in space.
by henvic on 3/19/22, 12:15 AM
No. Gold standard has none of the properties you told. Fiat currency is a disaster and evil. Besides, it's also likely the only reason why cryptocurrency is drawing attention to anyone.