One thing that's often overlooked when people talk about crypto's shady image and lack of real world use cases is the fact that a huge number of world governments and financial institutions are doing everything in their power to hinder its wider adoption and prevent people from using it, without jumping through a ridiculous amount of regulatory hoops which pretty much undermine crypto's USP in the first place.
Personally I think KYC is one of the most disgusting invasions of privacy that has ever been foisted upon us. As usual the "Terrorists, Paedos and Drug Dealers" [Ts, Ps & DDs] bogeymen have been trotted out to justify the state's self-proclaimed right to know exactly what money you have, where you keep it, who you give it to, what you spend it on and where and who you got it from in the first place [see also the increasing drive for us all to become cashless societies. A further erosion of the right to get and spend without 'The Man' knowing every detail].
The wider adoption of crypto promises to return financial privacy to the individual and this is why governments around the world are so aggressively opposed to it. Crypto allows the anonymity of cash but on a global scale. So, in order to discourage this, there's an increasingly impenetrable regulatory wall built around the entire crypto ecosystem. Government and big finance can't do much to prevent what happens inside the crypto bubble. But they're doing their damnedest to make sure that getting fiat into or out of that ecosystem is made as difficult as possible.
One slight aside: Many of you will remember when the Panama Papers [0] scandal broke, a few years back. There were supposedly amongst them documents that showed that the then UK Prime Minister David Cameron's family were involved in moving large amounts of money around undeclared offshore bank accounts.
David Cameron was asked about these allegations and, refusing to answer, he said "A family's finances are its own private affair".
I often bring that quote up when people counter any mention of cryptocurrencies with the tired argument about them being used by "Ts Ps & DDs". Why is it OK for the rich and the ruling classes to move their money around anonymously in offshore tax havens and numbered Swiss bank accounts, but the ordinary Joe Bloggs in the street is expected to conduct all his financial dealings under the scrutiny of the government? And, if he dares to believe that his finances are 'his own private affair', he is practically branded a supporter of "Ts, Ps & DDs".
And how much of that is reflected in productive activities that economic value instead of being scams, proofs of concept, funny money and manufactured spending?
Well, there's currently 14B of value (not settlement) locked in decentralized finance https://defipulse.com/. So I'd say a significant portion of Ethereums settlements are for productive activities within this ecosystem by providing liquidity for financial primitives, like borrowing, lending, swapping, leverage and derivatives.
Sure, financial primitives that are mainly useful for speculation, very sketchy tokens, and various scams. $14B of FOMO can rapidly turn into $1B or $100M or $1M if/when the bottom falls out.
It's an open permissionless system, so of course the low hanging fruit is going to be speculation, sketchy tokens and scams. These require the lowest effort. It's the exact same thing in the traditional financial system.
Speculation is very important value-added activity in any system. In my opinion anybody who couples speculation with scams and value-destroying activities together loses credibility.
So... within the ecosystem, not outside of it. Meaning people aren't actually purchasing services or goods or generating activity outside of this ecosystem beyond inflating its value for development for uncertain ends.
The worlds two biggest financial primitives are borrowing and lending. These two primitives make up a large portion of the total financial activity in the worlds markets. It allows all other financial primitives to exist. As an analogy to programming, borrowing and lending is essentially the lowest level on the stack, where all other financial primitives are built on top of. In order to have derivatives, insurance, funding, etc. you need liquidity and borrowing and lending. DeFi on Ethereum is replicating the existing financial system, so by criticizing this, you're essentially also criticizing the legacy financial system.
Now that there's tons of liquidity on Ethereum, people have been building applications ontop of this financial stack. In the programming analogy, these applications are higher up on the stack (like web browsers) and rely on the primitives to build out financial infrastructure.
> DeFi on Ethereum is replicating the existing financial system, so by criticizing this, you're essentially also criticizing the legacy financial system.
Checkmate nOcOiNeRs. If you criticize my pyramid scheme network, you're actually criticizing the complex global financial system, because r/ethereum told me they're basically one in the same.
How many mortgages are settled at any level of the "financial stack" with DeFi? None.
How many bond payments have been paid out at any level of the "financial stack" with DeFi? None.
How many registered securities have been traded with DeFi handling any level of the "financial stack"? None.
If you want to use your "financial stack" metaphor, DeFi is like using a bluetooth smart dildo bootloader as the back end for a full stack web application. Sure, the stack you speak of exists, but there is nowhere that any programmer would ever seriously think to put that thing.
Stop arguing semantics and actually point to a legitimate use-case that someone outside the crypto space would have for DeFi (even if it is at a "lower level" of the fin stack).
Santander bank has settled at least 20 million in bonds directly on Ethereum (shorturl.at/lnFNV)
The applications you're talking about require infrastructure first. That's like criticizing devs in the 90s that an app like Netflix doesn't exist yet. Hmm I wonder why Netflix wasn't viable in the 1990s.
As for a simple "primitive" use case, I have a lot of my cash savings in DAI and I get 4% interest on it. There are a multitude of other use cases, if you care to look.
But you don't care, because it's obvious you think it's all just a scam, so there's no point even discussing any of this with you.
It's obvious that it's mostly a scam because the number of crappy altcoins, the number of wallets that ended up failing because they were criminal fronts or scams, and the absolute failure to demonstrate even one killer application show the reality of this.
I'm wondering how much of those coins that accrue "interest" you'll actually be able to offload into cold, hard cash that can be used to purchase goods.
I get paid in dai in the ethereum system and that keeps a roof on my head and the lights going, along with a few other hundred?thousand? people.
I still dont get why hackernews always has a bad reaction to cryptocurrencies. Disruption and innovation is praised, unless it challenges money. Experiments with computing and code is praised, but only if its a toy language.
We're all on the same side :) just playing with different ways to do things.
Would you expect everything to move onto Ethereum/Blockchain immediately? Obviously not - small incremental steps are taken to improve legacy systems. 1T transacted is a fairly impressive milestone in that journey.
I'm expecting that after a decade or so of rapid development by people constantly hyping and offering a vision of the future that's a complete lie, that at the very least some of it would materialize.
We're talking about financial primitives, not owning currency. These people do not have access to bank accounts, loans, mortgages, etc. Once you have identity systems on Ethereum, then no-collateral loans and mortgages will be offered to anyone with access to the internet.
Probably quite favorably when you compare that to the fiat system we have now. Look at SPACs, CLOs, or the Hertz bankruptcy stock buying opportunity, or Nikola Corporation, etc. I could go on forever.
IMO the only relevant milestone is when it stops doing all this godawful energy burning mining and switches to proof of stake. Then we can all legitimately applaud it.
They don't all use a lot of electricity. Proof of Stake blockchains use very little electricity and don't require specialized hardware. Lisk (LSK) is DPoS and is a good example but there are many others like that.
Blockchains exist for situations in which the participants in a transaction or system as a whole do not trust one another. You will always pay a price for that. Centralized systems are much more efficient but they depend on trust. In the cases where that trust breaks down or shouldn't have been given in the first place, it tends to create problems that are astronomically more costly than if a trustless system was used in the first place.
What caused me to get out of Bitcoin was that in reality, the level of trust Bitcoin required from me was much too high compared to traditional banking. I had a few thousand dollars worth and I became quite paranoid that my coins could be exfiltrated at any time due to:
* The Bitcoin client software I downloaded (I didn't build from source, and even if I did, I wouldn't have read the entire source first, and even if I did, I could get Ken Thompson'd)
* A computer virus delivered in a game I install, or hardware drivers I update, that would be virtually undetectable until it's too late
* A fire that destroys my home / somebody compromising off-site backup of my private key (pick one or the other risk)
* An untrustworthy exchange or an exchange that is unfortunately compromised at the moment I choose to transform them into Real Money(tm) -- while I kept my coins in a wallet off an exchange, I would still need to turn them into USD someday since the dream of paying for ordinary things directly with Bitcoin is wheezing on life support
Some of those concerns can be mitigated with a hardware wallet, but not all, and you still must have faith in the people who designed the hardware wallet and the manufacturer who actually built it.
At least with traditional banking, if my trust is violated I usually have some recourse by which I can recover my money. E.g. if my PC is hacked and the hacker transfers money from my bank account, as long as I see that happen within a few days I can probably have the bank stop it and get my money back. With crypto one false move and you lose your stuff, do not pass go.
In short, the "trustlessness" protects me from a pretty low-risk problem -- I would say practically a hypothetical problem at least in the U.S. -- but exposes me to a high-risk problem.
This right here is IMO the fundamental heart of the argument. Things like reversible transactions and such are features that were built into the banking system, not bugs. It really comes down to a question of which feature set is valued more by an individual. The attempt to frame this in moralistic terms is just typical tech holy wars.
On a philosophical basis I do like the idea that no one person, nation, or corporation has control over the currency. And the irreversable nature of transactions is something I could accept, if I felt it was possible for me to have complete confidence in the security of my wallet.
But just the software-based ways that I could potentially be stolen from are too plausible to ignore. I have never felt that I could say with total certainty that my system is not compromised or vulnerable to compromise. Even a bug written with no malice could be my undoing. Working in the software industry has given me very little faith in the infallibility of software, both open and closed source.
Of course many people hold large quantities of crypto and are fine. But a few have it lost or stolen. Even super simple attacks sometimes work, like the malware that would poll the system clipboard waiting for it to contain for a BTC public key, and if found, swap it with one owned by the virus-writer -- so that you inadvertently paste the thief's key in as the destination for the transfer you're about to initiate. When I first heard about that attack, I thought it was clever and had to really think: hmm, would I have fallen for that? Usually I double check, but if they were smart enough to generate a large set of wallet public keys so they could replace the destination with one that starts with the same few characters, I probably could've been duped at some moment of carelessness.
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> In the cases where that trust breaks down or shouldn't have been given in the first place, it tends to create problems that are astronomically more costly than if a trustless system was used in the first place.
Is this actually true? My mind immediately goes to credit card fraud as an example, which definitely isn't more costly than if a purely trustless system was introduced. The cost of fraud is baked into using a credit card, and credit card vendors have built ever-improving technology to cut down on fraud on their end.
How is that more expensive than a trustless system that would require everyone to move to?
In the example of the credit card system, the misplaced trust I am talking about would be misplaced trust in the payment processing networks themselves (e.g. Visa, Mastercard).
This could be fraud (unlikely I think) or pathological behavior such as banning people or organizations from their networks for political reasons (this already happens).
So organizations shouldn’t be able to remove people’s access to credit or accounts for any reason? If you take that away, you completely remove the ability to police money laundering and other kinds of financial crime (crypto is already a favorite technology of money launderers).
Legislation can (and should be IMO) written to provide users of big software systems more rights, but completely removing authority creates conditions for limitless money laundering, no? How does a government govern a blockchain?
I'm not talking about money laundering and financial crime, I'm talking about removing people's access to the banking and credit system due to their political beliefs.
It sounds like your solution to the problem is to take away the ability to remove people from the system altogether, no? If that’s the case, then you open up a whole new set of problems. There are far easier and cheaper ways to guarantee legitimate access to banking than rebuilding and migrating the entire system.
Cryptocurrencies aren’t exempt from that, the 2018 Bitcoin boom and bust was likely caused by one whale account[0] manipulating Tether. By your argument, Bitcoin will become corrupted because we know it can be corrupted.
The only way bitcoin can become corrupted is if someone gains control of >50% of the hashing power of the network.
I'm talking about the integrity of the system itself, not actors within it. George Soros famously did the same thing with the British Pound but the issue with the British Pound is that it is a fiat currency that can be devalued at the whim of a handful of people controlling the system itself regardless of market forces (aka the participants in the system). When Soros or that bitcoin whale "manipulate the market" they are still acting within the system.
Part of the digital currency deal is, that kind of privacy. Legislation may have to adapt? 'Money laundering' is avoiding taxes or hiding income. So change the rules about taxing money. Maybe a 'transfer tax' or some such, to take a (very small) cut on every transaction.
If cryptocurrencies are private enough to obfuscate transactions to the point that authorities can’t monitor illegal financial activity, how can the system also be transparent enough to effectively tax users? Isn’t taxation a centralized financial construct, in that a central authority (government) assesses taxes? If the coins built today become the mainstays of crypto transactions and don’t have a concept of a transfer tax, how will one ever be added to the system? The entire system seems to be built from the perspective that it’s “our playground, our rules”, but why governments ever allow that?
The energy it uses right now for full nodes and all the other infrastructure minus the energy it uses for the proof of work. If the proof of work is replaced by another proof mechanism, like proof of stake, it could be applauded.
That standard is not applied to many things. There are many cases where it makes sense to use a technology that uses more energy than technically feasible because it offers other benefits. For example, using java instead of assembly.
This is actually a core principle in Ethereums community. It's called minimum viable issuance. Ethereum 2.0 is specifically designed with this principle in mind. No one wants to overpay or underpay for security, so market forces decide what level of issuance and risk is acceptable.
would love it if someone could make a webpage to visualize the current pace of carbon emissions by proof of work systems in terms of the number of acres of forest that would need to be burned to release the same amount of carbon. or even just know the calculation.
Back of the envelope: 250 TH/s of ETH Mining. The most recent Inno miners run at 1.5 watts per MH/s. So, we have 375MW sustained energy consumption globally.
From here, you need to figure out if most of the mining is done on, say, coal or, say hydro. My experience with large-scale mining is that it is often paired with hydro. This (probably biased) report at https://www.hydropower.org/greenhouse-gas-emissions claims 18g/kwh of CO2 from hydro.
So, the best-case lower bound would be 375MW1000 (to get to kwh) 24 (hours) * 365 * 18g = 59130000000 grams per year of CO2, or 59,130 tons of CO2 per year. Big emitters measure in kilotons, so 59kt. Note this does not cover other datacenter energy costs, but they are minimal compared to the mining.
For a rough comparison, Cruise ships (notoriously bad): Carnival in 2017 reported 10,539kt of CO2 emitted across their ships only.
The average US household produces 7.5tons of CO2 per year, so another way to look at it is that it is roughly 8,200 households of emissions.
Wikipedia estimates 90mm global users of Ethereum, so on average each user of Ethereum is emitting 0.00065555555 tons or 655 grams of CO2 per year for their Ethereum use.
Note that older miners won't be as power efficient. A reasonable rule of thumb is that 80% of mining power is with the most recent hardware. Also, there may well be 'dirty' miners out there, but most of the projects I'm aware of are looking for cheap energy, and in most places scalable cheap energy is hydro or possibly nuclear.
>> Wikipedia estimates 90mm global users of Ethereum
This is a gross oversimplification. How many of those 90M users would consider Ethereum to their primary medium of economic activity? What percentage of their economic activity is in ETH - 100%, 1%, 0.01%?
Not really possible cause we don't know how much carbon PoW generates. You could naively just assume they generates the average amount (which is what some analysts have done), but I doubt that would be accurate.
would love it if someone could make a webpage to visualize the current pace of carbon emissions by banking and credit card systems in terms of the number of acres of forest that would need to be burned to release the same amount of carbon. or even just know the calculation.
This is a pretty bad-faith "what-about-ism" response. The energy consumption downsides of proof-of-work systems are pretty well known. And those particular downsides don't apply to the systems you listed. Sure, running those systems still takes energy, and there's probably an interesting comment about what a ratio between the two might look like. But your comment as written is not that.
It is not a whataboutism. Complaints about energy usage are only meaningful in comparison to the alternatives.
>The energy consumption downsides of proof-of-work systems are pretty well known. And those particular downsides don't apply to the systems you listed.
What? I have no idea what you're talking about.
Proof of Work energy requirements are not necessarily proportional to usage of the chain, while almost every single complaint about it has made invalid extrapolations under that assumption. It can easily be incredibly more efficient than the existing financial system.
Personally I think KYC is one of the most disgusting invasions of privacy that has ever been foisted upon us. As usual the "Terrorists, Paedos and Drug Dealers" [Ts, Ps & DDs] bogeymen have been trotted out to justify the state's self-proclaimed right to know exactly what money you have, where you keep it, who you give it to, what you spend it on and where and who you got it from in the first place [see also the increasing drive for us all to become cashless societies. A further erosion of the right to get and spend without 'The Man' knowing every detail].
The wider adoption of crypto promises to return financial privacy to the individual and this is why governments around the world are so aggressively opposed to it. Crypto allows the anonymity of cash but on a global scale. So, in order to discourage this, there's an increasingly impenetrable regulatory wall built around the entire crypto ecosystem. Government and big finance can't do much to prevent what happens inside the crypto bubble. But they're doing their damnedest to make sure that getting fiat into or out of that ecosystem is made as difficult as possible.
One slight aside: Many of you will remember when the Panama Papers [0] scandal broke, a few years back. There were supposedly amongst them documents that showed that the then UK Prime Minister David Cameron's family were involved in moving large amounts of money around undeclared offshore bank accounts.
David Cameron was asked about these allegations and, refusing to answer, he said "A family's finances are its own private affair".
I often bring that quote up when people counter any mention of cryptocurrencies with the tired argument about them being used by "Ts Ps & DDs". Why is it OK for the rich and the ruling classes to move their money around anonymously in offshore tax havens and numbered Swiss bank accounts, but the ordinary Joe Bloggs in the street is expected to conduct all his financial dealings under the scrutiny of the government? And, if he dares to believe that his finances are 'his own private affair', he is practically branded a supporter of "Ts, Ps & DDs".
[0] https://en.wikipedia.org/wiki/Panama_Papers