> U.S. Treasury Secretary Janet Yellen and other officials have warned about the use of cryptocurrencies for illicit transactions.
Wait until you hear about cash.
More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.
Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.
> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
I find this argument a little weird, because I think we can all agree that bubbles and fad tech isn't really great for society as a whole. If you believe cryptocurrencies aren't a fad and actually provide useful benefits to real people (which does not include "we built a company that does crypto stuff and made a bunch of money"), then ok, fair opinion, but I don't share that view. To me it just looks like a big house of cards built on something that is fundamentally not that useful or valuable, but is propped up mainly by speculation. Building a company on top of it that is sold for $400M is great for the founders and investors in that company, but doesn't mean that crypto itself is useful for society.
I apply this to other things, too... there are ton of lucrative, successful businesses built on top of and around internet advertising, but I think that entire ecosystem is a huge net negative for society.
How can you not see what the importance of this new infrastructure? I come here and read these comments and am just at a loss for words at this point. Forget Bitcoin and look at Ethereum. This tech is so powerful I am in some ways scared of it and you call it a fad. The gulf between our interpretations drops my jaw to the floor :)
Sovereign identity, DAOs, NFTs (not just the art stuff which atm is a little cringe but game items, land registries, deeds), stablecoins (usdc, dai, yes there is also wilder experimentation here).
I think people can quickly get dissuaded by some negatives like lack of scaling or environmental issues. These are real but are being solved. We really need communities like HN to engage because if proponents are right then the change will be vast and we are unprepared.
My personal favorite outcome is playing out right now. When a tech company is successful they capture near 100% of the value, despite leeching content off users. Ethereum based projects generally share rewards with the community of users that make the protocol/network successful. Applications are forkable, not just the code but the community, too. The community is in control.
And what are some example use cases you can do with those things, or that people are using them for? Genuinely asking. I see people very excited about things like DAOs, but most descriptions seem to be about inter crypto use cases.
With the early internet it was easy enough to see there were use cases like “instantly send a letter to someone across the world” or “order a book not stocked at your local store” or “go directly to Nintendo’s website and read their info”. I remember doing this last one as a kid in the library and was instantly taken with the internet.
What are some similar ELI5 use cases of the Ethereum chain and those names you mention? Other than intra crypto loans, derivatives etc
Liquidity for things that don't normally have liquidity.
Example: like wrapped Bitcoin, you could create wrapped Wine. Say you've got $1 million in a wine cellar. Create a wrapped token which allows you to use it as collateral or provide it to a liquidity pool to generate revenue.
Now your wine is earning you interest. Something like this may already exist...
Same for Tesla stock above. Now that a TSLA token exists you could provide to a pool for interest since it doesn't pay a dividend.
> Now that a TSLA token exists you could provide to a pool for interest since it doesn't pay a dividend.
Explain further. Why would you be able to have the benefits of owning wine or TSLS and also earn interest on it. That’s your cake and eating it too.
There must be a risk element to the liquidity pool. What risk exposure are you taking by depositing TSLA stock there that you can’t get through normal finance?
Not a real problem. Any civilized country has solved identity already.
> DAOs
A solution in search of a problem
> NFTs
Speculative. Game items, land registries and deeds are a solved problem. If your jurisdiction/company hasn't solved them already with Postgres and hardcopy it's because it's not interested in solving it or it's not a real problem, just a minor annoyance.
Most of the problems solved are not at their first iteration of solution. There will be a next one for most of them as well. None can deny that the crypto field opens opportunities for the next iteration of solutions
Even if they might do things better (which I don't see that happening; solutions are objectively slower and more cumbersome than centralized databases with audit logging), they appear to solve "problems" that aren't really problems.
There's a lot of things that classify as annoyances and inconveniences in the world. That doesn't mean that I'm willing to dump a boatload of cash to solve them.
Identity isn't currently a technological issue. Microtransactions aren't a technological issue solved by blockchains. Ledgers of most things in general don't have a trust issue that's solved by blockchains.
Technies being techies think that technology solves a lot of issues just by existing while completely discounting the issues of trust and control in institutions themselves.
Most blockchain problems are actually governance issues.
Thank you. This mirrors my experience to a T. It's always those same empty sets of phrases
"Just imagine all those possibilities."
"It may not be there yet, but the smartest minds are working together on it."
"How can you not see what the importance of this new infrastructure?"
"DAOs, NFTs, [insert new useless crypto tech of the day]"
If, just once, they could just provide a single real use case that would actually improve my life... I get it, crypto is great for buying drugs on the internet, money laundering, riding the hype train, speculative investment, and so on. But I just have never seen any real legitimate use case that would benefit from crypto.
Perhaps it means that this is a known problem with known working solutions. Countries that haven't solved identity are ones that either don't want to or can't, generally due to a mix of corruption and poverty.
Perhaps I am simply suffering a tragic failure of imagination, but I fail to see how adding a blockchain changes things substantially.
Being able to identify people via blockchain either requires them to remember some esoteric passphrase or an ID card with the identifier on it which...solves absolutely nothing.
> Countries that haven't solved identity are ones that either don't want to or can't, generally due to a mix of corruption and poverty
It's not a known problem because each country has its own context. That's like saying US healthcare problem can be solved just by doing what nordic countries do.
I hope that will never happen. We really don't need anyone to end up in a situation where a key is lost and they can neither prove they own something nor sell it legally. Also, "transfer your home by mistake" scams. And have fun trying to figure out how to deal with dead owners.
The other aspect of these is that, unless we're also going to eliminate the possibilities of courts ruling on things, the reversibility features of land registries and deeds is a feature, not a bug.
Husband and wife divorce and the courts rule that the husband gets the deed to the house and the wife gets the Ferrari. Husband refuses to transfer the Ferrari's deed. Now what?
Unless you mean that the land registry continues to exist but uses a public blockchain as their database? In which case... why? If they did decide they wanted it all public, auditable, and in the open, they could just publish it as a signed text file every day and anyone who cared could mirror it.
Don't get me wrong, I think there's some really cool possibilities in the space, but lots of the things that get proposed are fundamentally subject to court orders. Unless we change the law so that judges can't say "I don't give a shit what the 'blockchain' says, A belongs to X and B belongs to Y, and anyone who won't play ball can sit in jail for contempt until they get on board," there won't be much point in keeping track of those assets on a blockchain.
Court systems, even traditional ones, can interact with Ethereum. At the end of the day, Ethereum is just a ledger. We humans are the ones that enforce laws and social contracts, Ethereum just helps with the (automated) bookkeeping.
If you want bookkeeping where entries can be rewritten by designated parties, then why would you want ETH / distributed consensus? What does it give you in that case over the existing database with a public mirror?
Also laws change. What you signed in an ETH contract today may be completely different than what's legal / possible to enforce tomorrow.
Because you trade and automate assets through contract logic. The benefits of contract composability on Ethereum mean that the velocity of money increases because now assets can be manipulated by logic without an intermediary. So if someone wants to borrow your asset, you can deposit it into a contract and now can lend it out peer to peer, and have interest acrue on an ongoing basis. Assets can be more easily "put to work". This is exactly what banks do with your money actually, only with Ethereum it's easier so liquidity / velocity is greater with assets because they can easily move around. It needs to have decentralized consensus because otherwise it's not credibly neutral.
If a law changes and affects an on-chain asset, then that logic will need to be reflected on-chain, otherwise the involved parties won't come to agreement in the real world. There are ways to make contracts upgradeable on Ethereum while still preventing someone from stealing funds, like through a multi sig wallet, perhaps with lawyers holding some of those keys. It all depends on how it's structured, but the benefits of using Ethereum (or something like it) are clear.
You keep saying "asset" as though this means anything. Say my asset is a bulldozer.
How is an automated ethereum contract going to lend it out and ensure its return in good working order, or pursue damages if it is not?
Say my asset is actually just a lump sum of regular US dollars, which I would very much desire to be returned to me as US dollars plus interest so I can my US taxes with them at a later date. How is an ethereum contract going to actually ensure I get my US dollars back, or have resource to pursue them, seeing as how no mechanisms of US dollars are dependent on ethereum?
The asset won't be the bulldozer, but ownership of the bulldozer. How did the natives of the Yap islands know who owned which Rai stones? Through social contracts. The same would be the case for bulldozer ownerships on Ethereum. It's just a way for you to prove to other humans (or programs) that you own the bulldozer. If you sell the bulldozer in real life, then presumably the buyer would want the ownership. The difference here is where the ownership data lives, not necessarily who issues it.
There are stablecoins backed by USD reserves, like USDC. Again, the ethereum contract is only a ledger. The people responsible for giving you USD is going to be Gemini who control the supply of USDC. You having proof that you own USDC allows you to withdraw USD.
There are of course stablecoins that are not backed by USD, but rather backed by ETH directly and the USD peg is maintained through arbitrage, oracles and control systems implemented in the contracts.
Except you keep talking about automation of assets but you haven't answered the question: how does the delivery, and return of the bulldozer work?
How does the delivery and return of my USD work?
At every junction the answer is "well you trust another party and..." - so why is ethereum needed in the process at all? All of this is just companies providing an API for a service (which generally they don't, now, because it's complicated to orchestrate such a thing).
Ethereum is not contributing anything useful here, because everything important is "trust this person" - at which point I'm really just "hiring a lawyer".
Your bulldozer would need to have a chip installed that can connect to Ethereum and read off who the current authorized operator is. The operator and the owner would have to have cards that contain keys that speak a protocol that the bulldozer understands. Once the loan time runs out, the bulldozer locks out the renter.
The GP is describing a system kind of like Zipcar - you go online, you enter payment, and Zipcar allows your card to operate a car for a period of time. So, you might say, so what, we already have a Zipcar, why replace it with the blockchain?
Because if Zipcar goes out of business, all the cards and hardware on Zipcar cars are defunct. If all the hardware talks to contracts on Ethereum, there's no Zipcar to go out of business - you buy the hardware once, but the operation of the system happens on Ethereum, not in Zipcars' SQL database.
> There are stablecoins backed by USD reserves, like USDC. Again, the ethereum contract is only a ledger. The people responsible for giving you USD is going to be Gemini who control the supply of USDC. You having proof that you own USDC allows you to withdraw USD.
This still depends on trust. The blockchain doesn’t verify the backing. And USDC’s attestation is rather late.
Well, yeah, it's a centralized stablecoin. The advantage is that it can be used in Ethereum contracts in DeFi. If you want a stablecoin with no trust assumptions (other than the protocol and governance), there's MakerDAO's DAI.
If we're after velocity / speed of movement, why not just add APIs to existing services. Changes would be immediate and required setup would be so much simpler.
You can use zero knowledge proofs if you really want to conceal the information in a contract, but still prove to the world that you've fulfilled that contract. If you're using public Ethereum, then presumably you want your contract to be public.
I wouldn't rely on that one. As cool as Filecoin is, LE can query who has a given file and chase them and their ISP until they no longer advertise that file. Without secrecy you can't have a censorship-free solution.
You'd have to embed the whole file in the blockchain for that. At that point Filecoin is not relevant. That's not censorship-free either - the use of Eth network can be banned too. And LE or govs see who to target too.
> You'd have to embed the whole file in the blockchain for that
No, you don't. The eth contact can control ownership of and permissions to the Filecoin files.
> Eth network can be banned too
Banning the entire network is different than granular censorship of individual files
> And LE or govs see who to target too.
Anonymity is also different from censorship.
You are talking about a lot of adjacencies and "what-abouts"... There are at least half a dozen projects in this vein at the moment, so I'll kindly leave the rest as an exercise to the reader
Eth can't really control filecoin file. Eth nodes are not serving the file. If you go after the nodes which do serve it and remove copies, eth won't have you.
Anonymity is different from censorship, but censorship is trivial in networks where you ask "who has this file" and everyone points at the actual nodes which store it, with public IP addresses.
You can scale Ethereum by running computations off-chain and submitting batches of zero knowledge proofs on-chain. StarkWare https://starkware.co/ is the leading layer 2 for zk proofs. There are also other platforms that use other zero knowledge techniques to batch computation and sends proofs of that computation on-chain.
Isn't eth terrible at this? i have $12 USDT stuck on an eth address because i need to spent $30 worth of eth to send it. That's not even including the fee I'll incur when i have to send eth to the address to fund it..
With Ethereum? That seems like one of the least interesting possible use cases.
* For one, Bitcoin can do this too (though not in many places)
* For two, you can’t do it in many places
* For three, you already can buy online with paypal, prepaid debit/credit, and other checkout solutions, for less fees. You can buy a prepaid credit card useable online in any convenience store for a low fee....
Maybe that might make you question your assumptions?
I mean, we've had a decades of cryptocurrency and just one actual application has arisen - crime. Money laundering, tax evasion, purchasing illegal items, and that sort of thing.
When it comes down to it, cryptocurrencies say that people trust some obscure algorithm that almost none of them could evaluate over society and governments.
Crypto is a better version of gold and a store of wealth that whose supply isn't at the whims of central banks.
Gold has a purpose. Central banks may pretend that gold serves no purpose in a modern economy, but they still hold on to trillions in gold. I hope eventually they'll get around to holding a crypto currency like Bitcoin. They're just upset they don't have a head start in accumulating a reserve.
Gold is shiny pebbles people are willing to pay money for. Crypto is spreadsheet cells people are willing to pay money for. Well, some amount of money -- mostly Tether though, which is likely in turn backed by the same crypto lol. It's really an open question just how much new real money is flowing into crypto.
It's all pretty clear in the settlement Tether signed [1]. Particular note are #17, #20, #36, #43-46
There is a need to have a medium of exchange for trade. Barter has its limitations. For all of history, people have created new forms of money for exchange. The primary characteristics you would need is scarcity, clear ownership, transferability and fungibility. Gold serves this purpose, and Bitcoin even more so.
The fact that gold is a shiny pebble is not adding anything meaningful to the conversation.
Neither gold nor bitcoin are particularly good for the purpose you are suggesting -- that's why gold was replaced with fiat currency. Because fiat currency was better. Bitcoin chasing after gold's position is unfortunate because of course, fiat is better than gold.
The characteristics you need for a medium of exchange are:
- fungibility.
- the ability to hold its value for exactly as long as you need to hold onto it. Any longer than that is a non-goal.
- stability/predictibility.
- the ability to adjust to shocks, and a changing population.
- low cost of transactibility.
Scarcity is a non-goal. Clear ownership is a non-goal except in as much as possession is 9/10th of the law.
Basically none of these apply to gold, and basically none of these apply to bitcoin. That's why nobody uses it as such.
Generally speaking we don't need to wait as long as the previous iteration existed to prove the new generation is successful.
For instance, I think it's fair to say e-mail is a success, even though the first postal system was established under Cryus the Great in 550 BCE in Persia. The first e-mail was sent in 1971. Are you saying we won't be able to declare victory on e-mail until the year 4492?
Obviously. However, that doesn't mean email isn't trivially an improvement lol. And it certainly doesn't mean we need to wait two thousand years to make that claim. C'mon now, that's patently ridiculous.
If you owned all the gold, people would still want to buy gold. If you owned all the Bitcoin, nobody would want to buy Bitcoin. The only value stored is the network of people pumping it, and the only question is how long it’ll take them to move on to the next thing.
> The fact that gold is a shiny pebble is not adding anything meaningful to the conversation.
Not the parent's argument, but TECHNICALLY speaking Gold as a shiny pebble can be used for jewelry, wiring, etc. It TECHNICALLY has utility.
Bitcoin has no inherent utility. ETH (and derivatives) on the other hand can power a smart contract which actual real business value, but the fact that it has a currency associated to it is generally meaningless.
Calling it a bubble is essentially an unfalsifiable statement, there's no way to really disprove it. Many would very much disagree that it is non useful, especially on a forward looking basis (the same way a money losing unicorn is still worth a billion dollars). At what point is it no longer a bubble?
Cryptocurrency/web3 is at its core just technology. Fundamentally, the technology is still not that far advanced from the early Bitcoin days, but the little that is currently implemented successfully allows for ponzis and gambling. Cryptocurrencies currently trade for over $2 trillion, most of that value may indeed be a net negative for society, but that doesn't say anything about the core technology in itself. If cryptocurrency didn't exist, people would be trading tulip bulbs or pumping stocks like TSLA to $700B (oh wait...).
This may be a relatively lawless environment, but as for its current atmosphere, blame the world's central banks, not the crypto builders who are mostly as disgusted by the current situation as sidelined observers.
Decentralized networks have the potential to resolve many of the issues we techies love to complain about. Only a tiny percentage of that $2 trillion is allocated to teams actually working on solving these issues (Binance and Coinbase definitely aren't a part of it), so please try to reserve your judgment when you see developments coming out of crypto. Most of it is under-developed, over-hyped, and just an extension of the tech-bubble ponzi, but some of it will actually change the world. In the same way Tesla is actually positive to society overall and we shouldn't shun their cars just because the company's stock is a meme used in zero-sum-game gambling.
Community-governed vs. advertiser-dictated networks. Free markets. It's a wide topic, I'm surprised you can't find a single usecase you would use or think makes sense.
If it can help you imagine some, take the decentralized primitives: a money/value transfer network, a reputation network, a content delivery network.
Starting from those, many currently gimped online services could be replicated in a way that incentivizes behaviors which benefit users, more than the platform owner. Local economies that currently function only through local, unscalable networks of trust could be brought online.
Of course, if you believe everything is better done in a way that can be regulated by a central entity, then crypto as it stands won't do anything for you (although public ledgers do make investigations easier). Core to crypto is a belief that P2P networks are superior to centrally managed ones.
The statement that P2P networks are superior to centrally managed ones stands far from reality. There is a certain class of problems where this is true. But like in most computer science problems, distributed systems have a ton of flaws and inneficiencies.
Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.
Computer systems aren't outside of human law or common principles of human trust or institutions. BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.
> The statement that P2P networks are superior to centrally managed ones stands far from reality. There is a certain class of problems where this is true.
Yes, indeed. That's enough to be useful, they don't need to be better at everything.
> Moreover, trust isn't something mediated by computers. Trust is a question of human societies. Algorithmic trust is not arbiter of trust any more than the thousands of electronic trust schemes, which get gamed at some point or another and where human intervention is necessary for course correction given a measure of authority.
Yes, and P2P/F2F systems allow more human input in networks. Individuals are free to decide with whom to interact or not. This is more humane than letting a blackbox ML model be the arbiter of truth, decide who is a fraudster and should have their account frozen (Paypal), decide who should be silenced (Twitter), ...
> BTC and all those other networks are just as if not more vulnerable to being gamed as any other system.
Great, there's a $1 trillion bounty for when you decide to start gaming BTC.
> Core to crypto is a belief that P2P networks are superior to centrally managed ones.
This. And maybe also that "automatic" processing (enabled by maths) is more efficient and solid than human beings, especially when it relates to trust.
Any "anti-cryptocurrencies" stance has IMHO to state why cryptocurrencies affect him/her author, or anybody else. Stating that it is useless is just an opinion. Many things are judged "useless" by many, let's for example take "billiard": there is AFAIK no solid and widely accepted "anti-billiard" stance. If there is no harm, there is no reason to ban.
Seems like the Theta token is the example that you seems to look for. Cancel culture is a recurring subject recently on HN, between Twitch which that will shutdown channels that infringed outsides of their platform and Youtube which demonetize so many kind of content... This solve both.
Just take Uniswap for example. Now imagine that every asset on the planet could be represented by a fungible or non-fungible token. You can put a Uniswap plugin into any browser and you now have a universal way to swap between any assets you want, 24/7. You could buy real estate, bonds, gold, stocks, currencies, all from your browser.
Now obviously this is not quite a a reality today. Most things exchanged on Uniswap are crypto tokens, but there are a lot of synthetic assets today, like mTSLA (which is a synthetic share of TSLA) and many more. So now I can hold stocks in my Metamask account today. Sure, it's only price exposure, it's not like TSLA has dividends anyway.
And then there's the oracle problem when it comes to real world assets, but this is solvable with existing legal systems, and soon, crypto legal systems like OpenLaw.
So yeah, Uniswap is my go to example of the power of DeFi.
> You could buy real estate, bonds, gold, stocks, currencies, all from your browser.
I'm not sure what world you live in where the biggest problem with buying a six-figure investment instruments is that _I can't do it from my browser_.
There's about a thousand things more important in my mind when it comes to investing. For a day trader this might be a problem. For decades-long instruments it isn't.
All the things you mention have issues that go beyond a browser. You could log on to a real estate page and buy a house and that's technically possible, and digital token doesn't do a damn to improve the experience.
I am a thousand times more likely to run into legal permits issues, KYC and anti-money laundering forms, getting stuck reading contractual obligations that certain assets require, etc.
That's easy for you to say, but there's plenty of people on this planet that don't have access to any financial markets. Now with a smartphone, browser and internet connection, they can buy exposure to US equities without a brokerage from any country.
But it's so much more than that. Have a little imagination. Digital assets could very well be the dominant forms of assets in the future, so easy access to markets to trade these is important.
You just disagree that this has importance, but the market says otherwise, since people are very interested in using Uniswap, and volume will only grow from here. It's undeniable that this is a usecase, and I remember only a couple of years ago that HN would say that Ethereum is completely useless, and yet here we are.
> Now with a smartphone, browser and internet connection, they can buy exposure to US equities without a brokerage from any country.
1. While this is technically become realer and realer every day, it's becoming less and less logistically due to regulation.
2. Eventually people will realize that the frictionless experience of crypto is also its greatest security risk[0]. Why do you think the Winklevoss twins store their wallet backup codes in...you guessed it...BANKS! ha.[1]
The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.
Blockchain tech is a next generation internet still in its early days. I don't think it will go away. What do you think these networks will look like in 20 years?
It might be a negative for society now (I assume you are referring to the shady nature of using it as an alt currency), but it's precisely the tech you need to provide an alternative against Facebook or other walled gardens many people love to hate on here.
It solves multiple problems at the same time. Content creators can get paid by design, tech is open an transparent and scalable. It's unlike anything we've seen before.
Just as an example, have you heard of smart contracts? There's a cambrian explosion happening now among networks, everybody tweaks something to be different from others. I suggest you to take a look around, there's a shocking diversity.
> How does cryptocurrency help with any of that?
How can a globally spanning Turing complete computer help? I don't know, but we will see attempts.
> Citation needed.
Haha, I always forget we are at academic level of discussions :)
But for fun's sake, go to https://coinmarketcap.com/ click a random currency and click source code / read the whitepaper.
> Currently the Dash network has ~4,800 active masternodes [8]. By requiring 1,000DASH collateral to become an active masternode, we create a system in which no one can control the entire network of masternodes. For example, if someone wanted to control 50% of the masternode network, they would have to buy 4,800,000 DASH from the open market. This would raise the price substantially and it would become impossible to acquire the needed DASH.
Oh my god
> Bad actors could also run masternodes, but not provide any of the quality service that is required of the rest of the network. To reduce the possibility of people using the system to their advantage nodes must ping the rest of the network to ensure they remain active.
Oh my goddddd
Nobody making this has any clue about distributed systems, do they
With my brief experience, they compute the state of a transaction in which everybody agrees. Why is that cool? You don't need an authority to tell who is right.
> What do you think these networks will look like in 20 years?
My prediction is that some useful inventions will be adopted by regular people ok with regular old reputation based trust. And then some actual useful things will happen.
I was reading a report from my country's central bank experiment with e-money. A PoC token thing with a one time use rule enforced by a trusted network of intermediaries. They expressed some discomfort with this being a scalability issue and also not allowing offline transactions in case of infrastructure issues.
Ironically I found myself thinking that this could be solved by a digital equivalent of cheques.
I admire that controversial opinion, but would you really be comfortable with a federal authority telling you which software on your computer is "great for society as a whole" and which is a fad?
Oh I totally would if it were fucking up my country's attempts to meet the Paris climate accord.
But I'm not American and have no problem with a nanny state doing the right for society (crypto libertarians really, really hate society I have noticed).
Totally get your point here, however the counter that always gets me is the rate of quantitative easing in the US/UK. Not sure on accuracy of this but I've seen figures(cityam website) saying around 18% of all US dollars were created in 2020. There's a good argument that it's safer financially to put money into crypto. Personally I feel quite unsettled with both traditional finance and crypto at the moment.
Take crypto out of the equation, what are the implications of the fed issuing a programmable currency? Many financial services would become obsolete. What do I need a stock broker for? What do I need a bank for? You have Wall St and other sophisticated investors profiteering and competing against the general public, devaluing our purchasing power, making leveraged trades because they know the public will hold the bag. It's a system that exists to favor the few and it's time to disrupt the orgy.
I think that OP's point was likely that many of these wallets are actually cold wallets for exchanges and institutions, rather than individual whales. The article's definition of whales is pretty loose anyway: "individuals who hold their assets in digital wallets and not on an exchange".
The majority of economic activity is not "programmable"--if I order a ship load of steel from some country, how is that contract going to be enforceable/verifiable with cryptoeconomic techniques?
Any discussion of programmable currencies is always going to run straight into the oracle problem. It is extremely hard to join on-chain to off-chain things without dragging in a party that is implicitly or explicitly trusted. And the moment you do that, the purpose of cryptocurrencies goes away, as a single database run by the trusted authority is several orders of magnitude more efficient and convenient.
The vast majority of finance deals with "real" assets--stocks of companies (arguably blockchainable, like the Topl thing that a sister comment mentioned), commodities (e.g. futures), logistics, etc etc
Not sure how that all can be trustlessly secured with blockchain technology
I don't follow it at enough of a detailed level other than to know the UN is using it as a proof of stake concept for the transactions, and then reimbursing the token holder in their local currency (caveat - I think this is correct, but again I'm not involved with them at any detailed level).
That's not programmable today, but may be in the future.
Presumably the shipment has a series of checkpoints, which add some amount of traceability. There's also the potential for insurance for blockchain contracts.
I only recently learned about oracles, but I suspect we're only getting started on unlocking the potential of blockchain.
If there are oracles making the progress at each checkpoint along the way available from the blockchain, and insurance contracts for potential disruptions at each stage, your contract can ensure payment on delivery, and the supplier can be insured against any disruptions.
Who operates those checkpoints? Isn't there going to be some sort of implicit trust there? Even if somehow you built a machine that executes instructions that is verified on the blockchain, how are you going to make sure that machine's firmware is secure?
edit: I think this is a valid thing to tackle potentially as a company, but right now it seems impossible.
If the fed did a cryptocurrency, it would be backed by the full might of the US Government — and all the things that the government can do if it decides to print more money. This also includes military and police powers.
Which brings me to the other point: currencies are governed at both ends; at issuance and at use. If you use a crypto that’s not approved, the government can simply arrest you for using one of its competitors. The treasury could likely do this without even needing to issue new laws, just new guidance. Governance is the reason for the existence of the US Treasury and Federal Reserve. It’s a core feature of any currency and the government isn’t going to abandon that lever of hard power. They’re only going to do a cryptocurrency that gives them more power, not less.
All of the stakeholders you list have a vested interest in not being disintermediated. They’re also deeply embedded in policy creation. I can’t help but notice the way crypto evangelists speak of crypto is the way leftists speak of Marx: in very vague terms outlining a utopian vision of a new economic paradigm that is frustrated by the sticky realities of the momentum of money and power. The reality of Marxism is different from the utopia, as would be the realities of central bank crypto (hint: it’s gonna be authoritarian af).
Exactly. I think all of the people that say "Crypto doesnt solve any problems" just live in countries with strong institutions which dont have the problems crypto solves. Even in those places though crypto is useful as a hedge against institutional failure.
"Instead of relying on forecasts and estimates, the data collected by DCEP payments will provide China’s central bank with a treasure chest of information that can be used to monitor economic trends, predict consumer behaviours and resolve issues before they would normally reveal themselves."
Do you know more about the DCEP? who is setting the rate? How do they support offline transactions? Do they have contracts?
I can see value in democratic nations agreeing to use a single global blockchain they've created, without an MLM-Ponzi structure redistributing wealth simply because of adoption/use (consensus by agreement, not through greed/financial gain).
Totally would never happen; it would require too many people to give up too much power. See also Brexit (the UK never fully integrated into the EU over this exact currency control issue).
I almost think the several countries that remain in the EU which choose to avoid or delay joining the Eurozone are better examples. While the UK evidently had other concerns with EU membership besides the Euro, even pro-EU governments seem to encounter opposition when it comes to the currency union.
Winner-take-all elections lead to weak control over who represents your interests. It's like being party to a lawsuit where one attorney represents all parties.
And you can't fire your attorney for four years.
In the single attorney situation, SELECTING the attorney would be the major struggle. And then that attorney has all the power. The parties would then have to lobby the attorney to win the case.
And that's why our elections have become such a struggle and why lobbyists can buy votes.
And that's why Wall street firms can call up their friends and get a multi-billion dollar bailout.
P2P loans already exist and are only becoming more competitive as the market grows. This (Bitcoin) will cause a complete disruption of the financial system given enough time.
I'm always bothered by this arguement because most of the same people in government who want to see a crackdown on Bitcoin also seem to want cash to be eliminated.
I've been asked to do consulting on one of these digital cash replacement projects. The requirements included all the stuff you'd expect, like strict ID requirements for every account, and the ability to freeze funds at will. But they also wanted things like the contents of receipts getting uploaded to government servers, to allow real-time tracking of not only who was paying who, but what the funds were supposed to be for. My contact wouldn't tell me what government it was supposed to be for. But they did admit it was a dictatorship. Obviously, this would have been a very effective tool for cracking down on dissent.
Frankly, I kinda suspect what was really going on was the company that reached out to me was pulling a scam on that dictatorship and had no real plan to actually deliver a working product. But it's still a good example of the panopticon that authoritarians want to replace cash with.
I could also easily carry more than $10k across a border. It's illegal without reporting it (exact number varies). But that's one type of payment.
I've carried $2k USD in just $20s in my pocket across international borders, and had it been in $100s that would be the limit. But if I want to transfer even one million dollars that 100 trips. Or 100 pockets if I ignore the law. I own cargo pants, but even they don't have 100 pockets. And a billion? That's a thousand people each with a hundred pockets full of cash.
What I was saying is that mere logistics makes it hard to move a billion in cash.
So there's a natural prevention of moving large amounts of cash. It's not impossible, but "making it hard" was done on purpose. So cryptocurrencies are not "clever" for "fixing a problem". They're actually removing the amelioration to the problem.
She noted that in general you target the criminal activity itself, not the currency used to fund it. But then she further noted that cash was just as big of a problem for them and harder for them to deal with. She said that crypto had the advantage that it at least left a trail, unlike cash. No one said criminal activity is easy. But it's not fair for you to conclude that therefore it's ridiculous because using cash is hard.
Which is another way of saying they want absolute control, which in this case is the absurd charade where "inflation" measures that they claim represent life on the ground exclude the essentials like education, healthcare, and housing.
I liked the take from the Mayor of Miami (from a podcast about cryptocurrency):
"they [governments] will have to borrow money like everybody else borrows money, they can't just print their own money. They have to borrow money at an interest rate. And if governments don't behave fiscally then they are going to have to borrow at worse and worse rates. They can't just invent their own interest rates and currency, which manipulates how markets work...
We in the city of miami, we're forced to balance our budget, we actually have a surplus, about $150 million in surplus and we have some of the lowest tax rates in the history of the city."
It's only wrong if it doesn't work -- but it does. Economists aren't 100% sure why, but it does.
The fact is while the debt has exploded, the total cost to service that debt has collapsed. The US is now paying less interest on its sovereign debt than before the COVID stimuli. Explain to me how it's stupid not to take advantage of this?
The reality is when you take on debt, the only thing that matters is what you choose to do with it. If you use it to generate economic activity - and hence revenue - that's a good investment. If you don't, that's a bad investment.
Now, you can "circumvent" this by investing your money like you're supposed to in literally anything.
The cost of debt has dropped would be a more accurate description. Well... just because you can take out more loans does not mean you should. The issue is really how long you can refinance the debt for, or can you outgrow the debt, otherwise you’ll be forced to inflate it away. The cost of financing will not be this low forever and it’s still a few hundred billion of interest each year. Still, we should spend money on infrastructure and cool tech while we can.
Yes, and that the only point of taxes is to reduce inflation, since the govt doesn't need taxes anyway since it can print money. Taxes don't even cover the cost of govt expenditures so it makes sense.
Broadly speaking the tools of monetary policy available to reduce inflation are:
(1) Increasing reserve rates for lending. This causes the circulating supply of currency to go down.
(2) Increasing interest rates for lending. This reduces the demand for borrowing, which is largely fractional reserve. This also causes the circulating supply of currency to go down.
(3) The Fed unwinding its balance sheet by selling bonds. They collect the cash and remove it from circulation. They can increase the circulating supply by buying bonds.
Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy.
The government doesn't print money per se, the government can borrow money by selling bonds. This just reallocates the existing money supply. The overwhelming majority of US government debt is held domestically by US persons. This doesn't change the money supply either, unless the Fed steps in.
> "Taxation doesn't change inflation, to the best of my knowledge, as before and after taxation the same amount of money exists in the circulating supply. Taxation is fiscal policy."
Fiscal policy affects inflation. You're thinking of inflation as "the money supply / total of all $", but that's only one definition or part of inflation. Generally, you would also describe inflation as the price of things you buy going up or down (CPI). Say you ratchet up the effective tax rate to 90%. Everyone's going to have a whole lot less money to buy extra things. Some things with fixed raw input cost still wouldn't budge much. However now that people's monthly incomes have gone from $5000 -> $1000, you're going to see houses, education, Pelotons, and other extra income sinks, have their prices fall precipitously.
The point of taxes is to create demand for the currency in the population. The government can then promise to pay people in its own currency so that it can provision itself with staff, goods and services.
that's the point. if money is backed by something with a max-supply (like gold or some cryptocurrency) or if there were a law limiting the max money supply then eventually they will have exhausted their reserves if they aren't careful, and will need to borrow. The american dollar is not backed by anything but the "full faith and credit of the american govt"
Even cryptocurrency projects like Brave browser's BAT has a max supply, so Brave will have to buy BAT back from the market (at the market rate) if it wants more.
His point is that a government is more fiscally responsible when it has maintain real reserves, where there is a risk of depletion. The federal reserve is a misnomer, since it doesn't have meaningful reserves (like gold). It just prints.
So here's the thing...there was a long period of time where empires were on the gold standard. Spain during the early American colonial period was one such empire.
Spain did really well out of it's brutality in the New World - plundering the Inca and Aztec empires yielded a wealth of gold, and the big find in the salvage industry today is still "spanish gold" because just so much of it sank to the bottom of the ocean.
But now a question: did the Spanish economy boom from this influx of gold they had (through a substantial expenditure of resources), suddenly acquired?
Spain actually experienced massive inflation and then an economic crisis as the government suddenly found itself, bizarrely, bankrupt. Gold wasn't worth remotely what it was before, because gold is not actual productivity - the conquest of the new world was a conquest of gold, at the cost of real resources - food, men, timber, arms etc. But it didn't yield anything that was actually worth trading for other then just more gold. So prices skyrocketed, and suddenly the Spanish empire was raising taxes - despite in theory having "made money" because it couldn't afford to pay for its own upkeep.
What does this have to do with the concept of loans? Quite a lot. Because the exact same factors would apply to a government with a wealth of productivity which was forced to seek loans from a market: demand for currency drives the value of currency up, but the same thing happens - farmers, workers, everyone else winds up poorer because the value of their labor is being reduced relative to the value of currency. So currency holders get richer, but everyone else with bills and day to day living expenses are getting poorer.
yes, just because a nation is on a gold standard doesn't mean they can't have devaluation of currency, like when spain dumped a bunch of gold into the market from south america.
Cryptocurrency wouldn't have this problem, since it has a hardcoded limit, unlike gold or USD.
A government which has to "seek loans" for crypto by definition must be trading in something which is not crypto internally. Because a government can't directly trade it's own citizens productivity (hence taxes), and can't mint new crypto to repay such loans in response to productivity.
So in such a scenario there are only two options: increase taxes on citizens for crypto they hold (while in the meantime being unable to pay for services upkeep - and thus probably inventing a form of fiat anyway to stay afloat), or devalue it's own currency to pay escalating loan rates to crypto holders to buy more crypto for those transactions in which people will not accept fiat.
Of course since taxes can only meaningfully be levied in the crypto-world on income, since you can control businesses to some extent but not holdings, the effect is the same: the compensation for your labor goes down, or you're fired (because the value of your output has gone down faster then wages), or most likely, you are inefficiently taxed at a much higher rate then is necessary to ensure the government is never stuck with the risk of a crypto shortfall which would suddenly put their ability to supply payment for services into almost immediate default.
> We in the city of miami, we're forced to balance our budget
This is true, but not without some moral hazard. Miami can keep building on land that will be swamp within the lifetime of the building because federal taxpayers and inflation are there to bail them out.
If I was a politician and in charge, I'd ban both in a heartbeat. Even though banning "cash" would be practically impossible, because people would then just replace it with barter, or favors or bottle caps.
But if it were to come to that, I'd replace it with some sort of digital currency that is "private" but accessible to the government within rules and reason of course.
It hasn't necessarily been out front-and-center in the mainstream media, but it's definitely something getting talked about in mainstream financial circles routinely. Here's a bit of a partisan source from a quick google search, but it's got a lot of links and citations you can follow up on and I believe it is basically correct in its facts, even if you disagree with the conclusions drawn from them: https://www.newswars.com/cashless-society-democrats-propose-...
It's up to the "trial balloon floated in Congress" point. The trial balloon has so far always been shot down, but it's really only a matter of time. If the government could just push a button and have access to literally every single transaction that occurs, they would certainly do it. They wouldn't even blink.
Also, I want to say, I'm just linking one example. You can follow up with search terms similar to the ones used in that article, and probably find even more mainstream sources discussing it. It's a topic in the air in financial circles.
anecdote time: I once travelled to Vietnam for a vacation, people in vietnam prefer $100 bills because they're easier to use for hiding wealth, transporting cross border, and other slightly less than legal reasons. Additionally it's the preferred currency of criminals in the country too (so I heard). They will even pay higher exchange rates for ones in better condition or with more anti-counterfeiting features
So yeah, USD is used for a lot of crime globally.
EDIT: changed "anti-moneylaundering" to "anti-counterfeiting" by suggestion
In Canada, organized crime holds on to the $1000 notes. They're the largest value banknote commonly used in the West in the last few decades. They were last issued in 1992 and then officially withdrawn in 2000 for concerns over moneylaundering. They're not legal tender anymore, but can be exchanged at the bank. There's about $1 billion in circulation, and that will likely remain true for a long time yet. They move in a closed loop in the drug trade, stuffed in briefcases and in safes of criminals who effectively act as banks settling debts. No one wants to cash them because of the risk of being traced, but because they can be cashed in theory, they retain full value. The €500 is slowly displacing them, in Canada and abroad.
I saw one as a child. Most Canadians have not, as far as I know. An acquaintance of a friend of my father's had several, and my father was interested in numismatics, so he traded one for $100s. The implications of the man who had some "pinkies" (called so for their colour) being a biker with a facial scar didn't click into place until I was much older.
Hows that better than a bank account?
You can hold CHF on a bank account as well and it keeps the same value as the note. (both lose value due to inflation)
Also dont forget insurance for banknotes in a safe.
GP said it, negative interest rate, i.e. the bank charging you to hold on to your money when you have more than a certain amount (was it 100k or 25k CHF).
So if you put in 100k in the bank and wait a year, you'll be able to withdraw maybe 99.8k CHF. If you hoard 100x 1000 CHF notes, you'll still have 100k CHF. Sure in 1 year those 100k CHF will probably buy less Big Macs then the present, but the 200 CHF loss will mean even less Big Macs.
Its meaningless, if someone puts over 100k on a bank account where inflation eats it away they probably dont care about interest rates and its just a fraction of someone holdings that is deposited at super low risk/high availability.
This only makes sense if you have way more and the rest is actually invested and grows.
Storing you whole savings like that is rather stupid regardless of if you reach the limit and pay interest rates or not. and putting it as banknotes in a safe is similar stupid potentially even more stupid because there is real chance you physically lose it all.
Most people are not going to invest 100% of their savings in things like stock market (most people might be 60/40 or less).
Cash at a bank is the best you can do in terms of risk free asset (for people in CH it's the equivalent of a bond allocation in a portfolio, just with higher return).
Yes there are saner things to do with 100k, but GP was just comparing the 2 options, and you asked "Hows that better than a bank account?" and I answered...
Its clearly not better, its worse. You exchange possible interest rates with a rather incalculable risk of total loss or some absurd insurance fees which are likely to be higher.
If putting paper in a safe would be better then someone (probably the bank itself) would offer that as a service. If they cant make it lucrative at scale you certainly cant either.
The regret only grows. Now I'm torn between trying to explain the concept of imaginary scenarios where the scope is limited and crafting a statement with a hidden insult somewhere.
If this were a party conversation, imagine me walking away rolling my eyes and shaking my head...
If the sum total of the wealth you are trying to hide is a in the thousands, you aren't who the government is concerned about. At least, not enough for policy changes. So, while cash is likely far more prevalently use in crime, you're talking about the huge long tail of low level drug dealers and smugglers, not the oligarchs and money launderers.
Deposited/electronic money tends to be necessary when you hit a million plus. At that point cash sucks and is super risky to hold.
In Uzbekistan, I saw a disproportionately large number of people with gold teeth. When I asked my host about it, he said that that was the older Soviet-era generation that would get gold teeth so that they could carry some useful wealth with them in case they had to flee their homes all of a sudden.
That doesn't stop cryptocoins from being the currency of choice for criminals that need completely anonymous digital transactions, which is why they are the standard for the online black market and for ransomware. It's hard to argue of the advantages of cryptocoins while in the same breathe arguing that cash is better for crime.
The bigger issue is that very few people want to hold onto cryptocoins if their goal is to spend the money. You can't really buy much directly with cryptocoins in comparison to cash which is universal. I can't use it at Walmart, I can't use it at McDonalds, I can't use it to buy a house, I can't use it damn near anywhere. The only way I can use it is through a scheme that converts it to cash first. No criminal wants to add that papertrail step to their operations.
they prefer USD in parts in SE Asia because the local currency has experienced hyperinflation in the past. the problem is there is no easy way for them to exchange overly worn bills back to the Federal Reserve, so they have like rotting old falling-apart $1 bills that look like they're on the verge of disintegrating.
The possibility of cryptocurrencies being banned in the U.S. is probably greater than what many people realize, especially those current holders. At least an attempted ban not unlike what happened in India.
While the whole "illicit transaction" argument is bullshit, Yellen and other Treasury officials probably realize that cryptocurrencies like Bitcoin could pose an existential threat to the U.S. dollar and needs to be snuffed out early. Companies like Microstrategy and Tesla have already began using them as substitutes for U.S. treasuries. Together with the decline of oil dependency and the petrodollar, a day will come when the de facto currency is no longer the U.S. dollar and with it goes the world currency status. Yellen's department, the U.S. Treasury, would become a minor department and a shadow of its current self.
An apt analogy could be the U.S. government is like Nokia in the early days of the iPhone.
That said, a U.S. ban may actually unintentionally lead to greater adoption as it effectively means cryptocurrencies withstood and prevailed an attack by the world's foremost national power.
> it effectively means cryptocurrencies withstood and prevailed an attack by the world's foremost national power
That's a big if.
For now the USA remains the world's richest and biggest unified market. Surviving a ban from said market is not a given for any product. In fact I imagine it's a death sentence for most global products.
Crypto maximalists - and I know a LOT of them - are drawn to crypto because of ideology, not just the money. The idea that a person should own his/her own assets, be able to share and use them whenever they want, and be free from government censorship and foolhardy economic stewardship is incredibly powerful.
When governments talk about banning crypto, what scares them isn't crypto; it's this ideology. And this ideology also makes crypto incredibly hard to ban. You can create all sorts of regulations but that will only harden the stance of crypto maxis because it will only prove them right.
> You can create all sorts of regulations but that will only harden the stance of crypto maxis because it will only prove them right.
They can harden their stance all they want, but breaking the crypto ecosystem is incredibly easy if governments really wanted to. All you have to do is ban companies from interacting with crypto currencies in any form, be it accepting, exchanging, holding, or producing them. That would immediately shut off the gateways between the crypto ecosystem and the real economy, which reduces crypto to P2P transactions in parking lots.
History has shown that when the potential rewards are large enough, the players will literally move jurisdictions to tap into the rewards. All that happens is forgone tax revenues for nations.
Because unless you have a one world government (hopefully, no one is a proponent of this), there will be at least some countries that will welcome you. And since the rewards will be large enough, market participants will even do illegal things to access it.
All it will eventually do is make your country less competitive until you have no recourse but to change the law. FOMO isn't just for people; it's for nations as well.
All they'd really have to do is announce that they were going to build enough computing power to initiate a 51 percent attack on bitcoin. I imagine the NSA is already there but it would be a nice cash injection for Intel or whatever.
Bitcoin has a very, very short history of being a decent store of value and the US Government publicly saying they plan to break it would collapse the entire scheme.
It’d have to be a very prolonged 51% attack. Other nation states would likely join in, and it’s not like the USG can stop millions of people around the world from mining. Even if they succeeded in driving the price of most coins to zero, it’d be a Pyrrhic victory with USG looking like giant, insecure assholes spending a huge amount of resources just to destroy something that democratized money and banking. Months later, a new white paper would come out that finds a way to disadvantage state actors and viola, the game of whack-a-mole begins anew. People want out of dollars because the US economy is mismanaged, and that demand isn’t going away.
I mean, companies are barely interacting with crypto right now, very few businesses use it for trade, but it keeps going up so i dont see how that works. US based onramps are useful only to americans, and i m sure people will seek ways to convert their dollars elsewhere, like they did for years before coinbase or other us based exchanges existed
> companies are barely interacting with crypto right now
Not sure that is true
> According to security firm Sophos, 51% of organizations it sampled globally found themselves the targets of ransomware attacks in 2019. The crooks succeeded in encrypting data in 73% of these attacks. Just over a quarter of these organizations paid the ransom, or their insurance companies forked over the cash.
Why is this post so downvoted? It seems that antigovernment sentiment is not popular here
It’s not only that but also all that “crypto is not technologically interesting and it’s just Ponzi scheme!”.
There are so many interesting and unique things there. You can mix cryptography, finance, etc. into endless amount of protocols.
Here is some interesting ideas in crypto: decentralized stable coin (dai), automatic market makers (uniswap), zero knowledge rollups, dns that you actually own and not rent, p2p prediction markets, automatic borrowing, algorithmic stable coins without peg and so on and so forth.
And there is always something new.
I think blockchain is essential building block of the future free web.(at least stuff like dns)
Oddly, HN is over all rather closed minded about cryptocurrencies/blockchain. I can understand being jaded at all the bitcoin maximalist out there that are frankly ignorant or even just being generally weary about the idea of such currencies... but it seems like the general sentiment is very negative in almost every thread with very minimal understanding of cryptocurrencies or frankly currencies in general.
Shame, tbh. I wish there was better discussion on the topic. Blockchain is very cool, even if you don't believe bitcoin is replacing your dollars ever.
At this point, I don't even care about Bitcoin anymore. It serves no purpose. I don't even care about cryptocurrencies as such.
But the ideas popping out from these fields are just so darn exciting. DeFi makes all these complex financial instruments that were previously the sole purview of big banks accessible to anyone.
And we're barely scratching the surface with NFTs and DAOs.
I think it's exciting too, but I'm also a little weary of making these complex financial instruments more prevalent. I see more of a downside to the increase in these instruments overall. Still fascinating to watch unfold though.
I see the downside as well, but all the same, I'd be happy if I can own the rewards and the risk. If I go broke because of experimenting with this stuff, I'll be okay with it - it's my money, my mistakes.
Lots of people went broke in 2008 because of their bankers' mistakes.
It strikes at the heart of ownership and responsibility and I can't understand why HN isn't bullish about it. Everyone here loves the idea of owning their data and their hardware and their software but somehow, their money should be owned by...bankers? So they can invest it in junk and crash the market?
What you described as the ideals of crypto maximalists largely applies to fiat currency. Individuals "own" their own USD, are able to share and use as they please within the bounds of legality.
Not sure what it means to "censor" currency, but if they consider governments' economic stewardship to be foolhardy, why would they consider the wisdom of miners, programmers or the crypto's regulating body to be superior?
What's left is the question of legality, anonymity lets users skirt the government's laws, which has value to basically criminals.
What value does crypto provide to those groups you mentioned, that cash cannot provide? If the answer is, it allows them to break laws then yes by definition they are criminals. You can argue that some of these laws are unjust, sure but that's tangential to the question. The value of crypto by volume is largely for speculative bets and criminal activities.
Governments that are democratically elected aren't scared of anything but losing their job if they don't get re-elected. When a government starts to defend it's own existence against people's will, it becomes fascism. And by the way, this ideology you are talking about is called liberalism. The idea that money could and should be provided by open market rather than a central government is not some crazy idea. It's just wasn't possible before bitcoin.
Beany babies spawned a lot of successful business, but you absolutely cannot from derive that they were fit for purpose, or in any way useful.
You're cargo culting.
They're still a solution in search of a problem, backed by tech people who think they understand what they are trying to replace.
Once you understand the fence you can tear it down, but cryptonerds really really don't understand law (they think smart contracts solve a problem) or economics.
There are few things more annoying than hearing a crypto cultist talk about economics. It’s like a plumber lecturing me about database architecture based on their Excel experience.
Ironically people who actually work as blockchain devs are very chill about it.
The cash argument is not a good take at all. When you travel with large amounts of cash people ask questions, you are obligated to declare it when crossing borders if it’s over certain amount(over 0,25BTC as USD will make you fill out declarations and it may be confiscated until you can prove that it is legitimately yours) depositing it to your bank account rings all kind of bells, the banks can refuse to work with you and can trigger law enforcement interest.
We can be cynical about it but actually number of banks paid fines in the billions of dollars and they take it seriously now. Some hard hit banks like BNP that got fined for $9B would even refuse to work with cash intensive businesses.
The criminals need to go through trouble of creating shell companies to launder or transfer money, cash is no good anymore.
That’s not my argument. Crime is not gone, tools are changing and the enforcers are trying to catch up.
Cash is now for petty criminals only. For anything beyond car level of money you need involvement of politicians or high end criminals.
They tend to use gold and fake bank transactions BTW.
Just today there is a trial of the Turkish bank Halk Bank that was allegedly caught laundering money for Iran. High ranking Turkish and Iranian politicians are involved, the funds in form of gold were transferred using private jets and laundered through Dubai. The defense of the person who run the gold operations includes Rudy Giuliani. The things are at that level now.
This is why Europe eliminated the 500 euro note, and the US doesn't produce bills larger than 100 dollars. The thought is these are largely used be criminals.
Similarly Modi's demonetisation which the intent was to remove black money from the economy. All bills of 500 and 1000 rupee were to become worthless if not exchanged by a certain date.
> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
This is the broken window fallacy writ large. The small value cryptocurrencies provide over other digital transaction methods is overshadowed by the huge inefficiencies of how transactions are processed via PoW. The fact that there are companies that have made a fortune dealing with all these "broken windows" doesn't change the basic fact that cryptocurrency is probably the least energy efficient way to move money digitally.
> I’m not aware of any other digital transaction methods that can send un-printable money besides cryptos.
That's because it's not a useful feature heh. Money is meant to be a medium of exchange and temporary store of value. To the extent it holds its value for the duration of your ownership of it, it's met its goal.
You can simplify this even more. Open an InteractiveBrokers margin account and request a debit card. Fund the account, purchase gold (futures, GLD, whatever) and spend on your IBKR debit card. This will pull from your margin. Your margin interest is ~1% and tax deductible. Settle up your account as you see fit.
These are political problems. If you think that an additional form of currency will solve them, I have a bridge to sell you. Even if you convince the US government to switch to BTC (this is probably a harder political project than defunding the defence department), I'm sure they'll think of something if they need to fund a war or two. BTC would be a mere speed bump.
Yes, the US can still raise funds other ways. It would still be preferable if they were more transparent about it.
> Even if you convince the US government to switch to BTC
There's no need for that. It would be enough for some people to switch to BTC. I.e., not store their money or denominate their salaries in USD.
As things stand, most wealthy people already store their money in things other than USD that are somewhat less easy to manipulate, like stocks and commodities. It would be nice if this strategy were more accessible to people worldwide.
Oh we have don't worry. The proportion of cash used for illicit activities is much much lower than the proportion of crypto used for illicit activities. Especially once you remove speculation volume (which cash doesn't have). Then there's the whole new kind of crime it created - ransomware.
Plenty of work was done to ensure tracability of cash. Take large amounts in or out of the country? Form. Withdraw or deposit large amounts? Form. Act suspicious? Form. Structuring? Prison.
You can't really compare a system designed to circumvent regulations regarding transactibility to a system designed to provide as much oversight as is practical. They're not even in the same ballpark.
I don't ever see most nations willingly giving up monetary policy by ceding to cryptocurrencies. This is especially true for China and the US. They can however adopt their own version, where they remain the authority and would operate the nodes responsible for handling transactions. This would allow many of the advantages of cryptocurrencies while still allowing a country to control not only the money supply but also be able to audit money and (even in the cases of fraud and theft) return money to its rightful owners. You could even have a system where you can freely convert between the digital version and the physical cash version.
I believe that is exact where the value of bitcoin is: because any nations will not giving up their own currency. Bitcoin is anti-establishment. Of course, the real test will only happen when some country start banning bitcoin. No one knows what's going to happen.
lol, it will prove them broke. The overwhelming majority of people own bitcoin because number go up. Banning it will make number not go up. This will cause them to divest. Substantially nobody is in it for the ancap utopia espoused by $20 transaction fees and 30 minute long confirmation times.
Yeah literally that has been my argument too. And I'm invested in this... because number go up.
Ok, so govs ban exchanges and you have your stuff in cold storage. You have to buy/sell p2p? Are people gonna do that just to have this magical deflationary currency? Possibly... but idk.
Ever wondered why so many crypto projects come from China and Russia and former Soviet states?
Because people who live there know what oppressive governments can do and how unreliable fiat is. I don't think people in the developed world understand it because they haven't really faced oppressive governments.
In US, BTC had a use such as on Silkroad for drugs and other stuff; in China, at least from what I understand, it has a use of transferring assets out of the country.
If you talk about China specifically, the average people wouldn't consider governments 'oppressive', the approval rate for government is actually quite high.
Are you sure it's not because that's where cyber attacks come from? Because you do know that trading cryptos is illegal in China. Do you have any data to back up your assertion?
If that happens and people don't get mad, it will be truly, truly sad.
Most people here are pro ownership. If you think everyone should own their data (they should), why wouldn't you think that everyone should also own their money?
Crypto might be a 'scam', but at least I get to own the risks. Giving up ownership means that my money is just used by bankers to invest in their own scams, and when they screw up, bail them out again.
You can't be pro data ownership and anti money ownership.
Well that’s easy to say when everything’s is going your way haha, as soon as bitconnect and gox and quadriga hit the fan the first thing people did was yell “help! Police!! Why didn’t anyone stop this?!” That’s exactly what’s going to happen with tether.
The biggest advantage, from the government's perspective, is tighter control over the money supply and over transactions. A blockchain with a centralized authority is able to do unique things like forcibly remove money from someone's address and freeze an address from sending/receiving, all near-instantly. Hard to track and freeze money when it's a bag of cash in a criminal organization's possession.
Cash is extremely difficult to use in criminal enterprises, especially with the USD. Large amounts of cash are bulky due to $100 being the largest note. Massive amounts of cash is difficult to convert to/from other forms of assets due to CTR, SARs and fed surveillance.
Cash as a vehicle for facilitating criminal activity by now is largely fiction. Even diamonds are easier than cash.
Large amounts of cash, and not even all that large ($10k) have been considered evidence of crime and confiscated by the cops in the US. The laws that enable this have been slowly dying off, but it still happens. No other evidence of a crime is necessary nor do the people need to be convicted of anything, the cops just take the money because it might be used to commit a crime.
They check cargo holds and do random bag checks - as of the mid 2000s due to the "war on terrah" but maybe that went out of fashion in the past decade. Large denomination bills are designed to be easily scanned externally since they contain metal strips in the bill design.
My main problem with crypto is I like the rule of law. If someone steals my bitcoin it's gone. Normal bank transactions have (imperfect) protections. There is a reason the world switched from storing cash, or gold, under a mattress.
If a country was running on a crypto coin which had a major hack, it could collapse the whole countries economy.
If you have a billion dollars to hold, you don't want the volatility that could turn it into a hundred million, or ten billion in a few weeks, just because.
Also, holding a billion dollars in a form protected by a single private key is effectively putting a billion-dollar bounty on your own head.
What does that mean? How does "crypto" guarantee that someone has the reserves necessary to back the stable coin in circulation? Whenever cryptocurrency interacts with the "real" world, you're trusting someone to verify that the real world state corresponds to the state recorded in the blockchain. I have yet to see a satisfactory solution for this. You're also trusting someone to verify that all this software is free from backdoors and bugs that could be used to commit fraud.
Backed by crypto means for every stablecoin worth 1 USD someone has locked away for example 1.5 USD in crypto.
Whoever locked the crypto away and created the stable coin needs to buy it back to unlock the crypto again.
If the price of the stabelcoin would drop below 1 USD everyone who created them and sold them would make a profit buying it back lower. This essentially makes the coin stable.
I'm not going into further details as you can easily google how this technically works.
Also no one said there is no risk you have all kinds of risks including meteorite impact event.
Backed stabelcoins simply reduces/decentralizes and shift the risk to code/market dynamics and other stuff rather than a single issuer of a coin. Nothing ever is without a risk.
BTW if finding a flaw in the code makes you rich that kinda a very good incentive for people to find flaws. We dont really have anything better than that in your "real world".
kind, they dont lose that it just locked away. But yes it must be more than the value to be backed else it could become partially backed if the crypto price goes down to fast. It can be more of less than 150% backed is up to whoever writes the code. But 150% seems reasonable for a volatile assets.
You may think no one would do that but its actually a way to bet a price gains of your crypt.
By locking away 150% you get 100% in stable coins to invest/spend without losing the volatility (possible gains) of your crypto.
So if the price of you crypto goes up you get the whole profit on the locked 150% collateral even if you spend the stabel coin.
ofc you need to buy back the stable coins to unlock you crypto but the buy back should always cost the same because its a stable coin.
Example with numbers:
You lock away 150 USD in ETH
You get 100 USD in stable coin to spend
Price of ETH goes up 100% (doubles)
You can now buy 100 USD stabel coins and unlock 300 USD worth of ETH
This is interesting because you have 100 USD that you can use while you wait for the price to go up.
You could buy ETH with it which also doubles in price so you have 200 USD worth of ETH
You sell 100 USD worth of it to buy back the 100 USD stable coins
You now turned 150 USD worth of ETH into 400 USD worth of ETH even trough the price of ETH only doubled.
Ofc if the price drops your stable coin will be undercollateralized and someone else can "buy them" and re-collateralize which would make you lose the difference.
In other words if you bet on rising prices and it goes down you have to top up to keep the 150% collateral if you cant top up someone else will and you get liquidated.
In the end is a zero sum game. Some lose others win but its a net gain because stable coins can can exist that are backed by crypto.
I never said all-in Tether.
Also you cant "cash out" a billion dollar of anything. Its completely absurd, no one has a bank account with a billion dollar on it. It also make zero sense to ever do that. Its completely irrelevant if that is or isn't possible with coin XY if there is nothing you could move it into.
The only reason someone would cash out a billion is if he wants to invest it into something. What could this possibly be that requires a instant investment of the whole billion?
You guys need a reality check. No one ever buys something with 1 billion at once. There are multi-billion contracts but they aren't settled at once.
You could probably sell one billion in Tether over the course of a few month just fine. Simply stop selling if the price goes below 1 USD and use all large exchanges parallel.
It has several billion fake volume so even if real volume is 100 times lower it should suck up an additional billion. Assuming real volume is 100 times lower and you sell over the course of 100 days you would only cause less then 1% of the volume.
Eh, when the Archegos fund leveraged at $100B collapsed a few weeks ago, many banks cashed out many billions. It made the news because they gave lots of leverage to a big gambler, not because that event in any macroeconomic sense mattered at all.
The people in power are balancing the business opportunities against their own loss of control over the issuance of currency and some financial market functionalities (with smart contracts, etc.). I think it's a given they will always choose their own power over the business opportunities of others.
> I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.
This is a very under-appreciated point. US persons (citizens and companies) assume the US banking system for granted. Many countries (even some developed ones) do not have a developed banking sector and by consequence it is harder/expensive to make transactions, access to capital is limited and access to markets can be restricted which limits opportunity.
Crypto-currencies requires significant expertise, much more than the current banking system. Countries who will attract these companies and knowledge will have lots of sway in the international economy in the future.
> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created
I strongly dispute that claim.
After a decade of effort, tens of billions of dollars invested, and thousands of crypto startups, we still don't have a single successful business other than those selling crypto services. (To be fair, Brave looks like it might make a run for it. We'll have to wait and see.)
Pointing to the fact that some people arre making a lot of money does not validate a business model or a social good.
Even in the most vile and egregious scams, there are always some people making a lot of money.
>Binance and Coinbase are large, successful companies
I don't think you should group Binance with Coinbase. Binance is mostly unregulated, literally on the run, refusing to admit where it is headquartered[0], possibly because it avoiding paying taxes.
It seems like more and more likely that Binance is just a mechanism for CZ to exit via a massive BNB pump and dump.
> Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
I would absolutely dispute this. Personally I think the vast majority of this is just rampant speculation, and bubbles are not business opportunities.
Well, unless if you're selling the equivalent of shovels.
>Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies.
What business opportunities have been created outside of the crypto space?
> i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures.
They may also leave themselves open to these currencies being manipulated by foreign mal-actors
Indeed, not an expert... but what is a state actor stopping form putting extraordinary resources (say NSA for instance) in mining and minting to gain an advantage? And how bad is that?
It wouldn't even need to be just mining. I'm assuming there have to be at least a few zero days present on the asics at large miners. Just mucking up the network enough to scare enough people to panic sell could cause massive chaos.
I've seen the estimation that 40% of all bitcoin transactions are related to drugs. Hydra (russian dark web drug store) is still the biggest receiver of bitcoin transactions. I don't think that cash is anywhere close.
Don’t worry; they’re getting rid of cash too. I don’t understand the crackdown though. Crypto is a dream for tracing criminals. Even the privacy coins.
Tell me when 95+% of cash transactions don't serve any good purpose like it currently is with cryptocurrencies (speculation, waste of energy, malware ransoms, money laundering, hiding wealth / tax evasion, other illicit use)
I am sorry but that’s a very weak argument about cash being involved in illicit transactions. As it stands right now cash is still TANGIBLE. If you want to launder cash you still need to be physically present. Crypto not so much.
I will leave you with this: the reason why crypto will inevitably fail is because no one and no country will be willing to go to war to defend it. As for USD? There’s the single greatest military power assembled by mankind backing all US interests.
I am not contesting that cash isn’t laundered. I am simply pointing out that whenever someone brings up crypto being utilized for money laundering the first argument is almost always “well cash is also used for money laundering” which is pretty weak. If you knew what people can do to launder money in shitcoins and bitcoins you would not make that argument. There’s a reason why Macau is no longer needed to get money out of China. And there’s a reason why gold is no longer used to move drug cartel money in the past two years.
> There’s a reason why Macau is no longer needed to get money out of China
Why would letting people circumvent the laws of an oppressive state to move their assets to safer havens be a bad thing? If anything, this describes a bull case for Bitcoin - "use BTC to bypass your oppressive government!"
Unless we are pro oppressive governments here (which, by the comments, seems like a lot of people here are)...
Wait until you hear about cash.
More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare.
Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M.
Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.