Can confirm. I’m friends with a group of very smart distributed systems engineers who were excited to launch an actually useful crypto project that gets talked about here from time to time.
As much as they’re excited about the technology itself, very few people are actually interested in using it. Instead, their business seems to revolve around the value of the utility tokens for their project.
Few people are buying the utility tokens to pay for the service. They’re buying them to horde so they can resell to other speculators when the price goes up. They have a lot of tokens in circulation, but only a small number of them get used to pay for the service. Many of them are sitting in the wallets of exchanges where they get traded back and forth but never come near the blockchain.
Investors only care about getting more press releases out so they can pump up the price of their discounted tokens, which have a shortened lockup period relative to something like stocks. It’s almost like a pump-and-dump scheme for investors.
Maybe their underlying project will become popular in the future, but the volatility of the token price makes it increasingly unattractive for companies that want to actually use it.
> They’re buying them to horde so they can resell to other speculators when the price goes up.
It's almost like all interest in cryptocurrency is driven by greed and speculation. I've been learning more about it, and I'm pretty convinced this is the case. Go into any crypto space, and all people are talking about is yield, price action, how much their tokens have grown etc. I think the only thing I've seen that isn't purely about speculation is NFTs, oddly enough, which seem to be basically a fad.
To be fair though that's most things. That's the very purpose of the stock market. When you buy a stock most of the time most people don't care what the company it represents does, they just want the stock to go up. Same thing can be applied to most things there are vast warehouses full of art people will never see as its just owned as a tax dodge / speculation. Heck most of us work jobs we hate for nothing but money. Greed / speculation and the need for income make the world go round.
All those things still produce tangible goods at the end though, is the difference.
I can hate my job but at the end of the day I still created value for my employer. Companies on the stock market still create actual value for people, even if shareholders don't particularly care how they do it.
Bitcoin produces a money that cannot be debased by inflation on a whim and which is very hard to forcibly confiscate. It can be transferred in minutes to any place on the globe, across any number of borders and past any capital controls, with transactions that cannot be stopped or censored by even the most powerful and invasive government on Earth. It's a safe haven from fiat currencies and almost a perfect medium of savings.
Unless we are working with a weird and strict definition of "tangible," I'd say it's tangible good that is, rightly, valued by many millions of people.
* they can stop transactions by blocking access to wallets and exchanges etc
* They're a terrible medium for savings, unless you want your savings account to routinely swing wildly up and down in value
* 99.9% of people interested in Bitcoin do not care about these supposed benefits (which I'm skeptical even exist.) Yes there are the handful of goldbugs and libertarians, but most just want to see the number go up.
First, if you are concerned about things like confiscation, then you take the recommended security steps such as running your own node. At that point confiscation is indeed difficult (not impossible) and blocking access is essentially impossible. A government would have to prevent you and anyone who could act on your behalf from having any access to the Internet in order to stop the transaction being propagated on the network.
As for savings: I stand by my assertion. In its early years, yes, bitcoin is going to be volatile. But as anyone who has held bitcoin for 3+ years knows, it retains and grows value over the course of years exceptionally well. Savings implies a medium- and longer-term horizon — think years, not months — and on that horizon bitcoin has always been a winner.
I think there are more people in this world who care about the harms of inflation and capital controls than you are giving credit to. I care about preserving my wealth from debasement, as do all of the people I happen to know who hold bitcoin. And I suspect I might have a better feel for the "pulse" of bitcoin users than your 99.9% estimate, which (forgive me) strikes me as being detached from reality.
They do, but is the stock an actual tangible good? Companies with identical financials are not valued the same way. Look at a company like Tesla, its stock is pure speculation. I cannot physically hold my stock other than a piece of paper maybe that says I hold it. I cannot really do anything with it except hope to sell it to someone else for more money. It does not really grant me ownership If I tried to walk into an amazon warehouse screaming I an owner, I would be locked up and committed.
It wasn't always this way, in the early days there was genuine excitement around the technology. bitcointalk.org was a hive of ideas and opportunities. Bitcoin was used to transact internationally to trade goods, it was a payment medium as it was supposed to be. Even the bitcoin subreddit was good, but that turned first. Then all forums became dominated by price. I shudder at the posts I read these days about newbies to bitcoin. You are right it has become all about greed, nothing about the technology. When BTC hit $20k I remember telling a friend that while I was happy with the price it was ridiculous, bitcoin hadn't changed sufficiently to be worth that, but I also knew that if it hit $20k it would hit $50k and $100k, but I alway thought it would take longer because I assumed it would come from adoption of the technology. But it is all speculation now, you only have to love at dogecoin to see that. It is a virtually limitless coin, if it hits $10 it is through sheer madness. The same things said about bitcoin are being said about dogecoin. "It will be the payment medium of the internet, you can buy a coffee with it etc. But every post in the subreddit is about Lambos and moons.
NFTs are the same thing though, yes the medium differs, but these high benchmark prices are being paid by people with hundreds of millions in cryptocurrency, with the aim pretty much of minting their own NFTs and selling them. Those big ticket items are just painting the tape. Likely bought and sold by the same people in many cases (if we take the crypto markets in general as a guide).
That would happen if you call something a currency. Maybe we should have called it something else, and derived its value from its application. But hindsight, etc. The plan was btc would be insanely liquid and decentralized it would collapse the banking system. So we went 200% with cryptocurrency. Now we’re trying to force the planet to ignore the potential sunk cost of having invested their life savings into it, to instead look at more useful tokens.
Cryptocurrencies fundamentally are about transactions. So I don't think it's appropriate to claim cryptocurrencies are any more driven by greed and speculation than any other common transactional activities, such as saving money in a bank account, mortgaging a home or buying a cup of coffee.
> Investors only care about getting more press releases out so they can pump up the price of their discounted tokens, which have a shortened lockup period relative to something like stocks. It’s almost like a pump-and-dump scheme for investors.
"almost"
If even useful services are being abused for speculation, it's time to realise the entire space is fundamentally broken. We've already seen massive fraud in the space, it's only a matter of time before people who fundamentally don't understand what they are "investing in" are left holding bags. It will necessarily collapse because of how it's being used. (imo)
How is this any different from the "web tech" space at large? Where investors will push towards "data-hoarding", privacy-invasion, dark patterns and/or addictiveness or other psychological "abuse", more often than not?
Because these crypto companies are generally deliberately marketing themselves as the democratic solution to the original problem through this new decentralized technology. Then when their private discord and telegram groups get exposed for pump and dump scams, their go to defense rings of your comment “so what, it’s the way it’s always been”
I think the real issue is that in 2009-2013 it was used by people who understood the risks. Now it is used by retail investors with no clue, who will be hit hardest by it.
I suggested everyone buy it when it was under $500, I said invest with caution up to $1000. Now I can't in good faith suggest to people that they buy it. And I am fortunate, everyone who did buy it on my suggestion made plenty of money.. probably because they had me in their ear saying "don't sell it" when they hit their first bitcoin drop. I get messages often thanking me for introducing them to cryptocurrency. However I and sure that there are many who didn't buy it and now regret it. Same as there are others who bought it, sold at a loss and regret it. It has been repeated as Infinitum, only invest what you can afford to lose and that is most definitely still the case. Bitcoin can still go to zero (or close enough not to matter) but It could also go to $100,000, and right now latter is more likely, but I feel as the price goes up so does the chance it goes to zero.
The thing is your entire post is about investment and making money or losing money...what does that have to do with p2p electronic currency and the democratization of money?
Buy/hodl has converted the concept for electronic currency, if there really ever was one, into a money making endeavor based on your current wealth and ability to risk a loss. That’s the antithesis of democratization, or 1 person 1 vote, but a I was here first so that makes me king now get on your knees and grovel at my supremacy.
The only real way to look at Bitcoin is as if there is an AI operating in the background with the sole intent of taking “investors” money through constant cycles of FOMO pump and dumps. It’s a stock without any assets or profits backing its value, at any point the shareholders could just start a new company and nothing would be lost by abandoning Bitcoin, because it’s just a shell company with nothing inside.
That's why it's the investment space that needs disruption - which is why crypto is met with so much pushback on HN. A year ago, crypto-related stories made front page much less often, if at all.
Because people here try to understand the technology and its usage before riding the hype train. Most people investing in Ether for example have no idea what it even means. But when you ask them they would spit answers like "it's going to revolutionize finance..". When you ask them how, they have no answer. When you ask them for specific applications that they know of outside of the stupid NFT, they send you to Google. Yesterday someone on Youtube gave an example about a fridge that will order you eggs and milk when they run out, and everything will be done on the blockchain.
Not a crypto hater. I even invest for fun and because you cannot deny the opportunity to make money rn. But don't expect people to ride the train blindly. I do think that crypto isn't going anywhere. But the current valuation of these coins is just absurd rn.
IMO these things are basically driven by speculation as well. From what I can tell, they mainly provide liquidity for financial institutions. Financial institutions are interested in crypto so that they can make money trading it. IMO there is very little actual utility here.
I think it's a fair question, but these are not great examples, IMO.
COD skins and Roblox bucks can only be produced and sold by one company, so I don't see why you would need a decentralized protocol for them. CS:GO doesn't use DeFi, and apparently the market was active enough to be used almost entirely for money laundering.
For other financial markets, I can definitely see more of a case to be made, but it remains to be seen whether that will actually take off. From what I've seen, the crypto markets right now are primarily dealing in crypto, as I said.
The difference with COD skins being in-game vs on a blockchain is not only can you associate a universal identity to them (your wallet address), but anyone can see and trade for them anywhere. Maybe not the best example, but if you generalize to artwork/digital content it really makes sense.
Agreed. I think the real use for NFT is tradable identities/roles, which grant access to digital or physical experiences that span organizations. Remains to be seen whether someone builds a killer app/experience around that. So far, people are only interested in mundane simulation of physical scarcity.
I suspect financial institutions are interested in crypto because they don't want a new financial system with a more democratic organizational model to make them obsolete.
Maybe there are some forward thinking people there who want crypto to be the driving factor behind refactoring from COBOL, who knows.
2017 was very different. Crypto type stories frequented the front page with technical marvels. Then a few things happened... 1) we evaluated 2) this scamconomy arose 3) the bubble burst.
I was excited then, when it was new to me, but then I learnt the truth about blockchain
This website is being served to you using cryptography right now (tls).
I took web tech to mean the technology used to serve the web - the differences with cryptocurrencies are manifold, the principal one being that billions of people use the web every day to perform important functions, compared to cryptocurrencies where most users are simply speculating on prices.
1) A depending on B does not mean A is part of B (though I'd dispute cryptocurrencies requires the web to function at all, perhaps you're thinking of the internet?).
2) Cryptographic libraries (many relatively recent, e.g. go or rust libraries) are definitely an important part of the web, they're integral to web tech if you define web tech as the tech that powers the web.
The tokens issued in this case (on of the few) have a purpose which is not speculation. If large amounts of speculation is undermining the business itself then yes I think that might qualify as a form of abuse? Happy to use an alternative term of your choice, ESL etc.
I'm not sure if the price speculation actually undermines the underlying businesses. For example, I participate in a blockchain wiki project. On the telegram there is a lot of people talking about the price but I don't feel like it diminishes the usefulness of the project. I asked questions about editing, the admins helped me out and I was able to use the platform.
Perhaps their initial approach was not the right one i.e. was the public token the right method to maximize the value of their actual offering? Maybe they need to rethink given what you have said.
I know of a very similar company (might even be the same one) the telegram forum they have setup is just full of people speculating what will / might happen ...will it go to the moon... etc.. They have now moderated that out but still main reason people join the group to start with.
This is impossible. If it can be traded it can be speculated. The value of any tradable asset is determined by how much someone is willing to trade for it and by nothing else. There is no way to make it stable other than to make it impossible to trade.
Like the OP Twitter thread said: It's universal across every crypto project that issues their own tokens.
There's no reason to force customers to buy a brand new token invented out of thin air just to pay for a service that could be otherwise purchased with real money or Ethereum.
Yes it does because he's saying "I swear guys this was definitely a good idea no need to confirm what I say" and then continues to bash crypto because it wasn't getting any traction. So his argument is just based on his opinion that it was a great idea, meanwhile most ideas are garbage.
> 2. You aim to build a community, but in reality 90% of your telegram/discord are scammers and people asking why price is going down/accusations that you and your entire team should go to jail.
I'm consistently repulsed by the lack of thoughtful discussion in crypto communities. For a space littered with intriguing technology it's endlessly frustrating that there's no HN-like forum. Instead, any community that started off that way is now filled with speculators and shillers.
Take your pick for where to source your news: 1. crypto influencers on YouTube who are paid to shill, 2. forums likw Reddit filled with speculators and conmen, 3. pump and dump groups on Telegram.
The greed and FOMO on display in the crypto gold-rush is deeply depressing, and for the majority who join the craze at the peak of the bull run, it'll surely end in tears.
> it's endlessly frustrating that there's no HN-like forum
There are communities like this, such as the crypto dev discord, the daily gwei discord, ethereum cat herders discord, etc. You're just in the wrong communities. That's like spending time on 4chan and saying "the internet sucks, it's filled with horrible people and no thoughtful discussions."
I do think it's scattered, but certainly there. There are many high-quality and thoughtful Twitter posters but you really have to filter. Meanwhile, I think there is room for a crypto HN since HN is actively hostile to anything positive towards crypto.
> Take your pick for where to source your news [actual answers]:
1. Newsletters. One basic example is Bitcoin Optech. I've always been the kind of person who looks at any newsletter just about long enough to put it in Trash. But I've come to understand there are plenty of greatly curated and/or written ones out there.
2. Podcasts. I can recommend Unconfirmed and Zero Knowledge, for example.
3. Discord (I know I miss out by not going here but the noise-to-signal ration and complete lack of privacy/anonymity/anything like that are both too much. It makes me a bit sad that this is where the action is even for infrastructure and supposedly open/freedom-asserting projects.)
Can be non-trivial to find the good ones for whatever angle/topic you are interested in, of course.
> The greed and FOMO on display in the crypto gold-rush is deeply depressing
Absolutely agree and I couldn't agree more with the comment you're replying to.
For podcasts I recommend Uncommon Core (technical) and Up Only (which despite the name is not just “up only” shilling and has excellent guests lineups)
I’ve been thinking about forking HN to have crypto discussions, I really wish there was a board like this which only talked about technical stuff of crypto
I think this depends on the coin. The IOTA discord is quite interesting, and people using the tech. Not sure IOTA will be a thing though, but I still like reading the discussions in the Discord.
As someone interested in all of cryptography, I cringe every single time when we call blockchain "crypto".
Sure, there's cryptography in it. But you don't call a mail or http server "crypto". There's similar tech in git, we don't call it "crypto", we call it VCS.
Calling this "crypto" is just trying to add a mystic aura for stuff people don't understand, to further muddy the waters.
We have a word for this technology. It's not "crypto". It's blockchain.
Sure, it's your shorthand for "cryptocoin" or "cryptovalue". Which are again newspeak for blockchain, and we could argue that given its limits and usage of the last years they should be called crypto-investment, at best.
Which is still like ordering a pizza and forcefully referring to it only as "food". I want a pepperoni-food please.
Sorry for the rant, but it really feels like it's just a way to further embellish something with dubious values like the post points out
Regardless of the "crypto" shorthand, blockchains are distinct from cryptocurrencies. A cryptocurrency can exist without using a blockchain to record balance changes, and likewise, a blockchain can exist which is not used for recording accounts or spendable outputs.
The "crypto" shorthand emerged from the cryptocurrency side, which by and large, uses cryptographic primitives in order to spend and receive value. One further bit worth adding is that the market demand for cryptocurrencies broadly has directed massive amounts of resources towards the development of novel cryptographic primitives.
As someone who works on stuff that involves cryptography but not cryptocurrency, I agree, but at this point I consider it a lost cause. Cryptocurrencies have taken over so much of the popular imagination that even when I say "cryptography" I get responses like "oh you mean like Bitcoin?"
It's like people will create their own desired footpaths over fields when the sidewalks are not in the right place, so it seems the word "crypto" is just a shortcut because there aren't any shorter words to describe blockchain.
A new one was created to convey a shared concept (aka the purpose of language) and will always be more popular than the thing you invested way too much time into to change.
It’ll sting at first but time to accept that and update your lexicon.
"crypto" means hidden/concealed, if we're going to go there. I sometimes use the term "cryptoracist" but I had to stop because most people don't know what κρυπτός means.
> 16. And my personal pet peeve is that, by and large, most of crypto actually does want Bitcoin to die. Perhaps not in a "I want Bitcoin to go to zero", but in a, "Bitcoin doesn't do anything and so I want its value to be rightly distributed to my project, which has real utility".
This is the most frustrating thing about crypto and has been since at least 2016. Most of the projects with the highest market cap in the space either don't do anything, don't plan on doing anything and don't have any purpose.
And then you have a myriad of projects that are rewriting the traditional finance playbooks. Or blockchain infrastructure projects that are laying the foundations of what could be a fully decentralized and anonymous web. And they're worth a 100th of DOGE's market cap. Granted, they might still very well be grossly overvalued. Especially at this stage of the bull market. But the fact that there's such assymetry with projects that are at best vaporware and at worse outright scams is by far the most frustrating part of crypto.
> Most of the projects with the highest market cap in the space either don't do anything, don't plan on doing anything and don't have any purpose.
The second most valued crypto-currency is Ethereum. And the entire ecosystem around it does plan on doing a lot of things, starting with decentralised finance.
There are also efforts to layer a network on top of Bitcoin in a bid to counter-act Ethereum. And competing networks like Diem (Facebook, Spotify, Uber...), CENTRE (Coinbase / Circle...), Stellar (Stripe...) that aim to replace the current payments infrastructure.
Then there are cross-chains like Polkadot, Cosmos, Polygon et al that try to make all of these disparate blockchains inter-programmable.
Agree that pump and dump schemes seem like the norm, but that's like saying Internet has no utility and is crap because there's porn, spam, and malware all around.
I said most because indeed most of the innovation, both technical and cultural originates from Ethereum.
But DOGE, XRP, ADA, LTC, BCH, TRON, ETC. EOS, NEO, BSV are all in the top 25 and have nothing to show for it despite being some of the oldest players in the space. The L2 projects on Bitcoin are not new and they've never brought anything revolutionary. And I think BTC is fine without L2, it's a very different philosophy from ETH and I can respect that. I just don't think it does or will ever deliver the typeof value that ETH and the projects hosted on it do.
Polygon, Cosmos or other innovative L1 projects like Avalanche, Algorand or HBAR all sit at 9 digit mcap - which is certainly very high but still annoyingly low when you consider that DOGE is worth 77 billion dollars and BSC, whose sole purpose is to make scams out of ETH projects and run them on a centralized chain, sits close to 100 billion dollars.
There is no rationale here to be found, You are comparing an insane bubble (Doge, etc.) to a regular bubble (Avalanche, etc.).
People have completely lost the value of money, do you realize how much money is $4.5 billion?
In 2007 Apple had a market cap of 80 billion and a P/E ratio of 26, it had revolutionary products on the market that were clearly going to change an entire industry while at the same time bringing in steady revenue, can you imagine how much it would be worth today in this bubble?
I could not agree more, I've been so heated over the last year looking for any sort of rationale but this greed fueled fake currency explosion is driving me insane. I understand the tech, I don not understand the hype.
> BSC, whose sole purpose is to make scams out of ETH projects and run them on a centralized chain, sits close to 100 billion dollars
Scams are big business, but that just illustrates how delusional and bubbly these are; is BSC, a thing I'd never heard of before, really of equivalent value to .. Square? Lockheed Martin? Target? AirBnB? AMD? NTT? Uber?
Gas costs in ETH have been at historical highs, making it uneconomical for players under 5-6 figures of capital to do basic transactions, let alone yield-farm / manage positions, so various DeFi dApps have moved over to less congested chains like BSC and Solana.
Sure, lots of scam projects due to cheaper deployment costs (again low gas fees vs Eth), but legitimate projects too: see PancakeSwap, which started out as a Uni clone, but has arguable expanded to offer more / different set of features.
Speaking more broadly, yes, we're in a crazy bubble, but that's really the case across all asset classes at the moment due to rampant central bank printing. Scams are proliferating in equities too, see SPACS.
Not to trot out the "this time is different" meme, but unlike the '17/'18 cycle, you have far fewer whitepaper copy-pasta scam ICOs and way more legitimate projects; with real teams, real users, real use-cases. Plus, institutions are actually ape-ing in, so take that for what you will.
IMO pace of development and adoption will only accelerate from here on the back of an already "mature" internet and mobile ecosystem + generational familiarity/acceptance of digital value in the youth.
As someone who grew up during the transition from analog-digital, crypto gives me mega 90s/00s internet vibes, especially the feeling of inevitability around the DeFi space.
"4. You realize that most of the "influencer" network of crypto is actually a cartel of individuals who all know each other and collude in pumping the same bags. They all cost around $20k-30k for a review, btw."
This is the sad truth about all these people on Youtube / Twitch. I know two individuals who are sucked into their "shows" and use what they are saying as gospel. It drives me nuts because they spout off numbers like "BTC @ 100k" and theres no date given.. I just respond by saving an even more ridiculous number like "BTC @ 100bn"
Still waiting for someone to name one singular measurable impact of a crypto project.
It's a solution that's been searching for a problem for over 10 years.
Decentralized, distributed, blah blah, stop drinking the koolaid.
Is a network controlled primarily by 4 mining companies decentralized?
Do you need a distributed network to sell NFTS that are only useable within the world of a specific video game company? (game nfts)
Name a project that can't be accomplished traditionally with the cloud and some code?
Name a reason why you should leave your FDIC insured government backed bank for a 3rd party wallet and incur transaction fees, gas fees, fraud, hacks ect that are equivalent to wire transfer fees cbx fees ect.
The crypto community has been spewing advantages that don't exist and solutions for problems that do. not. exist.
I was looking at a project called Helium or HNT. The basic idea is that "miners" are running something like a mix between a WiFi endpoint and a personal cell tower. People can use HNT tokens to get network access and the miners earn the tokens by providing the access.
I thought it seemed like a pretty neat idea and was encouraged by the fact that this crypto project actually did something useful. As I looked into it though I could only find people talking about how to mine the token, or details about the price, and nobody was talking about using the network. I wanted to try the network myself, or see if I could get a device on the network and what the service was like.
It's a little naive of me, but at first I was imagining something like cell service being provided by this system. I was wondering what it would take to get my laptop on it and imagining having a network connection wherever for a low price.
When I looked into it though I didn't find anyone using the network. The limitations on the network were severe, if I recall correctly their pricing calculator shows you the price of network usage in terms of cost per packet, where a packet can send something like 16 bits of information. Their envisioned use case was a collar for pets to wear that could ping the network once a day, but to my knowledge no such collars had actually been created or sold...
Disappointed to find something that looked kind of useful at first glance actually resolve to something that looks kind of useless.
FDIC covers all 6 billion people on earth now? You can store an unlimited amount of money in your head by memorizing 12 words. Like it or not, that has value to a lot of people around the world for a lot of different reasons.
> Still waiting for someone to name one singular measurable impact of a crypto project.
It's a solution that's been searching for a problem for over 10 years.
Protection against a devaluing currency, privacy and access.
> Name a reason why you should leave your FDIC insured government backed bank for a 3rd party wallet and incur transaction fees, gas fees, fraud, hacks ect that are equivalent to wire transfer fees cbx fees ect.
For so many people the answer is simply: higher interest rates.
DeFi: Removing middlemen (and their fees) as well as discrimination based on arbitrary criteria from all kinds of financial services. Also, these services can easily run 24/7.
This is a brilliant thread and sums up neatly what's wrong with crypto space in general.
> 90% of your telegram/discord are scammers and people asking why price is going down/accusations that you and your entire team should go to jail.
So much this. The greed of get-rich-quick crowd is the biggest hurdle in the success of crypto. Remove the incentives from crypto projects and you'll see how the interest from general public decreases. After all no one cared about BTC until people figured out how to build a ponzi scheme out of it.
It's also one of its biggest strengths. People with real value at stake in an ecosystem will do anything possible to increase the value of their holdings, which means making the overall ecosystem more valuable through individual and team contributions, all open source contributions I might add.
Here is a free tip if you want to do it anyway.
DON'T CREATE ANOTHER F**ING TOKEN!
Build you product on an existing reliable fast and cheap blockchain that fits your needs.
Focus on the product not the price of tokens on said DLT.
You dont need a token. No, really you dont. Your tokens only use case is likely to transfer value and guess which token can do this better than yours? All of them! Simply because they already have adoption/liquidity/fiat on-ramps etc. etc.
You also instantly gain a community simply by using a token that has a community already.
And you avoid lots of legal problems.
Here are some companies that did/do this:
coil.com
sologenic.org
gatehub.net
forte.io
raisedinspace.com
(Very biased (they all use XRPL.org) because I simply dont know other projects. But you get the point, every DLT that actually works in a useful way should have people building on top - if not its probably garbage tech)
> You dont need a token. No, really you dont. Your tokens only use case is likely to transfer value
Other way round: transferring value to yourself is the only use case.
If you take a second to look in the mirror and see the wreckage of previous startups in this space, you'll see that - as pointed out in the OP thread - 99% of the community is there for the pump and dump. For all the practical purposes, distributed solutions end up worse than centralised ones. Except possibly for censorship resistance, which means you have the problem of attracting people who want to use it because they've been banned from other services.
I, personally, think Handshake is an interesting value add. Decentralized ICANN on a blockchain, mainly because I can't think of a better method to decentralize TLD management.
The negative is a lot of the TLDs sold on Handshake were sold to early interested parties, many of which were speculators. Unfortunately, other than an ICANN run solution, I can't think of a way to solve this since you need critical mass to make it fair, but can't get critical mass without having everything running.
Maybe they should have restricted the character length of the TLDs that were available to be auctioned at any given time based on the number of mined coins so more valuable TLDs wouldn't come available until, ideally, more people were onboarded to the service. Not sure there's a great solution there.
I've never been able to get over Handshake basing their domain-claiming system on DNSSEC -- and when they launched they couldn't even claim their _own domain_ because .org was still signed with a RSASHA1-NSEC3-SHA1 key: https://github.com/handshake-org/hsd/issues/399
What do you expect from Big Tech engineers? Honestly most peoples livelihoods are generated by working on extremely centralised, monopolistic services.
> > You dont need a token. No, really you dont. Your tokens only use case is likely to transfer value
> Other way round: transferring value to yourself is the only use case.
Everyone needs money. These tho claims are contradictory. If by creating tokens you can transfer value to yourself, it is clear use case and thats why people will keep creating tokens.
Sounds to me as if you dont have any "blockchain project" ideas. That's fine do something else.
If whatever you every wished to crate does not profit form this tech, it probably really just does not profit form it. Nothing wrong with that. It would be a shame to slap blockchain on a cool project that doesn't need it.
No it's not that, there's not a single blockchain based solution that achieves better results than a classical solution. Not a single one. Never has been. Not in 14 years. I'm open to one showing up! But, well, it hasn't.
And that's because there's a huge fundamental cost to trustlessness, decentralization and permissionlessness that substantially no project actually benefits from.
The post above has a list of companies who build on top of such a decentral permission-less system that apparently has no benefits.
Start with coil.com what they do it not possible with the financial system. They enable users to stream money to content creator in real time with fractions of cents per second.
A central system would not make any sense. It must be p2p and there must be a ledger to "settle the transactions"
Its not impossible to make it central it just not lucrative in any way. But if the middlemen is removed it doesn't have to be lucrative for that middlemen anymore and it turns out to be almost free because you just need to send p2p data packages to stream money.
Its called interledger protocol (ILP) its not a blockchain its a protocol but like I said above you need to settle somehow and which bank or financial system lets you settle fractions of cents? No one because there is no money to be made from this so a system that does not generate money for the owner (a decentral system) works best.
> The post above has a list of companies who build on top of such a decentral permission-less system that apparently has no benefits.
Correct.
> Start with coil.com what they do it not possible with the financial system. They enable users to stream money to content creator in real time with fractions of cents per second. A central system would not make any sense. It must be p2p and there must be a ledger to "settle the transactions"
Any wallet could offer the same thing. PayPal could offer it. But they don't because nobody wants micropayments. Nobody's ever actually wanted micropayments, it's something they think they do, but in reality, they do not. This comes up from time to time. One of the crypto folks actually wrote a really good paper on it, I'll dig it up.
You just build up the balance until it's over $1 and ACH/RTP it. Those transaction methods cost $0.0033 in bulk.
Further, this is just revisiting whether people are willing to pay for content online. They are not. They would rather be subjected to ads and not pay anything.
No, its not a wallet at all its a protocol like TCP but for money. If you are interested go read about it first. There is no point in arguing about something you dont know what it is.
>PayPal could offer it
Yes, they could but its not lucrative and if it would be they would not be interested in using a public interoperable protocol where everyone can offer the same service and compete.
So you have some sites that use PayPal and other sites use 15 other payment companies. You just recreated subscription hell. Its completely missing the point. If its decentral and standardized all systems work together. If I have the wrong token or currency the decentral system finds a way to swap them so I can use any services no matter what "wallet" or currency I use. I cold stream Netflix and Amazon Prime and only pay what I watch and when I watch.
Also why would I want PayPal to know whom I stream money?
If its central its impossible to hide such data.
If its p2p no third party know what content I pay for. That's how it should be.
>Nobody's ever actually wanted micropayments
We already have it.... its called ads. Ever page load, every click, every interaction and every data collected about you is a form of inefficient micropayment. One that does not respect your privacy, tires to maximize the time you waste and tries to trick you into buying stuff you dont need. And the cost of that is slapped onto the product you may buy.
Don't you think there are tons of people out there who would rather not annoy their visitors with ads?
They would rather have them pay a few fraction of a cent directly to them without the ad-mafia taking a huge junk out of the revenue.
And dont you think there are people who would rather pay a few fraction of a cent than see ads or block ads knowing that the content creator does not get paid then?
>Further, this is just revisiting whether people are willing to pay for content online. They are not. They would rather be subjected to ads and not pay anything.
That's your personal opinion. The facts are not on your side. People already pay to not see ads its just cumbersome because every service needs a subscription or pro app or whatever. It does not scale to the number or services the average user wants to use. And it hardly adjust to the actual use. Its objectively just so much worse than if you could stream for what you use in real time.
You could go a long way without ads for a few bucks if you would replace them with the actual revenue they create.
Only if your time is worthless you would rather watch a 15 second ad than pay 1/10 cent or whatever to not see it.
> Don't you think there are tons of people out there who would rather not annoy their visitors with ads?
No, I don't. I mean I think they would if it didn't cost them anything but I firmly believe when given the decision between being vaguely annoyed by ads vs. ponying up the cash, they'll do the former substantially all the time.
Nick Szabo has a great paper on it. [1] Trust me when I say this is almost certainly the only thing Nick Szabo and I agree on.
No it does not. It proves the point that people are willing to pay for content.
But no one wants to be locked-in to patron. There is a high chance over the next years many patron competitors will emerge and its neither in the interest of creators nor the consumers to have to pick one an lose out on the others or to use all in parallel. These walled-garden solutions suck. It either fragments people or someone has a monopoly and screws people over.
Standardized web monetization with micropayments has obvious benefits, its like email you dont care what provider the other people use its just works.
That coil.com exists only proves one thing: they found a neat token idea to shill. We're in full-on speculative mania phase. Anything with blockchain stapled to it immediately garners a high "market cap" and a lot of attention. We're back in the new Long Blockchain Inc phase.
> People already pay to not see ads its just cumbersome because every service needs a subscription or pro app or whatever.
People will pay if it's a frictionless payment of a small amount reflective of the value gained. Netflix did this with movies, Spotify with music, `crypto with everything?` if the tech and business models are worked out.
You can still have fixed cost/flat rates whatever. The key point is that you can use any service you want and they have to actually compete with the price and content. This is not the case now. You are locked-in or you overpay if you have multiple subscriptions.
Imagine how awesome it would be if you could search for a movie choose the service that current has the best cost/byte ratio for your location (they can make this variable to manage load). Then you start streaming. No registering needed. Not even a login.
After 10 min you notice the film sucks so you stop the stream. You only payed for the first 10 min.
Totally friction-less ofc. You could watch on a random TV anywhere and stream the money from your phone.
Sounds like sci-fi but we have all the key tech needed for this.
It sounds not very compelling. Id rather give Netflix $50/mth and not worry about any of that.
[edit] not to mention, content creators don't price their movies in dollars per byte haha, they price it based on what they think people will pay. This is part of the reason all you can eat is much more enjoyable.
I think you didn't get the bigger picture. Its not for streaming a movie is for everything on the web.
Why would you pay 50 for Netflix if you can just consume content wherever you want for 50 bucks instead. They can still offer you a flat rate if they want. The option to pay what you use doesn't take the option to pay upfront or whatever away.
There is no doubt they will lure you into using the same service somehow but that's kind irrelevant. The goal is to have the choice and that you can pay/support the small fishes too. The one you would never make a subscription for.
Same with donation. You probably dont have Wikipedia or hacker news subscription. But leaving a few cents for free content ever month would probably be a good idea to keep it free.
Its not "all you can eat" is "you can eat where you want" you never missed that because it was always like that you never needed a subscription for certain food or restaurant chains.
You just go and eat wherever you want and they all expect you to pay what you ordered or whatever deal they offer. This system makes it far more likely you go eat somewhere new and far more likely that you eat spaghetti where you like it the most and pizza somewhere ease.
Web content should work the same.
This conversation is odd. Someone says there are no real world use cases. Someone else says yes there is and poses one. Former person points out that in fact that example just makes their point for them. The counter is well there has to be some use case because there are theoretically an infinite number of them. We just have to find one from that set.
This example right here. It presumes that content creators will happily just bypass distributors like Netflix. I find that unlikely because it ignores what Netflix actually provides for content creators.
1. Funding in some cases.
2. Discovery and a ready audience.
3. Availability of content to your audience.
Content creators have little motivation to not use Netflix or Disney+ or whatever other service. Those services have little motivation to use crypto streaming payments. And frankly most consumers don't care enough to create an incentive for the creators by voting with their wallet.
Sorry for the confusion what I meant was this is achievable today, but instead people opt to avoid micropayments and instead want to watch ads + get the content free, or pay for an all you can eat model. Everyone’s thought about micropayments. For decades. They’ve tried it many times. There’s no technological reason today that micropayments couldn’t be adopted overnight. They reason they aren’t is because people don’t want them.
There’s a mass grave of micropayments startups, and I bet you anything it’s not because they couldn’t figure out how to debit and credit fractions of a unit.
People don’t want to continuously make judgements about whether they’re getting good value for money in their content - especially their entertainment content.
>People don’t want to continuously make judgements about whether they’re getting good value for money in their content - especially their entertainment content.
Why dont you look into the things we talked about here?
See coil.com its a flat-rate system you are never bothered to decided if what you see is "worth the money" you just see that it streams money and you know its roughly halve a cent per minute. If the content sucks you leave because obviously you want the money to go to something you like. But that's already the default behavior anyway.
I did look into it, I've seen these ideas before, and no, nobody wants to have an app or service than can just arbitrarily withdraw money from them haha.
This is the problem you've danced around a few times. Content producers do not price their content by the byte or by the minute. They charge premium prices for premium content. And they charge low rates for low-end content. The flat-rate per-unit-data billing model falls down as soon as content providers set their own rates (and they will demand to). Then not only is there a ton of perverse incentive (like content providers just setting the max rate all the time since they know you're not making a purchasing decision) but it also feels crap to know you have no (a) idea and (b) control over how much you're getting billed.
The only model that I can see working is a Netflix type model where you bill folks a fixed monthly fee, and you hand out the money to content producers based on agreements you negotiate. You aggregate the risk, you negotiate the pricing, you intermediate the customers and the content producers. You bill once a month, a fixed, predictable amount. No blockchain needed, just a Stripe account.
I'm uniquely qualified to answer this, I worked at a startup that considered building literally this 5 years ago. The payment mechanics were never the issue. The fundamental billing model and customer interaction dynamics were at issue. Nobody wanted it haha, according to our user research. Nothing has fundamentally changed by stapling the blockchain to it.
We actually got pretty far along building it - and had a bunch of high profile content producer relationships, you're welcome to reach out if you want to take the learnings. You seem involved in the project.
You also miss the whole point. The Netflix example isn't something anyone tires to do now and it may never happen its just to show what the tech COULD do.
Today web monetization and micropayment ideas are targeted at replacing ads. Ads are already micropayments.
> Now go pitch it to the 50+ copyright owners that you'd need to convince to make this happen.
How about instead I pitch it to people that make content I _actually_ want to see. The Netflix/Spotify thing was just an analogy. Before youtube became big brother, the majority of content I watched was there.
I'm personally sick of the `50+ copyright owners` homogenizing our culture into bland idiotic sludge. My hope is the `50+ copyright owners` lose all power and wither away.
Re: coil.com, what they do is entirely possible on a centralized system. cam sites have been using token based internal payment systems based on minutes viewed, tips, etc at sub $0.01 levels for 20+ years now. and until the tubes came along, all sides profited handsomely.
Coils is just payment provider for web monetization. You can use another (probably none exist so far) and more importantly you can use web monetization outside of coil owned platforms.
The cam site thing maybe look similar on the surface but its not. It only works in very limited full controlled closed system. It can not scale to the web. You would need 100+ subscriptions in the end that not the goal. Or you would need one overlord that has the monopoly on web monetization and everyone is forced to use g$$gle. Obviously bad for all kinds of reasons like privacy, competition, censorship etc etc.
> you can use web monetization outside of coil owned platforms.
Like you can use PayPal to sell (access to) digital assets? Or patron?
I'm not sure which part of the core value proposition of coil has anything to do with blockchain?
And small wonder: crypto/chains allows us to transfer trust (eg, I trust i can buy milk for my dollar, I buy bitcoin for a dollar, I give you bitcoin, if you can sell bitcoin for a dollar, we trust that I have given you the opportunity to buy milk).
This could also go via bank transfer, or hybrid systems like PayPal,stripe or vipps[1].
I see some benefit to "magic crypto cash on the interwebz"- but untraceable tender is generally not what chains facilitate. Quite the opposite.
When you realize crypto currency can go two ways: perfect taxation (billionaires and corporations will fight it, to the death), or: perfect money laundring/tax evasion (government will fight it, to the death) - the crypto future looks quite distant.
[1] a Norwegian bank owned platform for instant digital settlement: https://vipps.no
The question you have could easy be answer by yourself if you just go to the official page and read for 5 minutes what they are doing and how.
Coil primary uses ILP its not a blockchain its a protocol it can use fiat or "magic crypto cash on the interwebz" its irrelevant.
>This could also go via bank transfer, or hybrid systems like PayPal,stripe or vipps[1].
As soon as they support ILP yes, it could use whatever that's the whole point.
An open standard/protocol where everyone can join and offer competing service and 2 parties can transact with each other regardless of whos underlying service they use.
Like email. I dont care whos your email provider I just need your address and it works.
The IPL equivalent is called Interledger Payment Pointer. Again has nothing to do with blockchain.
If you actually are interested its now up to you to read more about it.
I wont go any further with this discussion.
>>> I'm not sure which part of the core value proposition of coil has anything to do with blockchain?
>> The question you have could easy be answer by yourself if you just go to the official page and read for 5 minutes what they are doing and how.
From coil.com:
> Get your Coil Membership for $5 per month.
> Install the Coil Extension or the Puma Browser app.
> Log in to Coil and enjoy web monetized content and features across the internet.
So the same model as patron?
The original question was about if the companies product could work without the blockchain. I would be happy to see an open standard for transactions - but no one will pay coil.com for that. They make money as middlemen. That's what they are selling.
So, again - how is blockchain essential to what coil are doing (as a business)? Is their business model not being a payment provider, collecting legal tender ("real money") from consumers and funelling it to producers? Do users not depend on coil for the client code and platform?
Certainly creating an open protocol, is a way to build the product - but it does not appear to be quicker or easier than a more traditional, centralized solution?
> Start with coil.com what they do it not possible with the financial system. They enable users to stream money to content creator in real time with fractions of cents per second. A central system would not make any sense.
I’m sorry, what? Genuinely curious about what the use case is here, I’ve never heard of this before. I pay based on the amount of time I consume?
Currently Coil costs you 5 bucks a month and its distributed to the content creators that you consume on the basis of how long you consume them. The Creator must have a web monetization enabled website [1] to participate.
And you need either an add-on or a browser that has it integrated.
The creator can show/hide content based on whether you stream money or not (kinda like a paywall)
Its obviously intentional very simplified ATM because its rather new. There is long way to go before we can actually pay for exactly what we consume.
Isn’t this roughly similar to what Spotify does? You get paid based on how many listeners you have? Or YouTube paying the content hosts a split on ad revenue? I guess I’m not sure what crypto solves here that doesn’t actually already happen. Isn’t Coil just another centralized place you pay that then pays out to its network, like everyone else?
Exactly - a good use of a decentralized ledger doesn't leave so much room for speculative profit motives.
However, my own investment thesis is that the "crypto" market is ultimately destined to march towards that useful and unprofitable outcome, kicking and screaming the whole way, by dint of the long-term market survivors being the civically oriented perennials. But this is a long journey, maybe another decade or two in the making(a epochal shift in tech). It will continue to have ups and downs.
The goal was to remove the middlemen to make stuff cheaper/unbiased/fair/private. The token prices going up an down is indeed just a side effete of speculation. but will definitely go away over time its not solving any problem and it hides the tech because people just see the money.
Bitcoin is a worldwide network storing $1 trillion in value without a central party or government. That has never happened before. Are you sure you're just not open to considering the technology at all?
Ethereum is another one to look more into. Smart contracts are doing things that no classical solution has ever done. Have you done a deep dive on how the technology of Bitcoin or Ethereum actually work?
FWIW, I think plenty of the altcoin tokens are garbage, but some of the top players, like Bitcoin and Ethereum, are doing things that classical solutions simply do not allow today.
There’s a difference between the cryptocurrency world’s definition of “innovation”, and solving longstanding problems for humanity.
How does Bitcoin solve inequality?
How does Bitcoin solve world hunger?
How does Bitcoin solve disease?
Bitcoin — and cryptocurrencies more broadly — do none of those things, with only one notable exception. Bitcoin — being a global currency of fixed supply — stands to usher in a global deflationary economic system. Investors in a deflationary environment have little incentive to invest in the future, and consumers have little incentive to spend. These two things could grind the caustic consumerism destroying our planet’s natural ecosystems to a halt. However, there’s room for interpretation even here; many humans would likely not trade off their own survivability for that of the planet’s natural ecosystems.
All of the hullaballoo about “Defi” and Ethereum only amounts to a Wall Street reskin, i.e. better high brow gambling. This does nothing for humanity either. Very innovative (!), lots of money being made, nicely exascerbating inequality of course. But achieves nothing.
(The S&P is actually down since 1970 as measured in gold [1]. Wall St is a carnival, and defi is just that carnival, squared.)
Cryptocurrencies by virtue of being digital money accessible anywhere in the world and not manipulatable by central banks can do a ton of good in countries that are experiencing currency mismanagement. It was particularly popular in Argentina, and right now Lebanon is experiencing hyperinflation as well.
Controversial opinion — but I'm of the mind that the world is about to experience massive inflation due to the horrifying Covid response of massively expanding the money supply, so we might be able to see even more of a need worldwide.
Thing is though it’s not being used in those cases even though it’s available because of fundamental limitations. Concretely over the last few years a full 66% of all transactions in Venezuela are now conducted in USD. The USD is simply a far superior currency along every metric. Stable, fungible, cheap, internationally accepted.
> No it's not that, there's not a single blockchain based solution that achieves better results than a classical solution. Not a single one. Never has been. Not in 14 years. I'm open to one showing up! But, well, it hasn't.
Mind helping me with my assumptions??
From what I see, the classical solutions assume the central authority will always exist and provide its services at reasonable prices, that the authority will be benevolent and just, and the central authority is usually single purpose.
Regarding survival, crypto space has a similar assumption that at least some people will run nodes - but I like it's robustness to being 'killed off' because only a few people need to participate in mining or validating.
Regarding benevolence, I think there are plenty of examples of hostility towards users in the payments space specifically.
Regarding single purpose, blockchains are fairly interesting as they allow for any purpose that's signed with the participating parties. Which is a wildly open means of coordination amongst groups -- which is also why blockchains look a lot like currency at outset, because currencies have been the tool for eons to coordinate human efforts.
But looking at it closer, a lot of the world runs on IFFT logic, which seems ripe for smart contracts - the only issue is the interoperability between traditional world and blockchain world to become like Daniel Suarez's Dameon.
ILP is (could be) the "interoperability between traditional world and blockchain" but only for payment/money/value
We dont really know yet what else there might be. NFTs is the current hype but who knows what/if that will turn out to be in the future.
I’m jaded with the crypto-scammery too, but isn’t lower fees with 24/7 instant transactions the selling point? (For low fees think Binance not Coinbase).
That doesn’t require the blockchain. The US is moving from ACH to RTP, which is 24/7 instant approximately free transfers between bank accounts. [1] My understanding is the reason it took so long was small banks wanted to figure out a risk management model.
These system do not work outside the justification where they are made.
Domestic Tx are fast and cheap because all parties involved have agreements and the same laws etc. etc.
Cheating between local banks is rather useless because there is some kind of overload (the sate/a judge) that can order stuff to be reversed.
Blockchains are for when no such trust/power based system is in place.
So if you send USD to Mexico for example. You exchange USD to crypto send crypto to Mexico and sell it there to get MXN. The crypto transaction is final there is no reversing, it can not be unfunded, frozen or anything. The receiver doesn't need any kind of trust relationship to the sender. Its either transacted or not and both sides can independently verify that. Its not just a real time transaction its also a instant settlement (clearing).
Other way to make settlement is if you move physical cash or gold but there goes the "instant" part.
> The crypto transaction is final there is no reversing, it can not be unfunded, frozen or anything.
People keep saying this like it’s a good thing. It’s dreadful.
> Blockchains are for when no such trust/power based system is in place.
And exactly what situation are you transacting with somebody you do not trust and you cannot find a mutually acceptable intermediary? If no such situation exists you probably should not be transacting. You are exposed to too much counterparty risk.
Do you have a concrete example of a time that this has been a problem for you? Because I can’t think of a single one.
All of them rely on a centralised authority, as can be seen with the bitcoin & ethereum forks - if something goes bad, the people in control will step in and make it better. That means there are people in control. This is not trustless, decentralised or permissionless.
Permissionless--nobody can stop a transaction from taking place because of ideology.
Decentralised--the miners and the software devs have to agree on something to make a hard change. This has happened so rarely as to be a non-issue. When it does happen, the currency forks and those that want to use it can do so as they please.
BTC became LiteCoin, BCH, and BSV from hard protocol forks.
Ethereum forked from Ethereum Classic.
Hive forked from Steamit as Tron tried a hostile takeover.
Trustless -- Here trustless really mean visibility. I can verify everything is correct in the chain myself. I don't have to believe there are gold bars in a vault somewhere, but to a degree it also means I can trust there's no central authority that may be ponzi-ing or ready to abuse the protocol.
Yeah, but you probably rely on a wallet provider, which messes with most of this. The wallet provider can absolutely block a transaction for ideological reasons, and requires you to trust it, and so on.
You need to be pretty techy to verify a transaction in the chain yourself, or do any of the other things you talk about. A non-technical person can't do this. They have to trust other people. This really isn't different from trusting that there are gold bars in the vault.
It's been what, 5 years ish, since this all blew up? In 5 years you can name 5 hard forks in the major currencies. That's not "rare".
Nope, Cardano, Monero, Polkadot, Tezos and ARRR all kept in my own wallet--backed up with seed phrases.
I don't keep BTC as I think it's basically crippled (TPS). I have individual wallets for each on both my PC and phone. I'm staking DOT, XTZ, and ADA from my PC wallets.
> In 5 years you can name 5 hard forks in the major currencies.
BTC has been around for 13 years--not 5.
The forks are success stories. Further, forks grant holders equal amounts on each chain--so no coin is lost in this way.
The Hive fork remains a great example of on chain (Proof of Stake) governance, and having beat back a centralized hostile takeover, came back valued higher in post.
> A non-technical person can't do this.
But it's at least possible. Would you discount science and technology purely because you don't understand it?
Honestly you don’t know what you’re talking about. What do you mean better results? What’s your metric? In terms of security it does achieve better result.
Another good example would be a project like Uniswap on Ethereum that existed for a long time without a token. To your point precisely, Uniswap v1 was similar to the Bancor project but explicitly removed the token/tokenomics. The simplified launch made the protocol better for both them and their users.
Ah cool thx, BTW you can swap on the XRPL DEX too, however you can only swap "issued currencies" (IOUs) so you need to trust some counterpart (like gatehub or another exchange) to actually hold the asset behind it until you withdraw. The benefit is that is extremely fast and cheap even slow assets like BTC can be swapped just as fast as all others (in a few seconds).
> Edit: I thought this was legitimate reasoning behind having your own token. I don't mean it in an inflammatory way. Please explain why you disagree.
Because you don't need to create a token at all to tip creators, inflationary or otherwise.
If you want to use crypto, just use an existing blockchain. Or don't use crypto and just create a centralized market that pays out at certain thresholds. Blockchain solutions aren't actually cheaper than centralized solutions, they just hide all of the costs elsewhere in transaction fees and mining payouts.
The only reason to create an all-new token is to have something to sell to people under the guise of enabling value. It was a bad trick when car washes sold car wash tokens instead of letting you pay for car washes directly, and it's a bad trick when crypto companies make you buy their tokens instead of just buying the service directly.
> Because you don't need to create a token at all to tip creators, inflationary or otherwise.
But if you don't do it through inflationary means, then consumers have to actually send tips and or have accounts. (for better or worse)
Inflation is a nice way to build incentives into the currency's structure. Further, Hive has no transaction fees as that's funded via inflation as well.
I do like the idea of a streaming value for value service wherein I have a wallet that I top up from time to time, but there are many models that are viable here.
I dont think this is a downside at all.
If you build on a existing blockchain you ofc need funding rather than "printing" you own funding. It may be harder but also less of a legal risk.
BTW Coil.com pays content creators based on user interaction. Its however not self printed money its form actual user who want to support content creator rather than ad-companies.
Ofc coil itself runs on funding money like any other startup nothing wrong with that.
Also a project can ask the team behind the DLT they want to use and possibly get some of their reserves. Its in their interest that the DLT is used for something. Actual devs who build something are worth way more than the thousands of people who just buy something because Elon Musk tweets about it.
And btw at the same time a dev can still bet on price gains or the token they use. I see no moral problem with that. If your product actually creates demand that moves the price up and you bet on that you own it.
The nice thing about "printing" vs funding for things like this is that you don't need users to sign up or transfer funds to be able to tip content providers.
That said I do prefer the Coil.com model as I love crowd funded ad free media content, and I _do_ pay for it. : )
> Here are some companies that did/do this:
coil.com
gatehub.net
forte.io
^ This is a bit silly of a counterexample given that these 3 companies are all able to exist from the significant XRP investments from Ripple.
> You dont need a token. No, really you dont. Your tokens only use case is likely to transfer value
That's rather untrue. Token use cases have proliferated through the advent of DeFi (decentralized finance). This would be a more accurate take during the 2017 ICO bubble but the space has matured a great deal. There are valid use cases now such as governance, fee sharing, derivatives, etc.
> But you get the point, every DLT that actually works in a useful way should have people building on top - if not its probably garbage tech)
This communicates OP's lack of familiarity with the crypto space. A vast majority of the tokens launched today are launched on top of the Ethereum blockchain. They're not trying to create better tokens for the transfer of value, they're trying to create tokens to help manage decentralized financial services. They're not even DLTs, they're smart contract applications.
It's rather easy to mock the crypto space and have an oversimplified perspective like this, most people will nod along. However, it's a bit sad to see people on a forum like this make such charged statements oversimplifying the work of others as "garbage tech."
Alright, so I make a two-sided market on chain, and the fees I charge accrue to... me? This seems like a similarly large legal headache to having them accrue to token holders! I am probably obligated to make sure that all users of my protocol are not Kim Jong Un, right?
Take a look at Sologenic. Sologenic is a fronted for the DEX. AFAIK they have no legal obligation to limit who is using it at all. The DEX as as its name says is decentral, they can not control it. They just make software that lets users use it. They can also not directly take fees because the DEX does not have fees (you make things decentral to remove the lurking middlemen who takes the fee)
IDK how Sologenics business model looks like (they are pretty new) but I assume they will make certain features in their apps cost something. Possibly can be payed directly with crypto.
KYC rules usually dont apply for such stuff. Fiat on-ramps have to deal with that. Hence using an existing system that already has the infrastructure is preferable.
I'm not necessarily sold on the idea of making products without business models. My lawyers so far have told me somewhat different things from "if it's all crypto then you have no KYC obligations"
I'm sure they have one but these days you offer something for free first to gain users and make you product as premium as possible so you can actually expect someone to pay for it.
>"if it's all crypto then you have no KYC obligations"
Yes, its not that simple but this thread is not legal advice anyway
> KYC rules usually dont apply for such stuff. Fiat on-ramps have to deal with that.
I think it would be a very risky bet to assume this will remain the state long term. It's not even the state now, overall.
Similarly:
> The DEX as as its name says is decentral, they can not control it.
It is possible to construct situations where a business is not technically capable of meeting its legal obligations. The usual solution to this is that the business changes, not the obligation.
Not necessarily. For example, https://gains.farm has a valid and novel use case: decentralised (i.e. on chain) leverage trading. Tokens you win are minted, tokens you lose are burnt.
Companies already have loyalty points and gift cards and rewards programs long before blockchain.
No consumers want to have to deal with tokens and blockchain to interact with a company.
Consumers will always do what's easiest and cheapest. Blockchain solutions are inherently more difficult, more expensive, and more risky (for the consumer) than just breaking out your credit card and getting paid 2% cashback to spend your money.
That's exactly what we dont need. 99% would use the token to move value (pay for something) and we really dont need a bazillion different tokens for that. Also most tokens are not stable and thus not very desirably for payment.
I don't have problem having gazillions of tokens, I just don't use them. There isnt need and in the long run companies will just write them off like many other hyped IT projects.
No one will, that's the point. Imagine you would have to pay Netflix with Netflix token and on eBay you would have to pay with eBay token.
The current financial system is already annoying, we re dont have to make it worse.
No one said they should. But they can offer something and get payed with one that's usually the use case of the token. And it does not require a new token.
I personally have experienced NFT cartels first hand and would love to expose it. From pay to play propositions by a “NFT artist” that’s sold millions in NFTs for an invite to an invite only NFT marketplace, promises of $x/month in sales, to a prolific “NFT collector” on Twitter confirming being part of the whole scam by retweeting me upon request of the artist to verify the authenticity of it all.
From what I gather no one gives a shit, and their attitude seems to be we can buy off anyone who challenges us. The irony is the same people shaking me down for Bitcoin in exchange for an invitation to the marketplace/inner circle successfully have collectively called for for banning/suspending of accounts from various NFT marketplaces openly on Twitter.
I've been thinking about this, there are so many crazy/interesting stories in the crypto sphere that you could fill volumes upon volumes. I wish they were reported more, hope someone picks you up on your offer.
Not really.. most of these companies aren't trying to evade the law- in fact the industry is mostly begging for regulatory clarity in order to be in compliance. Nobody wants to invest millions into something that may or may not end up being designated as illegal.
I actually think that this is at the core of most of these companies.
Take anonymous money transfers for any amounts. This is why KYC/AML laws exist.
If someone could show how a cryptocurrency with anonymous features can follow KYC/AML laws, I'm all ears.
Begging for regulatory clarity makes it seems one-sided. It seems very clear to me that the dream the cryptocurrency companies are trying to sell is fundamentally incompatible with the intent of the regulation, even if not yet its text.
What can they be left with afterwards? We'll see, but it won't be the vision they've sold.
> Nobody wants to invest millions into something that may or may not end up being designated as illegal.
The bitcoin blockchain has child porn on it. And BTC is explicitly designed to break KYC/AML laws. Yet people invest.
There are really dumb laws that you need a powerful defense or deterrent against.
The biggest problem is that you cant talk about them, or even share the deterrents, because it makes you a target for the regulators if you do. Its actually better that the regulators simply know you have a lawyer, and that they have no idea what your legal strategy is. In finance, ignorance of the law is an excuse (“scienter”), they codified the law specifically that way for themselves, and so giving any knowledge about the law undermines the defense of your own actions, and being able to say “my lawyer made me do it” is an even better defense.
This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime.
Corporate Securities lawyers know it, exchanges and service providers know it, they carved out a niche for themselves to provide this legal service and it costs 6 figures easily. It is not a perfect defense.
Many crypto project issuers are victims in this regard, with everyone onboard with this racket, they cant even talk to the SEC about what’s wrong.
Taxes aren't that hard but most providers overthink the word “crypto” when they hear it and confuse themselves.
You seem to be describing exactly what I said. They are trying to get around the law, and trying to get around the intent of the law.
So the aim is to break the intent of the law. Laws that were put there on purpose.
So I really don't understand what you mean by "nah". It's exactly that. Company sees the law, says "that's dumb, I'm going to break that but in a complicated way" and then does breaks it using what they consider a loophole.
"Nah"? No, you exactly agree.
> In finance, ignorance of the law is an excuse
Yet you can also get convicted for tax fraud without having intent.
And the flip side of what you said is also that (depending on jurisdiction) it can be illegal to do something legal, if your motive was to get around the intent of the law. Using loopholes can be illegal, even though the act is legal.
> This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime.
This is just delusional. I think you forgot who has the guns.
Lets focus on securities laws because as I said tax is solved and not that hard. I’m not talking about tax fraud so lets focus instead of being all over the place:
So basically crypto projects dont mind securities laws, they do mind that the securities laws have lots of unnecessary contigencies added to them that makes it impossible to couple with utility.
If a crypto token actually was a registered security, then nobody could list it because they arent broker dealers. All the partnership projects could not be because the partner would have to be a broker dealer. There would be zero framework to potentially add utility at all, if they complied with laws that didn't consider issued assets existing peer to peer outside of any walled garden. Alternatively, it can exist as a consumer product under the consumer framework, no different than the secondary market for Nike shoes, and thats what people do. Upon asking “how does Nike do it? People can walk in the shoes but many people buy their shoes with an expectation of profit” my securities attorney told me that Nike probably has securities legal opinions too.
Congress and commissioners at the SEC are warm to helping this, you are going to have to retire your talking points to the last decade as the grownups are building and some are representatives.
Tax is not even remotely solved, thanks to anonymity on these currencies. How can tax be solved if tax fraud is not solved?
> they do mind that the securities laws have lots of unnecessary contigencies added to them
Specifically what? What laws have what aspects, and more importantly why were they put in place, and why should they not apply to cryptocurrencies (but to other things?).
You're talking as if laws sprung from nature, somehow.
The paragraph about broker dealer requirements is about that
A requirement which did not spring from nature but has no usefulness for fungible consumer products and simply hasn’t been revisited
Without clarity from regulators it is impossible to simultaneously comply with FTC consumer regulations and SEC investor regulations as they are incompatible regulatory regimes which alter how things are marketed, promoted, traded and accounted for.
And actually complying with SEC regulations means there is no where to trade it. There is a joke amongst securities attorneys about the Howey Test which is the premier securities framework from the Supreme Court “if Howey wanted to comply and register properly as a security how would he? Well he couldn't because they’re fucking oranges”. And that reality exists for digital assets today, yet the market is there and the risk:reward is extremely favorable.
But what you might be missing from trying to nitpick specific regulations: The SEC will never ever ever fulfill its mission from Congress of protecting crypto asset investors by sanctioning crypto asset issuers, it will only hurt the investors in the current reality. Whatever it does in the equities space is not applicable here as the SEC's arbitrary adversarial actions provide the opposite of confidence in the crypto market and facilitating capital formation. It understands that part too which is a contributing factor for why its actions are limited pending modern direction from the legislative branch, and its prudent that you understand that as well.
To be honest I really hope this cryptocurrency and blockchain bullshit fad is dying really, really soon. Lots of promises and bold "ideas". We waste our precious resources on something that just benefits what feels like a few people but claims to bring decentralization. I think you can have all the cool projects without any blockchain/crypto bullshit. Nobody wants to do their due diligence with the regulations though and that's dangerous. We're polluting our atmosphere with something that is broken af.
Vitalik Buterin, the guy who thinks you can do quantum computing by running a quantum computer emulator on an ordinary computer [1]. Doesn't strike me as the sharpest tool to be honest...
A random tweet about a concept not being "fundamentally ridiculous" is an awfully low bar to discredit intelligence. Have a look at his blog[0] and let me know if that reinforces your belief.
Besides, if you read the whole thread you'd know he's acknowledging that if we could simulate QC classically, then we'd be able to have more efficient classical search algorithms. It's an if that's likely impossible at scale but not, by definition, impossible.
> competent observers would likely consider even that on the high side for a mathematical impossibility
If the statement made by Vitalik "There's no proof that efficient classical simulation of QC is impossible" is indeed the case, then it's the linked blogpost that has discredited itself mathematically by treating this as "breaking mathematics" or a "mathematical impossibility". More like groundbreaking surprise, but there's a big difference between "unlikely" and "proven to be impossible" mathematically speaking.
The element of controversy isn't whether efficient quantum simulation is possible, but the idea that by running such a simulation one would be able to break cryptography, as if they were using an actual quantum computer. This is a talk where he makes this claim
https://youtu.be/DkUpZkeqhF4?t=3372
If this isn't crackpottery of the highest degree I don't what is.
A talk from 8 years ago, when he was 18 years old? I mean, even having a semi-half-baked opinion on quantum cryptography at 18 is pretty damn impressive. Just because everything is forever on the internet does not mean that opinions are forever.
It's interesting that quantum inspired classical algorithms have been discovered that outperform the previously best known algorithms, and reduce the likelihood of useful quantum speedups in those areas. https://www.scottaaronson.com/blog/?p=3880
I take this tweet as Vitalik saying that a similar thing could happen for mining (or general search), and while it would be surprising, it doesn't seem like it is impossible.
Considering his background, I don't think he was talking about algorithms. In the past he became involved in this project:
"Quantum computing (QC) is a flexible model of computation and there are many physical means of implementing it. One obvious means of implementation is by classical simulation. In other words, performing QC by running ‘quantum software’ on conventional hardware."
Have you actually looked into the technology behind Ethereum? Do you understand how complex it is? You make it sound like Vitalik just quickly threw something together and had good marketing, however, Ethereum is quite technical and has been since the beginning [1].
It started as an ICOs selling off utility tokens. ICOs have a broken incentive structure which leads them to over sell and hype the technology to increase the founders wealth. They are still overselling and hyping future tech that has not been proven. PoS is advertised as a free lunch PoW but PoS does not stand up to scrutiny and likely devolves to PoW with nothing as stake grinding. Vitalik has also put his name on and pumped countless ICOs which have left bagholders with nothings.
Ethereums tech is based off scaling bitcoin in an more ambitious way than bitcoin maintainers consider safe. Ethereum is still PoW and every client must download and validate all other clients smart contracts. This does not scale and leads to centralisation. Removing the most important property of these networks designed to be controlled by no one group/person. Smart contracts and decentralised exchanges are the goals of a decentralised network but Ethereum has sold the idea before they have the technology to achieve this.
Ethereum has excelled at regulator arbitrate. It looks like it's not controlled by one group so it's not regulated like a company. But one group controls the rules and the hard forks on the network. It is a success in this way
Sounds like he's talking about tokens, rather than an honest blockchain built from scratch with no rewards for the developers other than creating innovative technology. Without a premine/instamine/devtax, there's no need to shill the coins, or care much about the price.
There is no way for this to be a productive conversation if ‘real innovation’ can always be a goal post to move. The other side of that is that I don't remember, none of this has been relevant since 2016 which is half a decade ago now. Just trudge bitcointalk for defunct chains and find one that you liked the roadmap of.
There is a more quantifiable trend of market tolerance in this asset class for what founders can earn.
You have an extremely antiquated view of what that can be, the impractical charity developer building a product that the communities adores and spawns into a very active network. That pretty much never happens as the dev needs to use their time to exchange for food and shelter and nobody else picks up the baton.
Following that, devs attempted small dev taxes of 1-2%, the market barely tolerated that for some years, and it also wasn't good enough to fund development
Following that the market tolerated larger preallocations of 30%.
Then it tolerated fund raises where developers kept funds raised and large preallocations, similar to equities.
Then it tolerated even more where low float assets are now commonplace, with developers keeping upwards of 99% of the asset created, keeping the funds collected, and have unlimited issuance capabilities.
But there is no hard line in the sand, and not everyone has an uncomfortable relationship with money such that arbitrary thresholds determine what a founder “deserves”. It is obvious that being able to actually pay a dev team has done much more for the speed of development in this space than harping on about some irrelevant ideology. You might find it surprising (okay now I am being facetious, but it still has to be said to highlight the inanity of your last decade view), but the entire industrial era has the same aspect based on paying workers closer to the value they provide at the time and thats the only model proven to work in an economy.
Reading that twitter thread, and HN discussion here, I am again reminded how the whole startup scene looked before dotcom crash: insane valuations, lots of scammers, and what little utility there is, it's mostly for illegal means. (If you're saying that there's no real utility in Bitcoin, you really should google Hydra).
But don't you wish you bought Amazon stock right after IPO?
wasnt it obvious to some people back then who the real companies were, and all it took was everyone else catching up to speed to understand who the real companies were?
He forgot a point: exchanges are the house, and the house always wins.
Want your token to be traded on an exchange? You'll pay a fee, you'll do all the integration legwork for them pro bono, and then they'll skim money off of all the trades on your token in perpetuity.
Thank you for reaffirming my point! If you want your token traded on uniswap, you'll write the integration code pro bono, you'll pay a fee (a transaction fee to deploy it), and Ethereum miners (who run uniswap) skim transaction fees off of your token trades in perpetuity.
My code must conform to whatever programmatic interfaces that the exchange provides, even if they are not a good fit for the token's intended purpose. So yes, there is integration legwork that I the developer have to do.
> Using the network is not "skimming" transactions.
Sure it is. Users are paying a different token to miners (not me) to use my app's token. Tell me, if users are given the choice between transacting in both ETH and the ERC-20, or transacting only in an ERC-20, would they ever willingly do the former?
I didn't say that. I'm saying that it's another unanticipated burden of building out a crypto project, which is what this twitter thread is going on about.
EDIT: Also, sure, why not own the exchange too if you can swing it? Less middlemen taking a cut from your revenue.
Add to that: 16.5 You will be demonized by everyone except those that participate in what you build. 17. Every dollar spent on dev didn't 40x in ETH over the last year, or 400x in some other things. 18. Centralized gatekeeping of the "decentralized" projects both in coin ranking sites and exchanges. 19. Constant and never ending copycats and straight scams impersonating your brand. 20. People duct-taping coins onto what you build and stealing your users (ala sushi vampire attack on uniswap.) 21. Advertising is banned everywhere for you (reddit, facebook, youtube, google, etc) Caveat: Founder of #14 on nomics.)
I see lots of people in the thread, including the author, that have avatars with glowing eyes. Can someone explain what this is about? Is this some sub cultural thing?
From user experience, I personally don't see a strong benefit of crypto. It always looks like a Ponzi Scheme to me. When early users are people driven by greed than productivity, it is a HUGE problem.
I do. I can take out a 6 figure loan in 15 seconds and send it to anywhere in the world (https://aave.com/). I can deploy capital, I can participate in liquidity pooling on decentralized exchanges in a completely permissionless manner (https://uniswap.org/) (impossible unless you're a Wall Street insider in the current system), I can lend out currency at higher market rates to day traders participating in leverage trading (https://dydx.exchange/) (impossible unless I'm a Wall Street insider today), I can mint a derivative of a Tesla stock that follows the price action of Tesla from anywhere in the world (https://www.synthetix.io/). I can trade 24/7. I can play a game, earn in-game swag and trade that on an open marketplace (https://opensea.io/). I can take out crop insurance backed by a smart contract in an African country that lacks a stable legal system or currency (https://www.arbolmarket.com/). I can go on and on...
The defi thing really gets me confused as someone who works with loans and finance. What I have seen in defi is basically a borrower provides 100% collateral for the privilege of paying interest on it. That’s something no business would ever touch in the real world, unless they thought their “investment” in the collateral would exceed their interest rate. That works for borrowers as long as token prices keep going up, but not if they go down. That is why anyone would put up 100% collateral for a loan of the same amount.. but the thing is people do this even in stable coin which confuses me even further. Am I missing something important?
These are just collateralized loans that are automated. Nobody here would touch your businesses “in the real world” because it would take like 90 days to get any liquidity with those processes, compared to 15 seconds (1 block). There is nothing mysterious about a collateralized loan with a conservative loan to value ratio. The first thing you got wrong is that most services have a low LTV not 100%. Usually between 25-55%. Businesses in the real world do touch that.
The other thing you’re missing is who what and why. These aren't businesses these are basically self-replicating robot toll booths who are doing what lending businesses also try to do: pool liquidity and in some cases reinvest that greater liquidity.
When borrowers deposit collateral they are typically passing through a smart contract that then adds their deposit to a liquidity pool that the market can access. It requires confidence in these smart contracts that the collateral will remain available but that confidence is generally there. The market typically taps these liquidity pools for easier trading with lower spreads at larger amounts or for the repo market (flash loans). Lenders are repaid usually in the asset they lent, as well as a project’s token which amplifies yield. The risk isnt contigent on the projects token existing or going up, which I think you missed. For some platforms that is true but that is usually yield farming, but if you think a market need is unfulfilled just launch another version.
Typically earning or otherwise having enough of the project’s token allows people to vote on controlling some parameters, such as the interest rates provided or augmented by how much of the project token or the use of which liquidity pools or eligible assets in the system.
Back to the borrowers and lenders, yeah they can get and give personal loans for discretionary spending at market provided interest rates even in stablecoins.
You provide 100% collateral (really > 100% collateral) for the privilege of borrowing a different asset. For example, I could deposit ETH and borrow USDC against it to go buy something, or go make trades with. Or, I could deposit USDC and borrow ETH against it.
And people do this in traditional markets - it's known as "asset backed lending" or margin trading. Both things that my investment account allow me to do.
For most of these providers, you earn interest on your collateral too.
Example 1) lend USDC for 25% interest on Venus.io. Borrow DOT at 3-4% interest. Stake DOT for 12% interest and collect the difference.
Example 2) Lend USDC for 25% at Venus.io. Borrow BUSD for 12% interest. Trade the BUSD for USDC 1:1. Lend that USDC to borrow more BUSD. Repeat until you max out you reserve ratio.
I'm not cashing out, I'm staying in the Ethereum ecosystem for good. And no they're not worthless. USDC for example, is literally exchangeable for $1. I can literally take out a six figure loan against crypto holdings and buy a house with it. I can also pay off high interest credit card debt and earn yield at the same time. All the other tokens are liquid and exchangeable 24/7.
> USDC for example, is literally exchangeable for $1.
Thank you for reaffirming my point! The purpose of defi is to re-distribute dollars from people buying in to people cashing out, while providing literally no other goods or services. It's not like people want these tokens for other purposes -- you buy them so you can sell them to subsequent participants.
Despite the deceptive machinations of defi, the act of selling out leaves a paper trail that exposes you to liability for income taxes, capital gains taxes, and (if you wrote the token code) securities regulations. But I have some good news: if you live in the US, you at least have until May 17 to file your quarterly estimated taxes.
> The purpose of defi is to re-distribute dollars from people buying in to people cashing out
Not at all. You didn't read my post above did you? Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world? No? Can you loan money to someone in Thailand in 15 seconds? Can you borrow money from a pool of lenders from 84 different countries? No? Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees? No??
Well you don't get DeFi. So you should study both the traditional existing system as well as this new one so you can see quite clearly why this system exists and what problems it solves.
Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading. No one has ever pretended there isn't a paper trail: of course there is! It's an open blockchain. But you're running with your pet theory for why it exists straight over a cliff.
Hate to break it to you, buddy, but you can't do these things with defi tokens either.
> Let me ask you, if you want to be a market maker for the NASDAQ, can you do so with $1K in capital? Can you do it 24/7 from any country in the world?
If you're implying that NASDAQ won't let me be a market maker with $1k capital, then why should I believe that they'll do it if I offer $1k-equivalent of defi tokens instead?
Also, I can do this today. I'd start a market maker company with my funds and with funds from other like-minded people.
> Can you loan money to someone in Thailand in 15 seconds?
Show me a defi protocol that lends money, and I'll show you a protocol that only permits over-collaterialized loans, backed by other defi tokens that are just as limited.
Also, yes -- I can lend money to people in Thailand in 15 seconds. I simply invest my money in a local bank that will do it for me.
> Can you borrow money from a pool of lenders from 84 different countries?
Absolutely. Do you understand how banking works?
> Can you build an app that plugs into your bank, NASDAQ, and a video game API without paying anyone any service or API fees?
I don't know if you've ever tried to actually write software before, but I can say with 100% confidence that defi isn't going to open up my bank's APIs, NASDAQ's APIs, and video games' APIs to me. That's because these entities make money by charging for API access, and the existence of defi isn't going to change this.
Even if each of these entities were realized as defi contracts, the underlying blockchain miners still charge me a fee to mutate state within them.
> Buddy, I'm not worried about taxes on profits vs. losses. It's no different than stock trading.
Then you clearly do not understand how tax law or finance works. I humbly suggest you get familiar with it, and quickly, lest you end up with completely-avoidable penalty fees (or in a jail cell).
As for collateralized loans, they are the norm in traditional finance, too. When you take out a mortgage, it's collateralized by the house. When you borrow for a car, guess what happens if you don't pay? Unsecured, revolving loans are usually credit cards, with very high interest rates.
If you're snarking about the $30B in lending activity on crypto (up from less than $1B a year ago, on pace to 10x over the next 12 months), because it's collateralized, you don't understand what percentage of lending is collateralized and how big that market is worldwide (hint: its hundreds of trillions).
> That's because these entities make money by charging for API access, and the existence of defi isn't going to change this.
The point, for your intentional ignorance, is that the DeFi system is completely open. Open source, open access, pluggable, and composable. In that sense DeFi follows the Unix philosophy. And that is just one reason why DeFi will take over ever greater portions of the existing system. It is going to eat traditional finance.
> Then you clearly do not understand how tax law or finance works. I humbly suggest you get familiar with it, and quickly, lest you end up with completely-avoidable penalty fees (or in a jail cell).
You clearly don't understand that Coinbase just went public as a company and that many more legal entities exist fully legally in the crypto ecosystem such as Gemini, Avanti, Greyscale, Galaxy, Kraken, etc not to mention overseas entities in Europe and Asia. There's nothing illegal about participating in crypto.
I understand how to do addition and subtraction and how to do FIFO and LIFO. In fact, there's software programs to automate it. Who woulda thunk it.
Then I guess you don't really understand UNIX either. Software modularity is a necessary part of the UNIX philosophy, but it's far from the only part. If it was that simple, then Windows would be UNIX thanks to COM.
But that's not really the topic at hand.
> It is going to eat traditional finance.
Why should I believe this? Even if high transaction fees, bad UX, and non-existent scalability weren't significant barriers to adoption, why should I believe that traditional finance won't simply co-opt successful defi projects?
The fact that traditional finance does not do some things that defi does has nothing to do with technical capabilities, and everything to do with legality and market sizes. There's no grand conspiracy afoot -- traditional finance would let you do a lot more with your money than you can right now if it was profitable and legal.
If you're telling me that defi is going to "eat traditional finance" because traditional finance won't touch unprofitable or illegal activities, then what are you really saying about defi's prospects?
> There's nothing illegal about participating in crypto.
No one said that crypto is illegal. Tax evasion, on the other hand...
Taleb has never revealed the details of his investment portfolio. For someone who screams "I don't care - show me the returns!" it's interesting that he cannot prove that his "black swan" strategy has ever been actionable for his own or anyone's portfolio, how to use his theories to make significant money vs. normal strategies, and any proof that his hedge fund made any money during the dot-com crash which you would figure would be the prime time to make money given his public persona.
Taleb got profiled in the New Yorker, his Black Swan book became popular, and he has rode that and Twitter ever since. I highly recommend people see him for what he is - a public figure that is a bullshitter like anyone else - at least until he shows proof that he is some sort of investor oracle. He has actively sued people who revealed how much money his prior fund lost, as those documents are floating around but he attacks anyone who publicly reveals them.
> It's interesting that he cannot prove that his "black swan" strategy has ever been actionable for his own or anyone's portfolio, how to use his theories to make significant money vs. normal strategies...
Mark Spitznagel, a cofounder of Empirica (Taleb's old fund), went on to start Universa which did pretty well with similar theories (tail-risk strategies and insurance via options against extreme market risk) in both the 2008-2009 period and last year, when they booked a huge return. So there's some evidence that the theories work to produce uncorrelated (or negatively correlated) returns that outperform the market[1].
Someone in the industry has a theory that he made his initial fortune by being unhedged during Black Monday[0] and benefiting from being on the "right" side and he's been coasting on that since then. Obviously hard/impossible to say, but he is definitely hypocritical when it comes to things like "skin in the game".
What’s the distinction, and do you have a source formalizing that?
I had always understood a ponzi as being something paid out by later investors, and where you had a plausible reason to believe in increase in value.
Here the plausible reason is “bitcoin will take over the financial system and everyone will need it” or “bitcoin will be the new store of value and everyone will want it”. In either event payout necessarily comes from later investors.
Bitcoin makes no claim of being an income-producing asset.
All non-income producing assets { gold, wine, art, baseball cards, air-jordans } are bought as a store-of-value with the hope of selling it at a higher price.
Ponzi appears to be an income-producing asset, but the income is paid out from the principal.
Having been part of launching Helium HNT token (which is honestly a real-world utility use case), here is my personal experience related to his points...
Helium started as a traditional centralized IoT project, realized that centralization was a limiting factor, then joked about turning it into a blockchain application. Now it is over $1.5bn market cap and provides a real-world utility.
Exchanges are pay-to-play. It feels bad to interact with them to get listed.
Lots and lots of scammers.
There is still so much untapped value in some possible use-cases, but honestly too many get-rich schemes.
Launching a new layer 1 protocol is a tremendous amount of development effort and I think underestimated by most.
Security is hard.
Scammers/hackers go after all project members personally. You probably aren't prepared for any kind of success.
5 years ago crypto wasn't mainstream. Fast forward to today, and when you say you're in crypto, everyone thinks you're a billionaire.
1.) Decentralization will come for sure (DAO LLC), but no matter what, there is still a Foundation of some kind.
2.) Community depends on utility. There are some amazing strong communities, but is in direct proportoin to the utility the token really brings. Otherwise, just pump and dumpers.
3.) I don't think it is 100% possible to truly decentralize governance. But people are trying.
4.) I don't believe this is true for everything. There are pump and dumpers, but many of the decent tokens today need to focus on utility, the tokens for speculation only will always be manipulated.
5.) I think the VC landscape has changed and maybe a more piling on, but couple of years ago, VCs wouldn't touch crypto and the VCs focusing on crypto (Multicoin, Polychain, etc) are very good and extremely smart.
6.) Time makes no difference. Since it is decentralized it isn't like you have a support team fielding issues. You can't fix anything in a moment's notice. Releases take careful planning and careful testing.
7.) Again this assumes there is no utility in the token. But he is right you can't talk about token price or speculation. But underneath it all you hope the token price goes up.
8.) 100% true. You can't build it and they will just come. It requires real marketing and PR. Most importantly branding. People are looking for value and community around your token. But the early adopters are FOMO speculators.
9.) Yes, legal fees are very high. Could be 7 figures.
10.) Taxes are becoming more clear. Cost basis and capital gains. But a lot depends on how you acquired your token.
11.) Basically, people will constantly claim your are scammers. Literally day and night. And people will spam free bitcoin offers to all your telegram and discord users. Every day and every night.
12.) I think insider trading is unbounded in crypto currency, but that being said a.) its still illegal and not sure founders would be participating in this, b.) its still unclear what really motivates the market. Crypto is heavily retail and the chatter as always be trolls, scammers and naysayers. But also fomo'ers. So hard to say how much insider trading will capitalize on information versus exchanges that can manipulate the volume data. I think whales can manipulate far better than insider trading.
13.) hard to say are we talking a stock market bear market or a crypto bear market?
14.) There are several tokens that have real utility and likely you aren't questioning your lifes' decisions. But lots of sh*tcoin maybe you are. But blockchain (layer 1) developers are still incredibly hard to find--so think they can pick whatever they want to work on.
15.) Again, utility (real use case) or pure speculation play. There are tons of garbage uses of blockchain that are a super poor fit. Hopefully, you don't work for one of those (does supplychain really need to be on a blockchain?)
16.) Unsure if that is true. I think most projects get a halo effect from the success of bitcoin. Most new tokens should be real utility instead of trying to replace bitcoin.
I’ve advised many projects, allowing them to inherit my professional network in the crypto space, as well as launched my own tokens.
And the exchanges really are a problem and are still a racket.
It is so great that Uniswap and their style of autonomous liquidity pool creating has taken over, the market was tired of that other bullshit.
Even the most reputable custodial exchanges are a total racket! See Coinbase’s settlement with the CFTC a few weeks back for an example.
The challenges to fixing it are very high, I agree with Gary Gensler’s (SEC chair, former CFTC chair) comments to Congress today about a new regulatory framework for custodial crypto exchanges.
For one:
Projects cant talk about exchanges because one part of being considered an unregistered security is by providing an expectation of liquidity!
But communities do have an expectation of liquidity and so does everyone. Otherwise they will attack the founders personally, forever!
The exchanges know this and create extremely toxic relationships, that any complaint from a founder will cause the exchange to completely ruin and slander the project and also delist it, validating any detractors existing beliefs!
Complete racket because the regulators are already taking an adversarial stance and cant even get any insider to talk to them because they’ll go after the insider!
If you arent aware, uniswap (AMMs) and yield fixes this, as communities are providing all of the liquidity and listing of the token for exchange. So honestly the impossible regulatory environment is really being a catalyst for innovation.
I've used Uniswap and IMO, the UX doesn't compare to the centralized exchanges. I think that will prevent mainstream adoption except for those who are pretty crypto savy. I'm also concerned that decentralized exchanges may have tough regulation applied to them in the future. I'm not sure what that looks like, but it seems like a risk to me. The charges brought against the founder of EtherDelta comes to mind.
That is interesting what you said about the shadiness of centralized exchanges. I wasn't aware of that. Maybe a more clear regulatory framework will help.
However, it seems like whenever more regulation is put upon traditional markets, folks just find a loophole in it and it makes the situation worse for retail investors (best price / HFT comes to mind, but maybe I just took the Flash Boys book too seriously). Anyway, I'm not sure what the answer is there. Curious if you have more thoughts on this.
Uniswap already has mainstream adoption lol. V2 has had more volume than Coinbase for almost a year and its less than a year old.
People that want alpha learn that interface, the end.
If you want limit orders and big ole' chart taking 3/4ths of the screen so that you can pretend the Bollinger bands are suggesting a breakout, then you have to use third party GUIs, it is all possible and there are plenty of github projects about it. Uniswap V3 makes that even easier.
HFTs already exist here, they provide a service mostly liquidity depth. Crypto exchanges are fairly unique in that they operate many conflicting roles when in other markets they would have fiduciary duties.
Thanks! For the adoption, I meant more like new folks to crypto. I think sending someone new to Coinbase is a lot easier than having them set up Metamask, telling them how to get some ETH and sending them to Uniswap (and also having them understand gas fees, etc, otherwise their Uniswap transaction will take hours and maybe be cancelled due to slippage).
Anyway those third party GUIs sound interesting.
I also figured there already was HFTs on crypto, but good to know.
We'll see what happens with potential regulation. I do hope the US understands that not stifling crypto innovation would support them in having companies and leaders in this upcoming field. I do think crypto is in it's early stages at the moment and mainstream adoption to me is having crypto adoption at the level of say the US stock market.
People can buy eth directly in metamask with dollars
New people to crypto just follow their favorite youtuber
The ux will improve even more over time
The commerce applications on the other side like Uniswap are understood pretty quickly as its just market orders
But there is tons of room for innovation in making it more accessible
When I see the volume, liquidity, value on chain, and all times lows of crypto stored in exchanges, to me that means its easy enough for people to figure it out from their favorite influencer’s bite sized video
> Helium started as a traditional centralized IoT project, realized that centralization was a limiting factor, then joked about turning it into a blockchain application. Now it is over $1.5bn market cap and provides a real-world utility.
Why did you need to create a new, unique token anyway?
How much of that market cap would you estimate is used for utility versus simply being held for speculation?
Proof of Coverage was a new model that couldn't be easily done with a layer 2 protocol. I think it could be done now with Solana, but SOL wasn't live when we started.
I'm still wondering how no impactful hacking occured to this day at major exchanges or even the major blockchains.
By now it's probably a top-level target worldwide.
There have been a few notable hacks to exchanges, Binance, for example [1]. The DAO hack on the Ethereum network, which caused the fork of Ethereum and Ethereum classic, is also notable [2].
I do think the fact that there hasn't been a successful attack on the Bitcoin network is an example of how resilient it is. Safely securing $1 trillion in value on a decentralized network that hasn't been hacked in over a decade of operation, when as you said, it's probably a top-level target, is pretty amazing.
Most of the comments here seem to revolve around "traditional" crytocurrencies that are more or less copycats of Bitcoin with no real value-add.
I think what most people don't realize is how much crypto has changed since 2017, mainly through Ethereum and the concept of smart contracts. The idea of running (immutable) functions on a decentralized network combined with transaction of value has so many interesting applications, that I believe we haven't even scratched the surface of what's possible.
Shameless plug: We're in the middle of validating/refining an idea for a tokenized e-commerce platform. The main idea is that a tokenized platform can shift the incentives for all actors to produce drastically different outcomes. So we're more about embracing the game-theoretical side of crypto than the technical side.
“Bitcoin maximalist” is a pejorative invented by Vitalik Buterin circa the Ethereum ICO. It’s best understood as a laxative for one’s disposable income, prescribed by the Ethereum doctors to be imbibed by would-be altcoin investors.
Altcoin promoters quickly attached themselves to the term for financially motivated reasons, unsurprisingly. Notably it has little to no meme/entertainment value: its value is strictly limited to psychological warfare, and is rooted in sophistry.
It would be super awesome if the personalities attracted to this would realize they are many many years too late to attract anyone else to their scheme.
That's my personal opinion but ya'll seem to like that over here on the 'ol HN (aka the new slashdot)
Society is losing the opportunity to create a lot of wealth because people are investing in silly proof-of-work (or: energy/resource wasting) ideas. It's awful, and I guess we're only going to see this over once Bitcoin is surpassed by Dogecoin (I'm sure this will happen), and then Dogecoin gets surpassed by any other stupid shitcoin out there.
The idea of cryptocurrency is interesting, but the idea of having no back at all makes no sense. Wasting energy is not creating wealth.
> It's awful, and I guess we're only going to see this over once Bitcoin is surpassed by Dogecoin (I'm sure this will happen), and then Dogecoin gets surpassed by any other stupid shitcoin out there.
Just pointing out that both Doge and BTC are proof of work and consume energy in similar style with the mining process.
You don't see that most proof-of-stake still requires a tremendous amount of energy and resources wasted at the very least for the stupid mining process?
I thought this when I first learned about the idea, but the name doesn't give away the true nature of, at least, most implementations... It's like 'mining requires less energy', and not that the tokens aren't mined at all.
Of course, theoretically you could've an initial distribution defined and shared without effort, but what really happens is a points system that makes it easier for people to... uh... mine, but it's obviously still the same awful idea.
10% over something that is pure speculation and has no value whatsoever seems like really high. If anything, this just makes me feel confident about my prediction.
Except that Proof-of-work isn't wasted energy: it secures the bitcoin network/system by making it prohibitively expensive to attack, as well as provides a means to confirm groups of transactions in a decentralized manner. Bitcoin provides a real final settlement layer alternative to fiat central banks, and that's globally significant.
Plus there is the bisq project, a peer-to-peer bitcoin/fiat exchange that has decentralized their governance using a token that's colored bitcoin, rather than building on Ethereum.
Regarding the energy consumption of monetary networks, what's the real cost of the petrodollar system? Don't forget to include the US military costs fighting wars to force oil-producing nations to sell oil denominated in dollars, as well as all the banking, financial advisors, and physical security (Brinks) that prop up the central banking/fiat monetary standards.
Is there a POS stablecoin blockchain with smart contracts in the works? Why couldn't it be done? Because founders wouldn't be able to hold 80% of coins so they can cash out like Vitalik, CZ, or Justin Sun?
We can make trust-less stablecoins backed by crypto but we cant run a blockchain on a stablecoin. Its only stable if its backed or pegged to something and that we dont know how to do decentral.
Because every stablecoin is by definition centralized. It has an underlying bank account, which could at any moment be freezed or seized, all coins confiscated and all smart contracts voided (or some specific contracts voided). Not so with decentralized blockchains based on proof of work.
This account is talking about how many things in Crypto are non-credible but at the same time they also just "blab" their opinion on Twitter without any factual backing.
So many of the smartest people in the world work in the areas of getting people to click on ads, mining personal information, finance and crypto. Areas that at best have no social value. It is quite depressing.
One perspective on money is that it's a resource-allocation system. I think more transparent, accountable, reliable resource allocation potentially has enormous social value.
Not if you create a system where it's literally impossible to redistribute wealth. If majority of tokens in a crypto system are controlled under priv-keys owned by a small % of the population we'll literally lock ourselves under the control of those people. Scary thing is that we won't even be able to vote ourselves out of the potential mess because the private keys are mathematically secured. Capitalism is going to have a blast!
Yes, it literally becomes the invisible hand that controlls the freemarket but it no longer free and no longer a market if nobody can get in. Ultimately the value we all get is exchange with eachother at a fair and stable price. The cryptospace could potentially solve this problem when the initial gold rush does some damage. In a way the attention is not bad because more people understand what it is, study it, become savy, vote legislature and deepen the field towards the problems that trully need a solution.
What we want is to basically transfer work/resource tokens and make it resistant against depreciation. Lets add a simplistic example I help someone build a house and receive a fair token for that work. When I need to build a house 20 years later I pass that token, it retains the value such that someone accepts it to do the work I did 20 years prior. Because we’re mentally stuck into an outdated economic model that served ok prior to the digital age our imaginations aren’t creative enough move in the right direction. My thinking is that a direction will emerge, let’s hope it’s as far away from the possibility you talk about.
> What we want is to basically transfer work/resource tokens and make it resistant against depreciation. Lets add a simplistic example I help someone build a house and receive a fair token for that work. When I need to build a house 20 years later I pass that token, it retains the value such that someone accepts it to do the work I did 20 years prior. Because we’re mentally stuck into an outdated economic model that served ok prior to the digital age our imaginations aren’t creative enough move in the right direction. My thinking is that a direction will emerge, let’s hope it’s as far away from the possibility you talk about.
Yes, I think you have the right idea. This is a credit based system, which, I think is fairer because anyone can issue credit denominated in some numeraire and it holds its value over time as long as the issuer can be trusted to “redeem” the credit. The issue with this system is that bootstrapping it is difficult and it’s quite complicated because everyone now needs to become a credit risk/reputation expert!
Don't waste your breath dude, HN has become a safe haven for people that like to bury their head in the sand and shit talk crypto. Yeah, anybody that's actually knowledgeable in it know that what they're saying are the same old sad tropes that the news has been training people to repeat verbatim, but they've boxed themselves in and they'll die on this hill.
Where is a place to get a broader perspective on this? I've tried subreddits for some of the projects, the cryptocurrency subreddit, and google and youtube. I have a lot of difficulty cutting through the noise. (My sense is that projects like Ethereum could be extremely valuable but that its value is currently hurt by the speculation on Ether making transactions far too costly. I'd be very interested in getting exposed to the "quality" projects that are out there but it's hard to filter.)
> Ethereum could be extremely valuable but that its value is currently hurt by the speculation on Ether making transactions far too costly
FYI the price of ETH does not affect the transaction costs. The fee market is independent. There's solutions to this in place and more being worked on though. The 3 biggest contributors will be EIP 1559 which is meant to level out the fees and make them more predictable, L2 rollups which scale through sidechains that have the each of their blocks confirmed on Ethereum's L1 with proofs, and sharding of L1. Ethereum is currently in a growing pains phase as these L2 options gain more traction/adoption, UX for them improves, and all activity migrates there. The end goal is for a majority of interaction to occur on L2 with L1 being used mainly for a settlement layer.
Huh, I totally thought transaction fees were set in Ether and that’s why the costs are so high (in fiat of course). If that’s not it, what makes the transactions so expensive? Lot of competition for limited throughout?
Yes, it's competition for limited throughput. Especially with the DeFi boom, fees have been bid higher and higher to be sure transactions are included in an immediate block.
Incidentally, if you're looking to keep up with Ethereum in particular, the newsletter Week In Ethereum News is an excellent resource. It's a links-with-descriptve-blurbs kind of thing. It's still a bit of a firehose if you're catching up on the space, but just pick a few items that sound interesting every week. https://weekinethereum.substack.com/
It was easier eight years ago, I would just look at Bitcointalk threads and be able to make an evaluation pretty quickly. Small scale, relatively more clued in folks. Now the scale is a problem. There are so many projects I know nothing about.
Nowadays I usually go to /r/cryptocurrency/new for the firehose. I do not aim to read everything, just check in and take some notes. What tends to happen on that subreddit is that some really great posts get made but never hit frontpage because they're crowded out by useless memetic content. But you can take individual great posts and turn those into leads by doing some additional legwork. I don't usually talk to those users(I do not want to read comment thread replies and will completely ignore my Reddit inbox, instead I will monitor the thread if it interests me) but I will sometimes browse their post history.
All the billions that went into it have what to show for? How has it improved anyones life besides making some early enthusiasts and lots of criminals rich? How is society better off?
Lots of grand ideas that went nowhere because they are entirely unrealistic and divorced from reality.
Tell that to the Venezuelans that have been able to move money safely in and out of their country, or the many artists that went from struggling to be able to make a few bucks by selling NFTs.
Always treat every single crypto project as a scam. It is one of the safest bets you can make. Everyone involved is a scammer, every exchange is untrustworthy, and nobody can be trusted.
If you're trying to start an honest project in this space, you really need to ask yourself why you would put yourself in a situation where you are the only honest person in a room full of scammers.
> If you're trying to start an honest project in this space, you really need to ask yourself why you would put yourself in a situation where you are the only honest person in a room full of scammers.
This is one reason why I pulled the plug on my startup in the sphere. In the best case you're disadvantaged by all the scammers and liers: they can make promises, cut corners, rip investors where you are being careful, covering all bases, and trying to put a real case and working sofware out. In the worst case, your honesty is helping the scammers by adding credibility to their case.
That's an emotional response going the other way. Why not just think of the project itself as if the blockchain side of it never existed? Is there a real product, is there a visible progress, is the time investment happening in the development rather than empty announcements?
There has to be a better way to address this because "Why not blind yourself to relevant context" cuts both ways. You said "Always treat every single crypto project as a scam." - but if you ignore all blockchain ideas and still see a healthy and useful product, but ignore it as a scam - that's also blinding yourself to context.
Because a scam product will lie to you in order to look like a healthy and useful product. If you ignore the hints that it is a scam (that it is a cryptocurrency project, where 90% or more of all projects are, in fact, scams), you will be more likely to fall for the lies.
I didn't mean looking at future promises - that's part of the crypto game. I mean if the project mostly does what you expect from it now and continues development towards the rest - why does it matter if people see it as a scam on the crypto front? You're getting the value you need out of it.
As much as they’re excited about the technology itself, very few people are actually interested in using it. Instead, their business seems to revolve around the value of the utility tokens for their project.
Few people are buying the utility tokens to pay for the service. They’re buying them to horde so they can resell to other speculators when the price goes up. They have a lot of tokens in circulation, but only a small number of them get used to pay for the service. Many of them are sitting in the wallets of exchanges where they get traded back and forth but never come near the blockchain.
Investors only care about getting more press releases out so they can pump up the price of their discounted tokens, which have a shortened lockup period relative to something like stocks. It’s almost like a pump-and-dump scheme for investors.
Maybe their underlying project will become popular in the future, but the volatility of the token price makes it increasingly unattractive for companies that want to actually use it.